Thor Explorations remains Canaccord Genuity (TSX:CF, LSE:CF)’s top London gold producer pick after posting its first quarter 2023 operational update, with the miner reporting the production of 20,629 ounces of gold at its Segilola mine in Nigeria.
In a note to clients, Canaccord analysts reiterated their ‘Buy’ rating for the stock and price target of 35p. Thor’s London-listed shares are currently trading at 19p.
“THX remains our preferred gold producer exposure in London, with strong margins on offer in the current high gold price environment (spot trading at about US$2,000/oz),” the analysts wrote.
“Successful life extension of Segilola (either via the near-mine deposits, mineral resource extension or the potential underground development below the existing resource) could be a strong catalyst for the stock given the relatively short about four-year remaining life.”
Turning to Thor’s first quarter operational update, the analysts noted that gold production during the three months to the end of March came in slightly below their estimates due to lower grades, which offset Segilola’s continued above-nameplate-capacity ore throughput.
“The lower grades were driven by areas brought forward in the mine plan (originally planned to be mined later in the year) as a result of challenging ground conditions at the western pushback (an area of higher grade material intended to smooth out the production profile relative to the last published mine plan),” they wrote.
Canaccord’s analysts noted that two new production drilling rigs and additional haul trucks have now been mobilized to better equip Thor’s team to increase production for the remainder of the year, with the company expecting higher grades from the second quarter to the fourth quarter.
“We remain confident that the company will produce within the guided range of 85,000 to 95,000 for FY23 (Canaccord estimate: about 90,000) and that continued outperformance on throughput could result in production being at the top of this range (though we remain conservative),” they wrote.
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