Ora Banda Mining Ltd (ASX: OBM) shares are among the best performers on the ASX on Monday, up more than 7%, but brokers believe the shares have a way to run yet.
Both Macquarie and UBS have issued new research reports into the company, following the release of Ora Banda's quarterly report last week.
Both have bullish share price targets for the gold company, which I'll get to shortly.
First, let's recap the quarterly.
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Softer-than-expected gold production
Ora Banda said that it had produced 33,305 ounces of gold during the quarter at an all-in sustaining cost of $4,214 per ounce.
The company had closing cash of $207 million, with $83 million in operating cash flows offset by $133.7 million spent on exploration, development, and growth projects.
The company's development projects were progressing, with the start of construction of a new three million tonne per annum processing plant, the start of the Palmerston decline, and the start of mining development at the high-grade Waihi underground operation.
Ora Banda also said it had continued exploration success, with further strong results from the Little Gem deposit ahead of an expected maiden mineral resource later in FY27.
Ora Banda Managing Director Luke Creagh said:
It is great to see our DRIVE to 300 projects all on schedule as we pursue our aspiration of doubling production to 300,000 ounces and a step-change improvement in unit costs in FY29. Operationally, we are well placed with the underlying performance of our current asse ts, with weather interruptions and mill downtime that affected performance expected to be limited to the September quarter.
More upside for this ASX gold company predicted
UBS said in its research note that the company's production came in below their forecasts by 16%.
They said that, as a result, they had "tweaked" their FY27 forecasts for the company, driving expected earnings 8% lower.
UBS said while the result was disappointing, the company's shares were oversold in response.
They said the company had good growth prospects, a strong balance sheet, and positive project news flow to come.
UBS has a buy rating on Ora Banda shares and a price target of $1.95, compared with the current price of $1.19.
The Macquarie team are not so positive, but still have an outperform rating on Ora Banda shares with a price target of $1.30.
The broker said they believe the company's aspirations to reduce its cost of production over the year could be out of reach, but they agreed that the company's balance sheet is healthy and its growth plans intact.
Ora Banda is valued at $2.15 billion.
