Broker RFC Ambrian restated its buy advice and price target on Mandalay Resources (TSE:MND) after a record end to the year.
It also said the numbers point to the precious metals miner being “significantly profitable” for the year just gone.
The Canada-listed business produced a total of 10,927 ounces (oz) of gold, 785 tonnes antimony and 895,222 oz silver representing a total of 33,537 oz of gold equivalent in the quarter.
Costerfield in Australia produced 5,907 oz of gold and 785 tonnes of antimony, on "considerably higher volumes" than the fourth quarter of 2011 as a change in mining method boosted amounts mined.
Output from Cerro Bayo in Chile was 5,020 oz gold and 895,222 oz silver as higher grades and tonnes were mined and processed.
For the full year 2012, Mandalay produced a total of 35,125 oz gold, 2,481 tonnes of antimony and 2.91mln oz Ag, (107,941 oz gold equivalent).
For 2013, Mandalay said it expects production to rise to between 112,000-123,000 oz of gold equivalent, comprising 2.8-3.1 million ounces of silver, 36-42,000 oz of gold and 2,800-3,000 tonnes of antimony.
“These figures bode well for the annual financial results for 2012,” said Ambrian’s Duncan Hughes.
“It is our expectation that the company will achieve high margins on sales and should be significantly profitable for the financial year.
“Whilst a portion of this profit will be returned to shareholders as a dividend, we expect this to be balanced against financing expansion programmes at both operations and also utilised in future acquisitions.”
The shares closed at C$1.18, 9 cents shy of the London broker’s discounted cash flow-based (DCF) valuation of Mandalay.
“The expectation is that resources will continue to be discovered and converted to mining inventory, but these ounces are not valued in our model,” Hughes added.
“Consequently, our target price could be viewed as fair value based on what we currently have defined in resources and reserves, but probably understates the upside potential.”