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52-week High-Low $0.28-$0.14
Shares outstanding 48.1 million
Market capitalization $7.7 million
Fiscal year end December 31
Source: Bloomberg
Company Description
Acadian Gold Corporation is a Nova Scotia based
gold exploration and development company with
over 20 projects. Its four most advanced projects
hold a total resource in excess of 1.3 million ounces
in the indicated and inferred categories. The
Company is planning to advance these projects
through explorations and economic analysis to
determine if a gold mining operation can be
developed based on a central processing plant fed
by several operating deposits.
ACADIAN GOLD CORPORATION August 18, 2005
TSX Venture: ADA $0.16
Recommendation: SPECULATIVE BUY
12-Month Target: $0.60
Ronald Wortel, MBA, P.Eng.
(416) 644-8121 rwortel@northernsi.com
Update on Activities on Nova Scotia Projects
Event:
Update on exploration and project activities.
Highlights:
• Work programs designed to advance Acadian’s
principal projects are ongoing and initial results
from this work are anticipated early in the third
quarter
• The work programs include: a diamond drilling
program currently underway at Beaver Dam; a
review of resources at Beaver Dam, Forest Hill and
Goldenville: scoping studies and economic modeling
of the Beaver Dam, Forest Hill, Tangier and
Goldenville projects: and environmental permitting
surveys.
• In addition, first phase exploration programs are
ongoing. These programs are designed to identify
drill targets on the Company's extensive claim
holdings peripheral to its four principal projects.
• Work programs for 2005 are budgeted at close to $1
million and are well covered by the Company’s
current cash position.
• We expect the results of these programs to be
positive in the areas of resource expansion, resource
upgrading, and in providing initial economic
analysis of the Company’s mine development plans.
• Acadian Gold continues to trade at a very low
Enterprise Value to gold resources of close to
US$7/oz, well below the peer average of US$22/oz
even with their substantial 1.3 million ounces of gold
resources.
Investment Recommendation
Acadian Gold holds four advanced gold projects in Nova
Scotia with a 1.3 million ounce resource. These projects
are being advanced to the feasibility stage as part of a
many-mine, one-mill processing plant development
plan. The properties still hold the potential for resource
expansion, and there remain other resources in the
camp. We continue to recommend the shares of
Acadian Gold Corporation as a Speculative Buy.
Share Price
Page 2 ACADIAN GOLD CORPORATION August 18, 2005
Discussion
The diamond drilling program currently underway at Beaver Dam is designed to increase the resource density (tonnes
of resources per metre of depth) in the first 50 metres of depth within the boundary of a possible open pit, as well as
test the strike extension of the presently defined gold mineralized zone. The drill holes are located to fill in
information gaps due to incomplete sampling and wide spacing between certain drill holes in the historical drill
programs. Historical drilling at Beaver Dam was focused on defining gold mineralized zones amenable to
underground mining versus Acadian Gold's current strategy of outlining gold resources amenable to open pit mining.
The potential for proving up a potential open-pittable deposit at Beaver Dam is enhanced by the presence of lowgrade
gold values in argillite rocks hosting the gold mineralized quartz veins. The targeted gold mineralized argillite
and quartz veins packages range up to 45.5 metres in estimated true width and average 16.4 metres, within a 64 metre
wide geological zone.
The current potential open pit covers a strike length of 500 metres between section lines 650 E and 1150 E, however,
the gold mineralized zone remains open in both directions. A total of 13 drill holes have been completed to date, of
which 12 are in the 650 E to 1150 E interval and one is on section line 1250 E to test the easterly strike extension of the
gold mineralized zone. An 8,822 tonne bulk sample taken from a small open pit at Beaver Dam in the 1980s by
previous operators, returned a reconciled gold grade of 2.45 g/t. Metallurgical recovery for this test averaged 88.5%
using a gravity and flotation mill.
Should ongoing programs, including the planned feasibility study, prove favourable, then Beaver Dam would be
considered as the most likely location for a processing plant to serve as a central processing facility. Acadian Gold is
pursuing a multiple mine - central processing, managing and servicing strategy. In addition to Beaver Dam, Acadia
Gold Corporation is developing three other advanced projects, Forest Hill, Goldenville and Tangier.
Management is pleased with the overall progress being made on developing its four advanced projects; Beaver Dam,
Forest Hill, Goldenville and Tangier. The principal focus during the remainder of the year will be on Beaver Dam due
to its being the most logical site at this time for a central processing plant, and its high potential for additional wide
zones of low grade mineralization amenable to bulk mining extraction methods.
Analysis
The Company is using its funds to advance its key projects and understand their potential better. This is a good plan as
these four projects hold the resources defined thus far and are the main sources of resources for any future mining
operation. The focus on Beaver Dam and its open pit resource potential is also key in this plan in that the Company
does need one of these projects to provide the major portion of the mine feed and as a development site. Focusing on
an open pit mine to provide this is a natural move in that it could provide the most feed from a lower cost mining
operation, reducing the need for ore from underground operations that would require trucking.
The scoping studies and economic analysis that are currently underway will provide a first look at the viability of this
one-mill and many-mine development program. We are hopeful that this work will show that this option is at least
initially positive with the current strong gold price and the strong fundamentals.
The work is expected to also upgrade and expand the resources on these main projects. This upgrading of resources is
positive in our valuation as it reduces our discount on ounces with the improved confidence. This could then further
lower its Enterprise Value to our adjusted resource base from its current US$7/oz. as more ounces would be included
in this calculation. We believe this low valuation allows Acadian to add to its resource base in an accretive way through
financing exploration or acquisitions in the camp. Any incremental ounces that are added at costs within their current
valuation and below the group average would be seen as positive for the value of the Company. Additional ounces also
add to the size of the resource that needs to bear any future mine development costs. We believe that once this initial
four-property mine plan looks positive that the Company should look aggressively at adding ounces in reasonable
proximity to their current projects.
Page 3 ACADIAN GOLD CORPORATION August 18, 2005
Recommendation
Acadian Gold continues to trade at a very low multiple based on its current substantial resource base and the level of
confidence associated with it. The current work programs and studies should continue to highlight the quality of these
resources. The results of these programs are, according to the Company, expected to come out starting early in Q3
2005 and we expect these to have a positive impact on the value of the shares. We believe there remains upside in this
story with the advancement of its properties and are maintaining our Speculative Buy recommendation and
our $0.60 12-month target.
valent