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With Inflation Pressure Not Going Away, Gold Miners Are the “Value Play”

Quietly, the gold market has enjoyed a period of revival, having recently climbed to its highest in 2 months as inflationary pressures keep…

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This article was originally published by A Head of the Herd

2021-11-11

Quietly, the gold market has enjoyed a period of revival, having recently climbed to its highest in 2 months as inflationary pressures keep on piling up.

Source: Kitco

Economic indicators such as the latest US jobs and payroll data have barely changed the view of policymakers. The US Federal Reserve still views this inflation as transitory, thus won’t accelerate its rate hike. The Bank of England, too, seems to be following suit.

But many analysts beg to differ. Some even think the central banks have lost control of inflation, leaving the market to fend for itself for the time being.

This is backed by investors’ willingness to buy into more gold as a hedge since September, evidenced by the movement of gold prices over the past few weeks.

There is still room to go higher, according to those keeping tabs on the situation, citing gold as a “value play” once investors realize inflation has kicked into gear and is not transitory.

Also value plays are the junior gold exploration/ development/ mining companies, which could very well be the biggest beneficiaries of another rally like 2020.

Recently, two of the biggest figures in the mining industry predicted that investors will soon catch on that global inflationary pressures are far more intense than suggested, which could possibly send gold prices to $3,000/oz.

While there are ample junior miners holding gold projects, AOTH has zoomed in on those located within the top gold mining jurisdictions in the world with high growth upside.

Emerging Ontario Gold Explorer

It’s hard to ignore Ontario when discussing the world’s biggest gold hunting grounds.

The Canadian province has at least 20 mines in operation, producing more than 73,000 oz of gold on an annual basis, the most in the country. Gold mining is active in all parts of the province, including major camps such as Timmins, Red Lake and Kirkland Lake.

Still, the gold exploration potential in many areas of Ontario remains untapped, some even with multi-million ounce upside.

Earlier in the year, Goldshore Resources Inc. (TSXV: GSHR) (OTC: GSHRF) (FRA:8X00) took on the Moss Lake gold project from Wesdome Gold Mines Ltd., following Goldshore’s reverse takeover transaction with Sierra Madre Developments Inc.

The Moss Lake property, comprising 282 mining claims covering 14,292 hectares of land, is located near Thunder Bay, within an excellent jurisdiction situated between the Red Lake and Marathon camps.

A number of major gold deposits are found nearby, including Detour (Kirkland Lake Gold) with 15.7Moz in gold reserves (proven and probable) at 0.82 g/t Au, New Gold’s Rainy River with 2.6Moz gold reserves at 1.06 g/t Au, and Côté (IAMGOLD & Sumitomo) with 7.3Moz gold reserves at 1.0 g/t Au.

Moss Lake itself hosts a number of gold and base metal rich deposits, including the Moss Lake deposit, the East Coldstream deposit, the past-producing North Coldstream mine and the Hamlin zone, all of which occur over a mineralized trend exceeding 20 km in length (see below).

Mineralized zones at Moss Lake property

The property has seen extensive historical exploration since the late 1800s.

Prospecting resulted in the discovery of multiple high-grade gold occurrences and the North Coldstream copper-gold-silver deposit, from which 2.7 million tonnes was mined up to 1950 at 1.89% Cu, 0.56 g/t Au and 5.59 g/t Ag.

Gold exploration intensified during the 1970s with Falconbridge and exploration of the Snodgrass Lake prospect. The original Moss Lake showing was stripped and washed by the Tandem/Storimin joint venture in 1985.

Between 1986 and 1990, extensive drilling and 1,000m of underground development work were completed by several groups, along with the first resource estimates and metallurgical work.

During the 1990s, Moss Lake Gold Mines continued exploration with several modest drill campaigns and further geochemical/ geophysical surface programs, along with an updated resource estimate in 2010.

