Stifel GMP has repeated a 'Buy' on HighGold (TSX-V:HIGH, OTCQX:HGGOF) Mining Inc after the company reported more encouraging drill results from its Munro-Croesus project in Timmins, Ontario, which potentially extended the historic high-grade Croesus vein.
The drilling hit the equivalent of the historic high-grade Croesus Vein in one hole, which generated 13.40 grams per ton (g/t) gold over 0.5 metres (m) from 31m depth, within a broader interval of 4.80m from 28.7m depth grading 3.60 g/t of the yellow metal.
That hole was sunk 100m to the northeast of the former Croesus mine underground workings.
READ: HighGold Mining hails encouraging new drill results from Munro-Croesus project, which extend historic Croesus vein
Analysts at the broker said they were "encouraged" by the results, which priced the company's geologic model and "ability to successfully target high grade zones".
"We see excellent potential for HighGold (TSX-V:HIGH, OTCQX:HGGOF) to continue to find high grade near the Munro-Croesus mine (which produced at 95 g/t near the turn of the century) and at the #2 and #4 Veins on the property. The 8,000m follow-up winter drill program is still underway and expected to run until mid-April," they said .
HighGold (TSX-V:HIGH, OTCQX:HGGOF)'s Munro-Croesus project lies in the heart of the Abitibi greenstone belt and covers 51 square kilometres (sq km) of highly prospective geology situated between the Black Fox Mine Complex operated by McEwen Mining Inc (NYSE:MUX) and the Fenn-Gib gold deposit being developed by Mayfair Gold Corp. The former Croesus Gold mine is renowned for having produced some of the highest-grade gold mined in Ontario.
Stifel analysts pointed out that they do not think the market is currently ascribing any value to the Timmins properties in the company's share price.
"The stock currently trades at a spot P/NAV of just 0.18x vs the peer average of 0.34x, and well below its 1-year historical average spot P/NAV of 0.27x," they said.
"While our valuation for the company is anchored in a DCF for JT Main in Alaska we conservatively include $15m for the exploration value of the company’s extensive Timmins land package. We maintain our Buy rating and target share price of C$3," they added.
HighGold shares in Toronto stand at C$1.05 each.
Contact the writer at giles@proactiveinvestors.com