RE:👍Revaluation: Analysts set Euro Sun target price at CAD 2 Translated version from Google Translate :
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Revaluation: Analysts set Euro Sun target price at CAD 2!
Ratings & Research editorial team April 14, 2021 480
Gold mineralization from Rovina Valley; Photo: Euro Sun Mining
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The analysts from Hannam & Partners start reporting on the copper and gold project developer Euro Sun Mining (TSX ESM / WKN A2ARP6). You see the target price for the share at the end of the year at CAD 2.00 - which means a price potential of around 525% of the current level!
The experts see Euro Sun as an opportunity to get involved with an undervalued company that is developing a high quality gold project in a mining-friendly region. According to Hannam, the project has excellent infrastructure and considerable further growth potential.
The flagship project
According to analysts, Euro Sun's Rovina Valley Project is located in a region of Romania that has produced an estimated total of more than 55 million ounces of gold - and evidence of mining activities dates back around 2000 years. Rovina Valley consists of three porphyry deposits - Rovina, Colnic and Ciresata - within a trend of 7.5 kilometers in length. The project area has hydropower, rails, tarred roads and trained workers and the Rovina Valley is only 20 minutes away from the historic mining town of Brad, where gold was mined in the Barza mine until 2006. The fact that Euro Sun will use dry stacked overburden and not use cyanide are also important, positive factors for the project from an environmental point of view, according to Hannam.
Significant resource with growth potential; Feasibility study indicates high profitability
As the experts further explain, Rovina Valley has measured and indicated resources of around 1 million ounces of gold equivalent, making it one of the largest undeveloped gold projects in Europe. Of these deposits, Colnic is expected to be developed first, with resources of 2.7 million ounces gold equivalent. This will be followed by Rovina with 2.3 million ounces of gold equivalent in measured and indicated resources.
Colnic and Rovina were also the starting point for a recently published final feasibility study, which shows an open pit reserve of 2.8 million ounces at 0.65 g / t gold equivalent and a production of 132,000 ounces per year over a mine life of around 17 years . Ciresata's 4.9 million ounce gold equivalent underground resource has future growth potential.
As Hannam also notes, Euro Sun holds the Stanija license about 6 kilometers east of Rovina Valley, where the company has already identified four other gold and copper porphyry targets. Given the potential to include more promising zones in the mine plan, the analysts see significant future expansion opportunities for the project - both in terms of annual production and mine life. First of all, as estimated in the feasibility study, Hannam expects a production of around 106,000 ounces of gold and 8,600 tons of copper per year in the first ten years.
Revaluation possible in 2021
Since they already had a mining license and the PEA was carried out at a relatively high level, Euro Sun went directly to the final feasibility study, according to the analysts. The initial investment requirement is estimated at USD 399 million and the all-in sustaining costs (AISC) over the life of the mine at USD 813 per ounce gold equivalent. After tax, that results in a net present value of $ 359 million and an internal rate of return (IRR) of 19% with a gold price of $ 1,550 per ounce and a copper price of $ 3.3 per pound.
As Hannam also explains, Euro Sun is now driving talks with smelters and raw material dealers about possible purchase agreements for the concentrate to be produced on Rovina Valley. According to the experts, the project is around five hours away from Zijin's Bor steel works in Serbia and Aurubis’s Pirdop steel works in Bulgaria. In addition, it is comparatively easy to gain access to ports on the Black Sea. Accordingly, Hannam believes that the Rovina Valley product should be comparatively easy to market. The analysts expect the conclusion of acceptance agreements in the coming year. Then, in their opinion, the final building permit should also be granted.
Target price of CAD 2 per share implies potential of over 500%
According to the Hannam analyst model, the Discountend Cash Flow (DCF) could be USD 521 million or CAD 651 million at the end of 2021, assuming a gold price of USD 1,950 per ounce and a copper price of USD 7,000 per ton. In view of the fact that the project has not yet been funded, the E