In an Aug. 1 research note, analyst George Topping reported that iA Securities raised its target price on Wesdome Gold Mines Ltd. (WDO:TSX) to CA$7.50 per share from CA$7 because definition drilling in the Kiena project's Deep A zone "continues to yield excellent results." The current share price is around CA$7.08.
At the same time, however, iA Securities downgraded the gold company to Buy from Strong Buy "due to recent rapid share price appreciation," wrote Topping.
The analyst reviewed the recently released drill results from Wesdome's currently closed mine and mill project in Val d'Or, Quebec. Generally, Topping concluded, Kiena drilling continues to return highly economic widths and grades and remains open." With its Eagle mine covering exploration costs, the gold company "is advancing Kiena to one of the cheapest, quickest restarts available in the industry."
Topping added that iA Securities expects exploration to result in an estimated 1 million ounces of 8.5 g/t gold before Wesdome restarts Kiena, and that resource could support annual production of about 100,000 ounces, expanding to 170,000 ounces per year as exploration efforts progress.
As for the new results specifically, drilling in the Deep A zone, for one, showed continuation of mineralization for 700 meters (700m) along plunge.
Two, drilling in the zone returned high grades. Hole 6456, for example, returned "an impressive" 28 grams per ton (28 g/t) gold cut over 14m true width, Topping highlighted. Further, the average grade of the Deep A Zone intersections was 20 g/t cut over 4.3m true width.
These grades, 28 and 20 g/t, are 82% higher than the 11 g/t grade of the current Deep A zone resource. However, while the cited intercepts boast better grades, their widths are thinner than those in the zone overall, of 5–6m.
Three, drilling demonstrated that in the up-plunge extension of the A zone, what previously was interpreted to be a schist splitting into two zones now is thought to be a fold into the VC zone, Topping noted. This might be disappointing news to some, he wrote, "but in reality, it's probably better to have the gold concentrated in one mineralized zone." In the VC zone, hole 6523 hit 30 g/t over a 4.3m true width.
Topping indicated that the Canadian explorer and developer intends to release an updated resource estimate for the project this year and a preliminary economic assessment in early 2020. Of the roughly 50,000m planned for drilling in 2019, the company has completed about 30,000m.
Five rigs continue to drill on the property, one at 670m, the other four targeting infill and plunge extension at the 1,050m exploration ramp.
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Disclosures from iA Securities, Wesdome Gold Mines Ltd., Research Update, August 1, 2019
Conflicts of Interest: The research analyst and or associates who prepared this report are compensated based upon (among other factors) the overall profitability of iA Securities, which may include the profitability of investment banking and related services. In the normal course of its business, iA Securities may provide financial advisory services for the issuers mentioned in this report. iA Securities may buy from or sell to customers the securities of issuers mentioned in this report on a principal basis.
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Company Related Disclosures:
Wesdome Gold Mines Ltd.: The analyst has visited the issuer's operations. No payment or reimbursement was received from the issuer for the associated travel costs.
