Algold Resources Ltd (TSXV:ALG) released additional results from its ongoing surface sampling program at its Tijirit property in Mauritania. The results
were positive but not game changing. However, the results are a teaser to the pending drill results that we expect to build on the recently released
resource. While the stock has underperformed (down 13%) since the maiden resource, we expect the trend to be reversed when drill results are released.
Ongoing surface work expands Eleonore, pending drill results key. Of note, the Eleonore zone target has now been extended to 3.1km
along strike. Recent surface work was highlighted by a rock chip sample grading 70.8 g/t Au along with other good results. In our view, the market
is likely waiting for drill results from the ongoing program, to re-evaluate the potential of Tijirit.
Despite the pullback since the maiden resource, valuation only reflects modest exploration success. Since releasing the maiden resource
for Tijirit last week, the stock has declined 13%, while peers have generally been up. Algold still trades at a premium to peers, C$66/oz versus
other West African peers at C$21/oz. This essentially implies the market is expecting the resource to grow by ~3.1 times from the recent update
(to ~850k ounces), which appears conservative considering the exploration potential of the Tijirit property and the Eleonore target. We expect
that as Algold demonstrates the potential of Tijirit with the drill bit; its shares are likely to reflect a larger potential resource.
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
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