On Monday, Maxim Group initiated coverage on shares of Caledonia Mining Corporation (NYSE:CMCL) with a Buy rating and set a price target of $17.00. The firm's analysis points to a strong growth trajectory for the gold mining company, with production increases anticipated in the coming years.
The forecast includes a 4.9% growth in gold production for 2025 and a 7.7% increase for 2026, potentially bringing annual output to approximately 85,000 ounces.
Caledonia Mining's management has indicated that with one mine currently in production and another in development, there is a potential to reach an annual production of 200,000 ounces of gold. At current market prices, this output could be valued at around $540 million.
Maxim Group projects that from the fiscal year 2024 to 2026, Caledonia's revenue could climb to $209 million, marking an 18% increase from $177 million. EBITDA is expected to rise even more significantly, from $52 million to $85 million, a 64% increase, with EBITDA margins expanding to 40.8% in 2026 from 29.5% in the estimated 2024.
The firm's assessment also noted Caledonia's financial position at the end of the third quarter of 2024, which included $7.2 million in cash and $25.7 million in debt. The expectation is that the company will utilize its free cash flow for mine improvements, new projects, and to sustain its dividend, which currently yields 5.4%.
Maxim Group's price target of $17.00 is based on a multiple of 4.1 times the firm's projected 2025 EBITDA. This target also reflects the company's current trading at 4.7 times Maxim Group's estimated 2024 EBITDA forecast of $52.1 million. With these growth and financial metrics, the firm presents a positive outlook on Caledonia Mining's stock for the next 12 months.
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