Michael Curran, an analyst with Beacon Securities Ltd., provided the investment thesis for this recent spinout company.
An April 10 research note indicated that Beacon Securities Ltd. initiated coverage on Allegiant Gold Ltd. (V:AUAU; AUXXF) with a Speculative Buy rating and a CA$0.90 per share price target. The stock is currently trading at around CA$0.45 per share. "We consider Allegiant shares to be an attractive investment for exploration success, with a quality exploration team (with extensive experience and gold discoveries) working in a low political risk jurisdiction," wrote analyst Michael Curran.
Allegiant is a gold explorer with a Nevada focus but also assets in Utah, New Mexico and Arizona. It was spun out from Columbus Gold Corp. (TO:CGT; OTC:CGTFF) on Jan. 18, 2018. "Several of these properties have above average potential for new gold deposit discoveries," Curran highlighted. "This U.S. portfolio. . . .can now get the attention it deserves."
To Allegiant's advantage, several of its projects are drill ready. Two rigs are currently drilling at Eastside, "with the goals of both increasing gold resources and reducing the strip ratio in the proposed open pit," Curran reported. "As an initial target, we believe the current 0.65 million ounce resource at Eastside can grow to 1.5 million ounces." Another benefit is the Eastside project is in Nevada, "one of the best jurisdictions globally for mining investment," noted Curran. In addition to Eastside, Allegiant plans to drill at some of its other properties during the next 12 months.
Curran purported the potential for rerating of Allegiant's stock, now listed on the TSX Venture Exchange, exists in the short term once the company finishes initial drilling at Eastside. Further upside, in terms of another rerating or heightened market interest, could likely come from the several other portfolio assets, which "have potential for new deposit discovery."
As far as the team to get the exploration done, the company has a "solid leader" in CEO Andy Wallace," Curran said. "He and his Cordex team have been credited with nine gold discoveries over the years in Nevada, the majority of which became gold mines (Marigold, Stonehouse/Lone Tree, Daisy, Sterling, Dee)." Russell Ball and Norm Pitcher, new members of the board, bring "extensive experience in all aspects of project development (exploration, feasibility and operations), having worked with producers such as Newmont, Goldcorp and Eldorado Gold."
About Allegiant's 2018 exploration program, Curran concluded that it "can deliver new discovery and/or expansions of existing resources. Longer term, we see potential to achieve even higher gold resources and achieve future mine development."
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