Caracal Gold - Initiation of Coverage

Mid-tier gold producer in the making with a very compelling organic and acquisitive growth strategy in highly prospective East Africa

Caracal Gold is the old Papillon Holdings which joined the LSE in 2016 as a shell. After a couple of false dawns, the Kilimapesa Gold Mine in Kenya has been reversed into it together with a highly experienced management team equipped with the necessary funds to recommence production and really get things moving. Caracal was readmitted to the LSE in August 2021 with big plans to rapidly increase gold production and build a substantial JORC compliant resource base in short order by taking advantage of later stage opportunities in gold projects across Kenya, Tanzania and Uganda.

  • Bold ambitions of 50,000oz pa production and +3Moz MRE by year-end

    Gold production has risen swiftly at Kilimapesa since the reopening to 1,000oz per month. Well-defined development plans are in place to optimise operations to significantly increase production, while rapidly building up the resource base to create a reasonably sized long life mine with good margins.

  • New acquisitions Nyakafuru & Simba snapped up in Shanta’s backyard

    Caracal looks like it caught Shanta Gold napping in acquiring two cracking gold projects in Tanzania. These add JORC resources of 1Moz to the company’s existing 671,400ozs. These are advanced projects in proven gold districts which are planned to be developed as conventional open pit mining operations.

  • Enviable pipeline of acquisition opportunities to be actioned in 2022

    The acquisition pipeline includes one project that is close to production coming with a recently finalised BFS. Plus there is also a Kilimapesa look alike which is already in production. As before, vendors seem more than happy to take paper as they appreciate that the Caracal team is successfully & rapidly adding value.

  • Peer group & DCF analysis suggest +125% potential on a fully diluted basis

    Our highly conservative valuation shows the potential. We initiate coverage of Caracal Gold with a target price of 2.73p and Conviction Buy stance.

  • RISK WARNING & DISCLAIMER

    Caracal Gold is a research client of Align Research. Align Research own shares in Caracal Gold. Full details of our Company & Personal Account Dealing Policy can be found on our website http://www.alignresearch.co.uk/legal/ 

    For full disclaimer information please refer to the last page of the full document. This investment may not be suitable for your personal circumstances. If you are in any doubt as to its suitability you should seek professional advice. This note does not constitute advice and your capital is at risk. This is a marketing communication and cannot be considered independent research.

Table: financial overview
Year to Dec 2019A 2020A 2021E 2022E
Revenue (£’000) - - 4,030 24,179
PTP (£'000) (582) (1,074) (1,145) 5,897
EPS (p) (0.44) (0.811) (0.196) 0.286
Source: Company accounts & Align Research

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