A recent review of gold mining stocks by The MoneyLetter turned up three analyst reports with recommendations ranging from ‘speculative buy’ to ‘buy’ to ‘outperformer’.
PI Financial on Troilus Gold
Gold and copper mining stock Troilus Gold Corp. (TSX—TLG) is “piecing together positive exploration results in Quebec from the past couple of seasons,” say Toronto-based PI Financial analysts Philip Ker and Neehal Upadhyaya. Its Oct. 10 batch of assay results came from 12 holes “designed to upgrade inferred material to indicated, and to acquire better geologic data below the indicated mineral resource at the Z87 target.” The results included a seven-metre section grading at just below 20 grams of gold per tonne of ore.
Troilus and other Quebec miners are considerably undervalued compared to their peers, the analysts calculate. Troilus has an enterprise value per (total resource) ounce of $4.90 (with 4 million ounces of gold equivalent) but its peers average $24.30 per ounce.
While a potential resource upgrade for an undervalued junior gold mining stock is a positive for the analysts, they also say a weak junior mining market is enough for them to reduce their target price for TLG to $3 per share from $3.80. They maintain their Buy recommendation and Speculative risk rating, however.
Mackie Research on Wesdome Gold Mines
Wesdome Gold Mines Ltd. (TSX—WDO) reported preliminary third-quarter 2018 production results that came well above analyst expectations. Toronto-based Mackie Research analyst Stuart McDougall says the positive results are a continuation of strong grades at the Eagle River (ER) underground gold mine in Wawa, Ont. He maintains his Buy recommendation and $5.10-per-share target price for the company.
“Wesdome produced 19,795 ounces from its ER mine complex in the third quarter. We were looking for 15,806 ounces, using the prior quarter as a gauge. So the production beat reflects a 16 per cent quarter-over-quarter improvement in grade, net of lower throughput,” Mr. McDougall says. Wesdome stuck to full-year revised guidance of 70,000 ounces to 75,000 ounces. Year-to-date, the ER complex has produced 54,371 ounces, suggesting to the analyst “good potential for the company to meet the mid-to-upper range of its target.”
Wesdome sold 18,401 ounces in the quarter at an average price of $1,571 an ounce to generate $28.9 million of revenue, ahead of the analyst’s forecast of $27.5 million on sales of 17,267 ounces.
CIBC World Markets on SSR Mining
SSR Mining Inc.’s (TSX—SSRM; NASDAQ—SSRM) third-quarter 2018 results reflected strong production from both the Marigold gold mine in Nevada and the Seabee gold mine in Saskatchewan, along with initial production from the Chinchillas pit mine at its Puna Operations in Peru. Management expects to meet or exceed its 2018 production guidance.
The company produced 86,000 ounces of gold and 700,000 ounces of silver in the quarter, Toronto-based CIBC World Markets analysts Cosmos Chiu and Kevin Chiew keep their Outperformer recommendation and $14-per-share target price. Messrs. Chiu and Chiew say Marigold is on track to achieve the high end of 2018 production guidance of 190,000 to 210,000 ounces of gold.
This is an edited version of an article that was originally published for subscribers in the December 2018/Second Report of The MoneyLetter. You can profit from the award-winning advice subscribers receive regularly in The MoneyLetter.
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