Endeavour Mining is undervalued vs global gold mining peers, said Barclays

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Endeavour Mining Plc (LON:EDV, TSX:EDV, OTCQX:EDVMF), the largest gold producer in West Africa, is undervalued compared to its global gold mining peers, said Barclays in an research note.


“The company’s asset quality (AISC [All In Sustaining Cost] and EBITDA margins), ROEs [return on equity] and balance sheet are among the best in our global precious metals coverage. Yet it is also one of the cheapest stocks on all metrics,” said Barclays as it initiated its coverage with an ‘Overweight’ rating.


“That reflects perceived risks over its geographical exposure, propensity for M&A, mine lives, and reliance on refractory processing for part of its growth plans. However, we argue these concerns are largely misplaced,” Barclays said.


“Meanwhile, gold is one of the few inflation hedges not to have risen significantly,” it added.


Barclays has a 2,350p price target, implying 38% upside potential, based on the stock re-rating to 1.8x price to net asset value (P/NPV), in line with global gold mining peers.


Shares in Endeavour Mining, which made its debut yesterday on the London Stock Exchange’s main market, were 1,665p in mid-morning trading today.


The tier 1 gold producer, which has seven mines across Senegal, Cote d’Ivoire and Burkina Faso, said it can grow production above 1.5mln ounces a year while maintaining a competitive AISC of under US$900 an ounce. Gold was trading around US $1,860 an ounce today.

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