Edison Investment Research Limited: DFR Gold (DFR): Initiation - Past work heralds a cascade of future riches

London, UK, 21 September 2023

DFR Gold (DFR): Initiation - Past work heralds a cascade of future riches

DFR Gold is a Canadian-listed, West African gold explorer and developer. Its management and board have a strong record of discovering and developing gold projects and they have wasted no time in demonstrating value at DFR’s flagship Cascades project in southern Burkina Faso where, in a short time, they have defined a maiden resource, made new discoveries and demonstrated extensions to the existing resource. From drilling either already completed or under way, Edison estimates that DFR could almost double its maiden resource in the short term.

The current resource base at Cascades and recent exploration success on the licence represents a significant value opportunity for investors, with the remaining portfolio offering further upside. At its current share price of C$0.07 and a foreign exchange rate of C$1.3433/US$, DFR had an end-H123 enterprise value of US$25.53 per attributable resource ounce. This puts the company close to the mean of its peer group, but does not account for recent discoveries and represents a notable discount to recent corporate valuations (eg Fortuna Silver recently agreed to pay c US$60/oz to acquire Chesser Resources in neighbouring Mali). Given the higher-grade resource at Cascades (1.6g/t cf 0.98g/t average) compared to many of its peers in the region, the momentum of discovery in recent exploration campaigns and an experienced management team, we believe the current price will offer deep value to investors as exploration progresses.  

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