Shares in Caravel Minerals Ltd (ASX: CVV) have improved more than 39% over the past year, but they're still trading well off their highs over the period.
But the analyst team at Shaw and Partners has recently initiated coverage on the ASX copper stock and believes shareholders should persist, predicting serious share price upside for the company.
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Major copper project in development
So what does Caravel do? The company is currently finalising the definitive feasibility study for its Caravel copper project 150km northeast of Perth.
Shaw and Partners said in its recent research report that Caravel was one of the largest undeveloped copper resources globally.
They added:
The project is a large-scale, low-cost operation that will utilise bulk mining and automation to drive strong unit cost efficiencies, supported by its proximity to Perth, only 150km away. With a Tier-1 resource, progressing permitting and emerging strategic funding interest, Caravel is well positioned to develop a globally significant copper operation leveraged to ongoing structural demand growth from electrification, EVs and AI.
Shaw and Partners said a key advantage for the project was its proximity to established infrastructure which was unusual for projects of this size.
They added:
Located within trucking distance of Perth and connected to existing sealed roads, power infrastructure and skilled labour pools, the project avoids many of the logistical challenges faced by more remote copper developments. This infrastructure access significantly lowers capital intensity and operating risk relative to comparable greenfield projects.
Shaw and Partners said Caravel was progressing funding options while the definitive feasibility study was being finalised, "with the project's scale and long mine life lending itself to a diversified capital stack''.
They added:
Caravel will pursue a mix of project debt, strategic investment and potential offtake-linked financing, to minimise dilution while providing the balance sheet required for construction. Strong interest from potential strategic partners and lenders, highlighted by the Adani non-binding MoU, reflects growing global demand for secure copper supply. This positioning enables Caravel to assemble a robust funding structure as development decisions approach.
Shaw and Partners said the growing demand for copper supported the reasons to buy ito the stock.
They said rapid growth in renewable energy, the electrification of transport and, "the rising power intensity of AI-driven data centres are expected to drive sustained copper consumption over the short, medium and long-term''.
The project also had significant precious metal and molybdenum by-products, Shaw and Partners said.
The broker has a $1.15 share price target on Caravel shares, which would be a 400% gain from the current share price of 23 cents.
Caravel is valued at $128.5 million.