A PEA was completed by Moss Lake Gold Mines in 2013, ownership was amalgamated by Wesdome Gold Mines in 2014, and the Coldstream and Hamlin properties were acquired in 2016.

More exploration and drill programs in 2016 and 2017 confirmed extensions of mineralization along strike.

In acquiring the Moss Lake project from Wesdome in January 2021, Goldshore has inherited a significant historical resource (2013) estimated at 1.47Moz indicated and 2.51Moz inferred, for a combined 4Moz split between two deposits (Moss Lake and East Coldstream).

Despite having a number of companies’ fingerprints on it, the property remains under-drilled, as historical drilling only went down to 250m out of a possible 2 km long deposit.

According to Goldshore, the 20 km mineralized trend at Moss Lake contains multiple zones and targets that are ready for follow-up, with both infill and expansion drilling considered necessary.

The company’s belief was recently validated by assays from the first three holes of its 10,000m program at the Moss Lake deposit. Not only did the results show evidence of gold mineralization, but they also gave indications of a well-mineralized system that is much wider and deeper than previously known.

This signified the beginning of what promises to be a wide-ranging, lengthy drill program that would extend into Q2 2022.

Goldshore’s executive team is led by CEO Brett Richards, who has over 34 years of experience in the mining industry. He previously held executive roles with Roxgold (TSX: ROXG), Katanga Mining (TSX: KAT) and Kinross Gold (TSX: K).

High-Grade Silver Company

Like gold, silver also stands to benefit from investors’ flight to safe-haven assets.

Furthermore, the metal’s key role in several industrial applications means that demand would remain elevated during the global energy transition, bolstering the value of silver projects.

While most of the world’s silver is mined in Latin America and China, Canada should not be overlooked as a future silver producer. In particular, the western province of British Columbia is endowed with one of the richest mineralized regions on the planet: the Golden Triangle.

With over a century of mining history, this region has been the site of three gold rushes and some of Canada’s greatest mines, including Premier, Snip and Eskay Creek. Other significant and well-known deposits include Brucejack, Galore Creek, Copper Canyon, Schaft Creek, KSM, Granduc and Red Chris.

The Golden Triangle takes its name from a 500 km belt of mineralization that stretches from the British Columbia-Yukon border in the north to the town of Kitsault, just southeast of the port of Stewart. The Kitsault area is historically associated with molybdenum and silver production.

It’s in the southern part of the triangle where we find Dolly Varden Silver Corp. (TSXV: DV) (OTC: DOLLF), whose flagship silver project covers 88 sqkm of land in the Stewart Complex, an area well-known for its base and precious metals deposits.

The entire property hosts four historically active silver mines: Dolly Varden (which the project is named after), Torbrit, North Star and Wolf. These all have parts that remain unexplored to this day.

Map of Dolly Varden property

As shown in the map above, Dolly Varden’s project lies to the west of Hecla Mining’s (NYSE: HL) Kinskuch project and borders Fury Gold Mines’ (TSX: FURY) Homestake Ridge.

Kinskuch is an early-stage project with the potential for discovery of epithermal silver-gold, gold-rich porphyry and VMS deposits. At Homestake Ridge, the project’s PEA study has envisioned a 13-year mine with peak annual production of just over 88,000 gold-equivalent ounces.

However, unlike most in the region, the Dolly Varden project is a volcanogenic massive sulfide (VMS) and epithermal-style pure silver deposit in nature, which is extremely rare in the mining industry.

Mining activity on the property can be dated back to 1910, when the original Dolly Varden mine was discovered by Scandinavian prospectors.

Nearly ten years later, the Dolly Varden mine came into production and quickly established itself as one of the British Empire’s richest silver mines. It was also in the same year when the property expanded further with the discovery of another deposit nearby.

This deposit, named Torbrit, later contributed to most of the historical production at Dolly Varden. At its peak,  it was considered the third-largest silver producer in all of Canada.

