Atrium Research analysts Ben Pirie and Nicholas Cortellucci, in a research report published on September 11, 2024, initiated coverage on Allegiant Gold Ltd. (AUAU:TSX.V; AUXXF:OTCQX) with a Buy rating and a target price of CA$0.50 following the company's announcement of a 5,000 meter drill program at its Eastside District.
Allegiant Gold is a precious metals exploration company based in Tonopah, Nevada, focusing on its flagship Eastside District project, which hosts an inferred resource of 1.4 million ounces gold (Moz Au) at 0.54 grams per tonne (g/t) and 8.7Moz silver (Ag) at 4.4 g/t.
The analysts noted, "AUAU has commenced a 5,000m drill program at Eastside, part of which will focus on resource expansion and the rest on exploration targets."
Pirie and Cortellucci highlighted Allegiant's farm-out strategy, stating, "Utilizing its project farm-out strategy, the company has brought in ~CA$7.5M over the last five years, limiting dilution to shareholders and supporting its clean capital structure which has no warrants."
The analysts emphasized the company's potential, noting, "The Eastside District shows strong potential of growing to a multi-million-ounce deposit and ultimately becoming an attractive takeout target for the several major miners in the region."
Allegiant Gold's strategic focus includes expanding its resource base at Eastside while leveraging its farm-out strategy to generate non-dilutive capital for exploration. The company's management team, including CEO Peter Gianulis, collectively owns 14% of shares, with Kinross Gold holding a 10% stake.
Atrium Research's valuation methodology for Allegiant Gold is based on an EV/oz approach. "We value AUAU using an EV/oz methodology, assuming US$25/oz on its 1.4Moz resource. This still comes at a discount to the group average as we lean on the side of conservatism," the analysts explained.
With a Buy rating and a target price of CA$0.50, representing a potential return of 186% from the price at the time of the report, Atrium Research sees significant upside potential for Allegiant Gold.
Pirie and Cortellucci concluded, "Allegiant Gold's extensive portfolio, exceptional management, and successful farm-out strategy present a compelling investment opportunity poised for significant growth while maintaining shareholder value."
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Disclosures for Atrium Research, Allegiant Gold Ltd., September 11, 2024
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