Research ReportOn May 26, 2011, Seafield announced an updated NI 43-101 compliant resource estimate for its advanced exploration stage Miraflores project in the Quinchia district, Colombia. The company announced a total gold resource of 1,582,105 ounces, which includes a Measured and Indicated resource of 1,227,593 ounces of gold grading 0.9 g/t (grams per ton) gold at a cut off grade of 0.3 g/t Au and an Inferred resource of 354,512 ounces of gold grading 0.9 g/t gold at a cut off grade of 0.3 g/t Au.
v? Updated resource validates potential: The newly announced NI 43-101
compliant resource of 1.58 million oz more than doubles the existing resource
of 0.78 million oz at the Miraflores target and clearly validates our previous
assessment of the company’s potential. More importantly, the revised
estimate includes significant resource in the Measured and Indicated
categories, albeit at a lower cut-off at 0.3 gpt than the previous cut-off at 0.5
gpt for the inferred resource.
v? Strong potential for a multi-million ounce deposit: Seafield owns a large
land package in the Quinchia district in Colombia totalling 6,757 hectares. It
has several targets to drill, which could result in a large gold resource deposit
in the range of 3 to 5 million oz at different targets on its property. Most targets
are still undiscovered and untested. Apart from the Miraflores target, the
company is currently drilling at the Dos Quebradas and the newly discovered
Santa Sofia targets and continues to look for new targets to drill.
v? New management & financing at a premium: The company recently
announced significant changes to the management and the board of directors.
Mr. Cesar Lopez joined the company as the new CEO and is joined by Dr.
Tom Henricksen as the Vice President, exploration. Concurrent to these
changes, the company just concluded a financing of $3 million at a premium
to the market price. We believe these changes will help the company to focus
on advancing its highly prospective exploration projects and in properly
positioning the company to the relevant investors’ audiences.
v? Undervalued compared with peers: We continue to believe that Seafield
remains considerably undervalued compared to its peers, especially to its
immediate neighbour, Batero Gold Corp. (TSXV: BAT), which has a market
value of $ 138 million. With the newly announced resource estimate,
Seafield’s market value at $43 million represents a significant discount to its
asset value and its future potential. We believe that this valuation gap will
eventually close as Seafield continues to advance its various projects.
The current Ubika Model Price of $1.16, on adjusted shares basis, represents a 307%
increase from the previous close. We maintain our Undervalued Rating on Seafield