Historical records show that the Torbrit mine produced 18.5 million ounces of silver at an average recovered grade of 13.58 oz per tonne between 1949-1959, while the Dolly Varden mine had 1.5 million ounces at an average grade of 35.7 oz per tonne in the early 1920s.

Altogether, about 20 million ounces of silver were produced from the two historical mines over a 40-year period, with assays of ore as high as 2,200 oz (over 72 kg) per tonne.

Now, under Dolly Varden’s control, the path to restoring these silver mines back to production has begun, much like how Skeena Resources is reawakening the Eskay Creek mine up north.

Eskay Creek, which shares a similar style of VMS mineralization, was once considered to be the highest-grade gold mine in the world, producing 3.3Moz gold and 160Moz silver at 45/g/t Au and 2,224 g/t Ag from 1994 to 2008.

But first, Dolly Varden plans to unlock more silver resources from the historical deposits through drilling. According to the company, only about 3% of the property has been explored in detail.

An updated NI 43-101 resource estimate completed by the company in 2019 revealed 32.9Moz silver in indicated resources and 11.477Moz inferred, for a total of 44Moz silver, adjacent to the historical deposits.

An aggressive two-year drilling campaign is already underway to expand these resources. Last year’s drilling returned consistent intervals of high-grade silver mineralization at the Torbrit silver deposit, which Dolly Varden believes has the potential to support economically attractive underground bulk-mining.

The company also didn’t rule out a gold discovery consistent with the plus million-ounce resource at the adjacent Homestake property, in addition to the potential for another Torbrit-like silver discovery.

Gold Producer in Mexico

One company that has already been successful in restarting a historic mine is Magna Gold (TSXV: MGR) (OTCQB: MGLQF), whose flagship San Francisco project in Sonora, Mexico, resumed production in Q3 2020 and achieved full-scale commercial production on schedule earlier this year.

Location of San Francisco mine

Located 150 km north of Hermosillo, this 47,395-hectare property consists of two previously mined open pits (San Francisco and Chicharra) and associated heap leaching facilities.

The mine was previously operated by Geomaque from 1995 through 2000. During that time,  approximately 13.5 million tonnes of ore at a grade of 1.13 g/t Au were treated by heap leaching, and 300,834 ounces of gold were recovered.

Mining operations ceased in 2001 as a result of low gold prices, although leaching and rinsing of the heap continued for approximately one year after this.

In 2005, Timmins Gold (now Alio Gold) acquired the mine and processing equipment and began commercial operations in 2010. Since then, the mine has produced more than 820,000 ounces of gold, making it one of Mexico’s most successful gold mining operations in recent history.

Looking to re-establish San Francisco as a profitable mine, in March 2020, Magna agreed to take on the project, with a long-term view of improving the mine operation.

“We have a simple business model; it starts with growing organically. We only acquire properties in near-term production that were either mismanaged or forgotten in previous years,” Magna’s president and CEO, Arturo Bonillas, who served a 10-year tenure as president of Timmins Gold, said in an interview last year.

An updated Pre-Feasibility Study (PFS) on the property last September showed total proven and probable reserves of 47.6 million tonnes, graded at 0.495 g/t Au, leaving 758,000 ounces of contained gold.

“The numbers were great. The study shows that we have 1.5 million oz of resources in the ground. We have close to 800,000 oz of gold that we’re going to extract from the mine over the next seven years, at a rate of 70,000 oz per year,” Bonillas said at the time.

Now at full capacity, the San Francisco mine is capable of producing as much as 90,000 ounces annually,

There is also ample room for resource expansion, he added, citing an estimated upside of 3Moz gold and 50Moz silver.

Meanwhile, Magna has also been advancing several of its other highly prospective precious metals assets across Mexico.

The next area of exploration focus is Chihuahua, where its newly acquired Margarita silver project is situated. The project is a low-intermediate sulphidation epithermal Ag-Pb-Zn system, which can be traced to many of Mexico’s producing silver mines.

