WDO: Higher Long Term Gold Prices Will Drive Stronger Returns

Analysts nudged their average price target on Wesdome Gold Mines higher to C$27 from C$24, citing stronger long term gold and silver price assumptions and modestly improved profitability expectations as key drivers.

Analyst Commentary

Recent target price revisions reflect shifting expectations around precious metal pricing and Wesdome Gold Mines' ability to translate higher commodity prices into sustainable cash flow growth.

Bullish Takeaways

• Bullish analysts view the higher long term gold and silver price assumptions, including forecasts of $4,500 per ounce for gold and $55 per ounce for silver in 2026 and 2027, as supportive of a higher intrinsic valuation for Wesdome Gold Mines.
• The upward revision in the price target is seen as a recognition that stronger commodity pricing can materially enhance free cash flow generation and extend the company’s growth runway.
• Some bullish analysts argue that even after the recent sector outperformance, current valuation multiples still leave room for upside if Wesdome executes well on production and cost controls.
• Raising targets across the sector is interpreted as a signal of increased confidence that elevated precious metal prices can be sustained over a multi year horizon, which would benefit Wesdome’s long term earnings profile.

Bearish Takeaways

• Bearish analysts highlight that part of the latest target increases are characterized as a catch up to year to date price moves, suggesting that a portion of the upside from stronger metals prices may already be reflected in Wesdome’s share price.
• The decision to maintain a Neutral stance, despite higher price targets, underscores lingering concerns about valuation after a strong run, with limited margin for operational missteps.
• Cautious views center on execution risk, noting that to justify the higher target, Wesdome must consistently deliver on production guidance and capital discipline in a potentially more volatile commodity environment.
• Some bearish analysts warn that if gold and silver prices revert toward historical averages rather than staying at elevated forecast levels, the company’s earnings leverage could work in reverse, pressuring both earnings estimates and the current valuation.

What's in the News

• Updated 2025 consolidated production guidance to 177,000 to 193,000 ounces, down from 185,000 to 205,000 ounces, reflecting inconsistent execution and operational challenges at the Kiena mine, while reaffirming expectations for a strong fourth quarter driven by three mining horizons at Kiena Deep, Presqu'île and 136 level (Corporate guidance).
• Revised Kiena full year production guidance to 72,000 to 78,000 ounces, with site cash costs now estimated at $1,350 to $1,450 per ounce of gold sold and AISC at $2,175 to $2,350 per ounce, signaling higher cost expectations alongside lower output (Corporate guidance).
• Announced discovery of a new mineralized zone at the Dubuisson deposit east of Kiena Deep, highlighted by drill hole DB 25 068 returning 4.1 g/t gold over 25.8 metres, pointing to significant resource expansion and bulk tonnage potential at the Kiena Mine Complex in Val d'Or, Québec (Exploration update).
• Board authorized a normal course issuer bid, allowing repurchase of up to 3,013,315 shares, or roughly 2% of public float, over 12 months. All shares are to be cancelled, and purchases are to be funded from cash on hand and operating cash flow, pending Toronto Stock Exchange approval (Share buyback program).
• Named Philip C. Yee as Chief Financial Officer, effective September 29, 2025, adding a seasoned mining finance executive with prior CFO roles at Eldorado Gold, Kirkland Lake Gold and Lake Shore Gold to oversee Wesdome's financial strategy (Executive appointment).

Valuation Changes

• The Fair Value Estimate remained unchanged at approximately CA$26.61 per share, indicating no material shift in the intrinsic valuation from the prior model.
• The Discount Rate increased slightly from about 7.04% to 7.14%, reflecting a modestly higher required return for equity holders.
• Revenue growth assumptions edged down marginally from roughly 17.63% to 17.61%, signaling a very small tempering of long-term top-line expectations.
• The Net Profit Margin ticked up slightly from about 42.81% to 42.84%, implying a modest improvement in long-term profitability assumptions.
• The future P/E multiple moved up marginally from 8.91x to 8.94x, suggesting a slightly higher valuation multiple applied to projected earnings.