WH Ireland has started coverage on Hummingbird Resources Ltd (LON:HUM) with a ‘buy’ rating and a target of 42p, offering over 20% upside to the gold miner’s current share price of 23.375p.
In a note to clients, analysts at the broker noted that Hummingbird “is busy building its first gold mine in Mali at Yanfolila.”
They pointed out: “This low capital intensity mine is fully funded and construction is well underway with first concrete poured, steel contracts in place, a mine contractor appointed and a growing experienced production team assembled.”
The analysts added: “The mine once commissioned by the end of this year will produce over 100koz gold/a for an initial 8 year period at high profit margins and will be very cash generative.”
They said: “We see this is as only the beginning for Hummingbird with the prospective greenstone belt under its control around the Yanfolila plant, together with a stake in a wider exploration company over this part of West Africa and a 4.2Moz deposit in Liberia at Dugbe.”
The analysts pointed out: “Hummingbird has an experienced management team having i) completed the purchase of an asset from a major, ii) completed a Feasibility study (and optimised it), iii) negotiated both the debt market and the London equity environment in some tough years and iv) begun construction of a significant gold mine.”
They concluded: “We feel this is only the beginning for Hummingbird and initiate today with a BUY recommendation and a 42p price target.”