CHN’s share price has lagged its key commodity prices over the past month. The stock is only up 5%, while spot palladium and nickel prices are up ~12%. We note that palladium and nickel are the most important commodities for CHN’s Gonneville project, accounting for 48% and 25% of revenue from our base case development scenario for the project. The rising commodity prices have driven a 9% lift in our price target to A$2.40/share, which is a 50/50 blend of our base case and spot prices. The release of the updated resource estimate for the high-grade core of the Gonneville deposit remains a key near-term catalyst for CHN and we reiterate our Speculative Buy rating on the stock.
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