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Lundin Gold Initiated at Buy at UBS; Price Target Set at C$103.00

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UBS on Thursday initiated coverage of Lundin Gold (LUG.TO) shares with a buy rating and C$103.00 price target.

"We initiate coverage of Lundin Gold (LUG-TSX) with a Buy rating and C$103/sh price target. Our constructive view is underpinned by high-margin production at Fruta del Norte (FDN), stable ~$1bn/yr FCF at spot, and meaningful exploration optionality that is not fully considered by the market. FDN is a world-class underground asset, characterized by high grades, consistent execution, and a long, inventory-backed mine life. Three year guidance of 475-525koz is potentially conservative, with upside from plant optimization not currently priced, AISC below $1,200/oz supporting robust margins. While still a single-asset producer, we see the market underappreciating upside from near-mine epithermal targets and a developing copper-gold porphyry corridor which could present billion dollar value. The shares have underperformed the GDX by ~40% over the past year as investors have rotated into higher-beta, more leveraged names; however, in a range-bound gold environment, we see Lundin Gold offering an attractive risk-reward as the story begins to shift from execution onto expansion," the investment bank wrote.

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Price: $85.32, Change: $+1.29, Percent Change: +1.54%

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