Shanta shares have halved since February and tumbled last month when it said production from New Luika had been put back again to autumn 2012.
The broker says as a result Shanta is being rated more like an exploration company than one soon to enter production.
Westhouse expects Shanta shares will re-rate as it nears - and moves - into production and has kept a strong buy recommendation and 41 pence target price, which was cut from 47 pence on the second delay.
It adds that a drill programme at New Luika showed encouraging high-grade intercepts from extensions to the Bauhinia Creek orebody, the first area which will be mined at the project.
A resource update is expected from the company in April/May on the back of this programme and Westhouse expects that will improve the economics as higher grades will reduce costs.
The group recently raised US$40 million, which should allow Shanta to complete the plant at New Luika while also allowing it to ramp-up production more quickly once operations get underway.
“We would be extremely disappointed if the very conservative mid-Q3 target proves unfeasible,” Westhouse added.
The broker also expects Singida, the company’s other high-grade project, to follow New Luika into production by the end of 2013.
This will give Shanta production level of 130k oz annually by 2014, which it says represents an attractive growth profile to investors though the delays at New Luika may mean investors are more cautious over the timings for Singida.
With an enterprise value/total resource figure of $37/oz, Shanta continues to look undervalued when compared to the average of $43/oz for its London listed non-producing peers, concludes the broker.