Auteco Minerals Ltd (ASX:AUT, OTC:MNXMF) (ASX:AUT) (OTCMKTS:MNXMF) has secured a Speculative Buy rating and price target of $0.25 from Canaccord Genuity Ltd based on a suite of drill results from its Pickle Crow project in Ontario – which has identified several new high-grade veins in the Shaft 3 area.
Analysts Tim McCormack and Tyson Kestel said that the results point to tangible potential resource growth.
“In our view, the results are extremely positive in that the identification of new veins, coupled with extensions of known areas of mineralisation continue to improve AUT's geological understanding of the asset and point to tangible potential resource growth.
“Importantly, the Shaft 3 drilling program is being completed on a small footprint (~ 1 square kilometre) relative to the landholding (496 square kilometres), which serves as a reminder of the potential upside as the drilling focus steps out from the existing 1 million ounce at 11.3 g/t resource.
“The company has flagged that mineralisation remains open in all directions in all target areas.
“With an exciting pipeline of news flow, we expect to culminate in further resource growth and increased project development merit, we maintain a SPECULATIVE BUY recommendation and A$0.25 price target.”
Resource update due in July 2021
AUT has flagged that its focus will now shift to infill drilling in order to incorporate the newly discovered and extended vein structures into the resource update, scheduled for release in July.
The report stated: “As highlighted in our initiation note, we see potential for AUT to deliver a ~1.4-1.6 million ounce resource by end 2021 (current inferred resource is 1 million ounces at 11.3 g/t).
“The exploration results underscore our positive view on the potential of Pickle Crow as a development proposition, noting that there are now more than 30 individual veins identified, all proximal to existing underground infrastructure.
“While we would be impressed if the mid-year resource update hits our 1.4-1.6 million ounce target, with ~A$30 million cash and +4 rigs on site, we expect AUT to maintain an aggressive drill campaign and be well positioned for a further update late in 2021.”
Regional exploration kicking off
In parallel with the infill drilling, regional exploration is set to begin meaningfully this quarter, with at least one rig testing targets.
The analysts said: “We note that drilling to date has focused exclusively on near mine extensions and the discovery of new structures within the resource area (~5 square kilometres).
“We highlight the numerous regional drill targets yet to be tested and view the ongoing regional exploration as providing significant potential upside given the historical drill results released to date that have never been followed up.
“A ground magnetic survey was also recently completed and identified analogous geophysical signatures to the South West of Vein 5 (Shaft 1 area) and in the Crowshore area to the North East of the Albany shaft.
“These areas, which have not been drilled historically, add to the compelling regional drill-ready targets that have already been delineated through AUT’s comprehensive geological review of the area.”
Director on market purchase
In addition, executive chairman Ray Shorrocks today acquired 275,000 shares in the company at $0.0877 per share via Spring Street holdings.
Spring Street now holds a total of 28,203,571 shares in the company.