Zacks_Analysts' Blog : Pelangio - a review of 2011 and expectations for 2012 - Analyst Blog

Pelangio - a review of 2011 and expectations for 2012

Steven Ralston, CFA



Pelangio Exploration (V.PX: TSX-V and PGXPF: OTC)  is a junior gold exploration company currently proceeding with a second phase drilling program of over 30,000 meters at the company’s Manfo property in Ghana. Also, an exploratory diamond drill program of 7,000+ meters on its Obuasi property began in March 2011.



In 2011, over 25,000 meters of diamond drill holes were completed on the Manfo property. Drilling results at Pokukrom East defined a strike length of bulk gold mineralization of at least 850 meters, which is open to the north. The geochemical anomaly is much longer at approximately 1,200 meters in length. Having added a second drilling rig in July, a third drilling rig is expected in 2012. On November 1st, an NI 43-101 compliant non-resource technical report was issued, which upgraded the Manfo property to a resource delineation stage gold exploration project from an early stage exploration project. An initial NI 43-101 compliant inferred resource report is now expected in 2012.



At the Obuasi property the diamond drill program was expanded from 5,000 meters to 7,000+ meters during the summer of 2011. As of November 24th, 41 diamond drill holes totaling 8,604 meters had been completed. A non-resource NI 43-101 technical report on the Obuasi property is expected to be issued by SRK Consulting in early 2012.



In June 2011, Pelangio added another camp-sized property to its portfolio. The company entered into an agreement to acquire a 100% interest in the Akroma property, a 160 square kilometer very early stage exploration parcel in the Brong Ahafo region of Ghana.



During 2011, Pelangio completed a private placement and a public offering. The private placement in February raised $3.65 million and the public offering in December funded the company with an estimated $7.44 million. In addition, the exercise of options and warrants provided a further $6.1 million (as of September 30th).



We reiterate our Outperform rating based upon the attractive valuation level of the stock and the expectation that the NI 43-101 compliant inferred resource report on the Manfo property will act as a catalyst for price appreciation. Our target is $1.00.

 

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