Chalice Mining Ltd (ASX: CHN) shares have taken a real beating this year.
Since the start of the year, the mineral exploration company's shares have lost 55% of their value.
This has been driven largely by the release of its scoping study for the Gonneville Nickel-Copper-PGE Project.
While the study outlines an executable, tier-1 scale development project in a world-class jurisdiction, there were a few areas of concern for the market.
This includes production not commencing until way out in 2029 and the study being based on potentially ambitious commodity price assumptions.
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Insiders buy Chalice Mining shares
A couple of insiders appear to see the pullback by Chalice Mining shares as a buying opportunity.
Last week, Chalice Mining chair Derek La Ferla and non-executive director Morgan Ball made purchases on-market. Ball snapped up 3,500 shares for $11,025 and La Ferla grabbed 9,600 shares for $29,760.
Should you do the same?
Analysts at Bell Potter would be supportive of these purchases.
The broker recently retained its speculative buy rating with a $7.10 price target. This implies a massive potential upside of 150% for investors over the next 12 months.
It feels investors should focus on the project's low costs rather than commodity price assumptions. It commented:
The salient point here, however, is that the project does not kick off for another 6 years and realistically no-one has any idea what commodity prices will be at that time, or indeed what they will be through the life of the project.
With an initial mine life of ~20 years, Gonneville will operate through many price cycles, low and high. Therefore, being at the bottom of the cost curve is what secures returns over a project's lifetime and this is a major strategic attribute of Gonneville.
