Jefferies Initiates EMEA Mining Coverage, Names Endeavour and Hochschild as Top Picks

Jefferies has initiated coverage of the precious metals mining sector in Europe, the Middle East, and Africa (EMEA), identifying three companies as preferred picks with significant upside potential. The bank's analysts highlighted Endeavour Mining, Hochschild Mining, and Pan African Resources as "Buy"-rated stocks, citing compelling value and company-specific growth drivers.

Sector Outlook and Top Picks

The launch of coverage comes after a period of weakness for gold miners, which have underperformed the FTSE by approximately 20% and the price of bullion by about 10% over the past six weeks, according to the Jefferies report. The bank also initiated coverage on Fresnillo and Valterra Platinum with "Hold" ratings, suggesting their shares are trading closer to fair value.

Analysts led by Giovanni Holmes noted that while commodity prices remain the primary value driver, the market's focus is shifting toward "idiosyncratic, stock-specific catalysts." They see the three Buy-rated companies as best positioned to deliver earnings growth even in a flat commodity price environment.

Bullish Gold Forecast

Underpinning its positive view on the sector, Jefferies holds an above-consensus forecast for the price of gold, projecting an average of roughly $4,600 per ounce through 2030. The bank attributes this outlook to structural forces including G7 currency debasement, M2 money supply growth, and sustained buying from central banks.

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While Jefferies acknowledged that shifting interest rate expectations pose a near-term risk, the analysts believe the gold price "has likely absorbed some of this downside already."

Analyst Rationale

Jefferies provided specific catalysts for its top-rated stocks:

• Endeavour Mining (Buy, 5,700p price target): The bank sees 62% potential upside, expecting shares to re-rate as its Assafou project progresses. Jefferies forecasts approximately $5 billion in free cash flow over the next three years, enabling capital returns that could exceed its minimum dividend commitment.
• Hochschild Mining (Buy, 625p price target): With 45% upside, Jefferies believes the current share price does not reflect the company's turnaround progress or an expected production increase by the end of the decade. The firm projects free cash flow could rise more than 500% by 2029.
• Pan African Resources (Buy, 130p price target): Analysts see 41% upside as the company shifts its portfolio to higher-grade sources and Tier 1 jurisdictions. This strategy is expected to drive margin expansion and an estimated 13% compound annual growth rate in EBITDA through 2028.