Somerset Minerals Limited [SMM]
Metals & Mining
North America's Copper Frontier: Exceptional highgrades of over 50% copper
We initiate coverage on Somerset Minerals (ASX: SMM) with a 12-month midpoint target of AUD$ 0.057 per share, representing a potential upside of 138% from the current share price of A$0.024. Somerset is focusing on the exploration of its recently acquired Coppermine Project in Nunavut, Canada—an emerging high-grade copper belt. Initial assay results from the recent maiden surface sampling confirm “wide-spread mineralisation” with high grades of copper & silver (51.96% Cu and 74.7g/t Ag) indicating the potential for a district-scale copper system and multiple discoveries within the Copper Creek Formation, which contains extensive high-grade copper occurrences.
Positioned to emerge as a potential Tier 1 copper discovery
Somerset’s strategic landholding in Nunavut’s Kitikmeot region lies directly adjacent to White Cliff Minerals Rae Copper Project which recently reported 90.0m @ 4.0% Cu from surface, enhancing the geological prospectivity and the potential for a district-scale mineral system. The company is preparing for a pivotal exploration season, including surface sampling, and a fully funded and permitted maiden drill campaign scheduled for early-July 2025. With all regulatory approvals secured and 1,500 metres of reverse circulation drilling planned, Somerset is well-positioned to transition from early-stage exploration to resource definition through a phased and capital-efficient program. In parallel, its Prescott Project in Nunavut—prospective for sedimentary copper—adds further upside and optionality. Somerset offers timely exposure to a resource in a politically stable and infrastructure-accessible jurisdiction.
We maintain our positive outlook for copper prices
Copper’s 2025 market is marked by a short-term supply lift from smelting and inventory releases; however, long-term supply remains tight. Chile and Peru responsible for over a third of global supply—face declining ore grades, water stress, and permitting delays, limiting output growth to just 1.3% globally against 2.3% demand growth. With a projected 13-million-tonne supply gap by 2040, Somerset offers timely exposure to a high-grade copper asset in a stable jurisdiction, aligning with the secular demand for the resource.
Valuation range of A$0.040–0.50 per share:
To determine fair valuation of SMM, we used a Sum of the Parts methodology, by analyzing the copper district portfolio using price-to-net asset value (P/NAV), and benchmarking against established regional competitor White Cliff Minerals’ Danvers prospect, which offers a credible reference given geological and strategic similarities. SMM trades at a ~75% discount (SMM ~$14. vs. WCN ~$53M), offering strong re-rating potential as it moves into drilling in early July. The valuation range of A$33.3–39.7 million reflects Somerset’s potential as exploration picks up. The midpoint target of A$0.057 implies a 138% upside from the current price of A$0.024. Key risks include commodity prices, funding, and exploration outcomes.