Daniel Stewart & Co believes Ascot Mining (PLUS:ASMP, GXG:ASMP) is massively undervalued by the market and offers investors “superlative relative value” to a peer group of Central American gold exploration companies.
In a note on the Costa Rica focused group, analysta pointed to the already operating Chassoul gold mine in the country, where Ascot is ramping up production.
Ascot started mining on the Cajeta Vein in the third quarter of 2011. Following refurbishment and re-commissioning of a gold processing plant, first gold was declared in August 2011.
This is where the analyst believes Ascot has a considerable advantage over the peer companies. Ascot has both a developed gold mine and an operating gold plant generating cashflow from gold production, which is currently ramping up from 300 ounces to 500 ounces per month.
Mine development on both the Amarila and Nergra veins is at an advanced stage, and the mine has an estimated 15 year life.
According to DS, the recent weakness in the gold price has led to a de-rating of gold producers with the effect of revaluing gold explorers, however, this has led to Ascot being seriously undervalued.
Based on his life-of-mine gold production forecast for Chassoul of 116,025 ounces, Ascot sits with an enterprise value per resource ounce of US$0.02 per ounce.
According to his analysis, this is an extremely low metric relative to Batero Gold Corp’s (CVE:BAT) figure of US$0.31 per ounce and Seafield Resources’ (CVE:SFF) value of US$0.20 per ounce of resource.
“We do not believe that the market has recognised the value within Ascot Mining’s producing gold mine at Chassoul. We maintain our ‘buy’ recommendation and 21 pence target price,” said Daniel Stewart.
Ascot Mining was last trading at 6.5 pence, giving it a market capitalisation of £4.8 million.