Calling its “high-profile” Queensway discovery in Newfoundland “one of the higher profile successes globally for its combination of high grade and thickness,” BMO Nesbitt Burns analyst Andrew Mikitchook initiated coverage of New Found Gold Corp. (
) with an “outperform” rating.
“The project, and particularly the Keats zone, has produced extremely strong drill intercepts, with Keats providing multiple triple-digit gold assays across widths exceeding 10 metres,” he said. “The grade and apparent scalability of mineralization defined thus far at the project sets it apart from most other recent gold discoveries.”
“The project is at an early stage, with no resource and the Keats zone only discovered in 2019. New Found Gold is in the midst of a 400,000-metre drill campaign to expand and define mineralization at the project, and in our view, the company has strong potential to add additional zones and expand what has already been defined.”
Mr. Mikitchook sees New Found “well-funded” with “strong” shareholder backing, including a 31-per-cent stake owned by Eric Sprott.
He now sees the main risk being high market expectations, “given the strong expectation for expansion of mineralization at the project implied by the company’s $1.2-billion market capitalization.”
“However, with 38 per cent of the 400,000m drill program complete, in our view the results so far have reinforced the Queensway property as a world-class discovery,” the analyst said. “Due to the early stage of the project, we assign a Speculative qualifier to our rating.”
“As an exploration company, drill results will continue to be the main driver of NFG shares, in our view. NFG aims to extend existing zones, including Keats, while testing the Appleton fault and other targets on the large Queensway property.”
Mr. Mikitchook set a $10 target for New Found shares. The average is $11.15.
“We see strong potential for the substantial 2022 exploration program to continue to build value for shareholders,” he concluded.