This research report has been prepared by Trim Capital
Price $0.755 | Valuation $1.53 | Market Cap $73.9m
Chilwa Minerals’ mining project has significant economic potential given presence of multiple critical minerals and is poised for commercial production within five years, given confluence of various factors. We initiate coverage with a valuation of A$1.53 per share.
Key Messages
Promising project due to multiple commodities: CHW owns 100% of Lake Chilwa project, containing heavy mineral sands (HMS), niobium, and rare earth elements (REE) across various sources such as monazites, ionic clays, and carbonatites. Samples from Mposa deposit had ilmenite (76%), zircon (9.5%), and monazite (2-3%). Meanwhile, exploration of Mpyupyu deposits indicated the presence of potentially high-grade REE carbonatites.
Growing demand for critical minerals: There is growing demand for ilmenite and rutile since they are feedstocks for titanium, which has strategic uses in aerospace, defense, and medical industries. Niobium is commonly used in steelmaking for aerospace, defense, and electronics. Zircon has emerging applications in nuclear plants and EV batteries. Rare earths (REE) demand is rapidly increasing (prices ~2x over past year) as countries transition towards EV and renewable energy. All these minerals and elements are designated as critical by the US, Australia, and Europe.
Project advancing to the next stage: CHW has Mota-Engil as their strategic shareholder (30% stake) and project partner (service agreement), giving them access to key equipment and construction capabilities given the firm’s long history (~50 years) of operations in Africa. With this, CHW’s exploration activities are progressing quickly and moving towards scoping/feasibility studies in 2026. We see the project eventually moving to commercial production within 4 years, given management execution and targets (decision to mine by June 2028), government/local community support, infrastructure development (proposed Liwonde Dry Port by Mota-Engil), and potential funding from US entities.
Valuation
Valuation of $1.53: We valued CHW using a target EV/Resource multiple. CHW’s mineral resource estimate of 113 Mt is multiplied by the target multiple of 1.27x (average of ASX-listed HMS+REE mining firms and Malawi mining firms), resulting in an implied share price of A$1.53, providing a 103.3% upside from current prices.
Catalysts & Risks
Next catalysts: CHW is planning to conduct an IPO in NASDAQ by 2Q26, with expected proceeds of US$10m (~A$14.3m) that would be enough to fund at least a year (or 4 quarters) of exploration activity or until 30 June 2027. This will also give them better access to capital markets for subsequent funding rounds.
Risk to investment thesis: Some of the key risks that CHW faces are uncertainty on exploration results, mining regulations imposed by Malawi government, and potential for significant dilution given need for further capital raises.
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