Auryn Resources is a mining company, which operates in the Canadian North and Peru. The company produces copper and high-grade gold. Working in the Peruvian mountains or the Arctic entails high overhead, and Auryn operates at a net loss. However, the loss has been narrowing steadily since 2018. Despite the coronavirus disruptions, analysts forecasted a further reduction in the stock’s net loss per share for Q1 2020.
Furthermore, the company enhanced its financial position at the end of 2019. It managed to secure C$10.1 million ($7.22 million US) in funding by closing its private placing offering. At the same time, Auryn improved its interest rates on existing loans. These steps gave the company a firm footing just before the disruptions caused by coronavirus occurred.
However, that’s not all. Auryn has also recently released the Preliminary Economic Assessment of the Canadian Homestake Ridge project. As the assessment shows, the property has the potential to become a high-grade, profitable, small-footprint underground gold mine. According to the company’s estimation, the new mine will produce up to 88,660 gold equivalent ounces three years after opening, when it reaches peak production. It will have a production lifetime of 13 years.
What do the analysts think about Auryn Resources?
Joseph Reagor, Roth Capital analyst, believes that Auryn is a strong-buy stock. According to Reagor, the Homestake mine has high potential. However, the analyst thinks that the company can secure maximum value by not directly operating this asset. He noted that there are two possible courses for Auryn – it could either sell Homestake or merge it with a junior producer. Each outcome will probably result in a premium valuation.
Reagor set his price target at $3.25 per share, with an upside potential of 190%. It seems Wall Street is in agreement with Reagor about Auryn Resources’ potential. However, the average price target of the stock is $2.11. Currently, shares are being traded at $1.12 with an upside potential of 88%.
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