Reunion Gold Corp. (RGD:TSX.V) caught the interest of Leede Jones Gable that initiated on it with a Top Pick designation and a Buy rating, analyst Ron Stewart reported in a Feb. 22 research note.
"[The company's] Oko West gold project in Guyana has emerged as one of the best new gold discoveries of the 21st century," Stewart wrote. "Our analysis suggests Oko West has the potential to become a Tier One gold mine."
113% potential return
Leede Jones Gable assigned Reunion a CA$0.85 per share target price, which compares to the current price of about CA$0.40 per share, noted Stewart. The difference between these prices implies a 113% potential gain for investors.
The analyst pointed out that Reunion's current valuation is compelling and the stock is trading at a 28% discount to its peers on an enterprise value per ounce basis.
The Ontario, Canada-based gold mining company has 1,229,000 shares outstanding and a market cap of CA$491.6 million (CA$491.6M).
Advancing flagship asset
Stewart presented the key points about Reunion, including a description of each of its three properties.
The company's flagship project is Oko West, near Georgetown, the capital city of Guyana, a mining friendly jurisdiction, the analyst wrote. Encompassing the Kairuni deposit, Oko West has a current total resource of 4,200,000 ounces (4.2 Moz) of gold. Reunion aims to advance Oko West to readiness for a construction decision in late 2025 and produce first gold there in 2027.
According to Leede Jones Gable calculations, Oko West could produce more than 300,000 ounces per annum at an average all-in sustaining cost of less than US$850 per ounce, Stewart wrote. Kairuni's geometry and grade continuity are conducive to open-pit mining.
To date, Reunion has defined Kairuni over 1.5 kilometers (1.5 km) in strike length and up to 1 km in depth. The deposit offers further upside potential given it remains open at depth. Also, minimal exploration has been done in the area of the 3.5 km-long gold-bearing shear zone extension.
Also noteworthy is the metallurgy, Stewart wrote. Gold recoveries at Oko West of 92−95% are expected to be achievable on a commercial scale.
Two more properties
Reunion's other two assets Dorlin and Boulanger, in French Guiana, are on care and maintenance, Stewart relayed.
With Dorlin, Reunion has an earn-in option for a 75% interest in the project. It must deliver a feasibility study on the project within five years of the date the permit was renewed. The application, submitted in 2015, is still pending.
So far, Reunion and other operators drilled 239 holes over 31,200 meters (31,200m) at Dorlin, primarily in the Nivré target.
"Considerable exploration potential remains on the Dorlin project," Stewart wrote. "The Nivré deposit itself is open in all directions and as many as 11 additional geochemical targets remain virtually unexplored."
At Boulanger, Reunion has drilled two prospective areas, Cirque Filon and Saint-Michel. Regarding Cirque Filon, results for 72 holes targeting the Doyle and Capra targets returned an average grade of 3.42 grams per ton (3.42 g/t) gold.
Toward the northern boundary of the property, Reunion, in September 2019, completed an 18-hole, 900m reverse circulation drill program followed by a 7-hole, 1,000m diamond drill program. Results showed 12 significant mineralized intervals averaging 5.7m in length and 1.85 g/t gold in grade.
Significant catalysts nearing
The next possible stock moving event, expect around the end of this month, February, is release of an updated resource estimate for Oko West. It will incorporate results of about 50,000m of infill and expansion drilling done since the June 2023, the date of the previous resource estimate.
"Given the success of the recent drilling, we believe the company could be looking at a total mineral inventory of close to 6 Moz with as much as 60% in the Indicated category," Stewart commented.
On July 8 of this year, about 63 million share purchase warrants will expire, and Leede Jones Gable expects most will be exercised. Were all to be exercised, they would yield an estimated CA$25M, Stewart noted.
Also, Reunion will keep drilling at Oko West both to expand the resource and to explore the rest of the property.
All cashed up
Reunion is well-funded to continue advancing Oko West, Stewart wrote. As of Q3/23, it had $82M of cash and short-term investments as well as $77.2M of working capital.
Leadership with mining savvy
Stewart describes Reunion Gold's team as having tremendous experience, boasting a solid track record and having "chalked up more mineral discoveries in the Guiana Shield of South America than all their competitors combined.
"Together this team is credited with six gold deposits totaling approximately 30 Moz, including Omai (4 Moz), Rosebel (greater than 13 Moz), Montagne d'Or (5 Moz)," he added.
To name a few team members, David Fennell has been Reunion's executive chairman since 2003 but has 35 years in the mining industry. His numerous successes include involvement in the discovery and development of the Omai gold mine in Guyana and the Rosebel mine in Suriname, as Golden Star's CEO.
President and Chief Executive Officer (CEO) Rick Howes is a mining engineer with 40 years of experience behind him. Most recently he was President and CEO of Dundee Precious Metals.
Chief Financial Officer Alain Krushnisky, in his 25 years in the mining sector, spent a decade at Cambior and has held various positions, including vice president and controller.
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