Chrysos Corp’s Road Paved With Gold

This story features CHRYSOS CORP. LIMITED. For more info SHARE ANALYSIS: C79

Chrysos Corp’s proprietary assay technology is making in-roads into the global gold mining industry where a large addressable market awaits.

-Chrysos Corp accelerates technology deployments
-70% of top fifteen gold miners on board to date
-Large addressable market to be tapped

By Greg Peel

Chrysos Corp ((C79)) provides assay services for the mining industry via its proprietary PhotonAssay technology, described on the company’s website as such:

Delivering faster, safer, and more accurate gold analysis, Chrysos PhotonAssay is an environmentally-friendly replacement for fire assay on-site and in the laboratory.

Hitting samples with high-energy X-rays, Chrysos PhotonAssay technology causes excitation of atomic nuclei allowing enhanced analysis of gold, silver, copper and other elements in as little as two minutes.

Chrysos continues to engage 70% of the world’s largest fifteen gold miners — seven of those actively using PhotonAssay — underpinning Ord Minnett’s confidence in a multi-year growth outlook.

This week Chrysos released a December quarter update.

Deployments

Chrysos deployed three new units in the quarter taking total units to 34. Contracted units increased by two to 56. Revenue rose 51% year on year. First half revenue now totals $29m, up 52% year on year, and is growing at a run-rate toward the top end of the FY25 guidance range of 32-54%.

Twelve units are either being shipped or ready to be shipped and installed, including three units that were manufactured during the quarter. Chrysos is continuing efforts to align its deployment and manufacturing cadence to eventually lower its unit inventory.

December quarter capex totalled -$24.8m and while double the average of recent quarters, Shaw and Partners notes, includes one-time property fit-out costs and R&D related spend. The company closed the quarter with over $120m of liquidity, including $26.6m in cash and a $95m undrawn debt facility, and demonstrated it is operating cash flow positive.

Chrysos has now contracted six units in FY25 year to date which compares to just one contracted in FY24. This highlights the company’s focus on marketing direct to miners over the last 12-18 months is delivering, Shaw suggests.

It also highlights it takes time to grow lab relationships. Eventually, Shaw believes an improved macro cycle –exploration activity picking up and assay lead times extending– will provide a further motivation to contract new units across the industry.

While counting near-term units “is fun”, Shaw says, stepping back, the broker’s longer-term confidence is underpinned by the fact Chrysos is engaging with 70% of the top fifteen gold producers already. It is a question of when, not if, the vast majority adopt PhotonAssay, in Shaw’s view.

The seven gold miners actively using PhotonAssay in some capacity, and a further four engaged in paid test work or other engagements of some description, supports Ord Minnett’s long-held belief the opportunity ahead for Chrysos is extremely large (total addressable market in excess of 600 units) and underpins a multi-year growth outlook.

While encouraged by industry adoption, as shown by recent contract wins outpacing deployments, Bell Potter would like to see a sustained improvement in unit deployments. If the company can address deployment constraints and demonstrate an ability to accelerate installations, it will be in a better position to capitalise on any further acceleration in industry adoption of its technology, the broker suggests.

Recommendations

In FNArena’s universe, three local stockbrokers are currently covering Chrysos.

Bell Potter retains a Hold rating, lifting its price target to $5.70 from $5.50.

Ord Minnett lifts its target to $6.40 from $6.09, retaining an Accumulate rating.

Shaw and Partners reiterates a Buy rating while slightly reducing its target to $7.00 from $7.20, largely driven by higher capex.

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