Mining Explorer With Massive Gold Resource Sees Shares Rise

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After announcing a "transformational" resource focused on heap leachable gold at its Richmond Hill project in South Dakota's historic Homestake District last week, Dakota Gold Corp. (DC:NYSE American) has seen its stock reach a new 52-week high.

It climbed as high as US$3.35 on Tuesday after dipping as low as US$2.08 in December, a nearly 61% increase. It was the highest Dakota's stock has been since it hit US$3.35 in June 2023, when it released positive drilling results, also from Richmond Hill.

On Monday, BMO Capital Markets Analyst Alexander Mikitchook raised the firm's price target for the stock from US$6 to US$7.50, according to an Investing.com story published Tuesday on MSN.

The resource "will be the platform with on which Dakota Gold will revitalize the Homestake District," Co-Chair, President, and Chief Executive Officer Robert Quartermain said during a web call with investors and analysts discussing the new resource. "With over 48,000 acres of mineral tenures, we're the leading district exploration company. The mineral resource we identified at Richmond Hill, when in production, will fund its further development and expansion as well as the exploration and development of our Maitland gold project and many other mineral opportunities we have now identified in the over 60-million-ounce Homestake District gold camp."

The resource released last week focused on heap leachable gold at Richmond Hill totaling 3.65 million ounces (Moz) of Measured and Indicated mineral resources that the company said will "provide a pathway to near-term production" and will inform an Initial Assessment with Cash Flow (IACF) for the project planned for release mid-2025. The company said work on the IACF has already begun. The S-K 1300 Initial Assessment mineral resource estimate also identified a heap leachable Inferred resource of 2.61 Moz.

In its release announcing the resource, Dakota said Richmond Hill is expected to have "economics similar to the adjacent Wharf Mine of Coeur Mining, which is expected to generate over US$100 million in free cash flow in 2024 from approximately 90,000 ounces of gold." The Wharf Mine is located just 5 kilometers south of Richmond Hill.

Resource Now 'Directly Comparable' to Wharf Mine

BMO's Mikitchook also noted the deposit puts the deposit in a notable position in the United States and on a global scale, the Investing.com report said.

BMO Capital Markets Analyst Alexander Mikitchook raised the firm's price target for the stock from US$6 to US$7.50.

"The size of the Richmond Hill oxides is now directly comparable to the Wharf mine, which has yielded over 4 million ounces (Moz) of gold and currently holds reserves of 0.76 Moz of gold," Investing.com wrote of Mikitchook's comments. "The revised resource estimate has led BMO Capital to envision a potential expansion of Dakota Gold's development plan. The analyst anticipates the company could more than double its projected production from approximately 85,000 ounces of gold per year to nearly 200,000 ounces annually."

In an updated research note on February 7, Agentis Capital's Michael Gray wrote that the update exceeded the firm's expectations and "is too big to ignore." Agentis said it planned to switch its coverage of the company from being a "Gray's Prospect" to full coverage in the first half of 2025.

"We have benchmarked Richmond Hill vs the USA oxide gold developer peers on heap-leachable resources and potential production profiles," Gray wrote. "We believe Richmond Hill is a solid development asset complemented by Maitland as a torquey high-grade, Homestake-style discovery."

Building on a Golden History

The historic Homestake Mine produced 41 Moz gold and 9 Moz silver over 126 years. The company has 48,000 acres of holdings surrounding the original mine, which was first discovered in 1876 and consolidated by George Hearst.

In a July article, John Newell of John Newell & Associates wrote, "The area surrounding super giant deposits like Homestake is believed to contain significant additional gold resources, making it prime real estate for exploration."

"The Dakota Gold project is located near the Homestake Mine, which historically produced more than 40 Moz of gold," he wrote. This proximity suggests a high potential for similar deposits. Being in the shadow of many old mines increases the probability of finding significant mineral resources."

The Catalyst: Golden Bull Running Strong

Safe haven desirability continues to fuel demand for gold as it has hit multiple new records including conquering the US$2,900 threshold, according to Valeria Bednarik writing for FX Street.

The focus remains on the US. Federal Reserve Chairman Jerome Powell's testimony before Congress, "with market players looking for fresh clues on the future of monetary policy," she reported.

Gold has been in an uptrend for 16 months, having rallied by 63% since October 2023, according to a Reuters report by Clyde Russell. It has accelerated since Trump was re-elected, with an increase of 16% since mid-November.

"Investors are turning to gold as a safe haven amid rising uncertainty as Trump unleashes a variety of trade tariffs and threatens more to come," Russell wrote.

Ownership and Share Structure

About 25% of the company's shares are with management and insiders, including Co-chairman, Director, President and Chief Executive Officer Robert Quartermain, who holds the most shares at 8%, while COO Jerry Aberle holds 4.6%, the company said.

About 26% of its shares are with institutional investors. Top institutional holders include Fourth Sail Capital with 3.9%, Van Eck Associates with 3.7%, Blackrock Institutional Trust Co. with 3.9%, The Vanguard Group Inc. with about 3.6%, Fidelity Management and Research Co. LLC with 2.8%, and CI Global Asset Management with 2.4%.

About 16.5% is with strategic investors, including Orion Mine Finance, which owns about 9.6%, and Barrick Gold Corp., which owns about 2.3%. The rest is retail.

Dakota Gold has a market cap of US$315.4 million, with 94.43 million shares outstanding. It trades in a 52-week range of US$3.35 and US$1.84.