Nimy has 162pc upside as gallium potential grows: analyst

The Australian

15-05-2025

East Coast Research places 21c price target on gallium explorer Nimy Resources
That's 162% upside to its closing price on Friday
Early analysis shows Nimy's Block 3 could become a significant non-Chinese source of primary gallium, a metal prized for its use in semiconductors
Special Report: Nimy Resources shares could more than double as it unveils the scale of a gallium discovery along the first new greenstone belt uncovered in WA in 20 years.
That's the verdict of East Coast Research analyst Rahul Tiwari, who has placed a 21c price target on the $17m capped junior explorer, initiating coverage on the back of a potential breakthrough gallium find in WA.
Nimy Resources (ASX:NIM) controls the 90km by 30km Mons belt, where assays at its Block 3 East prospect have returned estimated gallium concentrations from between 400-800g/t in a chloritised schist.
Those results were followed by the declaration of an exploration target of 9.6-14.3Mt at 39-78g/t Ga, high-grade mineralisation which could deliver a superior source of primary gallium, a key metal in the production of semiconductors, compared its traditional production as a by-product of bauxite and zinc refining.
That means it could carry lower operating and capital costs, Tiwari says, making Mons a strategic asset for the West's supply of the commodity, currently subject to trade war export controls from China, which has cut off supply to the United States.
'The recent CSIRO study validates the presence of high-grade gallium in chloritized schist which implies that extraction process is expected to be simpler and cost effective resulting potentially in lower opex and capex requirements,' Tiwari said.
'Nimy has assessed only ~10% of the target area indicating significant potential of further discovery of gallium and other critical minerals i.e. copper, gold, nickel at its Mons belt (district scale greenstone belt).
'We expect Nimy to generate cash through the cycle from the potential of high output combined with low opex and capex requirements which highlights the strong investment case.'
Growing gallium market
The gallium market is niche, clocking in at around 750tpa, but Tiwari noted there was strong demand for additional sources of supply for the commodity, with demand from tech, renewable energy and the defence sector on the rise.
Gallium demand is expected to rise at a 24.5% CAGR between 2025 and 2032, while China dominates 98% of global output.
'The market capturing opportunity is huge considering that China accounts~98% of global gallium output and that supply diversification is utmost priority globally,' Tiwari said.
'We expect an upward trend in gallium prices in the future, a key catalyst for Nimy.'
Gallium is listed as a critical mineral in Australia, the key US market, the EU, Japan, Korea and the UK.
ECR has benchmarked the mid-point of Nimy's gallium exploration to close peers to assess its valuation, adding a conservative premium of 35% on the high potential of further gallium discoveries at Block 3.
It also noted the upside in the Masson project, which sits within Mons, and has returned significant intercepts of nickel, copper, cobalt and platinum group elements.
'Our EV/Resource valuation methodology has valued Nimy at A$0.17 per share in a base-case scenario and A$0.25 per share in a bull-case scenario,' Tiwari said.
'Our midpoint target price of A$0.21 per share indicates an 162% upside potential to the current share price of A$0.08 per share. We highlight that our valuation is conservative given that NIMY's vast and prospective greenstone belt contains multiple Masson style deposits in the northern section of the tenement.'
Rerate potential
Investors have already taken a shine to the stock since its gallium breakthrough started to penetrate the market.
Nimy shares are up 35% this year so far, and rose 16.05% on Monday to 9.4c.
Tiwari believes there are a number of catalysts emerging for the explorer, with more drilling on the way and a maiden JORC resource due later this year.
That will be a key next step for Nimy.
Initial metallurgical testwork is also about to begin in partnership with Curtin University, which will deliver insights into gallium recoveries and the optimal extraction method and flowsheet for the project.
The Curtin University agreement is supported by the Resources Technology and Critical Minerals Trailblazer, funded by the WA Department of Education.
Other potential catalysts include the release of an expected scoping study based on the JORC resource definition due in the second half of 2025, and phase 2 drilling at Block 3 which began yesterday as Nimy looks to book in a maiden resource.
This article was developed in collaboration with Nimy Resources, a Stockhead advertiser at the time of publishing.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.