Mackie Research analysts raised their target price on shares of Mandalay Resources Corporation (TSE:MND) (OTCQB:MNDJF) (FRA:R7X2) to $5.50 per share from $5.20, while reiterating their ‘Buy’ rating, following a “strong outlook” from the gold miner during the past week as well as follow-up discussions with management.
“We are now looking for about 40% growth in gold production over the next two years on expectations of higher grades,” the analysts said.
“Total cash costs, in turn, are expected to decline by approximately 17%, net of antinomy credits at 2021 price guidance of US$6,600/tonne,” they added.
READ: Mandalay Resources poised for more growth in 2021 as both its mines continue to be significant cash generators
The Mackie Research analysts also noted that Mandalay is now focusing its drilling efforts on resource expansion rather than reserve replacement, which continues to factor into their assumptions.
At the company’s Costerfield operations in Australia, which is considered to be one of the highest-grade gold mines in the world, drilling recently cut 461 grams per tonne (g/t ) gold over 0.11 metres (m) (true width) from a partially-recovered quartz vein located 90m below the deepest known intercept on Youle and 200m below current on-vein development.
As well, at Mandalay’s Bjorkdal mine in Sweden, nine recent holes extended the Lake zone at depth and returned some of the highest grades ever encountered at the mine – 119 g/t gold over 0.44m and 92 g/t over 0.4m.
The analysts added that Costerfield now hosts Proven and Probable Reserves of 616,000 tonnes grading 12.8 g/t Au and 3.52% antinomy (Sb), while underground reserves at Bjorkdal total 5.6M grading 2.05 g/t gold.
They also said that although Mandalay Resources ended the year with net debt of approximately US$30 million, management now expects the company to be debt-neutral by year-end.
Contact Sean at sean@proactiveinvestors.com