In a Nov. 15 research note, Tyron Breytenbach, an analyst with Cormark Securities Inc., reported that GFG Resources Inc. (GFG:TSX.V; GFGSF:OTCQB) has identified, via drilling, new areas of mineralization at its Rattlesnake Hills project.
GFG expanded the North Stock target "by 100 meters (100m) to the west, drilling 0.95 grams per ton gold over 22.9m outside of the previous mineralization footprint," indicated Breytenbach.
Drilling of the Middle Ground target, the brownfields area between North Stock and Antelope Basin, "continues to return economic mineralization," he added. By connecting those two targets, if possible, GFG could extend the overall mineralized strike length to 1.1 kilometers.
As for the overall size of the resource at Rattlesnake Hills, Cormark estimated it to be an open-pittable 2 million ounces based on results from the 80,000m of historical drilling and from this year's 43-hole, 15,000m drill program.
As for near-term upcoming catalysts, GFG will announce the remaining outstanding drill results. "We expect a steady flow of news into the final months of 2017," Breytenbach wrote. Subsequently, the mining firm is expected to release a maiden resource estimate for Rattlesnake Hills in H1/18, "which will set a baseline valuation for this early-stage but prospective explorer," added the analyst.
Because "valuations across the sector are down," Breytenbach explained, Cormark lowered its enterprise value per ounce estimate on Rattlesnake Hills to $35/ounce from $40/ounce and, consequently, its target price on GFG to CA$1.70/share from CA$2.10/share.
GFG Resources' shares are currently trading at around $0.50. Cormark has a Buy recommendation on the corporation.
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1) Doresa Banning compiled this article for Streetwise Reports LLC and provides services to Streetwise reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.
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Disclosure from Cormark Securities, GFG Resources Inc., Morning Meeting Notes, Nov. 15, 2017
We, Tyron Breytenbach and Alex Hunchak, hereby certify that the views expressed in this research report accurately reflect our personal views about the subject company(ies) and its (their) securities. We also certify that we have not been, and will not be receiving direct or indirect compensation in exchange for expressing the specific recommendation(s) in this report.
The firm does not receive compensation for any non-securities or non–investment banking related services. Neither the analyst nor the associate or any member of his/her household, serve as an officer, director or advisory board member.
Cormark disclosures related to GFG Resources as of 12/6/2017 are available here.