Cannacord Capital $1.50 Target
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TODAY'S DISCOVERY, TOMORROW'S FUTURE
Creating shareholder wealth by advancing gold projects through the exploration and mine development cycle.
Message: Cannacord with $1.50 target?????
Prodigy Gold Inc. (PDG : TSX-V):
Undervalued gold developer; initiating coverage with
SPEC BUY and C$1.50 target
Prodigy Gold Inc. |
Wendell Zerb, P. Geol, 1.604.643.7485
PDG : TSX-V : C$0.70 | C$166.2M | Speculative Buy , Target C$1.50
•
Undervalued gold developer; initiating coverage with SPEC BUY and C$1.50
target
Investment recommendation
We are initiating coverage of Prodigy Gold Inc. with a SPECULATIVE BUY
recommendation and a 12-month target of C$1.50. See our full report dated
November 14, 2011.
Investment highlights
•
Prodigy Gold is an exploration and development company focused on its
100%-owned Magino gold project, located in northwestern Ontario. We view
Magino as an above average, bulk mineable Au project with solid economic
potential in an elevated Au environment. Sound project characteristics,
including metallurgy, infrastructure, and the socio-political jurisdiction, all
contribute to the future potential for Magino’s development.
•
A new mineral resource estimate released in early November 2011 represents
a 55.2% increase in total contained ounces over the February 2011 estimate.
Total resources (M,I&I) are now 3.90 million oz. We expect an updated PEA
(by year-end) to be economically superior to previous studies, based on the
higher Au price expectations and the larger overall Au resource. Our
expectation is an open pit operation that could produce over 190,000 ounces
of Au per year over a 12-year mine life.
•
Based on comparative analysis, we believe PDG shares are undervalued and
open to upside re-rating as the project advances and investor awareness
increases.
Valuation
Our Prodigy valuation is based on a 0.80x risk multiple to our project NPV (10%,
US$1,750/oz Au peak pricing scenario) of US$432 million. Our total risk-adjusted
NAV 10% is US$439 million.
6 Recommendations
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