Drilling programs are also planned at the San Judas and Veta Tierra gold projects, and the La Pima silver project.

Sprott-Backed Gold Project

While Mexico and Canada are considered prime gold mining destinations, it is the US that produces the most gold on the continent.

Alaska has long been ranked among the world’s best gold mining jurisdictions and is one of the top producing states. Nearly all of the large and many of the small placer gold mines currently operating in the country are found in Alaska.

One project there that has caught the attention of Sprott Mining portfolio manager Conor O’Brien, business partner and confidente of billionaire resource investor Eric Sprott, is the Golden Summit property held by Freegold Ventures Ltd. (FVL: TSX) (OTCQX: FGOVF). Eric Sprott currently owns about 26% of the company’s outstanding shares.

Golden Summit is a large, bulk-tonnage project located just a 30-minute drive from Fairbanks, Alaska’s second-largest city. The Fairbanks mining district is host to several multi-million-ounce projects.

Golden Summit and other prominent projects in the Fairbanks Mining District. Source: SEC

To date, over 80 gold occurrences have been documented within the project boundaries. Historical records show that 6.75 million ounces of placer gold have been produced from the streams draining the property.

Freegold acquired an interest in the project in mid-1991 and subsequently conducted various exploration programs, including over 53,000m of drilling over an 18-year period.

A comprehensive property compilation in 2010 identified the potential to delineate a resource in what is known as the Dolphin area.

A ground-based geophysical survey was also undertaken during that time, which indicated that the alteration in the Dolphin area is well defined by a low resistivity feature. This resistivity survey, in conjunction with soil geochemistry and re-interpretation of previous drill results, provided guidance for resource definition and expansion.

An extensive drilling campaign was carried out by Freegold during 2011-2013, from which the company was able to delineate and upgrade the mineral resource through successive drilling in and around the Dolphin area.

Based on the most recent resource estimate of 61.46Mt indicated at 0.69 g/t Au (1.36Moz) and 71.5Mt inferred at 0.69 g/t Au (1.58Moz), a Preliminary Economic Assessment (PEA) for the Golden Summit project was subsequently released in 2016.

The study envisions a 24-year mining operation with peak annual gold production of 158,000 oz and average annual gold production of 96,000 oz, producing 2,358,000 oz of doré over the life of mine.

While the bulk of the current resource is hosted by the Dolphin intrusive, its true extent is not yet known.

Drilling in 2017 north of the current resource area demonstrated the potential for expansion of the current oxide resource at Golden Summit, with the majority of holes returning average grades above the internal cut-off (0.3 g/t Au) used in the PEA.

In 2019, following an extensive data review of past drilling and in conjunction with the resource model and block model level plans, Freegold identified what it believed to be the potential for a higher-grade corridor of mineralization extending from the area of the old Cleary Hill mine workings towards Dolphin.

This hypothesis was supported by results of the 2020 drilling program, including a high-grade discovery from the altered sedimentary host rocks that surround the Dolphin intrusive.

Drilling this year continued to confirm Freegold’s revised interpretation of a potential higher-grade corridor extending from the old Cleary Hill mine workings towards the Dolphin intrusive.

Should this high-grade system end up being proven, Sprott Mining’s O’Brien believes Freegold could become a natural acquisition target for Kinross, whose Fort Knox mine is located just 8 km away from Golden Summit.

Sizable Resource in Nevada

Like Alaska, the state of Nevada is another prominent producer of gold in the US. It is home to nearly 30 mines, producing about 5Moz of gold on an annual basis.

About 170 km northeast of Reno, Nevada, Getchell Gold (CSE: GTCH) (OTCQB: GGLDF) is in the midst of a drill campaign at the advanced-stage Fondaway Canyon project, comprising 170 unpatented lode claims in Churchill County.

