Lumina Gold Corp (TSX-V:LUM, OTCQX:LMGDF) has been rated 'Outperform' by broker Raymond James (NYSE:RJF) due to the attractive characteristics of its flagship Cangrejos project in Ecuador and the quality of its management.
The gold explorer recently closed a financing, raising gross proceeds of around C$24 million to advance the asset through drilling ahead of a pre-feasibility study (PFS).
The financing included the conversion of around C$5.2 million from its credit facility with renowned resource investor Ross Beaty into shares, meaning the latter's stake in the company increased to 19.98% from 19.79% previously, noted the broker's analysts.
"Drilling is expected to begin in Nov-2021 with a planned 9-month, 30,000m program. A PFS will provide further rigor on project economics and allow for LUM to begin construction permitting and negotiate an Investment Protection Agreement which would further de-risk the project," they added.
READ: Lumina Gold closes C$19M financing for Cangrejos project development, Ross Beaty increases position
Wholly-owned Cangrejos already hosts a total resource of more than 17 million ounces of gold and more than 2 billion pounds of copper, which supports a long mine life with significant annual gold and copper production at low operating costs, said the analysts.
The deposits are also near-surface and close to infrastructure and a deepwater port, and both the Cangrejos and Gran Bestia deposits are open in multiple directions providing the potential to expand the resource.
"With the current administration’s recent Mining Action Plan (Aug-21), we believe the political risk picture for mining in Ecuador has improved," said the Raymond James (NYSE:RJF) analysts.
"We believe the Plan’s objective to enhance mining development and investment through increased security for concession holders, elimination of illegal mining, plans to re-open the Cadastre and adoption of international conventions should continue to attract foreign investment into the Ecuadorian mining sector," they added.
Accounting for a recent financing, the analysts said their price target for Lumina Gold had moved to C$1.75 a share, from C$2 previously.
Contact the author at giles@proactiveinevstors.com