Turaco Gold Ltd (ASX: TCG) has caught the eye of a few brokers recently, after it released a positive prefeasibility study for its Afema Gold Project in southeast Côte d'Ivoire.
This time, we're having a look at what the team at Morgans is saying about the company and how much they think its shares are worth.
First, let's look at the company's project.
Image source: Getty Images
New mine to drive share price growth
Turaco earlier this month declared a maiden ore reserve of 1.91 million ounces of gold, which it says will sustain a mine producing more than 200,000 ounces of gold per year.
And in terms of the mine's revenue generation, the company published figures for a range of gold prices, but at US$4,000 per ounce – close to the current spot price of US$4,071.84 – the mine would generate gross revenue of US$8.095 billion over its life of 10.3 years.
The project would also have a payback period of 10 months, or 17 months if the gold price was US$3,000 per ounce.
Turaco said there was the possibility of extensions to the mineral resources, with all deposits open at depth and along strike, and there were also "numerous" additional exploration targets.
The company has immediately started a definitive feasibility study, which will also include commencing detailed design and engineering.
On the exploration front, the company will be continuing drilling with between three and five rigs operating.
Turaco Managing Director Justin Tremain said regarding the study:
In just a little over 2 years since acquiring Afema, the Turaco team has not only delivered extraordinary JORC Resource growth to 4.65 million ounces but has now also delivered a detailed development study with a maiden JORC Probable Ore Reserve estimate of just under 2 million ounces of gold based on a conservative gold price of US$2,000/oz and an AISC of just over US$1,500/oz, all within a granted mining permit. This progress is unmatched. The Study is the culmination of an extensive body of work including over 100,000m of drilling, comprehensive metallurgical variability test work, geotechnical test work, process and mine design, costing and scheduling.
Mr Tremain said the company was aiming to finish the definitive feasibility study by the second quarter of calendar year 2027 and to commence early works to allow first gold production in 2029.
Shares still looking cheap
The team at Morgans likes the project, but has sharply downgraded its price target for the company in its recent note to clients.
The analysts said:
While the prefeasibility study reinforces our conviction in Afema, following the transition of coverage, we have updated our forecasts to reflect the study outcomes and revised our valuation methodology. We also revise our recommendation to speculative buy, reflecting our reassessment of sovereign risk, together with the increased funding and execution risks associated with TCG's transition from explorer to developer.
Morgans has a price target of $1.18 on Turaco shares, compared to $2.19 previously.
Macquarie also recently published a research report on Turaco with a price target of $1 per share.
Turaco shares are currently valued at 47 cents. The company is valued at $506.2 million.
