Shares in 29Metals Ltd (ASX: 29M) took a tumble last week after the company announced that there would be delays in reestablishing mining at the Xantho Extended ore body at the Golden Grove project in Western Australia.
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Major share price plunge
The shares closed at 37 cents the day before the April 16 announcement, but fell sharply once the news broke, and are now changing hands for 21.5 cents.
The question is, are the shares good value at the new lower price? I have had a look at two broker reports, and the good news is that there is some upside expected, although the two brokers have differing views on just what the shares are worth.
I'll get to their actual share price targets shortly.
Firstly, let's review what the company announced. 29Metals said in its statement to the ASX that it had done a review which had given it a greater understanding of the Xantho Extended decline and "level access areas impacted by seismicity''.
The company said:
Based on this new assessment, additional works to further reduce the risk of future potential production interruptions are being progressed prior to recommencement of mining. Additional works include alternate level access development to mitigate interactions with higher stress zones of the existing decline, which are expected to be completed during the Dec-Qtr-2026. Potential to accelerate recommencement of mining in the upper areas of Xantho Extended whilst additional works are completed is under review.
The company said alternate ore sources would be mined and milled while the additional works were carried out, but there would still be an impact on production rates.
The company added:
Full year production outcomes for zinc, gold and silver are now expected to be 5kt to 25kt (previously 40kt to 50kt), 6koz to 14koz (previously 12koz to 20koz) and 400koz to 600koz (previously 600koz to 800koz), respectively. Due to the expected change in full year production mix, selling costs guidance has been lowered to $20 million to $45 million (previously $50 million to $70 million). The additional works at Xantho Extended are expected to be implemented within existing site cost and capital cost guidance.
Shares looking cheap
The analyst teams at Morgans and Jarden have both had a look at the changes, and both have downgraded their price target on the company.
That said they differ widely in their estimates.
Jarden reduced their price target from 38 cents to 32 cents, which would still provide strong upside from current levels.
Morgans had a much more bullish price target of 54 cents before the update, but has slashed this to just 26 cents, once again, still higher than the current share price.
Morgans said while the update was "operationally prudent, the market focus has clearly shifted to liquidity risk and execution through CY26''.
29Metals is valued at $402.5 million.
