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09 Feb 2021 | 13:51

Liberum lowers target price on SolGold

(Sharecast News) - Analysts at Liberum lowered their target price on mining outfit SolGold from 55.0p to 39.0p on Tuesday after the group again delayed publication of a pre-feasibility study. Liberum noted that SolGold has pushed back the publication of a pre-feasibility study to late 2021, electing to do further work to address alternatives and potential upsides.

In the analysts view, the delayed release implied a large capex increase and a longer time to first production, leading it to reduce its price target on the stock by 30% to 39p.

"We had been expecting a bump in the capex at the release of the PFS, of about 10% in capex and opex. However, this delay implies that it was going to be much larger and that it would be better to re-configure the mine plan (particularly mine access) at this relatively late stage."

However, Liberum highlighted that with most of the bad news "likely out of the way" and fresh management coming into the business, it still expects a bid once the Ecuadorian elections have passed, representing 73% upside to the stock's current price.

"Focussing on the positives, it would appear that SolGold are looking to pursue a lower risk, smaller capex development model that would be more achievable for the company to do themselves. Also, the company hopes this additional work on the pre-feasibility study, will reduce the work needed on the definitive feasibility study," concluded Liberum.
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