Roth Capital reckons miner Gold Resource Corporation (NYSEAMERICAN:GORO) is due a re-rating with production and cashflow set to continue to increase in the second half as commercial output is achieved at its Isabella Pearl mine in Nevada.
In a note published on Thursday, the broker repeated a Buy rating on the stock, with a target price of $6.50 (current share price: $3.55).
On Wednesday, the Gold Resource Corp. posted second quarter numbers, which showed net earnings of US$1.8 million, or US$0.03 per share, on revenue of $32.7 million.
Roth analyst Jake Sekelsky said he expects the group's "cash-producing Mexico Unit to continue to operate at a steady state and commercial production to be achieved in Nevada during 2H19."
Pre-commercial production at Isabella Pearl in the three months totaled 1,678 ounces of gold and 972 ounces of silver at an average grade of 0.61 grams per ton (g/t) gold but the analyst reckons that will trend higher.
Sekelsky pointed out that commercial production could be achieved by the end of 2019, with 2020 the first full year of production for the Nevada mine.
He concluded: "We highlight that based on our existing forecasts, the Isabella Pearl mine has the potential to increase GORO's consolidated production profile by over 100% and free cash flow generation by approximately 50% YoY."
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