Astral Resources' (ASX:AAR) merger with Maximus Resources (ASX:MXR) might create a company capable of producing about 110,000 ounces of gold per annum for eight years, according to a Monday note by Euroz Hartleys.
The combined entity will have 48 million tonnes (Mt) at 1.1 grams per tonne (g/t) of gold for 1.8 million ounces (Moz), located between Kalgoorlie and Kambalda, Western Australia, which Euroz said is one of the "best places in the world to develop a mine."
Euroz notes that exploration at MXR's property was largely for nickel despite having some large surface gold anomalies but would "iron out bumps" in Astral's low-grade zones at its project.
Astral could also fund and complete further drilling at Maximus' Wattle Dam gold mine, where drilling results suggest that mineralization could extend beyond the current resource of 251,000 ounces at a grade of 1.4 g/t gold, Euroz added.
Euroz believes that Astral Resources is undervalued, especially considering the current price of gold.
The firm maintained the mining firm's speculative buy rating and its price target of AU$0.28.
Shares of Astral Resources fell below 2%, while shares of Maximus Resources rose above 3% in recent Tuesday trade.
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