The property has been the subject of multiple exploration campaigns dating back to the late 1980s and early ‘90s, with nearly 50,000m of drilling completed. It covers 12 known veins, including five mineralized areas — Colorado, Halfmoon, Paperweight, Silica Ridge and Hamburger Hill.

The latest technical report on Fondaway Canyon (2017) provided an estimate of 409,000 oz indicated gold resources grading 6.18 g/t Au and 660,000 oz inferred grading 6.4 g/t Au, for a combined 1.1 million oz.

Up to 80% of these ounces are within Colorado, Paperweight and Halfmoon, with the remainder found in parallel veins or splays off the main veins.

Mineralization is contained in a series of steeply dipping en-echelon quartz-sulfide shears outcropping at surface and extending laterally over 1,200m, with drill-proven depth extensions to greater than 400m.

A detailed analysis of the historical drill data revealed that the mineralized system at Fondaway may be larger than previously thought.

Drilling by Getchell in 2020 identified the presence of a thick zone of gold mineralization, interpreted as a downdip continuation of surface mineralization, and high-grade mineralized structures with notable widths within the mineralized system.

Five of the six holes drilled as part of a 2,000m program intersected significant gold intercepts within the Central Area, which is considered by company management to be the “nexus for the gold-mineralizing system” observed at Fondaway.

Following up on the drilling success, which Getchell says “blew the potential of the project wide open” by producing a revised geological interpretation for Fondaway that extrapolated the continuity of the gold mineralization over extensive distances, the company decided to proceed with a drill program twice the size this year.

The 2021 program is designed to complete sufficient infill drilling to confirm this new geological model, thus elevating the resource estimate from the current 1.1Moz. Getchell will also continue stepping out from known gold intercepts to expand the geological model.

The results so far have been promising, with the latest drill hole returning one of the best cumulative series of gold intercepts in the project’s 45-year history. This was also the seventh consecutive hole to hit substantive mineralization, with more results still to come.

When Getchell first acquired this project, chair and CEO William Wagener said these properties would “dramatically transform and elevate” the company in prominence given that they boast significant gold in the ground and are located in a top gold-mining jurisdiction.

Richard (Rick) Mills
aheadoftheherd.com
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Precious Metals

BMO Reiterates Ratings On Osisko Gold Royalties After Preliminary Results

On January 10th, Osisko Gold Royalties (TSX: OR) reported its preliminary fourth-quarter deliveries and portfolio update. Osisko received 19,830 gold
The…

On January 10th, Osisko Gold Royalties (TSX: OR) reported its preliminary fourth-quarter deliveries and portfolio update. Osisko received 19,830 gold equivalent ounces for a total of 80,000 equivalent ounces in 2021. This is at the higher end of their 78,000 – 82,000 guidance. The company says that preliminary revenue for the fourth quarter is C$50.7 million and cost of sales came in at C$3.7 million.

Osisko Gold currently has 13 analysts covering the stock with an average 12-month price target of C$22.88 or a 51% upside to the current stock price. Out of the 13 analysts, 4 have strong buy ratings, 8 have buy ratings and 1 analyst has a hold rating on the stock. The street high sits at C$27, representing 78% upside, coming from Haywood Securities. While the lowest price target sits at C$19, representing a 26% upside to the current stock price.

In BMO Capital Markets’ note, they reiterate their C$20 12-month price target and market perform rating saying that the preliminary results were consistent with consensus expectations.

On the results, BMO says that all the results came in line with consensus expectations. The consensus estimates were 19,700 equivalent ounces, C$53.3 million in revenue, and C$4.2 million in cost of sales.

BMO says that in the news release, the company outlined a number of expected 2022 catalysts which include further expansion to Mantos Blancos, ‘imminent production’ at Santana, Ermitaño, and advancing Tocantinzinho under new ownership.

BMO says that they have not updated their estimates for the companies outlook and keep their estimates tied to their models of the mine operators under their coverage so there is a potential upside to their price target.

