This oversold ASX gold developer could more than double: Broker

Minerals 260 Ltd (ASX: MI6) this week released the results of a prefeasibility study into its Bullabulling gold project in Western Australia, and it’s fair to say the market was underwhelmed.

While the stock is up more than 440% over the past 12 months, the shares dipped slightly on the publication of the PFS and are now trading at 62 cents.

The analysts at Morgans believe this is cheap and have a bullish share price target on the gold company’s shares, which we’ll get to later.

First, let’s look at what they announced.

Major, long-life gold project in development

The company said in a statement to the ASX that Bullabulling would generate average annual free cash flow of $330 million and would operate for 19 years.

The company would spend $180 million from existing cash reserves to get to a final investment decision, while the mine would cost $560 million to build, plus another $115 million for pre-production operations.

A definitive feasibility study was expected to be completed in the first quarter of calendar year 2027.

Minerals 260 Managing Director Luke McFadyen said regarding the project:

Fifteen months after acquiring the Bullabulling Gold Project, we are presenting outcomes of our PFS and a Maiden Ore Reserve. We always believed Bullabulling could become a significant gold operation, and today’s outcomes confirm the potential for this high-margin, large-scale, long-life Project. Our target of delivering Bullabulling into production by the end of 2028 will establish Minerals 260 as the next mid-tier gold producer on the ASX. With an NPV of $2.3 billion, an IRR of 43% and $510M of average annual EBITDA, Bullabulling is set to deliver significant growth and value for our shareholders.

Shares in this ASX gold company looking cheap

Morgans said, importantly, that the PFS was completed using the previous 4.5 million-ounce gold resource, with an upgraded 6.2 million-ounce resource providing scope for further resource growth.

They added:

The market has reacted negatively to the PFS, which we believe is largely a product of the crystallisation of a sizeable upfront capital requirement rather than any deterioration in project quality. While pre-production capital of ~A$855m is significant, we view it as appropriate for an asset of Bullabulling’s scale, longevity and economic returns, with the project’s strong cash-generative profile expected to support favourable financing outcomes.

Morgans is anticipating first production in mid FY29 with an average output of about 150,000 ounces per year initially.

They added:

We assume a Stage 2 expansion, funded from operating cash flow, is commissioned in 2H FY31, increasing production towards ~200kozpa. Beyond lifting the production profile, the larger-scale operation has the potential to benefit from economies of scale and lower unit operating costs, although we do not currently incorporate these benefits into our base case.

Morgans has a price target of $1.38 on Minerals 260 shares.

The post This oversold ASX gold developer could more than double: Broker appeared first on The Motley Fool Australia.

More reading

• Which ASX 200 sectors paid the highest dividend yields in FY26?
• BHP shares may not double in 12 months but this ASX mining share could
• 5 things to watch on the ASX 200 on Thursday
• 13 ASX 200 shares that doubled in value in FY26
• 5 best ASX 200 mining shares of FY26

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.