ASX:MEK
Meeka Metals Ltd
Investment Summary
The fund managers believe Meeka Metals Ltd represents a compelling investment opportunity. They note its strong performance, particularly with the Murchison gold project in WA, which is on track for first production by mid-2025. The managers highlight that development works are both on budget and schedule, with well-established ore sources allowing for a mix of high-grade open pit and underground operations. Furthermore, capital intensity is modest and fully funded, anticipating free cash flows starting in 3Q25. They emphasize that Meeka is debt and gold-hedging free, allowing for attractive cash margins at current gold prices exceeding A$4,500/oz. The projected production of ~45koz is seen as conservative, with the potential for a 50% growth as underground mines ramp up. At an attractive valuation of ~3x EV/FY26F FCF, the stock remains appealing compared to its peers. With staggering FCF yields over 35% and a well-aligned management team, they expect the stock to perform very well.
Commentary From The Managers
Paragon Funds
31 Jan 2025
$0.11
- Meeka has been a strong performer for Paragon Funds, advancing its brownfield-turnaround Murchison gold project in WA.
- Development works are on budget and schedule with first production expected mid-2025.
- Ore sources are well established, featuring high-grade open pit and underground operations.
- Capital intensity is modest and fully funded, with the company expected to be free cash flowing from 3Q25.
- Meeka is debt and gold-hedging free.
- A$gold is generating records at >A$4,500/oz, allowing for scope of over 100% cash margins.
- The first full year’s production target of ~45koz appears conservative, with potential for a 50% growth.
- At spot A$gold, Meeka is projected to produce strong free cashflows (FCF) of $80m+ p.a. from FY26F.
- Despite significant appreciation, Meeka remains attractively priced at ~3x EV/FY26F FCF, considerably lower than peers.
- FCF yields are remarkable at over 35%.
- The management team is well-aligned and experienced, enhancing confidence in future performance.
- Paragon Funds expects the stock to perform very well.
Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.