Elementos Ltd (ASX:ELT, OTC:ELTLF) has earned a ‘buy’ rating with a share price target of A$0.62 from Petra Capital, underpinned by its 100%-owned Oropesa Tin Project in Spain’s Andalucian Province, which the research firm described as a world-class tin asset.
Petra’s recommendation is based on Oropesa’s open-pittable resource of 18.9 million tonnes at 0.40% tin and access to key infrastructure, which makes the project a simple, low cost and meaningful source of tin concentrate into key European markets.
Located in a first-rate mining region, home to several operations including MATSA (SFR), Cobre Las Crusas (First Quantum) and Rio Tinto (ASX:RIO) (Atalya Mining), Andalucia is supportive of mining and recently designated Oropesa a ‘State Significant Project, which means the mining and environmental licencing process is fast-tracked.
With first production expected in 2025, Oropesa will come onstream into a market with strong tin prices driven by an increasing supply deficit.
Trading at a current share price of A$0.33, Elementos presents a significant upside to Petra’s price target, which is underpinned by 1xP/NPV on Oropesa using a US$30,000 per tonne tin price.
The following is an extract from the research report:
Oropesa: a world-class tin asset
- Oropesa hosts a resource of 18.9 million tonnes at 0.40% tin containing 75,400 tonnes of tin; 88% of the resource is in the higher confidence measured and indicated category.
- Close to key infrastructure including highways, ports, water and power, as well as a skilled mining workforce.
- The March 2022 Optimisation Study confirmed a 13-year mine life producing 3,350 tonnes per annum tin-in-concentrate, with a post-tax NPV of A$198 million, 38% IRR, and an estimated 2.5-year payback period, based on US$32,500 per tonne tin price.
Tin is critical for green transition and tech revolution
- MIT Research indicates tin is the No 1 metal most impacted by new technology, used in robotics, computing, EVs energy storage and renewables.
- Global consumption is modest at 360,000 tonnes per annum. Elemental’s Oropesa will supply about 1% of the global market.
- 48% of the tin demand is driven by solder in electronics; solder is the ‘glue’ connecting everything electronic. Semiconductor demand rose 26.3% in 2021 and is expected to grow further in 2022.
- 75% of tin production comes from non-tier 1, non-OECD countries. Reserves are diminishing and stockpiles represent just one week of global demand.
- Market deficit growing to 20% of demand by 2030 (70,000 tonnes).
Key dates ahead
- 1H 2023 – definitive feasibility study (DFS).
- Mid-2023 – Environmental and project approvals.
- 2025 – First tin production.