Below you can see BMO’s updated fourth quarter, full year 2021, and 2022 estimates.


Information for this briefing was found via Sedar and Refinitiv. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

The post BMO Reiterates Ratings On Osisko Gold Royalties After Preliminary Results appeared first on the deep dive.


Author: Justin Young

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Precious Metals

Confessions of a Day Trader: Pump up the volume, this one’s in the bank

This week saw the day that APT traded with a 6 in the front. Amazing to think that once they … Read More
The post Confessions of a Day Trader: Pump up…

Each Monday, Stockhead’s resident day trader gives us a peek at the highs and lows of his trading diary and hints at what might be coming this week.

Platform used: Marketech
Round Trip: A round trip is $10 up to $25,000 and then above $25,000, commission is at 0.02% in and at 0.02% out.
Rules of engagement: Never hold any positions overnight (unless forced) and try to avoid any suspensions (if possible). No shorting.
 

Monday January 10

Mmmmm is all I can say about today. Mmmmmm!

Volumes very low. Hard to find anything, though CBA made a classic 11am move and everything else was just bland.

Both APT and FMG allowed me out with just a couple of minutes to go. The results of no profit and $12.00 profit sum up the day.

So, that’s $172 for the day and put in a bit of time and energy to produce that. Mmmmm. Off for a swim and a beer.

Image: Marketech

Recap:
Bought 500 CBA @ 102.66
Bought 600 APT @ 72.27
Sold 500 CBA @ 102.98 ($160.00 profit)
Bought 2,500 FMG @ 20.63
Sold 600 APT @ 72.29 ($12.00 profit)
Sold 2,500 FMG @ 20.63 ($0.00 profit)

Got a text off a mate and this was my reply in blue:

Bitcoin (which I don’t trade but watch) hit $39,500 that night (inflation hedge vs gold, had gold up Bitcoin down) and Friday APT traded down to $69.03.

 

Tuesday January 11

After yesterday’s effort, decide to be a bit more aggressive on size today. CBA broke down below $101.00 a few times today and gave me two opportunities.

Both times left sell limits at $100.98 because if they were going to push back above $101, they would need to take me out first, so for the sake of 2c it is a good strategy to have.

Just put sell limits below key breakout figures as sometimes they can reach that figure and fall back.

Then as I’m laying down with a nice sea breeze blowing through I noticed FMG getting sold down with not long to go. Made a 3c turn on 5000 and could have gone either way, so was a ‘heads or tails’ trade and heads came in!

Up $645 and spent a bit on brokerage but this allowed for smaller turns required to get a profit.

Image: Marketech
Image: Marketech

Recap:
Bought 1,500 CBA @ 100.98
Sold 1,500 CBA @ 101.15 ($255.00 profit)
Bought 1,500 CBA @ 100.82
Sold 1,500 CBA @ 100.98 ($240.00 profit)
Bought 5,000 FMG @ 21.04
Sold 5,000 FMG @ 21.07 ($150.00 profit)
 

Wednesday January 12

Back to finding my ‘zone’ a bit today.

Working out that volumes are not as big as they could be but there’s still some volatility going on.

For example, CBA’s day range was $102.48 to $100.82 and FMG’s was not as dramatic at $21.20 to $20.68, but both have support(ish) levels. CBA $101.00 and FMG $21.00.

Doesn’t really mean anything in the real world but in the stock market world, they get sold down and bought back up.

FMG trade went on longer than I thought and CBA again gave me two opportunities. Go to bed thinking ‘should I up the size even more or will that bring me undone?’

Sipping a nice single malt as I type and contemplate my movements for tomorrow and asking my trading ‘God’ for guidance. Up $775 for the day.

Image: Marketech
Image: Marketech

Recap:
Bought 5,000 FMG @ 20.90
Bought 1,500 CBA @ 101.57
Sold 1,500 CBA @ 101.73 ($240.00 profit)
Bought 1,500 CBA @ 100.99
Sold 1,500 CBA @ 101.18 ($285.00 profit)
Sold 5,000 FMG @ 20.95 ($250.00 profit)
 

Thursday January 13

Pre-market, the news that USA inflation was at a 40-year high got me thinking about gold.

