Co.'s Resource Estimate is Way Too Low, Experts Say

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New Found Gold Corp.'s (NFG:TSX.V; NFGC:NYSE.American) recently announced 2,000,000 ounce (2 Moz) gold resource at its Queensway project in Canada's Newfoundland and Labrador provinces is "absurdly conservative," said 321Gold Founder Bob Moriarty in a recent interview.

"It's an extraordinary project. It's not a flawed project," Moriarty told Richard Mills of Ahead of the Herd.

Specifically, the maiden Queensway resource, for which a technical report was filed in April, is 1.39 Moz of 2.4 grams per ton gold (2.4 g/t Au), Indicated, and 0.61 Moz of 1.77 g/t Au, Inferred, a news release noted.

Queensway boasts a deposit like Fosterville in Australia, Moriarty explained. Fosterville is one of the world's highest-grade, most profitable gold mines, mining consulting firm AMC Consultants noted in a project history.

What is more, Moriarty pointed out, while Fosterville is deep, Queensway is shallow so should contain even more, significantly more, gold.  

Economic Geologist Dr. Quinton Hennigh expressed a view similar to Moriarty's, when Jay Taylor of Hotline and Gold, Energy & Tech Stocks interviewed him recently.

"The resource that was published, in my view, did not honor the geology of this type of system," Hennigh said. "My hunch is they are grossly understating the likely gold."

This underestimation, Hennigh purported, is due to New Found Gold block modeling the mineralization as if it were a big disseminated system, resulting in dilution of the high grades. With block modeling, a deposit is divided into a grid of blocks, and the grade and tonnage of each block are estimated. For instance, one might use 5x5x5 meter blocks to model veins that are, say, about 1 or 2m wide and wider in some places.

"I would love to see a three-dimensional model that includes the drill data and the wireframing that was done," Hennigh said. With wireframing, boundaries of ore bodies are delineated.

Hennigh told Taylor he still believes Queensway could be "several Fostervilles."

In its most recent news, New Found Gold, headquartered in British Columbia, announced positive results of drilling outside of the existing resource area at Queensway, reported BMO Capital Markets Analyst Andrew Mikitchook in an April 30 research report. These results showed the potential to expand the resource and confirmed the gold system's depth potential.

"We view the 2 Moz resource (in all categories) as only the starting point for advancing the project," Mikitchook wrote.

Highlight intercepts among the newly announced data included:

• 6.55m of 38.7 g/t, including 2m of 99 g/t, in the Dome zone
• 8.2m of 10.3 g/t, including 2m of 38 g/t, in the Keats South Deep zone
• 3.1m of 6.16 g/t, including 0.5m of 18.4 g/t, in the Keats-AFZ Deep area

Since 2020, New Found Gold has drilled more than 600,000m at its 175,600-hectare project, and in doing so, outlined multiple near-surface, high-grade gold discoveries over a 22-kilometer strike length, according to the company's corporate presentation.

Gold Equities Now Attractive

Gold's recent historic surge is "unlocking value" in gold mining stocks, and accordingly, they are "drawing renewed attention for their potential to amplify returns," noted an April 30 article on Benzinga.

According to Jay Taylor of Hotline, "There has never been a more bullish time than now for gold mining stocks."

Brien Lundin of Gold Newsletter pointed out on recently that mining equities are outperforming, meaning that increasingly Western investors increasingly are putting money into these still undervalued companies. The trend began with the major producers and in recent weeks has extended to the junior companies, or explorers, like New Found Gold.

"Now that the money is flowing, results are also starting to flow in," Lundin wrote on April 24. "That's why I think this may be the best opportunity we've seen in the history of gold as an investible asset. The hard part, getting the gold price up, has already been done for us. Now all we have to do is make sure we're positioned in the best leveraged juniors."

According to Technical Analyst AG Thorson, gold is deeply overbought. After a year-long upleg, the metal's price has started moving into a warranted consolidation period.

"We now expect a sharp, multi-month decline of at least 20%, a move that could be swift and jarring," Thorson wrote in an April 25 FXEmpire article. "Our work supports a multi-month decline back to the US$2,800 per ounce (US$2,800/oz) region."

Participants in the latest of Reuters' quarterly poll forecast an average annual gold price above US$3,000/oz for the first time, the news service wrote in an April 30 article. Specifically, the 29 analysts and traders who responded collectively forecasted an average gold price for 2025 of US$3,065/oz and for 2026, US$3,000/oz. These are increases from the last poll's results, showing US$2,756/oz and US$2,700/oz, respectively.

In the longer term, certain factors support gold price stability, wrote John Zadeh in an April 28 DiscoveryAlert article. Despite renewable energy and tech sectors using 12% of global gold supply, production remains stuck at 3,500 tons per year.

"Bernstein & Co. projects a 7% annualized return through 2030, citing dedollarization trends and climate-driven industrial demand," Zadeh added.

For the global gold market, growth is forecasted through at least 2030, at a 5.1% compound annual growth rate, according to Research and Markets. By then, the market's size is projected to reach 6,300 tons (6.3 Kt), up from 4.7 Kt in 2024.

The Catalysts: PEA and Drill Program

Major near-term events for New Found Gold, as noted in its corporate presentation, include the start of a 2025 drill program at Queensway, for which plans are now being finalized, and the company is well-funded. The campaign will include resource conversion drilling, infill drilling in the mineral resource area, and exploration drilling targeting recent high-priority discoveries, such as Dropkick, Dome and Golden Dome, noted Mikitchook.

Also on the horizon, due out later this quarter, is completion of the preliminary economic assessment (PEA) of Queensway. Results of phase three metallurgical testing, now in progress, to support the PEA, are to be released soon, too.

Analysts Bullish on Stock

Don MacLean, Paradigm Capital senior analyst, believes the Queensway PEA "will be a pleasant surprise," he wrote in an April 30 research report. Further, he expects it will outline a high-quality, mid-sized project producing 168,000 ounces per annum during the first five years at an all-in sustaining cost in the lowest quartile, less than US$1,000/oz. MacLean forecasts a project internal rate of return, using US$3,000/oz gold, of 38%.

About the company, the analyst wrote, "Within the recent share price range of CA$1.50–$1.75, we believe New Found Gold offers investors a high-quality, mid-sized project within a mining-friendly environment with outstanding logistics, a project that is likely to be fast-tracked with support from the Newfoundland government."

Mike Niehuser, managing director and senior research analyst at ROTH Capital Partners, believes the PEA will show investors that Queensway, with existing data, could support a high-grade, low-cost, economic gold mine that could produce cash flow and mitigate shareholder dilution, he wrote in a March 31 research report. The report should pinpoint areas with the greatest potential for increasing grade, scale and credibility, he added, thereby "resulting in further optimization and providing confidence to investors."

Completion of the PEA, Niehuser wrote, is "essential to provide directions to re-establish investor confidence and to focus on mine development."

This analyst has a Buy rating on New Found Gold and a target price suggesting a 376% uplift from the current share price.

BMO's Mikitchook rates the gold explorer Outperform. His target price implies a 161% return.

Ownership and Share Structure

According to Refinitiv, strategic entities own 43% of New Found Gold. These include Palisades Goldcorp Ltd. (PALI:TSX.V; PLGDF:OTCMKTS) with 22%, Eric Sprott with 17% and New Found Gold management with 4%.

Institutional ownership amounts to 5%. The rest is in retail.

The company has 200.71 million (200.71M) basic shares outstanding and 114M free float traded shares. Its market cap is CA$222.06 million. Its 52-week range is CA$1.34–5.35 per share.