Venture Minerals Limited [ASX:VMS]
Metals & Mining
Targeting the right commodities
Venture Minerals (ASX: VMS) is an Australian mining company focused on the development of the Mount Lindsay Tin-Tungsten Project in northwest Tasmania, one of the largest Tin-Tungsten deposits in the world. With tin demand rising on the back of the EV revolution and Tungsten prices soaring as the metal’s use in defence applications has put tungsten in many countries’ critical minerals list, we see substantial value in the Mt Lindsay Project as Venture ramps up its development efforts.
Running multiple projects with high prospects
Besides the Mt Lindsay Tin-Tungsten project, Venture is running multiple other projects in north-west Tasmania and south-west Western Australia. The company has the Riley Iron Ore Mine in Tasmania ready for a quick restart should the market conditions improve. In WA, Venture is exploring for copper, nickel and PGE resources through a JV with Chalice Mining in Venture’s “Julimar lookalike” South West Project. At the company’s Golden Grove North Project, prospective for zinc, copper and gold, Venture has a JV with SensOre, whilst retaining the rights to REEs having found very high grade REE rock chip samples in the area. Venture also has a significant nickel-copper-PGE landholding at its Kulin project in WA.
Targeting the right commodities at the right time
Venture has obtained exposure to various commodities that are the full beneficiaries of the ongoing decarbonisation megatrend. Tin’s demand to make solder is rising as the EV revolution has increased the number of electrical components manufactured and therefore the solder required to create those components. Demand for REEs is soaring by the elements’ usage in the creation of permanent magnets used in wind turbines and electrical engines. Demand for nickel is increasing due to its use in the creation of Lithium-ion batteries, demand for copper and iron ore is rising by the electrification megatrend and the infrastructure required to make the energy transition possible. And demand for tungsten is soaring due to its application in military equipment and the increased international defence spending due to the rising geopolitical tensions.
Valuation range of A$0.036–0.041 per share
We value VMS at A$0.036 per share in a base-case scenario and A$0.041 per share in a bull-case scenario using an asset-based comparable valuation methodology and based on the number of shares on issue after assuming a full uptake of the ongoing share purchase plan to raise A$3m at A$0.018. Our target price range represents a Price/NAV of 0.44x, which we believe indicates substantial upside potential as our valuation range does not include the value of some of Venture’s non-core assets. The key risks to our investment thesis include commodity price risk, funding risk and project delay risk.