Berenberg raises target price Ecora Resources
Analysts at Berenberg updated their investment model on Ecora Resources on Monday and hiked their target price on the stock from 140.0p to 150.0p following the release of an updated feasibility study on the Santo Domingo project in Chile.
Berenberg said Santo Domingo was a high-grade copper-iron-gold project, owned and operated by Capstone Copper, in which Ecora holds a 2% net smelter return royalty over the project, including the highest copper grade portion of the deposit, which was expected to be mined during the initial seven years of production.
The German bank said the feasibility study demonstrated "a robust project", with an after-tax net present value of $1.7bn and an after-tax internal rate of return of 24.1%. Moreover, given that Santo Domingo was fully permitted and first in the development pipeline for Capstone Copper, Berenberg remains confident that the project will be built.
"We update our model for the updated FS on the Santo Domingo project, which increases our project NPV to $86.0m from $78.0m. Once fully online, we estimate a portfolio contribution of circa $22.0m over the initial six years of production (c20% of portfolio contribution), driving a step change in Ecora’s royalty revenues. We also make a positive adjustment to our 2025 royalty estimates from the Kestrel metallurgical coal mine in Australia to bring our estimates in line with guidance, and adjust our Mantos Blancos (Chile) volume forecasts following Capstone's Q2 report," said Berenberg, which has a 'buy' rating on the stock.
"Following a negative reaction from the delay to West Musgrave (Australia), we think that the Santo Domingo FS is positive for sentiment and hopefully marks the bottom of the weakness in the shares. The stock is trading on 0.38x NAV and 4.6x 2025E EBITDA."
Reporting by Iain Gilbert at Sharecast.com