Kaminak and Roxgold: Raymond James' New Gold Stock Picks

At first glance, Kaminak Gold (TSXV:KAM) and Roxgold (TSXV:ROG) don’t appear to have much in common. After all, while they’re both junior gold exploration and development companies, the former’s flagship project is in the White Gold District in Canada’s Yukon Territory, while the latter’s key asset is located in Burkina Faso, West Africa. 

However, yesterday the companies both received the good news that analysts at Raymond James believe they have strong potential. Here’s a look at what those analysts said about Kaminak and Roxgold, as well as what prompted them to speak positively about the two companies.

Kaminak updates mineral resource estimate

As those following Kaminak likely already know, last week, after being silent since the beginning of December, the company put out an updated NI 43-101 mineral resource estimate for its Coffee gold project, located in the Yukon.

The highlight, according to the company’s press release, is a 73-percent increase in oxide gold ounces. Specifically, at a base case cut off of 0.5 grams per tonne (g/t) gold for oxide and transitional material and a 1 g/t gold cut off for sulfide material, the indicated resource comes in at 14 million tonnes grading 1.56 g/t gold for 719,000 ounces, including 480,000 ounces classified as oxide; the inferred resource sits at 79 million tonnes grading 1.36 g/t gold for 3,434,000 ounces of gold, including 2,078,000 ounces classified as oxide.

Based on the update, a Raymond James report written by David Sadowski recommends investors “bolster positions in Kaminak.” That’s because “[w]hile grades have dipped slightly, total contained metal has grown considerably — particularly within the shallow and fast-leaching oxide facies — and some material is now in the indicated category, providing better confidence.” The upshot is that the new numbers underline “Coffee’s potential to host a low cost, heap leach gold mine.”

Raymond James is maintaining its “outperform” rating for Kaminak, but has raised its price target to $1.50, up from $1.20. Shares of Kaminak are currently selling for $0.80 each, up 1.27 percent.

Positive site visit for Roxgold

While the release of an updated resource estimate prompted Raymond James to look more favorably on Kaminak, for Roxgold it was a visit to the company’s Burkina Faso-based Yaramoko project that did the trick.

Yesterday’s comment on Roxgold, written by Sadowski and Milton-Andrews Bernal, states that “[a]fter a detailed tour of the site, drill core, and personnel, we have greater confidence in the consistency, competency and growth potential of the 55 Zone and its ability to host a highly-financeable, low cost, longhole stoping operation.”

The firm has upgraded Roxgold to “strong buy” and is encouraging investors to increase their positions in the company before it releases a feasibility study for Yaramoko; that is expected to happen midway through the second quarter of this year, following the company’s submission of an environmental and social impact assessment (ESIA). In their view, the feasibility study will likely “show an improvement over the outstanding economics” of the October 2013 preliminary economic assessment for the project.

Looking further into the future, Sadowski and Bernal presented the following timeline for Yaramoko:

  • exploitation permit application following ESIA approval
  • formation of an operating-level company at the same time
  • permission to mine by Q3 2014  
  • debt and equity to fund mine development in late 2014

If all goes smoothly, they expect Roxgold to produce first gold at Yaramoko in the first half of 2016.

Shares of Roxgold are currently selling for $0.63 each, up 5 percent.

 

Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article. 

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