Capricorn Metals ‘won’t stay under the radar for much longer’, says UK broker

13th October 2017
Resources Rising Stars

Emerging gold miner Capricorn Metals (ASX: CMM) is on the cusp of completing a DFS for its Karlawinda gold project in WA and could be an attractive M&A target for cashed-up Australian mid-tier miners or global gold producers, says UK broker Tamesis Partners LLP.

In a wide-ranging initiation note, Tamesis analyst Phil Swinfen says there is “considerable scope” for price appreciation as Capricorn continues to de-risk development by completing the DFS and progressing funding.

“The company is trading at a deep discount to its NAV and gold development peers,” he says.

Tamesis has placed a target price of 15c a share on Capricorn shares, a 75 per cent premium to their current price of around 8.3c.

“Once the DFS de-risks the key metrics, we see Capricorn as an attractive M&A target for both cashed-up Australian mid-tiers, or global golds looking to diversity portfolio risk and add low-cost base-load production to the growth profile,” Swinfen said.

Tamesis says the DFS will focus on Bibra, the main deposit at Karlawinda, which has a 1.1Moz resource and 713,000oz reserve at 1.1g/t Au.

“Mining is a refreshingly simple proposition with a low strip, large scale, multi-staged open pit,” Tamesis says.

“We forecast first production in H2 2019, ramping up to 95koz per annum over the 7 full years of mine life. We see LOM average C1 cash costs at A$900/oz, and AISC of $1,030/oz.”

The estimated project NPV for Bibra is $120 million, using a US$1300/oz gold price.

To read the full Tamesis report, click here.

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