Canaccord Raises Price Target On Teranga Gold Following Pre-Feasibility Study

Last night, Teranga Gold Corp (TSX: TGZ) announced the results of the Sabodala-Massawa Gold Complex’s preliminary feasibility study, for which they would be filling a technical report on or before August 31. The complex has 4.8 million ounces of gold, at an average grade of 1.98 g/t gold.

For the first five years of production (2021-2025), the project is estimated to have a production output of 384,000 ounces at an all-in sustaining cost of $671 per ounce, which is better than analysts expectations of ~350,000 ounces annually at an all-in sustaining cost of $715 perounce. The phase one capital expenditures is estimated at $37 million with $29 million to be spent in 2020, with the completion scheduled for the first half of FY2021. Phase two will start in 2021 with production planned for 2023; capital expenditures for phase two is estimated at $219 million with $71 million to be spent in 2021 and $148 million in 2022.

Canaccord’s analyst Carey MacRury calls this news release a “positive, outlining a high-grade, low-cost operation,” with an average all-in sustaining cost of $749 per ounce, identifying it as being “transformational for the company.” Canaccord this morning reiterated their Buy rating while raising their price target from C$17.50 to C$19.00, updating their models to reflect a sooner-than-expected development of Phase two and reflect updated CAPEX costs.

Analyst Carey MacRury moved Teranga into the mid-tier gold producer class, forecasting Teranga’s production average to be 527,000 ounces per year over the next five years at an average all-in sustaining cost of $837 per ounce, which is an improvement from their previous forecast of 491,000 ounces at $870 an ounce. They now forecast higher CAPEX in 2021-22 and roughly $200 million in free cash flow for those years, below the $330 per year estimate they had previously. MacRury also gives three potential catalysts for Q4FY20::

  • Updated life of mine plan for Wahgnion.
  • Updated 2020 and new five-year guidance.
  • Golden Hill preliminary economic assessment.

Alongside Canaccord Genuity upgrading their price target to C$19.00 and reiterating their buy rating on Teranga, Cormark reiterated their top pick rating while upgrading their price target from C$20.00 to C$21.00. Currently, the mean price target is C$17.14, which represents a ~17% upside.


Information for this briefing was found via Sedar and Refinitiv. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

Video Articles

Baselode Energy To Acquire Forum Energy: The Merger Of Equals Deal

TriStar Gold: The Revised Castelo de Sonhos Prefeasibility Study

Gold is Up 30%, But the Real Bull Market is Only Starting Now! | Adrian Day

Recommended

ESGold To Expand Mine Building At Montauban In Advance Of Gold & Silver Production

Goliath Resources Expands 2025 Drill Program To 60,000 Metres

Related News

Greenlane: Canaccord’s Take On The KushCo Merger

On March 31st, Greenlane Holdings (NASDAQ: GNLN) announced their fourth quarter and full-year financial results....

Tuesday, April 6, 2021, 11:51:00 AM

Columbia Care: Canaccord Drops Price Target To $13

On November 12th, Columbia Care (NEO: CCHW) reported its third quarter financial results. The company...

Sunday, November 21, 2021, 04:52:00 PM

Meta Platforms: Canaccord Drops Price Target To $330

Last week Meta Platforms (NASDAQ: FB) reported its first quarter financial results. The company saw...

Sunday, May 8, 2022, 11:14:00 AM

Cronos Group: Canaccord Lifts Rating, Price Target On Q1 Earnings Beat

On May 10, Cronos Group (TSX: CRON) reported its first quarter financial results. The company...

Friday, May 13, 2022, 04:37:00 PM

Village Farms: Analysts Expect Q3 Revenues To Hit US$68.7 Million

Village Farms International (TSX: VFF) announced that they will be reporting their third quarter financials...

Monday, November 8, 2021, 05:17:00 PM