On Monday, RBC Capital adjusted its price target for Adriatic Metals PLC (ADT1:LN) shares, a mining company listed on the London Stock Exchange, from GBP3.20 to GBP2.60. The firm has maintained its Outperform rating on the stock despite the revision.
The price target reduction comes after a decision by the Constitutional court that impacts the Vares project, which is one of Adriatic Metals' key ventures. The court's ruling necessitates the company to identify an alternative site for depositing tailings, a by-product of mining operations. RBC Capital anticipates this requirement will push back the project's ramp-up phase to the third quarter of 2025, a delay from the previously expected first quarter of 2025.
Analysts at RBC Capital believe the stock remains attractive at its current levels and view the likelihood of the alternative Tailings Storage Facility (TSF) not receiving permission as low. This optimism is based on the economic significance of the Vares project and the support it has garnered from the local community.
The revision of the ramp-up timeline and the adjustment of valuation multiples to better reflect the risks associated with the project have led to the new price target of 260p. Despite these challenges, RBC Capital reaffirms its positive stance on Adriatic Metals, with an Outperform recommendation still in place.
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