Analysts at Couloir Capital have initiated coverage on Kootenay Silver Inc. (TSX-V:KTN) with a positive outlook on the Mexico-focused silver miner for the next 12 months on their thesis that significant further upside remains to Kootenay's already sizeable resources.
The analysts noted that Kootenay’s main focus is the Columba project where the company has planned a three-phase drill program totalling 50,000 metres and expects to publish a maiden resource after the first two phases of drilling.
They added that on three other projects - La Cigarra, Promontorio & La Negra - the company has highlighted the potential for significant resource increases on the back of further drilling and the incorporation of previously drilled meters into existing resource estimates.
The four projects boast a combined resource of 136 million ounces of silver equivalent in the measured and indicated category and 35 million ounces of silver equivalent in the inferred category, the analysts highlighted.
“KTN already boasts a substantial combined silver resource across projects, with further increases to those resources being likely in the future,” the analysts wrote in a note to clients.
Specifically, the analysts believe there is ample upside from untested areas at Kootenay’s La Cigarra and Columba projects.
“Additionally, just under 90,000 metres of drill core have yet to be included in resource studies which should in part result in a resource expansion or at least add ounces to higher confidence categories,” they wrote.
“Furthermore, KTN appears undervalued relative to [silver] peers [operating in Mexico] based on a comparison of the ratio of enterprise value to silver ounces contained in the published resource estimate,” the analysts wrote.
They awarded the stock a price target of C$0.215, representing a projected upside of 287% to its current share price of C$0.075.
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