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On Tuesday, RBC Capital Markets initiated coverage on Lumina Gold Corp (LUM:CN) (OTC: LMGDF), assigning the stock an Outperform rating with a price target of Cdn$1.50. The stock has shown strong momentum, delivering a 26.49% return year-to-date, according to InvestingPro data, though it currently trades at $0.41 with a market capitalization of $171.47 million. The firm’s analysis is based on the advancement of Lumina’s Cangrejos gold/copper project in Ecuador, which is expected to have a mine life exceeding 25 years with an annual production rate of approximately 450,000 ounces of gold equivalent (AuEq).
The anticipated feasibility study, scheduled for release in the second quarter of 2025, is projected to demonstrate robust project economics with costs around $1,000 per ounce and initial capital expenditures estimated at $1.2 billion. RBC Capital Markets’ long-term gold price assumption of $2,200 per ounce underscores the project’s solid economic prospects, which are even more attractive at current spot prices.
According to RBC Capital Markets, Lumina Gold currently trades at a substantial discount compared to its industry peers. This valuation gap is expected to narrow as the company achieves key milestones, including securing project financing and obtaining final permits, activities which are planned to continue through 2026.
The coverage initiation reflects RBC Capital Markets’ view that Lumina Gold is a potential acquisition target due to its large-scale, long-life mining project and favorable economics. The Outperform rating and the Cdn$1.50 price target indicate the firm’s confidence in Lumina’s growth prospects and its potential to deliver value to shareholders as it progresses through development stages.
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