Catalyst Metals: Risks more than priced in and potential upside is significant; initiate at Overweight

Research evidence excerpt

Catalyst Metals: Risks more than priced in and potential upside is significant; initiate at Overweight

mines (Plutonic Main, Morgan India Private Limited

Plutonic East, K2, Trident), growing to 5 in CY27 as Old Highway is Zane Guo

developed. JPMe forecasts 5yr avg production of ~150koz (peak 160koz) at (61-3) 9633-4020

AISC ~A$3,100/oz, deliberately conservative vs CYL's 183koz avg / zane.guo@jpmorgan.com

200kozpa peak at ~A$2,300/oz, which leaves material potential upside if they J.P. Morgan Securities Australia Limited

deliver (NAV ~A$14/sh on company guidance). Little capex is required to add

the 100koz: ~A$100m (JPMe: ~A$170m), or ~A$2,800/oz of incremental Half Yearly Forecasts (FYE Jun)

capacity (~A$170/60koz uplift), roughly half of mid-cap peer CMM's ~A Adjusted PAT (A$ mn)

$5,900/oz for a similar expansion. Mgmt estimates ~50-70% of the capital is 2025A 2026E 2027E

already sunk (A$50m); the remaining build (JPMe: Q4FY26/27/28 at A$16m/ H1 42 109A 121

H2 64 131 146

A$60m/A$45m) is self-funded, with net cash building to ~A$900m by FY29 FY 106 240 267

and A$1.4b if CYL delivers on their plan - which we think the market

underappreciates.

• Plutonic Belt and execution risk. Plutonic is geologically difficult (mostly

UG, nuggety, hard to model). Our ~25% discount to the 200koz target is a

deliberate haircut to throughput (~1.9Mtpa vs the ~2.2Mtpa 200koz implies)

and grade (~2.9 vs ~3.3g/t), not a view that the ounces aren't there; on mgmt's

framing the constraint is development of Trident decline (costing ~A$2m/

month for the next 9 months) and ramp timing, rather than a resource or grade

problem. The mill has had crusher and liner upgrades and mgmt expects it to

run above its 2Mtpa nameplate, but we want to see ~2.2Mtpa sustained before

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crediting it.