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On Wednesday, BMO Capital Markets adjusted its stance on Foran Mining Corporation (FOM:CN) (OTC:FMCXF), downgrading the company’s stock rating from Outperform to Market Perform. The firm also revised its price target for the company’s shares, setting it at Cdn$3.75, a decrease from the previous Cdn$5.00 target.
The downgrade follows a re-estimation of the Phase 1 capital required to complete the project, which has increased according to BMO Capital’s analyst Rene Cartier. This development comes as a setback, especially since Foran Mining had recently submitted an updated technical report and provided a construction update.
Despite the increased capital estimate, Foran Mining announced a proposed non-brokered private placement aimed at raising $350 million, with indications that the full amount would be covered. This financing move is seen as a positive step, as it suggests the project will continue on its planned schedule.
However, the analyst noted that the net asset value (NAV) of Foran Mining is projected to decrease by approximately 22% due to the higher capital costs. This anticipated decline in NAV has contributed to the decision to downgrade the stock rating to Market Perform with a speculative tag.
In the report, BMO Capital acknowledged the scarcity of new copper mines and expressed an intention to keep an eye on Foran Mining’s progression towards reaching commercial production, indicating the firm’s continued interest in the company’s future activities.
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