Outcrop Silver & Gold Corp. (OCG:TSX.V; OCGSF:OTCQX; MRG1:DB) released a maiden resource estimate for its flagship Santa Ana silver-gold project in Colombia, which "stacks up well against similar projects" in terms of grade and "highlights project upside," reported Research Capital Corp. analyst Stuart McDougall in an April 27 research note.
Possible 173% Return From Here
Currently, this Canadian resource explorer offers investors a significant potential return.
The difference between Outcrop's share price today, CA$0.28, and Research Capital's target price on the company, CA$0.75 per share, reflects a possible gain of 173%. Outcrop is rated Speculative Buy.
Resource at a Glance
Santa Ana has a total resource of 27,000,000 ounces of silver (27 Moz Ag) and 140,000 ounces gold (Au), or about 37 Moz silver equivalent (Ag eq) at 530 grams per ton (530 g/t), according to the estimate prepared by AMC Consultants, noted McDougall. The resource includes seven veins.
Indicated resources amount to 1,230,000 tons (1.23 Mt) of 446 g/t Ag and 2.25 g/t Au. Inferred resources stand at 1 Mt at 312 g/t Ag and 1.64 g/t Au. Both resource categories add up to 2.2 Mt.
All figures assume long-term metals prices of US$25.50 per ounce for silver and US$1,850 per ounce for gold. Also figured into the resource are a 158 g/t Ag eq cutoff grade, a 1-meter minimum vein width, a US$114 per ton mining cost, and 93% Ag and 96% Au recoveries.
McDougall pointed out that the estimate for the core vein area at Santa Ana is below prior guidance.
However, he wrote, "We see strong potential for growth and are keeping our valuation goalpost at 50 Moz Ag, valued at US$3 per ounce, adjusted for options, warrants and assumed future equity," McDougall wrote.
The analyst highlighted two key points about the maiden resource estimate.
Outcrop is Undervalued
The first takeaway is that the 530 g/t high grade of Santa Ana's resource compares well to that of similar silver projects, such as those belonging to Silvercrest, Dolly Varden Silver, and Guanajuato Silver, among others, wrote McDougall. Comps average 329 g/t Ag eq for nonproducing projects and 438 g/t Ag eq when three producing projects are included.
Yet despite Santa Ana's equivalent grade, Outcrop is trading at a 40% discount to a select group of peers.
"We would expect that gap to narrow as the potential for expansion is demonstrated in [Santa Ana's] core area and beyond," McDougall added.
Potential To Grow Resource Exists
The second major point about the Santa Ana resource estimate is that it highlights significant potential for expansion, McDougall wrote. Specifically, each of the seven veins included in the estimate remains open at depth and along strike. Also, there are "dozens more veins" at the project, which have been identified but are untested and bear similar geological characteristics to the veins included in the estimate.
Outcrop plans to drill test some of these new targets this year, including Frias, Alaska, Espiritu Santo, Aguilar, Jimenez, and El Guadual.
Therefore, noted McDougall, throughout 2023, investors can expect Outcrop news and possible stock catalysts in the form of exploration updates.
| Want to be the first to know about interesting Gold and Silver investment ideas? Sign up to receive the FREE Streetwise Reports' newsletter. | Subscribe |
Important Disclosures:
1) Doresa Banning wrote 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: Outcrop Silver & Gold Corp. Click here for important disclosures about sponsor fees. As of the date of this article, an affiliate of Streetwise Reports has a consulting relationship with: None. Please click here for more information.
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 decision to publish an article until three business days after the publication of the article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Outcrop Silver & Gold Corp., a company mentioned in this article.
Disclosures for Research Capital Corp., Outcrop Silver & Gold Corp., April 27, 2023
Analyst Certification: I, Stuart McDougall, certify the views expressed in this report were formed by my review of relevant company data and industry investigation, and accurately reflect my opinion about the investment merits of the securities mentioned in the report. I also certify that my compensation is not related to specific recommendations or views expressed in this report. Research Capital Corporation publishes research and investment recommendations for the use of its clients. Information regarding our categories of recommendations, quarterly summaries of the percentage of our recommendations which fall into each category and our policies regarding the release of our research reports is available at www.researchcapital.com or may be requested by contacting the analyst. Each analyst of Research Capital Corporation whose name appears in this report hereby certifies that (i) the recommendations and opinions expressed in this research report accurately reflect the analyst’s personal views and (ii) no part of the research analyst’s compensation was or will be directly or indirectly related to the specific conclusions or recommendations expressed in this research report.
Relevant Disclosures Applicable to Companies Under Coverage: Relevant disclosures required under IIROC Rule 3400 applicable to companies under coverage discussed in this research report are available on our website at www.researchcapital.ca.
General Disclosures: The opinions, estimates and projections contained in all Research Reports published by Research Capital Corporation ("RCC") are those of RCC as of the date of publication and are subject to change without notice. RCC makes every effort to ensure that the contents have been compiled or derived from sources believed to be reliable and that contain information and opinions that are accurate and complete; RCC makes no representation or warranty, express or implied, in respect thereof, takes no responsibility for any errors and omissions which may be contained therein and accepts no liability whatsoever for any loss arising from any use of or reliance on its Research Reports or its contents. Information may be available to RCC that is not contained therein. Research Reports disseminated by RCC are not a solicitation to buy or sell. All securities not available in all jurisdictions.
Company Specific Disclosures: Within the past 12 months, Research Capital has provided investment banking services to the issuer