Then out of the blue, CHN opened down and I lined up 4000 to buy and then chickened out and made my order 2000. I thought there maybe something fundamentally wrong as a reason for marking it down.

As it turned out my timing was good but my size was not. Then later on, CBA gave me another opportunity when it fell below $102.00.

Good result for not too much effort today. Plus $585.

Image: Marketech
Image: Marketech

Recap:
Bought 2,000 CHN @ 8.34
Sold 2,000 CHN @ 8.55 ($420.00 profit)
Bought 1,500 CBA @ 101.98
Sold 1,500 CBA @ 102.09 ($165.00 profit)

 

Friday January 14

Well today was the day that APT traded with a 6 in the front. Can you believe it? Amazing to think that once they were par with CBA.

Just shows that a quality dividend payer will always win in the end. Not touching APT now until they become Block on the 20th.

Got a fix on CBA and also MFG. The range on CBA was $102.65 to $100.50. WTF is all I can say and today was all about patience.

Low volume and inflation scares and a Friday and an Australian holiday mode all adding to the volatility.

Up $2635 gross and $2089 net after brokerage (CBA the main culprit). Bring on Monday!

Image: Marketech
Image: Marketech

Recap:
Bought 1,500 CBA @ 100.59
Bought 2,000 MFG @ 19.58
Sold 1,500 CBA @ 100.81 ($330.00 profit)
Sold 2,000 MFG @ 19.65 ($140.00 profit)

The post Confessions of a Day Trader: Pump up the volume, this one’s in the bank appeared first on Stockhead.


Author: Bottom Picker

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Precious Metals

Lundin Gold Sees BMO Reiterate $14 Price Target After Production Beat

On January 10th, Lundin Gold Inc. (TSX: LUG) announced its 2021 full-year production results. The company announced that it produced
The post Lundin Gold…

On January 10th, Lundin Gold Inc. (TSX: LUG) announced its 2021 full-year production results. The company announced that it produced 428,514 ounces of gold, beating their own high range of guidance, which was 420,000 ounces. The breakdown was 289,499 ounces of concentrate and 139,015 ounces of Doré. The company processed 1,415,634 tonnes this year with an average throughput of 4,121 tonnes per day and a recovery rate of 88.6%.

Lundin Gold currently has 9 analysts covering the stock with an average 12-month price target of C$13.69, or a 36% upside to the current stock price. Out of the 9 analysts, 8 have buy ratings and 1 analyst has a hold rating. The street high sits at C$15.50, or a 54% upside from Stifel-GMP. While the lowest 12-month price target is C$11.75.

In BMO Capital Markets’ note, they reiterated their C$14.00 12-month price target and Outperform rating on Lundin Gold, saying that the company had strong fourth-quarter production.

For the fourth quarter Lundin Gold produced 107,900 ounces, beating BMO’s 104,600 ounces, and they note that the companies throughput and recovery rates have been steadily increasing each quarter in 2021.

Though the full year beat was unexpected by many, BMO believes that this was expected due to the strong production at Fruta del Norte with their throughput increasing 4,200 tonnes per day. Additionally, they expect Lundin Gold to come in at their own guidance for all-in sustaining costs.

Lastly, BMO believes that Fruta del Norte has started to accumulate high-grade stockpiles, which has only started in the last quarter or two. They believe that the building “of modest stockpiles as a positive for the mining operation.”

Below you can see BMO’s updated fourth quarter, 2021, and 2022 estimates.


Information for this briefing was found via Sedar and Refinitiv. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

The post Lundin Gold Sees BMO Reiterate $14 Price Target After Production Beat appeared first on the deep dive.



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Author: Justin Young

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