PRU surprised the market in its 1H update with a US5c interim dividend, well above expectations despite a softer quarter, highlighting the strength of its balance sheet and cash generation. Production guidance remains 400–440koz, though cost guidance increased ~9% due mainly to higher gold prices and royalties in Côte d’Ivoire, which are still under negotiation. The company also announced a 73% reserve upgrade at Nyanzaga to 4.0Moz, adding around five years of mine life, with first gold expected in the 1Q27. With ~$US1.15bn in liquidity, PRU retains strong flexibility to fund dividends, acquisitions and development projects, including the CMA underground and Nyanzaga build.
This week, we saw PRU sell its 70% majority stake in the Meyas Sand Project for $US260mn, strengthening its balance sheet even further, supporting additional capital returns to shareholders and development opportunities. After correcting ~25%, we see good risk/reward emerging in PRU, although further weakness towards $4.50 cannot be ruled out.
- We can see PRU trading above $7 in the coming 12-18 months.
MM is bullish toward PRU around $5
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