RBC Capital Markets says they see Harmony Gold (NYSE:HMY) as a prime takeover target, believing they are vastly undervalued at this time, as well as being poised to deliver on what they have promised in a relatively short time.
If they are accurate, it would be one of the few gold miners that may be had a decent price, as the rising price of gold has caused valuations in the sector to soar, making acquisitions extremely expensive, and in many cases: prohibitive.
Analysts at RBC say that one of the key reasons Harmony is undervalued can be traced to its 50 percent stake in Papua New Guinea's Morobe project, which includes the new-operating Hidden Valley mine, and the prolific Wafi Golpu property. The analysts said, "even on the most conservative basis, Wafi could add in the order of USD 1.5bn to USD 2bn to the value of Harmony. This is some 40% of the current market capitalization of the company."
Harmony, in RBC's view, "has been a disappointing story since the rand started strengthening in 2002, due to a strategy that banked on a weakening currency to keep marginal assets alive."
Now after a period of time they say "the new strategy is now set to deliver a new, less marginal, lower cost, more diversified Harmony. But that is not the end of the story. The ‘lucky' part of the equation is really reflected in the outstanding exploration results seen at the Wafi Golpu deposit in Papua New Guinea. We believe this exploration play is fast becoming a central play in the valuation of Harmony."
Harmony closed Friday at $14.10, dropping $0.29, or 2.02 percent.
No comments:
Post a Comment