Southern Hemisphere Mining [ASX:SUH]
Metals & Mining
A low-cost top-tier Copper investment
We initiate coverage on Southern Hemisphere Mining Limited (ASX: SUH) with a 12- month target price of A$0.088, representing a 320% upside from the current share price. SUH is a growing Cu-Au and Mn explorer and developer with highly prospective projects in Chile, including the Llahuin Copper-Gold-Molybdenum Project (169Mt @ 0.43% CuEq) and the Los Pumas Manganese Project (30.26Mt @ 6.24% Mn). Backed by strong exploration results, scalable operations, and a strategic location in a world-class mining jurisdiction, SUH presents an attractive investment opportunity.
A compelling investment opportunity across the metal portfolio
SUH is emerging as a diversified explorer and developer with a strong foothold in high demand commodities, thanks to its Llahuin Copper-Gold-Molybdenum Project and Los Pumas Manganese Project. Recent drilling campaign at Llahuin has led to a significant increase in mine discovery scale, a substantial metal upgrade (reaching over 0.9% CuEq), and discovery of new mineralised zones—all within shallow depths. With management focused on gaining a deeper understanding of the asset, value-enhancing diamond drilling is planned. This holds significant potential and is expected to drive further enhancements in the project's resource quality and scale. Meanwhile, resources at Los Pumas have also increased by ~28%, with the potential to produce EV battery-grade high-purity manganese sulphate (HPMSM), agricultural soil improvement products, and electrolytic manganese for steel production.
Llahuin’s strategic location enhances its investment appeal
The Llahuin Project, situated in Chile’s renowned copper belt, benefits from strong infrastructure and low-altitude advantages, reducing operational challenges. Its proximity to primary mining operations, including Pucobre’s El Espino Mine (230Mt @0.45% CuEq, US$490m CAPEX) and Los Pelambres (6.1bt @ 0.51% Cu, Antofagasta Minerals), offers synergies in infrastructure and potential strategic partnerships. These locational advantages, along with jurisdiction’s low-cost operations (relative to assets based in Australia), make SUH an attractive investment opportunity.
Valuation range of A$0.083–0.094 per share implies a significant upside
Using a SOTP-driven asset base comparable valuation methodology, we have valued SUH at A$0.083 per share in a base-case scenario and A$0.094 per share in a bull-case scenario. Our midpoint target price of A$0.088 represents a Price/NAV ratio of 0.24x, indicating significant valuation upside potential compared to the current share price. We anticipate that SUH will undergo a re-rating with the announcement of an interim JORC resource upgrade for the Llahuin Project. Significant value unlocking is also possible through further drilling at the Los Pumas project. Any M&A activity undertaken by management will be value-accrual. The downside risk to the stock is highly limited. Key risks to our investment thesis include project execution delays, geological downgrades, funding risks, and commodity cycle risks.