bell potter put a buy rec with a target of $4.00 last week, have...

bell potter put a buy rec with a target of $4.00 last week, have to wonder whats going on with this stock:


Lihir Gold Limited (LGL.AX - A$2.89) Buy Target: A$4.00



June quarter production of 170koz from Lihir was 10% below our expectation as shovel maintenance and high rainfall impeded the transition into the higher grade Phase 8 section of the Lienetz pit. Cash costs of US$417/oz were marginally higher than our forecast of US$411/oz. The quarter also saw the integration of the Equigold assets with 5koz of attributable production from Mt Rawdon. Full year guidance for Lihir Island remains unchanged at 700 – 770koz. However, in what seems to be a common theme across the resources reporting season, operating costs have been revised upwards. Full year guidance for Lihir’s cash costs have been revised upwards to US$400/oz, our new estimate is US$411/oz. Guidance for group output is +850koz incorporating Lihir, Mt Rawdon, Bonikro and Ballarat. With full year guidance unchanged, a big H2 seems possible. We are forecasting output of 398koz in H2 from Lihir Island, 6% higher than any previous half year period. With the grade forecast to rise and the arrival of two new face shovels due during the period, we remain supportive of the target. However, our full year forecast of 706koz remains at the bottom end of the company guidance. Increasing the operating costs reduced our NPV to $2.00. Our target price of $4.00 is based on a 2x NPV multiple. Lihir remains our preferred gold stock due and our BUY recommendation is retained.