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Investing.com - RBC Capital upgraded Vault Minerals Ltd (ASX:VAU) from Sector Perform to Outperform on Friday, setting a price target of AUD0.55.
The upgrade was based on "compelling valuation and reduced near-term downside risk," according to the research firm. RBC noted that a recent reduction in KOTH Reserve grade to 0.62g/t from 0.93g/t had helped alleviate lingering downside risk.
For FY26, RBC projects 367,000 ounces of production, which it describes as "perhaps conservative." This production level suggests a valuation of 2.5x EV/EBITDA, despite approximately 35% of FY26 EBITDA being lost to gold hedging.
The research firm expects further value improvement in FY27 as hedges expire, with EV/EBITDA falling to approximately 1.8x and a free cash flow yield of 22%, which RBC considers "fairly sustainable."
RBC also highlighted Vault Minerals’ AUD625 million net cash position and 0.76x price-to-NAV ratio as supporting its valuation, noting there is approximately 36% implied upside to its AUD0.55 price target.
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