Several compelling factors make this Nevada precious metals explorer an investment worth considering, noted a Fundamental Research report.
Western Exploration Inc. (WEX:TSX.V;WEXPF:OTC) caught the attention of Fundamental Research, which just initiated analyst coverage on it with a Buy rating, reported head of research Siddharth Rajeev in a Jan. 26 research note.
"We believe the company's primary strengths are its high-grade Doby George project with near-term production potential, a strong management and board and Agnico Eagle's backing," Rajeev wrote.
The Reno, Nevada-based precious metals explorer has a share price of CA$1.95, yet Fundamental gives it a fair value of CA$3.48 per share.
Whereas Western Exploration is trading "in line with the comparables average," Rajeev wrote, it "should trade at a premium considering its high-grade resources and near-term production potential."
Rajeev discussed the factors that make Western Exploration a compelling investment.
Doby George is one of three high-grade, Carlin-type deposits at the explorer's Aura gold-silver project in Nevada, "one of the most attractive mining jurisdictions in the world," the analyst wrote.
Doby George has a near-surface, high-grade oxide gold resource amenable to heap-leach processing. Management is planning a 3,000-meter (3,000m) resource expansion/stepout drill program there in H2/23, along with metallurgical studies, in preparation for a prefeasibility study next year."We believe there is potential for resource expansion as the deposits remain open along strike and at depth," Rajeev commented.
"We believe this deposit can be advanced to production quickly, at a low initial capex (less than US$50 million [US$50M])," wrote Rajeev. "Based on its existing resource, we believe the project has the potential to operate for nine years (40,000-50,000 ounces per year) at a relatively low opex (US$800 per ounce)."
In addition to Doby George, Aura hosts Gravel Creek, with an underground sulfide gold resource, and previously mined Wood Gulch, both about 8 kilometers from Doby George. Geological models of both show prospective mineralization over a total area more than three times the size of the current resource envelope.
As such, Western Exploration plans for Gravel Creek 5,000-10,000m of infill drilling and metallurgical studies.
"We believe there is potential for resource expansion as the deposits remain open along strike and at depth," Rajeev commented.
Accordingly, investors can expect sets of drill results this year that could boost the company's stock price.
Western Exploration boasts a management team and board comprised of professionals with "extensive experience in resource exploration and capital markets," Rajeev wrote.
Chief Executive Officer Darcy Marud, for instance, previously was an executive in exploration and development at Yamana Gold and Meridian Gold, noted Rajeev. Collectively, the management team has been involved in gold discoveries amounting to 12,000,000 ounces.
Agnico Eagle owns 17% of the Canadian exploration company, Rajeev pointed out. Backing by this major gold producer is a highlight of the Western Exploration story.
Also, members of Western Exploration's board of directors and management own 3% of the shares.
As for finances, Rajeev relayed that Western Exploration ended Q3/22 with US$1M in working capital and subsequently raised US$1.14M in equity financing. According to management, another equity financing, for an estimated US$5-$10M, is likely this year.
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