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Minera IRL still rated 'buy' at Fox-Davies Capital after acquisition to take control of Don Nicholas gold project

Broker Fox-Davies Capital (FD Capital) noted the announcement made by Latin American precious metal miner Minera IRL (AIM: MIRL) last month of the completion of the acquisition of Hidefield Gold PLC (AIM: HIF), with the broker upholding its 'buy' recommendation and its target price of £0.90.

The key asset in the transaction is the Don Nicolas project with a defined resource of 360,000 oz (ounces) of gold and a large exploration holding of some 250,000 ha (hectares) containing a number of promising exploration prospects, located in the mining friendly state of Santa Cruz in Southern Argentina.

The project has a JORC compliant indicated resource of 1.078 Mt (million tonnes) grading 5.8g/t (grammes per tonne) containing 200,700 oz and a JORC compliant Inferred resource of 1.075 Mt grading 4.6g/t containing 158,000 oz of gold. The company has approved a budget ofUS$5 million for 2010 for the advancement of the project.

FD Capital said that the aim is to develop Don Nicolas ahead of the Ollachea gold project in southern Peru to ensure continuity of production between its flagship Corihuarmi gold project and Ollachea, where the company intends to push forward with infill drilling.

In addition to the Don Nicolas project, the Hidefield leases acquired are contiguous with the Mariana leases where the Dos Calandrias project is located. It is believed that this deposit extends onto the Hidefield leases, but will not be a priority target of the exploration program.

FD Capital has assigned a value of US$50/oz to the JORC compliant resources at Don Nicholas, while including the updated number of shares after Minera IRL issued 9.7 million shares to Hidefield shareholders to bring up the total number of share sin issue to 85.57 million.

The target price favorably compares to the stock’s current value of £0.63 per share.



Disclosure: I do not hold a position