The Conversation (0)
Last week, Dalradian Resources received C$8.6 million in proceeds from the exercise of roughly 96.5 percent of 10 million warrants issued last February. The company sees the exercise as “a strong vote of confidence from Dalradian’s warrantholders,” and analysts at Dundee Securities seem to agree.
The company sees the exercise as “a strong vote of confidence from Dalradian’s warrantholders,” and analysts at Dundee Securities seem to agree. In a research note from Laurence Curtis, the firm states that it has increased its target price for the company from $1 to $1.50 in light of events that demonstrate “improved investor sentiment and market conditions” for the company.
Dalradian has garnered plenty of interest lately — the company was mentioned as a stock pick by Louis James of Casey Research at the recent Vancouver Resource Investment Conference, in part due to the large, high-grade discovery at its Curraghinalt project.
Shortly afterward, Dalradian saw an C$11.3-million investment from mining financier Ross Beaty by way of a private placement. “In completing its recent private placement to Ross Beaty for C$11.3MM, DNA adds a well-respected shareholder to its registry,” states Friday’s note from Dundee. “Given Mr. Beaty’s past success in resource investing, we consider this investment a meaningful endorsement of DNA and its 100%-owned Curraghinalt project in Northern Ireland. “
To be sure, both investments put the company on strong financial footing to complete its work programs for 2015. Curtis notes that Dalradian has a $30-million program planned for this year; it includes a drill program, as well as work in support of an environmental impact statement and prefeasibility study for Curraghinalt.
Dundee also suggests that while investors have shied away from new developments in recent years due to gold price weakness, quality assets are now starting to gain attention from the market again. For example, the note mentions Goldcorp’s (TSX:G,NYSE:GG) acquisition of Probe Mines (TSXV:PRB) — which made headlines in January — as well as Premier Gold’s (TSX:PG) joint venture with Centerra Gold (TSX:CG) for its Trans-Canada property.
The note goes on to assert that there are “a limited number of high-quality projects available,” meaning that producers with healthy balance sheets will be closely keeping an eye on undervalued developers such as Dalradian. “We submit that Dalradian, owns one of these high-quality assets as Curraghinalt offers palatable capex and high grades which result in strong project economics in a reasonable jurisdiction,” the firm states.
Furthermore, the firm argues that Dalradian has a relatively discounted valuation compared to Probe, comparing the two companies on the basis that both focus on higher-grade, underground deposits. “DNA currently trades at $29/oz, or ~25% of PRB’s takeout value,” the note states. It also points out that a preliminary economic assessment has been completed for Curraghinalt, while Probe’s project has not yet reached that stage.
Going forward, the firm is looking forward to drill results, environmental impact work for the project and results from a mini bulk sample from Curraghinalt. Certainly, investors will want to keep an eye out for more releases from the company.
At close of day on Friday, shares of Dalradian were up 5.56 percent, or 6 cents, trading at $1.14.
Securities Disclosure: I, Teresa Matich, hold no direct investment interest in any company mentioned in this article.