Shanta Gold PLC (LON:SHG) has the potential to double in value over the next twelve months according to a punchy update from broker Liberum.
The Africa-focused gold miner recently raised US$41mln in a modestly discounted placing that will facilitate prompt development of the highly attractive West Kenya project under any gold price scenario, added the broker.
“With this raise, Shanta has effectively de-risked its exploration plans at the West Kenya project under any gold price scenario.
“Just on the existing resource, West Kenya is a game changer for Shanta with the scoping study estimating an NPV of US$340mln and the bulk of proceeds will be used to prove up the identified potential over the next three years.”
In addition, said Liberum, with further exploration from existing proximal targets, the company hope to triple the existing resource to 3 Moz.
“Neither the Isulu nor Bushiangala deposits are fully explored and it is expected that there will be other deposits in the Liranda Corridor where the asset is situated.”
A potential share overhang from Barrick was also removed during the share sales, sid teh broker, as the Canadian giant sold its entire shareholding in a secondary trade alongside the placing.
Liberum adds that with plenty of news flow to come and a promising macro backdrop for gold, the price target remains 30p (prev 31p), with the adjustment reflecting the share issue.
Shares rose 0.5p to 15.1p.