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Caledonia is a Mining, Exploration and Development company focused on Southern Africa. Caledonia’s primary assets are a 49% interest in the Blanket Mine ("Blanket") in Zimbabwe and a 100% interest in the Nama base metals exploration project in Zambia. Caledonia’s shares are listed on the Toronto Exchange (CAL), on London’s AIM (CMCL)...Read more
Caledonia Mining attractive on number of fronts suggests CanaccordJanuary 16 2013, 2:53pm
Gold miner Caledonia Mining (LON:CMCL TSE:CAL) could have almost as much spare cash as its current value in two years time, underlining its appeal says broker Canaccord.
The broker says the investment case for Zimbabwe-focused Caledonia is based on four key pillars: a proven track record of delivery; a completed indigenisation process; a five year plan to increase production by 90% and dividend potential after the recent maiden dividend of C$0.005/share.
“With the net cash balance building, Caledonia offers a premium dividend, production and earnings growth versus peers,” says the broker.
The company trades on a 65% discount to peers on three key metrics, while average annual free cash flow will be US$33m over the next 5 years.
This will allow the company to fund its 5-year investment programme of US$37m internally, while leaving ample room for dividend growth, argues Canaccord.
It has a target price of 16p/share, and forecasts Caledonia will have US$55m in net cash by the end of 2014, equal to 90% of the current market capitalisation.
"This should draw attention to the group’s attractive cash flow, while an initial resource estimate at the Zambian copper asset (due mid-2013) provides further upside."
Shares were 7.09p today.