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Deep-South Resources receives a ‘Buy’ rating and C$2 price target as Red Cloud Securities kicks off coverage

Published: 14:18 25 Mar 2021 EDT

Deep-South Resources Inc -
Deep-South's Haib deposit in Namibia has an estimated Indicated & Inferred resource of 5.3 billion pounds of copper, which the analysts said is likely to grow further

Red Cloud Securities analysts initiated coverage on shares of Deep-South Resources Inc (CVE:DSM) with a ‘Buy’ rating and a target price of C$2 per share, saying “Deep-South provides investors a copper play with great value and substantial upside".

The analysts noted the copper resource developer has a large, sulfide copper porphyry deposit estimated to contain an indicated and Inferred resource of 5.3 billion pounds of copper, which it said is likely to grow further.

“With a strong balance sheet, exceptional economics highlighted by a Preliminary Economic Assessment (PEA) completed on the project and an ongoing definition drilling program that is expected to unlock higher-grades and significantly improve the economics of the project, we look forward to the advancement of the 100%-owned Haib porphyry copper project to the next stage of its development,” the Red Cloud Securities analysts wrote.

READ: Deep South Resources is "scratching the surface" of a massive copper porphyry in Namibia

They added Deep-South’s Haib deposit, located in mining-friendly Namibia, is based on historic data but was thought to be improperly drilled and assayed.

The company is currently conducting the first phase, involving 5,000 metres (m), of a 10,000m definition drill program, targeting higher-grade copper sulfide mineralization along and across structures, which is expected to significantly improve the resource grade.

As well, with its recently-completed C$4.6 million financing the analysts believe the company is well funded to undertake a more aggressive drill program if initial results are above expectations.

Analysts at Red Cloud also pointed to the recent shift in the supply and demand fundamentals of the copper market, which has resulted in a strengthening of copper prices, with some predicting the price to remain above the $4.00 per pound level in 2021, as the green economy focus should also provide upward momentum for the base metal going forward.

"With a strong and experienced leadership team at its helm, we believe the current management group is in a good position to take advantage of the improved long-term copper outlook and advance the Haib project to the next stage of its development, including the delivery of a robust feasibility study to its shareholders,” they added.

Deep-South Resources also has substantial ownership from insiders as well as Teck Resources Ltd (TSE:TECK.B).

Contact Sean at sean@proactiveinvestors.com

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