BMO Capital Markets is initiating coverage of Perth-based Cardinal Resources (TSX: CDV; ASX: CDV) with an outperform rating, noting that the company's Namdini gold project in Ghana is "one of the few recent sizable discoveries heading towards a construction start in the second half of 2020."
"Cardinal could be a takeover target with a sizable asset that would be meaningful and likely accretive to all but the largest producers," BMO analyst Andrew Mikitchook states in a research note, describing Namdini as "among the higher quality development assets in our coverage group as well among its peers."
Last month, Cardinal released a feasibility study on Namdini that outlines production of 4.2 million oz. gold over a 15-year mine life at all-in sustaining costs (AISCs) of US$895 per ounce.
The study estimated capex for the open-pit mine would cost US$348 million, plus a US$42 million contingency, and could be paid back within 21 months at a gold price of US$1,350 per ounce.
The project's after-tax net present value at a 5% discount rate is projected at US$590 million and its after-tax internal rate of return is forecast to be 33.2%.
The project, 50 km southeast of the town of Bolgatanga, lies within the Nangodi Greenstone Belt - one of a series of southwest-northeast trending granite-greenstone belts that host significant gold mineralization in Ghana and Burkina Faso.
The first gold pour is targeted in the second half of 2022.
At press time, Cardinal was trading at 30.5 ? per share with a 52-week range of 28.5 ? to 50 ?. The company has 493 million common shares outstanding for a $150-million market capitalization.