JPMorgan starts Ramelius stock with overweight, sets AUD3.10 target

Published 02/05/2025, 07:30
JPMorgan starts Ramelius stock with overweight, sets AUD3.10 target

On Friday, JPMorgan initiated coverage on Ramelius Resources (RMS:AU) (OTC: RMLRF) with an Overweight rating and a price target of AUD3.10. The firm’s analyst cited the company’s cornerstone asset, the Mt Magnet mine in Western Australia, as a key factor in the positive outlook. The mine, situated approximately 470 kilometers northeast of Perth, benefits from higher-grade ore hauled from satellite deposits, which is then processed on-site. According to InvestingPro data, the company demonstrates excellent financial health with a score of 4.04 out of 5, supported by impressive revenue growth of 54% in the last twelve months and a robust gross margin of 46%.

Ramelius Resources is also in the midst of acquiring the remaining 80% of Spartan Resources, which it does not yet own. Spartan Resources’ primary asset is the Dalgaranga Underground development project, located roughly 55 kilometers northeast of Mt Magnet. This acquisition is anticipated to transform the region into a hub with a production capacity of over 350,000 ounces per annum. InvestingPro analysis reveals the company is well-positioned for this acquisition, with a strong current ratio of 3.04 and virtually no debt on its balance sheet, demonstrating solid financial flexibility.

The company’s growth prospects were highlighted by the analyst, who pointed out the Rebecca-Roe development project, 135 kilometers northeast of Kalgoorlie. This project is expected to produce 130,000 ounces per annum with a final investment decision targeted for the third quarter of 2025. Despite the transition of the Edna May operation into care and maintenance, it still holds a significant gold resource of 950,000 ounces.

JPMorgan’s analyst expressed confidence in Ramelius Resources’ potential, projecting a move to a higher steady state of production at approximately 500,000 ounces per annum. This growth trajectory is considered impressive, although it may take longer to realize compared to some of the company’s peers. The Overweight rating and price target of AUD3.10 per share reflect the firm’s optimistic view on the stock’s future performance. InvestingPro analysis indicates the stock is trading near its Fair Value, with additional metrics and insights available in the comprehensive Pro Research Report, including 8 more ProTips that could help investors make informed decisions about this growing gold producer.

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