Morgans feels the $903m purchase price for a 30% interest in the Tropicana gold mine appears fully priced. However, quite apart from an immediate production and cash flow lift, the broker believes the purchase is transformational for the long-term outlook.
As an operating mine, managed by majority owner Anglogold, it provides immediate cash flow and minimum integration challenges. The Add rating is maintained and the target is decreased to $4.08 from $4.44.
Sector: Materials.
Target price is $4.08.Current Price is $2.60. Difference: $1.48 – (brackets indicate current price is over target). If RRL meets the Morgans target it will return approximately 36% (excluding dividends, fees and charges – negative figures indicate an expected loss).
