Capricorn Metals Ltd (ASX: CMM) impressed shareholders this week, with its third-quarter report showing its cash pile has grown to more than half a billion dollars on the back of steady gold production.
The analysts at Canaccord Genuity took the opportunity to run the ruler over Capricorn's results in the wake of their release, and have a buy recommendation on the stock and a bullish price target, which we'll get to shortly.
Firstly, let's have a look at what the company announced.
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Gold production steady
Capricorn said its Karlawinda Gold Project generated 30,358 ounces of gold at an all-in sustaining cost of $1617 per ounce.
Production was marginally down on the 30,476 ounces in the second quarter, but the costs were a slight improvement.
The company said it was on track to hit the upper end of its guidance of 115,000 to 125,000 ounces of gold for the full year.
Capricorn had $507.6 million in cash and gold on hand at the end of the quarter, up from $457.4 million in the second quarter, and the company declared a fully-franked dividend of 5 cents per share during the quarter.
The company said it was a strong quarter operationally, and added:
The sustained post expansion mining run rate allowed Capricorn to deliver the planned quarterly gold production whilst also achieving the development requirements of the Karlawinda Expansion Project (KEP). Mining production rates have stabilised at the expanded run rate for the KEP over the full year, with first ore delivered to KEP Run of Mine 2 during the quarter.
Capricorn said the expansion project was expected to be commissioned in the first quarter of FY27.
The company added:
On completion of the KEP the accelerated mining rates which have been required for the last 12 months will be reflected in a gold production rate increasing from around 120,000 ounces per annum to around 150,000 ounces per annum. Capricorn looks forward to the completion of this exciting project and the optimisation of mining to the increased production run rate that will be reflected in detailed FY27 production and cost (AISC and growth capital) guidance.
Shares looking cheap
Canaccord said in its note to clients that the company also released drilling results from the Lexington underground prospect, with all seven holes reported striking mineralisation.
They said another 10,000m of drilling was planned in the June quarter, "to support a maiden inferred underground Resource for Lexington''.
Canaccord has a price target of $19.85 on Capricorn shares, which would be a 72.3% return if achieved.
Capricorn is valued at $5.39 billion.
