Chalice Mining Ltd (ASX: CHN) shares have taken a real beating this year.
Since the start of the year, the mineral exploration company's shares have lost 55% of their value.
This has been driven largely by the release of its scoping study for the Gonneville Nickel-Copper-PGE Project.
While the study outlines an executable, tier-1 scale development project in a world-class jurisdiction, there were a few areas of concern for the market.
This includes production not commencing until way out in 2029 and the study being based on potentially ambitious commodity price assumptions.
Insiders buy Chalice Mining shares
A couple of insiders appear to see the pullback by Chalice Mining shares as a buying opportunity.
Last week, Chalice Mining chair Derek La Ferla and non-executive director Morgan Ball made purchases on-market. Ball snapped up 3,500 shares for $11,025 and La Ferla grabbed 9,600 shares for $29,760.
Should you do the same?
Analysts at Bell Potter would be supportive of these purchases.
The broker recently retained its speculative buy rating with a $7.10 price target. This implies a massive potential upside of 150% for investors over the next 12 months.
It feels investors should focus on the project's low costs rather than commodity price assumptions. It commented:
The salient point here, however, is that the project does not kick off for another 6 years and realistically no-one has any idea what commodity prices will be at that time, or indeed what they will be through the life of the project.
With an initial mine life of ~20 years, Gonneville will operate through many price cycles, low and high. Therefore, being at the bottom of the cost curve is what secures returns over a project's lifetime and this is a major strategic attribute of Gonneville.
