JPM-AUSTRALIA FIRSTTO MARKET Top Stories-20251008

US Government to take 10% stake in Trilogy Metals, approves access road to Ambler Metals project;positive read-through for S32.

Key Takeaways: 1) The US Government will take a 10% direct equity stake in Trilogy Metals (TMQ US, not covered), S32’s 50% JV partner in the Ambler Metals project, while at the same time the White House has approved the access road to the district, which has been the bottleneck in its development, 2) The Ambler Metals Arctic project in Alaska could produce ~70ktpa copper, ~80ktpa zinc along with by-products over a 13-year life, for $1.2bn capex; we expect the US Government involvement will help fast track financing and further approvals, albeit FID is still likely to be some years away, and 3) Trilogy Metals quotes a $2.8bn spot NPV (as of yesterday) and ~40% IRR (but capex is a 2023 number that would likely need revision); this implies $1.4bn NPV attributable to S32 or about A$0.43ps at our LT AUD (~13% of our NPV/15% vs last close). Overall, we expect the share price to start recognizing more value for a project that has largely been ignored by the market, given it was stifled by approvals. S32 is OW rated.