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Auteco Minerals Pickle Crow Project in Canada “about to take flight”, according to Canaccord Genuity

Last updated: 18:04 07 Mar 2021 EST, First published: 18:01 07 Mar 2021 EST

AuTECO Minerals Ltd - Auteco Minerals Pickle Crow Project in Canada “about to take flight” according to Canaccord Genuity
The brokers valuation is underpinned by the company’s potential production scenario.

Auteco Minerals Ltd (ASX:AUT) (OTCMKTS:MNXMF) has been rated with a SPECULATIVE BUY recommendation and a price target of A$0.25 by Canaccord Genuity analysts Tim McCormack and Tyson Kestel.

The recommendations are based on the upcoming pipeline of news flow from the company’s Pickle Crow Gold Project in Canada, which the brokers said its “about to take flight”.

Grade and scale

The brokers said: “While a waning gold price has weighed on sector sentiment recently, there are two factors that theoretically should endure any market conditions, grade and scale, and in our view AUT’s Pickle Crow project exhibits both of these attributes.

“In less than 12 months since announcing the deal to acquire 80% of the Pickle Crow project, AUT has defined a 1-million-ounce resource at 11.3 g/t, making it a standout among gold developers globally.

“Compounding our positive view on the company is the project’s favourable mining location/jurisdiction (Ontario), strong operating history (produced 1.5 million ounces at 16.1 g/t) and the exciting potential for further discoveries.

“AUT is currently undertaking a maiden 45,000-metre diamond drill program (four rigs), with a view to growing the existing resource base materially over 2021.”

Quality management team

Canaccord said: “While still flying relatively under the radar, in our view, AUT has done an exceptional job of building and attracting a quality board and management team.”

The board comprises Steve Parsons and the founding directors of Bellevue Gold Ltd (ASX:BGL) which has a recommendation of SPEC BUY and a target price of A$1.30.

The technical team (which is largely ex/current BGL staff) was also recently bolstered with the appointment of Darren Cooke as COO.

Cooke joined AUT from Northern Star Resources Ltd (ASX:NST) which has a BUY rating and a target price of A$15.70, where he was the principal geologist in the business development team.

The brokers said: “We see the current team as having an ideal balance of technical and commercial expertise to not only exploit the potential of the current asset but also remain cognisant of any non-organic opportunities that may be complementary to the portfolio.”

Exploration momentum building

The brokers said: “After an initial infill program to complement the historic drill database, AUT defined a 1-million-ounce resource (September 2020) in an impressive time frame.

“The focus pivoted in the 2H 2020 to target a number of extensional targets to the existing resource, as well as testing new structures for mineralisation.

“Recent results include 5.6 metres at 33 g/t from 20 metres (new structure), 1.6 metres at 17 g/t from 13 metres (new structure), 2 metres at 8 g/t from 396 metres (extensional) and 4 metres at 6 g/t from 420 metres (extensional).

“We think the results bode well for growing the existing resource, which has been flagged to be upgraded in mid-2021.”

Four rigs are now on-site at the project and in parallel to the near-mine program, AUT also plans to test several regional opportunities in 2021 including the Springer Shaft (2 metres at 37 g/t), SW Powderhouse (6 metres at 7 g/t), F Vein (4.6 metres at 9 g/t), Tarp Lake (36 metres at 1.5 g/t), and Metcalf (1.8 metres at 70 g/t and 1.8 metres at 29 g/t).

Potential production scenario

Canaccord said its valuation is underpinned by the company’s potential production scenario.

“We view the potential for AUT delivering an around 1.4-1.6-million-ounce resource during 2021 as high and using this as a basis, assume around 50% of the resource converting into an initial mining inventory.

“As a result, our modelling assumes first gold production in FY24 (capex A$150 million), with the project forecast to produce around 120,000 ounces per annum at an AISC of A$1,010/ounce for six years (around 776,000 ounces recovered.

“While we acknowledge the basis of our modelling is heavily assumed, should AUT hit our resource expectations in 2021, the conversion factors deriving our production profile and input costs remain conservative.”

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on 24/6/22