RE: condor4 Aug 2022 17:28
'Condor Gold - target price 82p'
Valuation: GBp82/sh TP from PEA scenario using 0.8x NPV12%
We continue to base our DCF model on the 2021 PEA open-pit “Scenario A”, applying a 12% WACC and P/NPV of 0.8x to derive a risked sum-of-the-parts valuation for La India of GBp82/sh target price, 273% above the current share price. As such, we implicitly include upside beyond the upcoming FS, as the Oct’21 PEA incorporated an expanded operation at La India, America and Mestiza. Estimated free cash flow of ~US$139m in the first full year of production drives a rapid ~1 year payback period from first production (~2.5 years from first capex), leveraging exceptionally high-grade material early in the mine life. We also see further exploration value still to be unlocked in future through the identification of additional satellite pits. The slight reduction in our target price to GBp82/sh from GBp85/sh stems from the modest dilution implied by the Jun’21 equity issuance and the pushing back of first output in our model to mid-2024E from late 2023E. These factors were partially offset by the rolling of our target date to Dec’22E from Dec’21E and a weaker $/£ FX assumption of $1.3/£ vs $1.4/£ previously. Hannam & Partners