RFC Ambrian has kicked off its coverage on Hummingbird Resources (LON:HUM) with a lofty 45p target price, almost double the current share price.
“The Yanfolila Project more than underpins the current share price,” the house broker said.
Additionally, the potential “mineable material” from the project and the options available at its Dugbe site have not yet been valued by the market, it added.
Construction at the Yanfolila project, bought from Gold Fields in 2013, is expected to start before the end of the year, after Hummingbird raised £3.5mln from a placing earlier this year.
“If construction does commence by the end of the year, we anticipate that this could enable production start-up by end-2016,” RFC Ambrian said.
Hummingbird’s most recent optimisation study shows mineable resources of 547,000oz at a grade of 2.65g of gold per tonne.
Final due diligence is currently underway by Taurus, which has agreed to fund the project’s development through a US$75mln facility.
“The all-share acquisition of the low-cost, high-return Yanfolila Gold Project and the successful negotiation of a debt finance offer to take it through to production have placed the company in a robust position to grow value despite current market challenges,” Ambrian said, as it placed a ‘Buy’ recommendation on the stock.
Shares were 0.2p higher at 24.46p today.