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Collective Mining (TSX:CNL) Could Be 49% Undervalued On Apollo Ramp Zone Results

Simply Wall St · 1d ago

Collective Mining (TSX:CNL) is back in focus after reporting its broadest and highest grade gold intercept yet at the Apollo project’s Ramp Zone in Colombia, a 154.3 metre gold equivalent interval.

The share price reaction has been strong in the short term, with a 1 day share price return of 5.05% and a 7 day share price return of 4.40% following the latest drilling headlines. This comes even though the 90 day share price return is down 9.69% and the year to date share price return is down 12.10%. At the same time, longer term total shareholder returns of 9.84% over 1 year and roughly 4.7x over 5 years suggest that the recent weakness follows a very large multi year run.

Scan for other precious metals drill stories with similar momentum, and filter for miners with stronger financial profiles using our hand picked 34 elite gold producer stocks in parallel with Collective Mining’s latest results.

Collective Mining now looks like a stronger explorer on the back of Apollo’s Ramp Zone, yet the share price has cooled. So how does that quality square with what you are being asked to pay today?

Most Popular Narrative: 49% Undervalued

Against a last close of CA$16.86, the most followed narrative for Collective Mining points to a fair value of CA$32.80. On these assumptions, the gap between price and perceived potential is wide.

Progress on drilling across the broader Guayabales district, including Trap, Apollo’s Ramp Zone and Plutus from surface and planned underground drilling following construction of the exploration adit, could add new mineralized zones that influence long term revenue potential across multiple deposits.

See why 2 investors see Collective Mining as 49% undervalued.

This narrative uses an 8.16% discount rate and assumes that by 2029 Collective Mining reaches forecast revenue of US$454.8 thousand and earnings of US$142.9 thousand, despite the business recording a loss of US$56.9 million today and having no revenue at present. To close the gap between the current CA$16.86 share price and the fair value of CA$32.80 implied by these forecasts, the analysis also requires a very large future P/E multiple of 19,526x on those 2029 earnings, which is well above the current 17.0x P/E for the wider Canadian metals and mining industry.

Those inputs highlight the core tension. The story leans heavily on continued drilling success at Apollo and across Guayabales, strong metallurgical recoveries, access to a CA$500 million securities program and dual listings. At the same time, it accepts that analysts do not currently expect Collective Mining to reach profitability over the next three years and that there is disagreement between the highest and lowest price targets. For readers, the key task is to decide whether such optimistic margin and valuation assumptions feel reasonable given the early stage of the project and the company’s unprofitable track record so far.

Result: Fair Value of CA$32.80 (UNDERVALUED)

Still, the whole Collective Mining narrative can shift quickly if underground drilling disappoints or if future engineering work points to heavier than expected costs.

Find out about the key risks to this Collective Mining narrative.

Next Steps

If this all feels optimistic on Collective Mining, do not wait for the next headline to decide where you stand. Go through the key figures, stress test the assumptions and then weigh them against the 2 important warning signs.

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