In an Aug. 14 research note, ROTH Capital Partners analyst Jake Sekelsy reported that the final results from the metallurgical work done at Vista Gold Corp.'s (VGZ:NYSE.MKT; VGZ:TSX) Mt. Todd gold project in Australia were positive. Accordingly, ROTH increased its target price on the gold company to US$1.60 per share from US$1.40. The current share price, in comparison, is US$0.86.
Sekelsky highlighted that testing resulted in recoveries in the low-90% range, "a significant increase" over the 86.4% outlined in the prefeasibility study. This recovery rate was determined from 71 samples of various grades from the main Batman deposit at Mt. Todd, "which we believe provides a representative sample of the deposit as a whole."
Next for Vista Gold, the analyst indicated, is updating the prefeasibility study, specifically the costs and foreign exchange rates within it, and incorporating the metallurgical results as well. "In short, we expect the updated prefeasibility study to feature enhanced economics relative to the existing prefeasibility study," Sekelsky added, noting such an updated study would be the "largest" short-term catalyst for the company.
Based on the recent metallurgical results, ROTH adjusted its model on Vista Gold, increasing, but remaining conservative on, the estimated average recovery rate at Mt. Todd to 90% rather than 87%, wrote Sekelsky. Also, "we believe additional upside remains via an update to foreign exchange rates utilized in the prefeasibility study."
ROTH, which considers Vista Gold a Buy, expects the Mt. Todd project "to continue to provide investors with strong leverage to higher gold prices," Sekelsky concluded.[NLINSERT]
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Disclosures from ROTH Capital Partners, Vista Gold, Company Note, August 14, 2019
Regulation Analyst Certification ("Reg AC"): The research analyst primarily responsible for the content of this report certifies the following under Reg AC: I hereby certify that all views expressed in this report accurately reflect my personal views about the subject company or companies and its or their securities. I also certify that no part of my compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in this report.
ROTH makes a market in shares of Vista Gold and as such, buys and sells from customers on a principal basis.
ROTH and/or its employees, officers, directors and owners own options, rights or warrants to purchase shares of Vista Gold stock.
Shares of Vista Gold may be subject to the Securities and Exchange Commission's Penny Stock Rules, which may set forth sales practice requirements for certain low-priced securities.
ROTH Capital Partners, LLC expects to receive or intends to seek compensation for investment banking or other business relationships with the covered companies mentioned in this report in the next three months.