Morgans believes the agreement to purchase a 30% interest in the Tropicana gold mine for $903m is transformational for the long-term outlook and an immediate lift for production and cash flow. The Add rating is unchanged and the target price falls to $4.01 from $4.44.
The broker sees substantial long-term potential for the asset with a number of deposits open at depth and a large land package with minimal exploration to date.
Anglogold, the manager and majority owner, maintains its right to match any offer for the 30% stake. Regis Resources has guided that if the bid is successful operating cash flow will be sufficient to internally fund development of McPhillamys.
Sector: Materials.
Target price is $4.01.Current Price is $3.22. Difference: $0.79 – (brackets indicate current price is over target). If RRL meets the Morgans target it will return approximately 20% (excluding dividends, fees and charges – negative figures indicate an expected loss).
