Buying into a gold mining stock as it ramps up production is potentially a good way to tap into some significant share price gains.
Broker Morgans believes this story is playing out with Catalyst Metals Ltd (ASX: CYL), on which it recently released a research report, including a bullish share price target, which I'll get to shortly.
First, let's have a look at what the company has been up to.
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Record production underpins growth story
In its recent quarterly report, Catalyst said it had produced a record 31,886 ounces of gold at an all-in sustaining cost of $2,666.
The company was sourcing ore from four mines across the Plutonic belt of deposits, and developing one of those, Trident, into an underground mine from an open-pit operation.
The company said it would provide FY27 production guidance in late September, including an update to its 10-year production guidance, which was released in September 2025.
The company said:
Over the last three years since Catalyst ownership, the Company's strategy at the Plutonic Gold Belt has been to define 2Moz of Reserves to underwrite an increased production rate from 100koz to 200koz for ten years. Production will be sourced from multiple mines across the Belt.
The company said it had been building its gold inventory in a bid to meet these goals and upgrading infrastructure to be ready for the necessary expansions.
The company's management said in a statement:
New discoveries such as those at Cinnamon and Trident have re-enforced our view of the geological potential of this belt. The value of the existing infrastructure and sunk capital, while somewhat tired and suffering from underinvestment, has allowed Catalyst to develop mines faster and at far lower cost. The pathway to a 200koz production rate is set. The mines from which this ore will come are in production or under development and the infrastructure required to process it is in place. Our investment focus during this quarter and much of FY26 has been towards activities to reliably deliver ±200koz over the longer term. This has included ongoing Resource development drilling to grow gold Reserves to 2Moz and ensuring the supporting infrastructure is right-sized and reliable.
ASX gold miner's shares looking cheap
Morgans slightly downgraded their price target on the company, but it is still well above the current level of $6.64.
They said:
We retain our BUY rating on CYL with a price target of $11.33 per share. While we have moderated near-term production assumptions to reflect a slower ramp-up, we continue to view CYL as an attractive mid-cap gold growth story. The pathway to ~200kozpa production, continued Reserve growth toward 2Moz and a debt-free balance sheet provide a strong foundation for long-term value creation. At current levels, we believe the market continues to price in substantial execution risk, providing attractive upside as growth projects advance and operational performance improves.
