Lundin Gold Inc. (LUG:TSX) will use the monies from a recent financing to begin exploring its 64,400-hectare gold property in Ecuador, according to a Haywood March 4 research note. "Commencement of exploration activities on the company's highly prospective land package should bear results, and we look forward to the first meaningful exploration budget for quite some time," analyst Kerry Smith reported.
Lundin Gold's bought-deal equity financing grossed CA$46.6 million from 8.625 million shares being issued at CA$5.40 per share, Smith indicated. These funds will be used "to fund exploration activities as well as general corporate purposes." No substantial exploration efforts have occurred on the property since the Fruita del Norte gold deposit was discovered.
Smith described that over the next two years, Lundin Gold will strategically and systematically explore the basin for systems geologically similar to Fruita del Norte. It will drill high-priority targets pinpointed along the Suarez pull-apart basin and conduct mapping and sampling to determine additional prospective targets.
The budget for exploration in 2019 is roughly US$4–6 million and for 2020, US$10–12 million, "but the programs will be results driven," Smith clarified.
As for the Fruita del Norte project, it remains on track for first production by year-end 2019. Engineering work is 85% done, earthworks is 75% complete and power line construction is 27% finished. Process plant construction continues to progress. "Gold prices are moving higher, and timing is looking good for this new producer to start production later this year," noted Smith.
The Fruta del Norte project "ranks as one of the largest and highest-grade undeveloped gold projects in the world," Smith wrote.
Smith highlighted that Lundin Gold's financial picture, cash balance plus debt, is sufficient to finish construction and take the Fruita del Norte mine through commissioning. Of the US$692 million capex budget for the project, US$372 million are unused. At year-end 2018, the company had US$168 million in cash.
Haywood has a Buy rating on Lundin Gold, and a CA$7.50 per share target price, recently lowered from CA$7.75. The company "will be a new producer with 290,000 ounces expected in 2020," Smith wrote. Lundin Gold's stock is currently trading at around CA$5.28 per share, a good point for accumulating shares, the analyst added.
Disclosure:
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.
2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: None. Click here for important disclosures about sponsor fees.
3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article until three business days after the publication of the interview or article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases.
Disclosures from Haywood Securities, Lundin Gold Inc., March 4, 2019
Analyst Certification: I, Kerry Smith, hereby certify that the views expressed in this report (which includes the rating assigned to the issuer’s shares as well as the analytical substance and tone of the report) accurately reflect my/our personal views about the subject securities and the issuer. No part of my/our compensation was, is, or will be directly or indirectly related to the specific recommendations.
Important Disclosures
The following Important Disclosures apply for Juggernaut Exploration:
▪The Analyst(s) preparing this report (or a member of the Analysts' households) have a financial interest in Roxgold Inc.
▪ Haywood Securities, Inc. has reviewed lead projects of Asanko Gold Inc., Lundin Gold Inc. and Roxgold Inc. and a portion of the expenses for this travel have been reimbursed by the issuer.
▪ Haywood Securities, Inc. or one of its subsidiaries has managed or co-managed or participated as selling group in a public offering of securities for Lundin Gold Inc. in the last 12 months.
Other material conflict of interest of the research analyst of which the research analyst or Haywood Securities Inc. knows or has reason to know at the time of publication or at the time of public appearance: n/a.
Research policy is available here.
