Broker Stifel GMP has repeated a 'Hold' rating on Pure Gold Mining Inc after the Red-Lake-focused miner reported high-grade drill results from its flagship mine in Ontario.
The surface and underground drilling was completed in the fourth quarter of 2021 and confirmed the tenor and continuity of mineralization at near-term production stopes, while also showed potential for incremental resource growth.
Highlight drill results included an intercept of 4 metres (m) at 21.1 grams per ton (g/t) gold in one hole starting at just 5m depth.
"The aggressive definition drilling, something that we understand was lacking in the past, has enabled Pure Gold to optimize final stope design, enhance high grade scheduling flexibility, ultimately leading to a much-needed operational improvement that should drive the future production growth while optimizing costs," Stifel analysts said.
READ: Pure Gold Mining says high-grade drill results bode well for upcoming production
"While proof of execution is needed to strengthen our confidence in the mine's future, today's news reaffirms that the orebody's grade potential has yet to be unlocked, and the new management team is taking the right steps to increase throughput and grade, lower costs and ultimately drive profitability," they added.
The broker also noted that it expected "further, steady" improvements over coming quarters, leading to an unlocking of the "full potential of the Pure Gold mine".
"We note, however, that our estimates continue to assume an additional C$14M financing in the next few months to carry the mine through the ramp-up phase," said analysts.
The broker targets C$1.30 for Pure Gold Mining shares, which are currently changing hands for C$0.73 each.
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