Following FireFly Metals Ltd (ASX:FFM)’s March quarter results, Shaw and Partners published a research note on the company maintaining its ‘buy’ recommendation and $1.10 per 12-month share price target on the stock, implying upside potential of more than 30%.
Shaw and Partners recognises FireFly’s position to benefit from stronger copper prices as it is highly leveraged to resource growth, with the company remaining a key pick of the research group in 2024.
As per its quarterly report, FireFly is on track to report a significant resource upgrade at Green Bay Copper-Gold Project in Newfoundland, Canada, in the September quarter after drilling a host of "outstanding" intersections with high grades and extensive widths.
Drilling results support the company’s strategy to significantly grow the Green Bay resource which currently sits at 39.2 million tonnes at 2.1% copper equivalent.
Results from FireFly's first VMS drilling at Green Bay included:
- 46.4 metres at 4.6% copper, 1.2 g/t gold and 7.5 g/t silver for 5.6% copper equivalent;
- 17.8 metres at 4.4% copper, 2.2 g/t gold and 18.8 g/t silver for 6.6% copper equivalent;
- 14.7 metres at 2.6% copper, 5.5 g/t gold, 24.2 g/t silver and 1.2% zinc for 7.5% copper equivalent;
- 11.2 metres at 4.9% copper, 2.3 g/t gold and 9.7 g/t silver for 6.9% copper equivalent; and
- 2.7 metres at 13.5% copper, 7.0 g/t gold and 33.0 g/t silver for 19.4% copper equivalent.
Results from drilling into the large-scale Footwall Zone also returned high grades over substantial widths, including 9 metres at 4% copper equivalent and 63.1 metres at 2.2% copper equivalent, including 12.4 metres at 3.1%.
Shaw and Partners said, “The results from the drill program at Green Bay to date are highly encouraging. FireFly has discovered new structures outside the existing resource envelope and extended known mineralisation by 350 metres.
"A resource update is expected in the September quarter of 2024. The resource is large and the grade compares well with comparative exploration stage projects.”
The company now has two drill rigs on site at Green Bay with a third expected this month. Drilling will also take place from the underground exploration drive to allow for faster, cheaper and more accurate results.
FireFly is well funded for future campaigns with cash of $54 million following its recent capital raising.
Positive copper price outlook
Shaw and Partners notes that the copper market is set to experience a significant surge in demand over the next decade due to an acceleration in the adoption of renewable energy, electric vehicles and associated infrastructure. However, this surge in demand is likely to be met with significant supply challenges.
Projections of an 8 million tonnes gap between supply and demand in 2030 mean the positive outlook for the copper price remains intact, despite headwinds posed from rising interest rates globally over the past two years.
The group recently upgraded its copper price forecasts by 10% to US$4.50 per pound in 2025 and by 20% to US$5.00 per pound in 2026.
“Green Bay has the potential to supply copper into a market characterised by looming supply shortages and growing demand driven by global efforts to decarbonise the global economy.”