Shares of Orezone Gold (TSE:ORE) shot up nearly 4.5 per cent after Jennings Capital initiated coverage with a speculative buy rating on the stock.
Orezone owns the Bombore project in Burkina Faso, which is the largest undeveloped gold deposit in the country. The property also has the largest oxide resource in West Africa, which, according to Jennings Capital, means the material is cheaper to mine because it is softer.
Last week, the company said its measured and indicated resources at Bombore increased to 4.6 million ounces.
Jennings Capital analyst Dan Hrushewsky wrote in a note that multiple pits at the site give the company flexibility. Orezone would have the ability to scale down operations to lower capital expenditures or, conversely, "design a mine plan to accelerate development of higher grade ounces" and alternate production between pits, if needed.
Hrushewsky says Orezone is highly leveraged to fluctuations in gold prices. He estimates the stock will rise a third for every 10 per cent jump in gold.
Jennnings Capital has a 12-month price target of $2.65 per share.