Couloir Capital Ltd has initiated coverage on Vancouver, British Columbia-based exploration company MAS Gold Corp with a 'Buy' rating and fair value estimate of $0.22 per share.
The research firm's analysts noted that MAS Gold is looking to leverage exploration work to further develop its captive ounces to a million ounces of gold in short term at its two flagship properties - Preview North and Greywacke.
The company is currently undergoing drilling at its Preview North Project, with metallurgical work being conducted at its Greywacke Project. The Couloir analysts expect this to feed into the development of a currently in-the-works preliminary PEA, which management has forecasted could be complete within 2022.
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“With the near-term goal of building its captive resource to over one million ounces of gold, MAS has established a large-scale gold portfolio spanning 34,306 hectares, which includes an existing resource base and will soon include a past-producing gold deposit,” the Couloir analysts wrote in their initiation report.
“As MAS amasses scale and ounces in the ground, management’s long-term strategy is to develop the La Ronge Properties into a hub-and-spoke mining network built around its North Lake Project, which MAS will look to build into a central hub fed by satellite deposits,” they added.
The analysts continued that despite its forward-looking development strategy and the merits of its existing portfolio, MAS has thus far "seemingly flown under the radar, with low valuation metrics relative to its peer group. We believe this could offer investors an under-discovered opportunity, with valuation leverage potentially offering upside on MAS’ upcoming development plans, which include a PEA that has been underway since May 2021.”
MAS Gold's primary exploration focus has been on the Greywacke and Preview North Properties, upon which the company is basing its ongoing PEA work. The MAS portfolio of properties does not form a contiguous tenement profile despite the relative proximity to each other, and Preview North sits in the middle, neighboured to the north by Greywacke and to the west by Elizabeth Lake.
"We see the active exploration in fairly close proximity to MAS’ holdings as a positive indicator, though significant intercepts and the discovery of mineral resources at Seabee may not provide inferrable insights on the potential of MAS’ own La Ronge gold Properties,” the Couloir analysts said. “More promising is that SSRM’s reserve expansion activities point to a major local miner looking to expand, which could potentially drive future interest in MAS’ own holdings as the company continues along its development cycle.”
Based on exploration work done in 2019, MAS achieved a maiden resource for North Lake in 2020, which established the inferred resource at 417,000 ounces of gold at 0.92 grams per ton. Following the results from preliminary metallurgical testing of the material from North Lake and Point, MAS commenced drilling at Preview North again in March 2021.
The Couloir analysts noted: “The 2021 drilling campaign was an important program due to the extension of the mineralized horizon at North Lake as a result of the drilling. MAS defined an extension of the mineralization to the tune of 130 meters down dip and 25 meters southwest, and to an increased depth of 180 meters below surface.”
The Greywacke Property is the other major project MAS is focusing on to deliver on its objective of a million-ounce near-term resource. Moreover, the executive chairman of MAS is credited with bringing three major deposits to production, as well as closing successfully M&A transactions.
“We believe that this translates to a competitive advantage in building MAS’ La Ronge Properties into a local mining hub over the longer-term or leading the company to an exit transaction,” the Couloir analysts concluded.
Contact Ritika at ritika@proactiveinvestors.com