Western Exploration Inc.'s (WEX:TSX.V;WEXPF:OTC) newly released 2023 stepout drill data from its Aura gold-silver project in Nevada boasted bonanza grades, reported Fundamental Research Corp. analyst Sid Rajeev in a January 10 note.
"We believe initial results indicate potential for resource expansion," Rajeev wrote.
Stock Undervalued, Offers 152% Gain
Fundamental Research maintained its Buy rating on the Reno, Nevada-based mining company but lowered its fair value price to CA$2.07 per share from CA$3.48 to account for share dilution, noted Rajeev.
Currently, Western Exploration is trading at a 31% discount, the analyst added, at about CA$0.82 per share, or CA$28 per ounce.
"We believe Western Exploration stands out with high-grade projects, a strong management/board, and the backing of Agnico Eagle," Rajeev commented.
The difference between the current and fair value prices reflects a compelling potential return on investment of 152%.
Bonanza Grades Encountered
Two stepout holes drilled 140−250 meters northeast of Aura's Gravel Creek, returned impressive grades of gold and silver, Rajeev highlighted. Specifically, hole WG457 demonstrated 257 g/t gold and 1,655 g/t silver. Hole WG456 showed 35 g/t gold and 2,800 g/t silver.
Adjacent to Gravel Creek, these results delineated an area of epithermal mineralization about 0.55 kilometers by 0.35 kilometers in size. This suggests potential exists for expanding the existing resource, now comprising 652,000 ounces of gold equivalent (652 Koz Au eq) in the Indicated category and 665 Koz Au eq in the Inferred category.
The Three Deposits
Gravel Creek is one of Aura's three deposits and hosts underground high-grade sulfide resources. Extending 600m along strike and more than 400m in depth, this deposit hosts 52% of Aura's resource estimate.
Another Aura deposit is Wood Gulch, which, along with Gravel Creek, is 8 kilometers away from the third deposit, Doby George, that hosts near-surface high-grade oxide resources. Western intends to advance Doby George before the other two.
"We believe Doby George can be advanced to production quickly, with a low initial capex (less than $50 million)," wrote Rajeev. "Based on its existing resource, we envision the project operating for nine years (40−50 Koz per year) with a relatively low opex ($800 per ounce)."
Will Need More Capital
Rajeev noted that at the end of 2023, the mining company had US$1.2 million (US$1.2M) in working capital. Thus, Fundamental expects Western Exploration will need to raise equity on the order of CA$ 3M-plus sometime this year.
What To Watch For
Investors can expect catalysts from Western Exploration throughout this year, including metallurgical test results, Rajeev wrote.
Resource updates each on Doby George and on Gravel Creek are slated for completion in Q1/24−Q2/24, followed by drill results from these two deposits in Q3/24−Q4/24. Subsequently, a prefeasibility study for Doby George is planned to be finished in Q4/24−Q1/25.
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Important Disclosures:
- [Western Exploration Inc.] is a billboard sponsor of Streetwise Reports and pays SWR a monthly sponsorship fee between US$4,000 and US$5,000. In addition, [Western Exploration Inc.] has a consulting relationship with an affiliate of Streetwise Reports, and pays a monthly consulting fee between US$8,000 and US$20,000.
- As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of [Western Exploration Inc.].
- [Doresa Banning] wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor.
- The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
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Disclosures for Fundamental Research Corp., Western Exploration Inc., January 10, 2024
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