Broker Upgrades: Why Canaccord is betting on goldies Emerald and Bellevue

Emerald price target raised to $5 by Canaccord
Record gold output and low costs boost Emerald’s potential
Bellevue downgraded to $2.10 but still a solid speculative buy

Emerald hits record quarter, price target raised

Investment banking outfit Canaccord Genuity has slapped a BUY recommendation on Emerald Resources (ASX:EMR) with a target price of $5.00 (versus current price of $3.42).

The group’s key reasons to buy? Strong operations, solid financials and huge growth potential.

Emerald’s flagship Okvau mine in Cambodia just posted a record quarter, with 31.9k ounces of gold produced, smashing expectations and guidance.

This comes after improving recovery rates, with extraction now at over 85%, up from 80%. The plant is processing gold faster than ever, hitting 586k tonnes, 17% above design.

The low-cost operation is producing gold efficiently with all-in sustaining costs (AISC) between US$810-880/oz, a competitive edge in the gold sector.

The company is also sitting on $218 million in cash, with minimal debt.

Looking ahead, Emerald is planning to expand to three mines by 2026, aiming to produce more than 300k ounces per year.

With two other projects in Memot (Cambodia) and North Laverton (WA), Emerald is positioning itself to compete with top-tier gold producers like Regis Resources (ASX:RRL) and Resolute Mining (ASX:RSG), but at a far lower cost base, according to Canaccord.

With all this in mind, Canaccord’s target price on EMR moves to $5.00 – up from its original $4.60 – and sees Emerald shaping up to be one of the most exciting gold stories on the ASX.

Bellevue downgraded, but still a speculative bet

Meanwhile, Canaccord has downgraded its price target for Bellevue Gold (ASX:BGL) to $2.10 (from $2.25) but still keeps a SPECULATIVE BUY rating. BGL is currently trading at $1.03.

BGL’s December quarter didn’t hit the mark. Sales came in at 26.2k ounces, missing expectations by 30%, and AISC surged to around $2,600/oz, well above the $1,989 forecast.

Free cash flow also went negative, dropping by about $28 million before debt repayments.

As a result, BGL lowered its FY25 production guidance to 150-165k ounces, a 9% cut from previous expectations.

What happened?

Well, mining ran into lower-grade ore, plus some production delays and equipment issues. On top of that, ongoing infrastructure upgrades slowed things down.

Still, there’s some optimism for the second half of FY25, with grades expected to improve and processing rates already picking up.

By December, the plant was running at a solid 1.25Mtpa with a 95% recovery rate.

For the second half of FY25, BGL expects around 90k ounces, down slightly from 96k, but still on track to reach a 200k+ ounces per year run rate by mid-2025.

With these updates, Canaccord has reduced its EBITDA and free cash flow forecasts by 21% and 66%, respectively, but still sees BGL as a solid speculative bet, with a price target of $2.10.

This story does not constitute financial product advice. You should consider obtaining independent advice before making any financial decision.