Buy recommendations on Catalpa Resources * PURE SPECULATION:...

Buy recommendations on Catalpa Resources

* PURE SPECULATION: Robin Bromby
* From: The Australian
* December 29, 2009 12:11PM


Catalpa Resources (CAH) has been getting analyst attention following its merger with the gold interests of Lion Selection Group. Foster Stockbroking puts a "buy" on the company. CAH is expected to become a two-mine producer in 2010, with the first gold pour at Edna May in June. The company has forward sold 352,000oz at an average $1557.50/oz which Foster says is a prudent level of hedging but leaving some exposure to the spot price. Using a gold price of $1200/oz, Foster says Catalpa could be producing up to $80 million of EBITDA by mid-2010. Target price is set at $2.20, against this mornings $1.39.

Austock Securities also sees Catalpa as a buy, especially with the recent weakness in its share price. They are more bullish, putting a 12-month target price of $2.80 a share.