Why Stronghold Metals Has So Much Upward Potential

Map of Eagle Mountain

The Eagle Mountain property has a resource estimate of 733,500 ounces of gold based on 179 drill holes totaling 24,203 meters. The resource has the potential of doubling in the next few quarters.

Stronghold Metals Inc. (Z – $0.40) is a Canadian mining exploration Company focused on the discovery and development of gold, copper and other metals properties in South America. The Company’s flagship property, Eagle Mountain in Guyana, has a NI 43-101 compliant resource estimate of 733,500 ounces of gold based on 179 drill holes totaling 24,203 meters.

Moreover, the resource has the potential of being doubled in the next few quarters when results from ongoing drillings, totaling 15,000 meters, show that gold is also found next to the currently known ore zones. First analytical results from step-out drill holes indicate exactly that. Additional assay results are expected over the coming weeks and months.

Investment Highlights

  • Stronghold’s management team and Board of Directors are comprised of experienced geo-scientists and financiers. A mining Company needs both. People that have the knowledge to increase the resource of a property and people that have the ability to raise sufficient amounts of money to keep the projects going.
  • The Company’s two most recent private placements, totaling $7.3 million, gave Stronghold a solid financial base for the advancement of the Eagle Mountain project, to search for potential acquisitions and for general working capital. These placements were heavily oversubscribed and several major institutional investors, including Sprott Asset Management, participated.
  • On September 7, 2011, Stronghold entered into a Letter of Intent with Mowasi Gold Corp. to acquire a 95% interest in an area of approximately 8,300 hectares, contiguous to Eagle Mountain. Although the concessions are at an early exploration stage, alluvial mining activities indicate a high probability of finding gold on the property. This is another opportunity to expand the resource estimate of the Eagle Mountain/Mowasi area. An additional advantage is that future ore from both properties can be processed by one mill.

Conclusion

Stronghold has an Enterprise Value per Resource of 30.44, while six of its peers trade at an average EV/Resource of 72.09. The Company has solid financial partners, including Sprott Asset Management and a well-balanced management team comprised of experienced geo-scientists and financiers. Based on these arguments, we initiate coverage of Stronghold Metals Inc. with a buy recommendation and an initial price target of $0.90 or 2.25 times higher than today’s stock price.

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