Canaccord Genuity lowers target price on Hummingbird Resources

Canaccord said that despite its "continued belief" in the "compelling value upside potential" of Hummingbird, it now reckons repeated operational setbacks had eroded of the market's trust in the company to deliver on that potential.

Following the emergence of further operational challenges at the firm's Yanfolila project during the third quarter, the analysts moved to adjust their estimates on the firm, now expecting it to produce around 97,000 ounces of gold this year, down from 103k,000, slightly below the bottom end of the 100,000-110,000 ounce guidance range.

In line with company expectations, Canaccord has modelled a "significant improvement" in output during the fourth quarter to make it the strongest quarter of the year, but just not quite strong enough to hit the company's target of the bottom of its guidance range.

The Canadian bank said it now sees full-year underlying earnings falling roughly 30%, while its net present value has moved down from about 37.0p per share to 23.0p.

"We believe our modelling of HUM is conservative, but prudent given the repeated disappointment HUM investors have suffered in recent years. We reduce our target price to 25.0p (based on 1x NPV, rounded to nearest 5.0p). Maintain 'buy' rating," said the analysts.