Acadian Mining Corporation. (TSX: ADA) is on course to become a mid-tier precious and base metal producer in Atlantic Canada. Acadian recently initiated production of zinc and lead from its Scotia Mine in Nova Scotia. Acadian also has a dominant land position in Nova Scotia with potential to support a centralized gold processing facility. There are a number of catalysts in the coming year which may lead to appreciation the Company’s share price in the coming 12 months.
• Sustained/increasing zinc, lead, and gold prices
• Increasing production of zinc-lead at its Scotia Mine
• Expansion of zinc-lead resource and mine life
• Feasibility for Scotia Goldfields Project
There is good potential for the gold processing facility to be financed from cash flow from production of zinc-lead at the Scotia Mine. The Scotia Mine production is unhedged and fully exposed to current zinc and lead prices. We are initiating coverage of Acadian with a Buy rating and 12–month price target of $2.00 per share. Given the move to the TSX and initiating production of zinc-lead concentrate, Acadian has a Low risk profile in relation to the current stock price and our conservative 12-month price target, unusual for higher risk natural resource companies in our coverage universe.
Investment Thesis
Acadian Mining Corporation (TSX: ADA), previously known as Acadian Gold Corporation, is evolving from a gold exploration company with numerous gold projects in Nova Scotia, Canada, into a rapidly growing, diversified mining company in Atlantic Canada. The Company is well positioned to leverage cash flow, human capital, and precious and base metal resources capable of taking advantage of the current metal cycle. The combination of these factors provides the operational and financial flexibility to advance toward midtier status.
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