On Thursday, BMO Capital Markets adjusted its outlook on Torex Gold Resources (TXG:CN) (OTC: OTC:TORXF) shares, increasing the price target to Cdn$25.00 from the previous Cdn$24.00.
The firm has maintained an Outperform rating for the mining company. This adjustment follows Torex Gold's first-quarter earnings report, which surpassed both BMO Capital's and consensus analyst estimates.
Torex Gold Resources reported earnings per share (EPS) of $0.42 for the first quarter, exceeding the BMO Capital and consensus estimates of $0.30 and $0.36, respectively. The company's operating costs were reported to align with expectations, with cash costs and all-in sustaining costs (AISC) of $943/oz and $1,221/oz, respectively, closely matching BMO Capital's estimates of $949/oz and $1,226/oz.
The company's ELG mine is anticipated to see a reduction in costs throughout the year as the strip ratio decreases. Meanwhile, the Media Luna project is on schedule to commence production in the fourth quarter of this year.
Torex Gold's current liquidity stands at $405 million, which provides a comfortable financial position against the remaining capital expenditure of $257 million. This positions the company favorably to complete construction and move towards generating positive free cash flow in 2025.
The revised price target to Cdn$25 by BMO Capital reflects a forward-looking analysis based on the company's recent performance and future prospects. The firm's analyst cited the roll forward of their financial model as the basis for the target increase.
InvestingPro Insights
Following the positive outlook from BMO Capital Markets, real-time data and insights from InvestingPro further illuminate the investment potential of Torex Gold Resources (OTC: TORXF). With a market capitalization of $1.21 billion and a notably low P/E ratio of 5.86 based on the last twelve months as of Q4 2023, the company stands out in the financial landscape. This valuation is further supported by a PEG ratio of 0.83, suggesting a favorable relation between the stock’s price, earnings, and growth.
InvestingPro Tips indicate that Torex Gold Resources holds more cash than debt on its balance sheet, which aligns with the robust liquidity mentioned in the article. This financial stability is complemented by the company's strong return over the last three months, with a price total return of 38.76%. Analysts have also predicted that the company will be profitable this year, which is consistent with the company's performance in the recent quarter.
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