Shareholders in Minerals 260 Ltd (ASX: MI6) are sitting on gains of 552% over the past 12 months, but according to the analyst team at UBS, there's still some upside to be had.
UBS has a bullish share price target on the company, which is developing the Bullabulling gold project in Western Australia.
We'll get to the price target shortly. First let's look at why UBS is positive on the stock.
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Project site visit bolsters confidence
Analysts from UBS recently attended a site visit with the company, where they were given a briefing about where the project is up to.
They said in their research note sent to clients this week, that the geology at Bullabulling appears to have further potential for high grade zones of gold, which "may bode well for positive reconciliation to resource models in time''.
UBS said the site for the mining camp had already been cleared, and documents had been lodged for the next set of approvals necessary for the mine's development.
They said that the company's management remains confident of meeting their timeline for a final investment decision in mid 2027.
Mining study shows Minerals 260 on to a good thing
Minerals 260 released its prefeasibility study for the mine in July, envisaging a project producing 150,000 ounces of gold per year over a mine life of 19 years.
The company expects the all-in sustaining cost of production to be $2520 per ounce.
Minerals 260 expects the mine to cost $560 million to construct, with a five million tonne per annum processing capacity initially, with the option to expand this by 50%.
Minerals 260 Managing Director Luke McFadyen said at the time:
Fifteen months after acquiring the Bullabulling Gold Project, we are presenting outcomes of our prefeasibility study and a Maiden Ore Reserve. We always believed Bullabulling could become a significant gold operation, and today's outcomes confirm the potential for this high-margin, large-scale, long-life Project. Our target of delivering Bullabulling into production by the end of 2028 will establish Minerals 260 as the next mid-tier gold producer on the ASX. With an net present value of A$2.3 billion, an internal rate of return of 43% and $510M of average annual EBITDA, Bullabulling is set to deliver significant growth and value for our shareholders. With early construction activities already underway, the Board has shown significant commitment to the Project and I look forward to regularly updating shareholders on the progress of advancing Bullabulling towards production.
UBS has a price target of 90 cents on Minerals 260 shares compared to the current price of 81.5 cents.
The company is valued at $1.85 billion.
