Reunion Gold Corporation (TSX-V:RGD, OTCQB:RGDFF) has retained a ‘Buy’ rating and C$0.60 price target from analysts at Stifel GMP after the company announced additional drill results from its Oko West project in Guyana that expanded the high-grade mineralization at depth in Block 4.
Analysts at the US brokerage noted that assay highlights include 5.6 grams per tonne (g/t) gold over 109.7 metres (m), 4.13 g/t over 65.4m, and 5.16 g/t over 18.5m.
“Today's results underscore the prospect for a future underground mine below the broad zones of mineralization coming to surface,” the analysts wrote in a client note on Tuesday.
“Drilling in other blocks along strike continued to show wide zones of mineralization extending from surface but with slightly lower grades.”
Noting that Reunion Gold is targeting a maiden resource estimate for mid-2023, the analysts said they expect the results from Block 4 to provide a significant amount of ounces given the continuity of high-grade intercepts reported and further drill results from other blocks to add incremental ounces to the resource estimate.
“Block 4 had already shown itself to be a 'center of mass' for mineralization and we expect it will drive the economics of a future mining operation,” the analysts added. “These drill results extend this zone at depth as well as provide greater definition ahead of the resource. We believe the highlight intercept will be one of the best grade-thickness gold hits reported this quarter.”
The analysts said their valuation for Reunion Gold is anchored in a DCF (discounted cash flow) model for Kairuni using a 10% discount rate to account for their wide-ranging mineable base and operational assumptions — and assuming the project will advance to production by mid-2026 processing 8,000 tonnes per day to produce 185,000 ounces (oz) per year at a site-level AISC (all-in sustaining costs) of $969/oz on average over the 13-year mine life.
Reunion Gold’s shares were nearly 6% higher at C$0.45 in early Tuesday afternoon trade.
Contact the author at stephen.gunnion@proactiveinvestors.com