Shares of Detour Gold Corp. have jumped a lot more than 10 per cent in the last 2 days as several analysts heaped praise on the company for its new mine plan and hiked their price targets.
Detour, which operates a massive open-pit mine in Northern Ontario, announced the updated plan on Monday. It contains a new block of the deposit, which boosts the general gold reserves to 16.9 million ounces and boosts the mine life by three years. In comparison, reserves stood at 14.9 million ounces after 2014.
The new mine plan also improves the overall economics of the project by reducing costs. It assumes a lesser mining rate and fewer waste stripping, and also reduces assumptions for the Canadian dollar and fuel costs.
Desjardins Securities analyst Michael Parkin noted the new plan is missing some specifics. But he still hiked his price target to $18.50 a share (from $17.50) as he is confident the brand new targets is possible.
“With management providing reliable guidance last year, we’ve good conviction in our revised estimates,” he said in a note.
BMO Capital Markets analyst Brian Quast noticed that the lower mining rate reduces risk by lowering capital requirements and “generally moderating” the project. He boosted his target price 4.3 percent to $16 a share.
At least eight sell-side analysts have risen their targets on Detour since the announcement.
