Initiating Coverage
Mandalay Resources (TSX:MND) is on a roll; YTD its share price has surged 72%, more than double both the GDX and GDXJ benchmark producer indices. We attribute the outperformance to a combination of stable production and a surge in its capacity to generate free cashflow. In the June quarter MND recorded free cashflow of $15.6M, three times more than the fourth quarter of 2023 on 24% more sales revenue. The Company has a simple three-point strategy to 1) maintain production and cashflow from its operations, 2) continue to replace reserves and resources and 3) to grow through M&A. We consider Mandalay to be well positioned to execute on this its strategic growth objective to either acquire new operating assets or combine with a compatible entity. With that in mind, we are initiating coverage of Mandalay with a BUY rating and C$6.50/sh target price.
