It’s a strange sort of move, but what should have been good news for gold stock I-80 Gold Corp (TSX:IAU) (NYSEMKTS:IAUX) turned out to be somewhat less so. Sufficiently less, in fact, to send shares down over 4.5% in Friday afternoon’s trading session.
The news in question featured I-80 Gold revealing results from some underground drilling on a site in Nevada known as Granite Creek. The results were downright astonishing, in fact, and I-80 pulled up some of the best results it’s ever seen in the region, known as the South Pacific zone, to date. I-80 Gold’s focus on Nevada seems to be paying off, as a set of surveys featured results as high as 37.7 g/t of gold over a 7.6 meter span. The results are considered “high grade,” and should produce quite a payoff for I-80 Gold accordingly.
So Why is it Down?
The test results out of Nevada were looking downright peachy, but why is the stock price in open revolt when it looks like I-80 Gold is about to be on the gold in a very, very big way? One of the biggest problems seems to be overall liquidity. Reports note that, while I-80 Gold is the second-largest holder of gold reserves in all of Nevada—and that’s saying something—its interest payments are sufficiently large to make even gross profit look weak by comparison. Further, there are concerns about I-80 Gold’s overall pricing; some believe that its valuation as it is is just too high, especially when compared to other miners like Calibre.
Is I-80 Gold a Good Buy Right Now?
Turning to Wall Street, analysts have a Strong Buy consensus rating on IAUX stock based on four Buys assigned in the past three months, as indicated by the graphic below. After a 40.04% loss in its share price over the past year, the average IAUX price target of $3.99 per share implies 142.55% upside potential.
