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Monday, 28 January 2013
Industrial Alliance sees "location, location" as top reason to recommend Cayden Resources
Industrial Alliance Securities has recently initiated coverage on Cayden Resources (CVE:CYD), along with three other companies operating in Mexico's prolific Guerrero Gold Belt.
The Guerrero Gold Belt is an emerging gold region in the southern State of Guerrero, Mexico, that extends roughly 60 km.
The broker rated the junior explorer a speculative buy, on the basis of "highly prospective drilling and a pending land sale", the analyst notes.
Cayden is a Canadian exploration company focused on two precious metal opportunities in Mexico and one in Nevada. Its primary projects are the Morelos Sur gold property in the Guerrero Gold Belt, and the El Barqueño property in Jalisco, Mexico - part of the Sierra Madre and Trans Mexico Mineral belts.
The Industrial Alliance analyst, Merrill McHenry, cites location as the number one reason for its recommendation, as Cayden "not only surrounds Goldcorp's Los Filos mines, but is between them as well."
Morelos Sur lies around 230 kilometres south of Mexico City, and comprises four targets: Las Calles, La Magnetita, La Joya and Mina Verde.
La Magnetita is the largest undrilled geophysical anomaly of its type in the gold belt and appears to mirror the geophysics ofGoldcorp's Los Filos deposit.
The analyst also takes note of exploration drilling at Magnetita East, a target the broker finds "highly prospective with excellent soil samples and geophysics", and potential near term settlements with Goldcorp.
In September last year, the company started initial drilling at the target, which consisted of 4,000 to 5,000 metres to test what it called the "highly mineralized" four square kilometre heart of the more than 500 parts per billion (ppb) gold-in-soil anomaly. It also received additional rock and mapping results from the La Magnetita East area, which included over 20 new bedrock samples that returned grades as high as 9.4 grams per tonne (g/t) gold, and 982 g/t silver.
In addition, the Industrial Alliance report highlights the company's El Barqueño property in Jalisco, Mexico - which could be a "company maker" as well, the analyst says.
Last September, Cayden said that Geotech had been contracted to begin a VTEM airborne geophysical survey on El Barqueño, with an initial drill program expected early this year.
For Cayden, analyst McHenry says that no price target can reasonable be estimated for the junior company, until an estimable resource is established.
"However, we believe there to be a sufficiently compelling rationale for us to assign “Speculative Buy” ratings based upon essential factors including attractive geophysical project(s); regional prospectivity; seasoned talented management; & 2013 catalysts."
The broker report notes the geophysical lineaments of the Guerrero Gold Belt, as well as its "rapid discovery growth". "We believe high prospectivity on a large scale (see: “Osisko 1 million hectare staking” below) are the makings of a World Class Gold District."
According to the research note, in 2011, Mexico joined the top 10 gold producing countries in the world, experienced the fastest growth in production, at 13.9%, and the lowest cash cost gold production.
Other juniors operating in the region that received initial coverage included Torex Gold (CVE:TXG), Newstrike Capital (CVE:NES) and Minaurum Gold (CVE:MGG).