Jefferies has reviewed valuations across five European, Middle East and Africa precious metals miners following strong sector share-price performance.
The American bank identified the most upside in Endeavour Mining PLC (LSE:EDV, TSX:EDV, OTCQX:EDVMF, FRA:6E2), which it rates 'buy', trading at 4.4 times next twelve months' consolidated enterprise value to EBITDA at spot prices.
Jefferies said higher-than-expected capital returns and net asset value accretion should benefit Endeavour's multiple as high-margin ounces from Assafou and Sabodala underground approach.
This should help close the valuation gap to historical levels over the next 12 months.
Hochschild Mining PLC (LSE:HOC, OTCQX:HCHDF, FRA:H3M) and Pan African Resources PLC (LSE:PAF, OTCQX:PAFRY, JSE:PAN), both rated 'buy', have seen the sharpest earnings multiple expansion, with shares rising 43% and 48% respectively so far this month.
Hochschild now trades at a 20% premium to its historical range, while Pan African trades at a 50% premium, broadly in line with the intermediate gold miner average.
Fresnillo PLC (LSE:FRES), rated Hold, has lagged peers, rising 28% against a 40% gain for the gold miners index, and trades at a 17% discount to its own ten-year historical range.
Valterra Platinum Ltd (LSE:VALT, JSE:VAL), also rated Hold, trades in line with its ten-year average, with Jefferies remaining neutral on the outlook for platinum group metal prices.
