Could this ASX-listed gold mine developer really increase six-fold?

Canaccord Genuity has recently run the ruler over Brightstar Resources Ltd (ASX: BTR).The analyst team thinks this company is extremely undervalued at the current share price.

We’ll get to their exact share price target shortly, but firstly let’s look at the company’s recent announcements.

Funds locked in

Brightstar is working on bringing its Sandstone and Goldfields projects in Western Australia into production, and to that end, recently locked in $193 million in new capital from an equity raise and another US$120 million from a new debt facility.

The good news for the company is that this means they will be fully-funded right through to production at Goldfields and up to a final investment decision for Sandstone.

At the Goldfields project the company is expecting to pour its first gold in the June quarter of 2027.

The company said it expected that project to deliver 75,000 ounces of gold per year and generate $1 billion in free cash flow over six years.

At the Sandstone project the company is expecting make a final investment decision in late calendar 2027 or early 2028.

Regarding the capital raise, Brightstar Managing Director Alex Rovira said:

We are delighted to have successfully executed on this funding package, particularly in the context of the challenging market conditions over the past weeks. With both the equity and debt components now settled, Brightstar is in an exceptionally strong position to deliver major gold production growth from the Goldfields Project while in parallel unlocking the value of our Sandstone Gold Project through drilling and feasibility work streams. A strong balance sheet positions Brightstar favourably against the backdrop of difficult capital markets and ensures a material capital buffer and contingency for our development requirements and funding for Sandstone.

Shares looking cheap

The Canaccord analysts said the capital raise meant the company should be “comfortably funded” through to first gold production.

They have modelled the Sandstone project to generate an average 150,000 ounces per year at an all in sustaining cost of $3013 per ounce, over a 10 year mine life.

They added:

We model pre-production capex of $400m (prev. $250m) with spend commencing in JunQ’28. Brightsar has flagged it plans to utilise free cash flow generated from the Goldfields Hub, as well as refinanced debt, to fund development of Sandstone. We forecast Brightstar to have cash of about $258m at end MarQ’28 and forecast the Goldfields Hub to generate about $200m in pre-tax free cash flow from JunQ’28-JunQ’29.

Canaccord reduced their price target on Brightstar from $2.80 to $2.40, still multiples of the current share price of 40.5 cents. The company is valued at $444.6 million.

The post Could this ASX-listed gold mine developer really increase six-fold? appeared first on The Motley Fool Australia.

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Motley Fool contributor Cameron England 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 Scott Phillips.