American Bonanza Gold Corp ABGFF

Canaccord Target 48 cents

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Analysis The results from the south end of the adit, samples 1686 to 1696 represent, we understand, the outer limits of the D zone. The key to the results is the material increase in value as the adit enters into the core of the zone from samples 1754 and higher. These results represent the beginning of confirmation of the higher-grade core and the drilling planned should enhance the understanding of the overall size and grade potential of this zone. Previous drilling implies that a plus 1.0 ounce per ton body exists. The D zone is one of several targets within which initial resources have been estimated. In our view, the potential to expand resources is very good, as well as the opportunity to define a high-grade core for early mill feed. Maintain Speculative Buy The current net ounces in situ for this junior totals 1.25 million, which employs a cut grade at Copperstone and the resources for the company’s two Nevada projects. Comparative peers targets are currently in around US$25/ounce. If we employ a US$25/ounce in situ value, plus the additional premium of $4.2 million for exploration upside, as noted in previous comments for this junior, we derive a target price of $0.48/share. A second approach for American Bonanza is derived primarily from the NPV at 10% of the mineable Copperstone resource as outlined in the MRDI study, updated by employing US$350/ounce Au, which generates a valuation of US$26.5 million or C$38 million, which we have rounded to $0.35/share. Given the exploration and development potential at Copperstone, we consider the in situ valuation approach recognizes better this upside and thus we maintain American Bonanza as a SPECULATIVE BUY with a 6 to 12-month target price of $0.48.