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National Bank Financial has updated coverage on Dalradian Resources, symbol DNA on the Toronto Stock Exchange.

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Following the recent closing of a $13.9 million bought-deal equity financing, analyst Steve Parsons gives the company an outperform rating, increasing the 12-month price target from $1.10 to $1.20, a healthy premium of 46% to the $0.82 price on February 26th, the day his report was issued.

Additional Information:

Company: Dalradian Resources
Stock Symbol: TSX: DNA
Date Published: Mar 5, 2014
Transcript: Available

Video Transcript:

I’m Samantha Deutscher for InvestmentPitch

National Bank Financial has updated coverage on Dalradian Resources, symbol DNA on the Toronto Stock Exchange.

Following the recent closing of a $13.9 million bought-deal equity financing, analyst Steve Parsons gives the company an outperform rating, increasing the 12-month price target from $1.10 to $1.20, a healthy premium of 46% to the $0.82 price on February 26th, the day his report was issued.

The 19.8 million unit financing, including the exercise in full of the over-allotment option, priced at $0.70 per unit, was placed by a syndicate led by Canaccord Genuity, including Clarus Securities, Beacon Securities, BMO Capital Markets, Cormark Securities, Dundee Securities, and National Bank Financial.

The company’s operations are focused on low-risk jurisdictions in Europe, with active programs in both Norway and Northern Ireland.

The principal project centres around the Curraghinalt high grade lode gold deposit in Northern Ireland, where the gold resource covers a fraction of known mineralization over a 12 kilometre gold trend

With mineralization still open in all directions, a November 2011, 43-101 compliant resource on the central section of the system returned:

2.23 million ounces of gold grading 12.74 g/t in the inferred category (5.45 million tonnes)
460,000 ounces of gold grading 12.84 g/t in the indicated category (1.11 million tonnes)
10,000 ounces grading 21.51 g/t of gold in the measured category (0.02 million tonnes)

Based on an 8% discount rate, and using a 3 year and 5 year trailing average gold price of $1,378 and $1,166 per ounce, the PEA indicates after-tax internal rates of return of 41.9% and 33.4% respectively.

Early in 2013 the company submitted an application for a permit to allow it to go underground and begin detailed engineering studies.

Proceeds from the financing are to be used towards a 55,000 tonne underground bulk sample program, which analyst Steve Parsons believes is a key de-risking step for the project.

The program will be designed to validate mining methods and associated dilution, to demonstrate vein continuity, and for detailed metallurigical testwork.

The bulk sample program is expected to last 12 months and cost approximately $20 million

While awaiting receipt of that permit, the company is working on a new resource estimate at Curraghinalt and testing the exploration potential elsewhere on the 84,000 hectare property.

Analyst Steve Parsons stated, “DNA continues to compare favourably with peer group….in the context of the potential for a low capex intensity development plan and favourable logistics owing to solid regional infrastructure and shallow depth of mineralization.”

The company currently trades at $0.87, well below the $1.20 target price, and with 109.4 million shares outstanding, the company is capitalized at $95.2 million.

For more information, please visit the company’s website www.dalradian.com or contact Marla Gale, Vice President of Communications at 416-583-5622 or email investor@dalradian.com.

For more information about National Bank Financial or to obtain a copy of their research report, contact your nearest National Bank Financial office. Their branches are listed on their website at www.nbf.ca.

I’m Samantha Deutscher for InvestmentPitch
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