Aurelia Metals Ltd (ASX: AMI) shares are having a difficult start to the week.
At the time of writing, the ASX All Ords mining stock is down 5% to 19.5 cents.
The team at Macquarie Group Ltd (ASX: MQG) is likely to see this as a buying opportunity for investors.
Let's see what the broker is saying about the gold miner.
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Why is this ASX All Ords mining stock a buy?
Macquarie notes that the gold miner released its guidance and aspirational targets at its investor day event last week. It said:
The Investor Day included FY26 guidance, and outlook for FY27/28 which outlined a CuEq. production target of ~40ktpa by FY28 through the centralised processing facility at Peak (1.1-1.2Mtpa capacity) with ~50% Cu/Au ore and 50% Zn/Pb ore fed by three separate mines at Peak South, New Cobar, and Federation. AMI also highlighted an aspirational goal of +80ktpa of CuEq. production in +5 years.
While this was a touch better than expected, it was offset by higher than forecast costs. Macquarie adds:
Group operating cost guidance in FY26 and outlook in FY27/28 was ~20% higher than prior MQe forecasts. After incorporating the mid-point of the guidance and outlook, we had meaningful downgrades to our forward forecasts.
In light of the above, the broker highlights that "FY28 is a clear FCF inflection point for AMI and MQe forecasts is trading on an EV/Ebitda of 4.1x and FCF yield of 8%, however if gold prices remain strong, in a spot scenario its EV/ Ebitda would improve to 1.6x and FCF yield would improve to 25%."
As a result, the broker remains positive on this ASX All Ords mining stock and is urging investors to snap up shares following a recent pullback.
Big returns potential
The note reveals that Macquarie has retained its outperform rating with a reduced price target 25 cents.
Based on its current share price, this implies potential of 28% for investors over the next 12 months.
Commenting on its outperform rating, the broker said:
While AMI can be applauded for providing a detailed level of disclosure, perhaps the market has penalised it for its transparency. Although positive FCF generation has been deferred to FY28 due to organic investments, its strong balance sheet (A$107m cash) differentiates it to peers.
Overall, this could make Aurelia Metals worth considering if you are looking for exposure to this side of the market.
