The Gold Report - Tue, Apr 17, 2018

Is This Nevada Gold Explorer at the Right Place at the Right Time?

This gold explorer has 14 projects in the U.S., including 11 in Nevada, and has announced plans to drill 10 of them this year.

Allegiant Project Map

High grades combined with low political risk have increased interest in gold mining in Nevada. The highly respected Fraser Institute Annual Survey of Mining Companies, an annual survey of mining executives, ranked Nevada the third most attractive mining jurisdiction in the world based on geology and policies. Of the 91 jurisdictions around the world, only Finland and Saskatchewan ranked higher.

With the announcements last month that Hecla Mining Co. (HL:NYSE) is buying Klondex Mines Ltd. (KDX:TSX; KLDX:NYSE.MKT) and Alio Gold Inc. (ALO:TSX; ALO:NYSE.American) is purchasing Rye Patch Gold Corp. (RPM:TSX.V; RPMGD:OTCQX), gold mining companies are beginning to take a serious look at Nevada.

The Hecla-Klondex deal, valued at $462 million, gives Hecla control of Klondex's three Nevada mines: Fire Creek, Midas and Hollister. Phillips S. Baker, Jr., Hecla's president and CEO, noted that "opportunities to acquire significant land packages along Nevada's prolific gold trends are very rare. Rarer still are for these land packages to have the highest-grade mines in the U.S. and this transaction is consistent with Hecla's strategy of owning large prospective land packages with mines where we can improve costs, grow reserves and expand production."

The Alio Gold-Rye Patch business combination, worth around $128 million, gives Alio access to Rye Patch's operating Florida Canyon mine in Nevada. Alio touted that the merger "establishes an operating presence in Nevada, providing further geopolitical diversification."

As gold mining companies seek to replace gold reserves and replenish their exploration pipeline, attention is beginning to shift toward other gold explorers that have highly prospective exploration properties in Nevada. One such company is Allegiant Gold Ltd. (AUAU:TSX.V; AUXXF:OTCQX), which was spun out of Columbus Gold Corp. (CGT:TSX; CGTFF:OTCQX) and began trading in late-January this year.

Allegiant, while a new company, boasts distinguished and experienced leadership. James Kwantes wrote about the pedigree of Allegiant's management in Resource Opportunities on Feb. 21, "Allegiant CEO Andy Wallace is the principal of Cordex Exploration—founded by John Livermore—and has been involved in the discoveries of several multi-million-ounce gold deposits in Nevada. . .Wallace is a gentlemanly Nevada legend whose knowledge of deposits and prospects in the state is impressive."

Brien Lundin, in the April issue of Gold Newsletter, noted that Cordex "is responsible for eight discoveries in Nevada, and its founder, John Livermore, discovered the Carlin Mine that started Nevada's run of elephant-sized gold discoveries back in the 1960s."

"Allegiant is exploration investing with the drill risks mitigated by the calibre of the team and the number of shots, across multiple projects." - James Kwantes, Resource Opportunities

Eleven of Allegiant's 14 projects are located in Nevada, with the Eastside Gold Project being the most advanced. In February, Allegiant's chairman, Robert Giustra, said that the company's 2018 drill program had two goals, "to double the in-pit ounces at Eastside while reducing the strip ratio, and to make a new, significant discovery at any one of the other nine high-priority gold projects that we plan to drill."

The 20,000-meter drill program at Eastside is already seeing results. On March 5, Allegiant announced that its first nine drill holes had extended "the Original Zone another 300 meters to the west, where it still remains open." Highlighted results include hole 147, which returned 42.7 meters of 2.49 g/t gold, including 9.1 meters of 9.03 g/t gold.

Robert Giustra stated that "these results confirm our geological model and validate our objectives to double the in-pit ounces and significantly reduce the strip ratio at the Original Zone. The Original Zone has the hallmarks of a very large gold system and is just one of many exploration targets that exist at Eastside." The company has added a second drill rig "to test the southern extension of the Original Zone, which also remains open."

In addition to Eastside, Allegiant plans to drill an additional 20,000 meters at nine other gold projects this year. All of these projects are drill ready, with the targets identified by Andy Wallace, and only one of them, Bolo, has been previously drilled by Allegiant. In 2013, drilling at Bolo returned 133 meters of 1.28 g/t gold, including 30.5 meters of 3.24 g/t gold.

Allegiant's management and aggressive exploration plans have put it on the radar screen of many market commentators.

Thibaut Lepouttre noted in Caesars Report on February 15 that "Allegiant Gold is one of our favorite exploration companies in North America as Eastside provides the 'current' fundamentals (and investment thesis), whilst the other exploration projects provide additional blue sky potential. . .We expect this year's drill program to be incredibly important for Allegiant Gold as it will aim to increase the resource whilst reducing the strip ratio."

"Allegiant is a buy for those looking to add to their spinout holdings and those who want to add an aggressive junior explorer to their portfolios." - Brien Lundin, Gold Newsletter

Brian Lundin noted in Gold Newsletter, "At current trading levels, the company is definitely undervalued compared to peers with similar precious metal exploration assets. It's a buy for those looking to add to their spinout holdings and those who want to add an aggressive junior explorer to their portfolios," Lundin concluded.

Mickey Fulp wrote in Mercenary Geologist in February that Allegiant "is one of my top picks."

James Kwantes concluded in Resource Opportunities that Allegiant "is exploration investing with the drill risks mitigated by the calibre of the team and the number of shots, across multiple projects."

Allegiant is also beginning to attract attention from Canadian investment dealers.

Beacon Securities initiated coverage on Allegiant on April 10 with a Buy rating and a 12-month target price of CA$0.90 per share. The stock is currently trading at around CA$0.45.

Beacon analyst Michael Curran noted that "Allegiant controls the entire portfolio of Nevada properties accumulated by Columbus Gold (via Cordex) over the past decade or so. We feel several of these properties have above average potential for new gold deposit discoveries."

He stated, "Allegiant Gold starts life as an attractive explorer with a proven exploration team, a portfolio of promising targets in mining-friendly jurisdictions, and ~$4 million in cash. We see re-rating potential in the short-term, as AUAU completes initial drill programmes at Eastside in Nevada."

Additionally, "medium-term, we believe several additional properties in the portfolio have potential for new deposit discovery, which could drive further market interest and/or AUAU share re-rating," Curran noted.

All eyes will be on Allegiant as it explores Nevada's elephant country in the hopes of making a significant, new gold discovery.

Disclosure:
1) Patrice Fusillo compiled this article for Streetwise Reports LLC and provides services to Streetwise reports as an employee. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.
2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: Allegiant Gold, Columbus Gold, Klondex Mines and Rye Patch Gold. Click below for important disclosures about sponsor fees.
3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article, until one week after the publication of the interview or article. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Allegiant Gold, a company mentioned in this article.

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