BMO: Outperform rating and $0.75 target price for RoxgoldAccording to BMO Capital Markets:
Roxgold
Stock Rating: Outperform(S)
Target Price: $0.75
Bagassi South Beginning to Look Like an Opportunity for Growth
Roxgold announced exploration results from the Bagassi South zone, located 1.8km south of the 55 Zone deposit at its Yaramoko property in Burkina Faso. The results continue to demonstrate continuity of the QV1 target, which remains the focus of regional exploration programs. Notable intercepts include 226.76g/t over 3.1m from hole YRM-14-BG-041; 3.04g/t over 5m from YRM-BG-043; and 2.44g/t over 1.7m from YRM-14KD-BG-023, located 200m west along strike from QV1. The latest phase of exploration includes 12 holes aimed at infilling gaps, as well as defining the extent of the current envelope. Additionally, a scout rig continues testing targets in the immediate area, including to the west of where anomalous mineralization was encountered in hole YRM-14KD-BG-023.
Our View:
- While still early stage, the current program appears to build on previous drill results and may ultimately define a potential satellite deposit in close proximity to the 55 Zone deposit.
- Excluding hole YRM-14-BG-041, BMO Research calculates an average grade of 2.2g/t over true width of 2.0m, from the QV1 intercepts in the latest release.
- All intercepts at QV1 to date have averaged 9.49g/t over 3.8m excluding hole YRM-14-BG-041, or 20.2g/t over 3.8m with the latest high-grade result included. Using the defined boundaries of QV1 mineralization from drilling thus far, a back-of-the-envelope calculation leads BMO Research to estimate potential for the zone to currently host 100,000-150,000oz.
- The QV1 zone remains open at depth and along strike, indicating potential to extend mineralization. BMO Research expects that if a resource approaching 200,000oz can be defined, Bagassi South could be evaluated for potential to supplement 55 Zone ore and add 10,000-20,000ozpa to Yaramoko production. However, this potential is currently excluded from BMO Research forecasts.
- Roxgold is rated Outperform (Speculative). The recently released 55 Zone feasibility study confirmed robust project economics and increased confidence in development plans, while the ongoing regional exploration demonstrates the prospectivity of the district and its potential to host high-grade satellite deposits.