Analyst Ryan Thompson wrote in an Aug. 13 research note that his firm BMO Capital Markets initiated coverage on Leagold Mining Corp. (LMC:TSX.V; LMCNF:OTCQX) with an Outperform rating and a CA$4 per share target price. With The company is currently trading at around CA$2.34 per share.
"Our Outperform rating is underpinned by Leagold's attractive relative valuation and peer-leading per share growth profile," he added.
Thompson expanded on those key points.
- The gold miner is about to kick off its aggressive growth plan with the phased expansion of the Los Filos mine in Mexico. There, the company will develop the Bermejal underground mine starting in Q3/19 then launch the Guadalupe open pit in Q4/19 and lastly, build a carbon-in-leach plant, beginning in mid-2020, to accommodate bigger recoveries.
- Once Los Filos is completed, Leagold will turn its attention, likely in early 2021, to restarting the Santa Luz mine in Brazil. That will require about 10 months of construction first.
- The producer has the capital to carry it all out due to the $400 million financing package it secured earlier this year.
- Further, Leagold has a management team that, with its experience and impressive history, could make it all happen. CEO Neil Woodyer, for instance, developed Endeavour Mining into one of the largest gold producers in West Africa.
Thompson highlighted that Leagold is currently attractively valued considering it is about to "deliver more than 650,000 ounces of gold production by 2021." Recent share price weakness created "a buying opportunity for investors with a longer-term view on the growth potential."
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Disclosures from BMO Capital Markets, Leagold Corp., August 13, 2019
IMPORTANT DISCLOSURES
Analyst's Certification
I, Ryan Thompson, hereby certify that the views expressed in this report accurately reflect my personal views about the subject securities or issuers. I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed in this report.
Analysts who prepared this report are compensated based upon (among other factors) the overall profitability of BMO Capital Markets and their affiliates, which includes the overall profitability of investment banking services. Compensation for research is based on effectiveness in generating new ideas and in communication of ideas to clients, performance of recommendations, accuracy of earnings estimates, and service to clients.
Analysts employed by BMO Nesbitt Burns Inc. and/or BMO Capital Markets Limited are not registered as research analysts with FINRA. These analysts may not be associated persons of BMO Capital Markets Corp. and therefore may not be subject to the FINRA Rule 2241 restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account.
Company Specific Disclosures
Disclosure 5: BMO Capital Markets or an affiliate received compensation for products or services other than investment banking services within the past 12 months from Leagold Mining.
Disclosure 6C: Leagold Mining is a client (or was a client) of BMO Nesbitt Burns Inc., BMO Capital Markets Corp., BMO Capital Markets Limited or an affiliate within the past 12 months: C) Non-Securities Related Services.
Disclosure 16: A research analyst has extensively viewed the material operations of Leagold Mining.
Disclosure 17: Leagold Mining has paid or reimbursed some or all of the research analyst's travel expenses.
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