Red Cloud Securities Inc is initiating coverage on project generator Fidelity Minerals Corp (CVE:FMN) with a Speculative Buy rating, citing the attractiveness of the company’s model to major mining companies.
Fidelity’s four main assets are in Peru. The firm is currently focused on its two most advanced assets: the Greater Las Huaquillas and Las Brujas exploration projects.
READ: Fidelity Minerals names new chairman and CEO in bid to unlock the value in its portfolio
"With a stable of high-quality projects to advance and in-house expertise in Peru, we believe Fidelity has strategically positioned itself to benefit from a growing appetite for new, prospective projects in the North Andean Copper Belt,” Red Cloud analyst Taylor Combaluzier wrote in a March 9 note.
The analyst cited the favourable risk profile of the project generator model, Fidelity’s four high-quality projects and a growing regional interest in Peru as reasons to watch the stock.
“Exploration success at one of Fidelity’s portfolio projects could attract a buyer and drive its share price higher,” Combaluzier wrote. “Given the potential for a significant discovery that could attract interest from potential buyers, the current share price offers a compelling entry point for investors.”
DEEP DIVE: Fidelity Minerals, a Peru-focused project generator with the right plan, at the right place and time
At an enterprise value of $6 million versus peers at $26 million, the analyst said Fidelity Minerals could re-rate between five and ten times on “the first hint” of a new deposit.
“Given the early-stage projects, we do not currently provide a target price for the Buy (Speculative) rated stock,” Combaluzier noted.
Shares of Fidelity were trading at nearly C$0.14 on Monday morning in Toronto.
Contact Angela at angela@proactiveinvestors.com
Follow her on Twitter @AHarmantas