Caledonia Mining Corporation PLC is the “pick of the African golds sector”, said analysts at Liberum, which held its buy rating on the stock with a target price of 1,319p.
In July, the Zimbabwe-focused mining company announced the conditional acquisition of the Bilboes gold project which could prove “potentially transformative”.
A recent feasibility study suggests it could add 168 kilo-ounces (koz) of annual production, taking its attributable annual production up to roughly 220koz.
“In other words, Bilboes could potentially enable Caledonia to realise its ambition of becoming a >200koz/year multi-asset producer in a single stroke,” said the broker.
Caledonia also has a history of providing a dividend, doing so every year for the last decade.
In recent years, Liberum said, the group has “made something of a habit of achieving quarterly records for production, revenues and profits, and ranks amongst the lowest-cost of African gold producers”.
Caledonia said it is on track to “hit the top end” of its full-year production guidance range of 73-80koz, although Liberum believes there is potential for even better, with estimates of roughly 81koz.
Even if it only falls in line with guidance, that would still mean it has outperformed many of its African-focused peers in the last few years.
However, there are some risks, such as country conditions worsening, conditions for closing the Bilboes agreement might not be met, and the price of gold could fall further.