Analysts believe Firefinch Ltd (ASX: FFX) is significantly undervalued at its current market capitalisation. At the time of writing, the Firefinch share price is 90 cents, a 1.13% gain on the day. In comparison, the S&P/ASX 200 Index (ASX: XJO) is up 0.07%.
Firefinch is a gold explorer and a lithium developer working on the Morila gold mine and Goulamina lithium project in Mali, West Africa.
Let’s take a look at why one broker sees huge upside for the Firefinch share price.
Analysts at J Capital Research believe the Firefinch lithium asset Goulamina is “underappreciated” and gold mine Morila “significantly undervalued”.
Commenting on their view of the company, analysts said:
We believe Firefinch should be trading at a valuation between $1.68 and $2.28 billion. With the current market cap of $990 million, the upside is between 70% and 130%.
We believe Firefinch’s under-appreciated lithium asset, Goulamina, alongside its operational gold mine, Morila, are significantly undervalued based on the current market capitalisation. We view both the gold and the lithium project as de-risked as they are operational and fully funded respectively.
J Capital believes Firefinch’s Goulamina lithium project should be worth at least $1.4 billion. Analysts said:
When we compare the Goulamina lithium project to the market value of eight other lithium companies with hard-rock lithium projects, we believe Goulamina is worth at least double what the market currently values it at.
Further, analysts valued Firefinch’s gold venture Morila between $275 and $430 million. After engaging a team of geologists, J P Capital predicted the mine could produce between 100,000 and 156,000 ounces each year. Analysts said:
We have totally discounted any potential upside from an underground mine. This is more conservative than street analysts, who believe Morila is worth double our low-end target.
Firefinch share price snapshot
The Firefinch share price has exploded 316% in the past 12 months, while it has climbed 3.5% this year to date.
Over the past month, Firefinch shares have jumped 35% and are 11% higher over the past week.
Since the J Capital report, the company’s market cap has increased to about $1.04 billion.
The post Could the Firefinch (ASX:FFX) share price have 130% upside? Broker weighs in appeared first on The Motley Fool Australia.
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Motley Fool contributor Monica O’Shea has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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