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On Friday, Canaccord Genuity analysts changed their stance on Resolute Mining Ltd. (RSG:AU) (OTC: RMGGF), upgrading the stock from a Speculative Buy to a Buy rating, while maintaining a price target of AUD0.70. This shift in rating comes as the situation in Mali, where the mining company operates, shows signs of stabilization.
The analysts at Canaccord Genuity expressed optimism about the company’s prospects, citing a belief that investors will begin to concentrate more on Resolute Mining’s fundamentals as conditions in Mali improve. They noted that the company’s guidance appears to be attainable and that its unhedged status is likely to benefit cash flow.
The valuation metrics for Resolute Mining were highlighted as a key factor supporting the upgrade. Canaccord Genuity pointed out that the company’s risked net asset value (NAV) is at 0.52 times, while its unrisked NAV stands at 0.24 times. Additionally, they forecast an average free cash flow (FCF) yield of 22% for fiscal year 2025 and 31% for fiscal year 2026, which they believe underpins the stock’s appeal.
In their commentary, Canaccord Genuity analysts stated, "With the Mali situation settling, we think investors may slowly start to refocus on fundamentals - we see guidance as achievable and its unhedged status should help cash flow." They continued to explain the rationale behind their price target, "Our target (heavily risked NPV5%) is unchanged at $0.70."
The upgrade reflects Canaccord Genuity’s confidence that the reduced sovereign and country risk following the outcomes in Mali presents a more favorable investment environment for Resolute Mining. The analysts concluded their remarks by reinforcing their position, "We move to BUY (from Spec Buy) as we believe there is reduced sovereign and country risk following the Mali outcomes."
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