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Thursday, November 03, 2016 Derek Macpherson

ALG Continues to Extend Eleonore


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Algold Resources Ltd. (TSXV: ALG) announced the first set of drill results from its Phase II 10,000m program at its Tijirit project in Mauritania. We view these initial results favorably as they appear to have extended Eleonore to 3.4km (was 3.1km) and in our view continues to suggest that meaningful resource growth is likely from this higher grade zone. We expect further results from the ongoing Phase II program to support our view that a larger resource is likely, which may backfill the stock’s current premium valuation and provide investors with some upside potential.


Drilling continues to extend Eleonore. These drill results have extended the Eleonore zone to 3.4km (was 3.1km) and the company believes that the zone remains open along strike. Results were highlighted by 3.86 g/t Au over 4m (T16RC099). In our view, we expect this higher grade zone to be the main driver of resource growth with the pending update. In addition, Algold identified Nour, a 400m long Eleonore-like gold bearing quartz vein system that is located eight km North of the main zone.

Valuation seems to only partially reflect the resource growth potential. Algold currently trades at C$130/oz, a significant premium to its West African peers at C$50/oz, indicating that the market expects the resource to grow by ~2.6x (to ~705k oz). Considering the continued higher-grade results from Eleonore, we believe the market’s expectation is likely conservative, suggesting the pending resource update is probable to provide shareholders some upside. As well, we expect further results from Phase II drilling should support Algold’s valuation and provide continued momentum for the share price.

Company Description: Algold Resources Inc (TSXV:ALG) is an early stage West African gold exploration company that controls meaningful land packages to the North and South of Kinross Gold’s (TSX:K, NYSE:KGC) Tasiast mine in Mauritania. The team includes Benoit La Salle (Chairman) a founder and former CEO of SEMAFO and Francois Auclair (President and CEO), who was the General Manager of Tasiast during its early stages of development.

Derek Macpherson | VP Mining Analysis
Sunneva Bernhardsdottir | Associate, Mining Analysis
Victoria Ellis Hayes | Associate
 
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