Canyon Resources, an ASX-listed exploration and development company, is advancing the high-grade, large-scale Minim Martap bauxite project in Cameroon. Minim Martap, a feasibility-stage project, is set to become an important independent source of low-cost bauxite for the fast-growing seaborne market. While we are planning to initiate full coverage of Canyon Resources soon, in this note we focus on the key elements of the company’s investment case – attractive project economics, favourable bauxite market fundamentals and supportive cornerstone shareholder.
Year end |
Revenue (A$m) |
EBITDA (A$m) |
PBT (A$m) |
EPS (A$c) |
Gross cash (A$m) |
P/E (x) |
06/23 |
0.0 |
(4.4) |
(5.0) |
(0.5) |
10.7 |
N/A |
06/24 |
0.0 |
(9.4) |
(9.5) |
(0.8) |
22.2 |
N/A |
|
Long-life, high-grade bauxite deposit in Cameroon
Canyon Resources is developing a long-life, high-grade Minim Martap bauxite project in Cameroon. It has a large compliant mineral resource of 1,027mt and proved reserves of 109mt at 51% Al2O3 and 2% SiO2. A bankable feasibility study (BFS) published in mid-2022 envisaged production of 6.4mtpa of bauxite averaging 51% total alumina and low silica of 2% for the first 20 years of operation at a C1 cash cost of US$24/t and initial capex of US$253m. In September 2024, Minim Martap was granted a mining licence, a major milestone that demonstrates government support. The project focus has since shifted towards upgrading the resource base and reserves, with additional work being undertaken on the infrastructure solution that includes upgrading the existing rail line and building a transhipment operation at the Douala port. These work streams will feed into an updated BFS that is due in Q125.
Anchor shareholder committed to build the project
Approximately 42% of the company is owned by Fortuna Holdings, a family office based in Singapore and Dubai. A prominent mining investor, Fortuna is a long-term shareholder committed to bringing the Minim Martap project into production.
Rising bauxite prices, strong industry fundamentals
Recently bauxite prices have risen sharply on the back of export disruptions from Guinea, the largest seaborne supplier of bauxite. With its long-life, high-grade project in Cameroon, Canyon is well positioned to reduce dependence on Guinean supply, allowing for more diversified and robust bauxite market. In the long term, bauxite demand is underpinned by the growing use of aluminium in the energy transition industries such as electric vehicles, electronics and green energy. At an average FOB price of US$45/t, the 2022 BFS estimated Minim Martap’s NPV8 at US$452m. Given the project’s premium product spec, the current spot benchmark price of c US$90/t (CIF China, 45% Guinea) bodes well for Canyon’s valuation.