HighGold Mining Inc (TSX-V:HIGH, OTCQX:HGGOF) stock is set for a re-rate according to broker Stifel GMP as the miner continues to conduct exploration on its flagship Johnson Tract (JT) property located near Anchorage in Alaska.
In a note, Stifel analysts reiterated their ‘Buy’ rating for the stock with a target price of C$2.75 per share. Shares of HighGold are currently trading at C$0.68 per share.
The analysts wrote that the high-grade bulk tonnage at the JT main deposit was ideally suited for low-cost underground extraction and remained open for significant expansion beyond the current resource in several directions.
READ: HighGold reports high-grade indicated gold equivalent of over 1 million ounces at Johnson Tract
On July 12, HighGold released an updated resource for the JT Main deposit exceeding 1 million ounces of gold equivalent, in line with analyst expectations, but with a grade of 8.22 grams per tonne of gold equivalent, which was 21% higher than the analysts’ model – representing a 37% increase from the April 2020 resource.
“We also expect the advancement of additional targets and discoveries on the historically under-explored JT property to create excitement in the market, including the faulted off, high-grade Offset portion of JT Main, the VMS-style NEO target, the Difficult Creek area and Kona prospect,” analysts wrote.
“We think the company will present an attractive takeout target for a major producer with an ideal combination of deposit scale and regional exploration runway.”
Analysts also noted that the company’s extensive Timmins properties also offered free optionality with no value for them currently reflected in the stock price.
“HIGH currently trades at a very attractive valuation on an (enterprise value per ounce) basis of just $13 per ounce - an undeserved discount to the North American explorer peer average of $31 per ounce,” analysts wrote. “Given the high grade and bulk tonnage nature of the [JT Main] deposit, favourable permitting environment and prospectivity of the broader property we think it should trade at a notable premium to peers.”
HighGold Mining is a mineral exploration company focused on high-grade gold projects located in North America.
Contact the author Emily Jarvie at emily.jarvie@proactiveinvestors.com
Follow her on Twitter @emilyjjarvie