Stifel GMP boosts price target on Karora Resources to C$6.60 after release of new three-year production guidance

Stifel GMP is upping its price target on Karora Resources Inc (TSE:KRR) (OTCMKTS:KRRGF) to C$6.60 after the miner released its new three-year growth guidance outlining a production scenario of 200,000 ounces of gold per year.

“We like the clarity and pathway towards greater scale, and the safe jurisdiction,” the research firm wrote in a note.

The Toronto-based, Western Australia-focused gold company said it plans to double its annual gold production from 99,249 ounces in 2020 to a range of 185,000 to 205,000 ounces in 2024 at an all-in sustaining cost (AISC) of between US$885 and US$985 per ounce.

READ: Karora Resources outlines plans to double its gold production by 2024

The company said its growth will be driven by increased output from its Beta Hunt underground mine plus production from its Spargos Reward and Higginsville Central areas.

Stifel previously had a C$5.85 target on the stock, which it rates as a ‘Buy.’

“Karora is planning to increase the Higginsvile Mill throughput 60% to 2.5 million tons per annum, and increase processing optionality as it looks to leverage its competitive land package,” Stifel wrote.

“The growth plan increases our confidence and clarity on a pathway to increasingly meaningful scale, and is entirely funded by cash on hand and operating cash flow.”

The firm added that 200,000 ounces of production in a jurisdiction like Western Australia is “incredibly sought after and valued,” noting that Karora trades at a price to book ratio of 0.60x versus its peers at 0.57x but enjoys “low jurisdisdictional risk.”

“The growth plan is built on current resources, and does not account for any exploration success – we are confident KRR will increase mineral inventory as it invests to ramp up throughput at the Higginsville Mill.”

Shares of Karora were trading at C$3.96 in Toronto and US$3.19 over the counter on Tuesday afternoon.

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Story by ProactiveInvestors