Resolute Mining Ltd (ASX: RSG) shares are on course to record a small gain on Monday.
In afternoon trade, the gold miner's shares are up 0.35% to 58.2 cents.
This latest gain means that its shares are now up over 40% since the start of the year.
Can the run continue? Let's see what analysts at Macquarie Group Ltd (ASX: MQG) are saying about its shares.
Can Resolute Mining shares keep rising?
The good news is that it isn't too late to climb aboard the Resolute Mining train according to the broker.
It highlights that the company has just completed an acquisition which it believes could be a bit of a game-changer in the future. It said:
RSG has acquired the Doropo (DFS stage) and ABC Project (greenfield resource), both located in Côte d'Ivoire, from AngloGold Ashanti for a total consideration of US$150m (staged over 30- months).
The acquisition provides diversification away from Mali, providing a relatively near-term and value accretive option to grow production >300kozpa. It also provides regional presence and scale that can be expanded over time, which we believe RSG will continue to pursue given the recent political instability in Mali. The transaction is accretive on a NAV basis (+13%), EPS basis (+78% longer term), and EV/Resource basis (-41%).
Though, Macquarie concedes that the development of Doropo comes with high upfront costs. It explains:
We forecast RSG needing US$360-470m of debt or other financing to fund Doropo. This is after accounting for the forecast FCF from ops, remaining Doropo consideration payable to Anglo, as well as the other potential contingent proceeds (Ravenswood).
Nevertheless, it feels that this will be worth the investment and is recommending investors snap up Resolute Mining shares before it is too late.
Price target upgraded
According to the note, the broker has reaffirmed its outperform rating on its shares with an improved price target of 65 cents (from 55 cents).
Based on its current share price, this implies potential upside of almost 12% for investors over the next 12 months.
Commenting on its outperform recommendation, Macquarie said:
Outperform. We see RSG's diversification into Côte d'Ivoire as a key positive, with Doropo economics also looking promising, albeit with development risk. We expect the project to de-risk via a financing strategy, optimised DFS and progressing development.
All in all, it may not be too late to consider this gold miner even after its strong gains this year.
The post Up 40% this year, how much further upside does Macquarie tip for Resolute Mining shares? appeared first on The Motley Fool Australia.
Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Macquarie Group. The Motley Fool Australia has positions in and has recommended Macquarie Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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