UBS Initiates Coverage of Capricorn Metals Ltd
UBS has initiated coverage of Capricorn Metals Ltd (ASX:CMM) with a Buy rating and a price target of A$17.00 per share. The target price represents roughly 40% upside from the Friday closing price of A$12.12.
Production Outlook
The brokerage expects Capricorn Metals to increase its annual gold production from approximately 120,000 ounces in fiscal 2026 to more than 300,000 ounces by fiscal 2029. This growth is driven by the ramp‑up of the Mt Gibson project in Western Australia and the expansion of the existing Karlawinda mine.
Financial Position
UBS forecasts that Capricorn Metals will finish fiscal 2026 with net cash of about A$463 million. This cash balance is deemed sufficient to fund the Mt Gibson development while also leaving capacity for additional investments and shareholder returns.
Environmental Approvals and Timeline
A critical catalyst identified by UBS is the receipt of environmental approvals for Mt Gibson. While the project has undergone lengthy state and federal permitting processes, UBS believes the remaining timeline is now measured in weeks rather than months, with state approval expected by November. The broker models the first gold production to occur in the March quarter of 2028.
Processing Capacity Expansion
Beyond the initial phase, UBS anticipates that Capricorn Metals will eventually increase Mt Gibson’s processing capacity to 6.5 million tonnes per annum, up from the 5 million tonnes outlined in the original feasibility study. This expansion would raise steady‑state production to roughly 220,000 ounces annually.
Earnings Forecast and Price Sensitivity
UBS’s earnings forecasts for fiscal 2027 are positioned above consensus estimates. The brokerage notes that higher-than-expected gold prices could provide additional upside to its valuation model.
---