AusGold (ASX: AUC) a wonderful freehold real estate asset with growing valuation, page-74

Ausgold (ASX:AUC)

Argonaut believes Ausgold is well poised to capitalise on the buoyant gold market, improving its target price on AUC from 11c to 13c – versus the current price of 5c.

Ausgold has commenced definitive level studies on its Katanning Gold Project. Key areas of the study will include investigation into whether the deposit will support a larger-scale project.

Release of the updated study is scheduled for Q3 this calendar year, with an updated Resource Estimate also scheduled for Q3.

Ausgold has said it plans to make a final investment decision in the second half of the year before commencing project financing discussions.

Argonaut warns that financing remains a key risk to the project, and potential cost inflations could impact the ability to fund the project.

“We feel that costs have at least plateaued since the first study was completed in August, so we are not expecting a large mark-up, but this does remain a risk,” said the note out of Argonaut.

Another key risk is the ability of Ausgold to secure the farmland the project is located on, but the project is on granted mining leases, so risk to eventual development is low.

Three exploration streams are underway in parallel right now: Near-mine exploration, which may add incremental ounces to the mine plan, regional gold exploration, which may identify satellite projects for future development, and lithium exploration.

Results for this work will be reported throughout the first half of the year.

“We maintain our Speculative Buy recommendation on AUC,” said Argonaut.