Algold Resources Ltd. (TSXV: ALG) announced additional drill results as part of its Phase II 10,000m program at its Tijirit project in Mauritania.
These results are primarily from the North, Central and South areas of the higher grade Eleonore zone and indicate that those areas remain open in
all directions. Like the initial results we discussed in a previous post,
we view today’s results favorably as they appear to continue to suggest that the project has the potential for significant resource growth. We expect
further drill results from the Phase II program to support our view that a larger resource is probable, which is likely to backfill the current premium
valuation and provide investors with some upside potential.
High grades continue to be intersected at Eleonore. Today’s results returned a weighted average grade of 3.51 g/t Au over 3.5m and were
highlighted by 15.85 g/t Au over 2m (T16RC136) and 4.07 g/t Au over 4m (T16RC104). Although the widths are relatively narrow, these results returned
much higher grades than the current Tijirit resource grade of 1.71 g/t Au (all categories). In our opinion, the results support our view that the higher-grade
Eleonore zone is likely to be the main driver of resource growth with the next update.
Valuation seems to only partially reflect Tijirit’s resource growth potential. Algold currently trades at C$93/oz, a significant premium
to its West African peers at C$35/oz, indicating that the market expects the resource to grow by ~2.7x (to ~719k oz). Considering the steady-stream
of higher-grade results from Eleonore, we believe the market’s expectation may be conservative, suggesting that the pending resource update may provide
additional upside for shareholders. We expect that ongoing results from the Phase II program should support Algold’s current valuation. Algold also
announced that since the end of Q2 2016, it has raised C$1.68 million (net) through the exercise of options and warrants. This, together with the funds
raised in Q3 2016 by way of private placement (C$3.71 million net of issuance fees) should provide the company with sufficient funds to complete the
Phase II program.
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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