If you are searching for an ASX gold stock to buy with big potential, then it could pay to listen to what Bell Potter is saying about the one in this article.
That's because if it is on the money with its recommendation, the gold developer's shares could almost triple in value over the next 12 months.
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Which ASX gold stock?
The gold stock that Bell Potter is recommending to clients with a high tolerance for risk is Santana Minerals Ltd (ASX: SMI).
Bell Potter highlights that the New Zealand-based gold developer has continued to de-risk the Bendigo-Ophir Gold Project. It said:
During the quarter, SMI completed a major capital raise ($130.0m at $0.90/sh), which has left it well-funded with $184m cash at quarter end and a further $17m settling in April. This has enabled SMI to commence permitted early site works and secure long-lead items, de-risking the development schedule for the Bendigo-Ophir Gold Project (BOGP). It also represents the equity funding component of pre-production CAPEX of $277m, with the balance expected to be debt funded.
The broker highlights that despite the de-risking, which normally boosts a share price, the ASX gold stock has retreated due to Fast-track Approval (FTA) Determination concerns. It said:
SMI has achieved major de-risking milestones during the quarter, securing a major portion of project funding and leveraging this to advance the development schedule. Exploration success also saw the estimation of an additional 0.5-1.5Moz Exploration Target, making a case for material mine life extension and reinforcing the economic significance of the BOGP.
Despite the technical progress, the share price has traded lower on perceived risk around the pending FTA Determination. In our view, the project is technically robust and designed to exacting standards and conditions. An encouraging precedent has been set with Newmont's Waihi Gold Mine approved.
Huge potential returns
According to the note, Bell Potter has retained its speculative buy rating on the ASX gold stock with an unchanged price target of $1.70.
Based on its current share price of 57 cents, this implies potential upside of approximately 200% for investors over the next 12 months.
Commenting on its buy recommendation, the broker said:
The BOGP is one of the most advanced and highest margin greenfield gold projects on the ASX. The BOGP has been further financially and technically re-risked during the quarter. We make no changes to earnings, valuation or recommendation.
