Here's what 1 broker thinks about the Chalice (ASX:CHN) share price

Why 1 broker thinks the Chalice (ASX: CHN) share price could continue to climb in 2021. Here's a rundown on the mining exploration company.

| More on:
asx shares in 2021 represented by sparkling gold numbers 2021

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

2020 was a breakthrough year for ASX mining shares, with commodities including gold, iron and copper running to multi-year highs.

Higher commodity prices brings to life many more prospective exploration projects, with a number of ASX mining shares delivering 1,000% returns last year

Chalice Mining Ltd (ASX: CHN) was one of the best performing ASX mining shares, running from 20 cents to close at almost $4.00 in 2020.

On 5 January 2021, Bell Potter upgraded the Chalice Mining share price target from $5.35 to $5.60. Here's why the broker sees significant upside in the exploration company. 

The Chalice growth story so far 

Chalice is a Perth-based exploration company, focused on base and precious metals. It has an experienced management and geological technical team whose members are recognised for their exploration success.

The company's strategy is to target tier-1 scale (net present value greater than US$1 billion) mineral projects. This by actively managing its exploration portfolio and undertaking high impact activity on its projects. 

Chalice advanced two gold projects to the point where they were sold for $107 million – far more than the cost of exploration – to larger companies for subsequent development. Chalice returned $25 million to its shareholders and retained significant funds for further exploration. 

Today, the company's assets comprise 2 new and significant discoveries, the Julimar project in Western Australia and the Pyramid Hill gold project in Central Victoria. Chalice also owns a number of minor exploration projects and royalty interests for a range of metals including gold, nickel, copper and vanadium. 

Chalice share price upgraded with buy rating 

The Chalice share price was upgraded from $5.35 to $5.60, or a 25% upside to its current share price. Bell Potter believes the company is well-funded to continue its major exploration program at Julimar, plus drilling programs at Pyramid Hill gold project and limited exploration on its other projects with cash currently estimated at ~$120 million. 

This funding will support even higher levels of drilling activity and associated economic studies at Julimar. The broker continues to regard the Julimar proejct as a world ranking one with potential to become a major new Tier-1 source of platinum-group elements. 

Foolish takeaway

ASX mining shares across the board, from giants such as BHP Group Ltd (ASX: BHP) and Rio Tinto Limited (ASX: RIO) to microcaps, have all benefited from higher commodity prices. 

Chalice's recent capital raising was well-received by the market, and places the company in a position to deliver further drillings activity and economic studies for its two core projects in 2021. 

At the time of writing, the Chalice share price is trading up 3.57% at $4.64.

Motley Fool contributor Lina Lim has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Resources Shares

Miner looking at a tablet.
Mergers & Acquisitions

Should you buy BHP shares now before tonight's Anglo American takeover reveal?

ASX 200 investors should know tomorrow morning whether BHP will become the largest copper miner on Earth.

Read more »

Two young male miners wearing red hardhats stand inside a mine and shake hands
Resources Shares

Will ASX copper shares keep surging from here? (Plus: 2 top picks for exposure)

Can copper stocks continue their electric returns?

Read more »

Three miners looking at a tablet.
Mergers & Acquisitions

BHP share price marching higher amid fast approaching $75 billion takeover deadline

BHP is still in negotiations over its acquisition proposal for Anglo American.

Read more »

A happy miner pointing.
Resources Shares

1 Australian mining stock worth a long-term investment

I think this copper play could be an excellent pick in the mining sector.

Read more »

two business men sit across from each other at a negotiating table. with a large window in the background.
Mergers & Acquisitions

Deal or no deal? Why the BHP share price is crumbling today

The BHP share price is under pressure following the mining giant's third takeover bid for Anglo American.

Read more »

ASX shares downgrade A young woman with tattoos puts both thumbs down and scrunches her face with the bad news.
Resources Shares

Guess which ASX 200 mining giant could crash 30%

Goldman thinks this miner's shares could be seriously overvalued.

Read more »

Three analysts look at tech options on a wall screen
Resources Shares

Own Fortescue shares? Here's why you now own an ASX tech stock!

The mining giant is now selling software.

Read more »

a mine worker holds his phone in one hand and a tablet in the other as he stands in front of heavy machinery at a mine site.
Resources Shares

Rio Tinto share price sinks amid gas woes

Rio Tinto is struggling to secure the gas it needs to power all of its projects.

Read more »