West Africa focused gold producer, Cluff Gold (AIM: CLF, TSX: CLF), received some positive coverage from London based Evolution Securities today, after the broker initiated coverage with a ‘buy’ note.
In the note, Evolution said that Cluff Gold has “worked hard” in developing two gold mines (Kalsaka, Burkina Faso and Angovia, Ivory Coast) simultaneously and was on track to reach annualised production of almost 100,000 ounces per annum as the two operations moved through commissioning in the next three months.
Cluff Gold’s Baomahum Project in Sierra Leone, which is at the scoping study stage, also has the potential to be a multi-million ounce deposit, the broker said: “The Baomahun project is the company’s key exploration focus and although less than 30% of the potential strike has been drilled, almost 1.5Moz have already been identified. A revised scoping study is underway while exploration drilling continues and we expect this to generate considerable newsflow over the remainder of the year.”
Taking into account the increasing production profile and potential value of Baomahum, Evolution Securities valued the gold producer at 132 pence per share.
“We think that the upside potential of Baomahun is not fully reflected in Cluff’s share price. We also believe its shares will be re-rated once Kalsaka and Angovia are fully commissioned and the company becomes a profitable gold miner,” Evolution added.
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