A couple of analysts looked at the drilling results from European Goldfields (LON:EGU) and Ariana Resources’ (LON:AAU) joint venture in north eastern Turkey.
This morning the partners said that the latest exploration results provided confidence in the mineral potential of the Artvin area.
Work to date has focused on three targets: the Salinbas gold zone and the Ardala porphyry within the Ariana JV and the Derinkoy gold target in the Aldridge Minerals JV.
Drilling intercepts from Salinbas included 21.5 metres grading 6.63 grammes per tonne (g/t) gold and 42.7 metres grading 2.78 g/t gold.
Evolution Securities analyst Louise Collinge said that the exploration results are certainly very encouraging and worthy of additional follow up work.
Similarly, Collins Stewart analyst John Mcgloin singled out the Salinbas results as being particularly interesting.
“The results are very encouraging, however are still relatively early stage,” Mcgloin said.
“We note that the high grade intercepts have been primarily at surface, whilst grades and thicknesses at depths below 50 metres appear to be significantly lower at this stage,
“More drilling is needed to gain confidence in the potential viability of the resource.
Mcgloin also examined this morning’s updates from Cluff Gold (LON:CLF, TSX:CFG) and Minera IRL (LON:MIRL, TSX:IRL, BVL:MIRL)).
Cluff reported that ongoing drilling at Kalsaka has intercepted significant sulphide mineralisation, and it announced plans for a new large-scale drilling campaign that will start early in the New Year.
“Results from recent drilling at the company’s Kalsaka mine in Burkina Faso have highlighted the potential to expand resources of oxide material and to potentially define a sulphide resource,” Mcgloin said.
He adds: “New management is obviously having a positive effect, and we believe that the announcement should be seen as positive.”
Meanwhile Minera IRL upgraded the Ollachea gold resource, with a massive 80 percent of the resource being converted into the indicated category.
This is the second piece of good news in as many days from the Ollachea project in Peru.
Yesterday the company told investors that it has found potentially economic gold mineralisation at the recently discovered Ollachea’s Concurayoc zone.
“Drilling has extended the definition of mineralisation further to the east of the Minapampa zone where the bulk of previous resources had been defined,” Mcgloin said.
“Mineralisation remains open along strike in both directions and with yesterdays drill results from the nearby
Concurayoc target, the company believes there is potential to define over 2 million ounces in the area,
“We expect to see the shares stronger today and retain our buy rating and target price of 110p.”
In a broader piece of research finnCap initiated its coverage of Minera IRL.
According to finnCap Minera IRL has few equals as a small cap gold producer.
The broker report noted that Minera’s Corihuarmi gold mine in Peru paid off its capital expenditure (capex) in just seven months, while the US$35 million raised during the month fully funds the company to “deliver shareholder growth in the next three years”.
FinnCap said that Minera made a well timed acquisition when it bought AIM-listed Hidefield Gold for £7 million a year ago as it has already unlocked twice the price that was paid for it.
All prospective exploration ground within the Deseado Massif has now been staked and the Goldcorp (NYSE:GG, TSX:G)acquisition of Andean Resources is seen as evidence that large gold mining companies are taking more than a passing interest in the region, finnCap stated.
Minera IRL is currently trading on a 0.7x multiple of finnCap’s risk-adjusted valuation of 117 pence per share, which is based on a flat gold price of US$1,300/oz and includes the Escondido exploration project in Patagonia, valued at 16 pence per share.
The current share price of 86.5 pence gives Minera a 35% upside to the broker’s valuation.
An analysis into Minera’s cash flows showed should the gold price rise above US$1,300/oz, the free cash flow from the Corihuarmi mine, combined with proceeds from the November fundraise, provides the company’s operations with sufficient cash to last until this time next year.
Spot gold prices currently stand at over US$1,380/oz.
“In the meantime, we see significant potential for adding value to the shares through an aggressive exploration programme, particularly at Escondido, in addition to further technical risk reduction of the Don Nicolas and Ollachea development projects,” said finnCap.
Canaccord Genuity is initiating coverage of miner Noventa (LON:NVTA) with a ‘buy’ rating and a 12-month target price of 20p, a near 100 percent upside to the current level of 11 pence.
Since June 2009, the new management team, led by Eric Kohn, has achieved outstanding results in turning Noventa back into a tantalum producer, the broker said.
Operations recommenced at the flagship Marropino mine in Mozambique in April 2010 to reprocess tailings and the operation has consistently achieved a recovery rate of 51 percent versus an average 30-35 percent achieved by the previous management.
Tantalum is crucial to the operation and development of most modern day electronics.
Canaccord said the economics of the Noventa operation look very compelling. The current spot price for tantalum concentrate is more than US$90 per pound.
The broker estimates that Noventa can achieve an economic break-even price for its tantalum concentrate of US$40/lb, including cash costs, a 15 percent return per annum and recover its invested capital over 10 years.
Noventa’s deposits in Mozambique have some of the lowest production and capex costs globally.
Canaccord expects operations to increase dramatically over the next nine months as Noventa moves from processing tailings to mining rock from the Marropino pit. “Based on current reserves and resources, we estimate an average annual production of 633,000 lbs of tantalum concentrate over a 14-year mine life.”
Its discounted cashflow-driven net asset value at a 12 percent discount rate provides a value of US$143 million or 20p/share fully diluted after accounting for an estimated US$10 million equity raise to help fund the new plant.
The broker concluded: “We have not included any value beyond the current reserves and resources, or the impact of mining Mutala at an early stage or the possibility of significantly increased recoveries. Each of these should provide material catalysts over the coming year.”