Best Gold Stock to buy and target prices 2011, Analysts at Ambrian Capital

Best Gold Stock to buy and target prices 2011, Analysts at Ambrian Capital ; a good time to buy gold equities because they are undervalued compared to the price of physical gold. highlighted that although the gold price has been hitting record highs, of over US$1,600 an ounce, gold-focused mining equities were flat over the first half of the year.

We believe there are various factors that have contributed to this rapid rise, and we believe these same reasons will continue to keep gold prices high for some time to come.

The broker also featured other London listed gold stocks that it believes could rise :

Avocet Mining (LON:AVM) - "Buy", Target price 277 pence (current price 221.50 pence).

Duncan Hughes says the company has transformed itself, by switching its focus to West Africa this year, as it sold its southeast Asian mining assets. The analyst said: "The investment thesis is now about West African growth, and we firmly believe management can make this a 500,000 ounces per annum gold company within five years.

We value Avocet using a 1.3 times NAV (net asset value) for Inata and an insitu resource valuation for the Guinean resources at £553.3m., We believe resource and reserve upgrades, confidence in the West African political situation and production growth will act as catalysts to future share price growth."

Archipelago Resources (LON:AR.) - "Buy", Target price 72 pence (current price: 59 pence).

Adam Kiley said that a recent visit to the flagship, 1.7 million ounce, Toka Tindung project in Indonesia - reinforced Ambrian's belief that Archipelago will soon be producing 160,000 ounces of gold equivalent per annum. With a strategic major shareholder, we also believe there is a high possibility of corporate acquisitions focusing on other Indonesian gold projects,

The analyst believes the positive share price momentum for the remainder of this year would be driven by the continuing exploration success at Toka Tindung; an upgraded reserve/resource at Toka Tindung in late 2011; the continued ramp-up to full production; and achieving annualised rate of production in the fourth quarter of this year.

Centamin Egypt (LON:CEY) - "Buy", Target price 182 pence (current price: 138.10 pence).

Ambrian reckons Centamin's Sukari gold project, located in the desert 25 kilometres from the Red Sea, is one of the outstanding gold projects in the world that is currently not owned by a major producer.

A string of important announcements and events over the coming months will shape the remainder of 2011 for Centamin and influence its short-term share price,

Centamin has forecasted 2011 production to be between 250,000- 290,000 ounces of gold, at an average cash cost of US$450 per ounce. During the March quarter Centamin produced 45,204 ounces gold at a cash cost of US$525 per ounce.

Condor Resources (LON:CNR) - "Buy", Target price: 7 pence (current price: 5.00 pence).

Ambrian is encouraged by Condor's potential to grow the resources at La India, in Nicaragua. An aggressive 20,000 metre diamond drill programme is currently underway at the project, to expand the current resource.

We expect a number of high-grade gold intersections to be announced during 2011," Hughes said. A third resource upgrade is anticipated at La India later this year.

Crucially Hughes added that unlocking La India's potential was the key to realising Condor's growth potential.

Hambledon Mining (LON:HMB) - "Buy", Target price 8.5 pence (current price: 4.25 pence).

Hambledon should be worth £62 million, rather than its current market value of £55.76 million, according to Duncan Hughes. Since last March the company has demonstrated an improving production profile at its wholly-owned Sekisovskoye mine in Kazakhstan, the analyst added.

Hambledon is currently producing some 26,000 ounces per annum from an open pit at Sekisovskoye, Highlighting the successful turnaround, Hughes said: "Management has shown that it is able to improve production performance, which has historically been hampered by harsh winters and poor recoveries.

"The project is expected to hit first underground ore later this year and the firm recently raised £8.6 million to facilitate an efficient underground operation."

Mwana Africa (LON:MWA) - "Buy", Target price 20.5 pence (current price 4.66 pence).

The company is focused on gold, nickel and other base metals and diamonds in Zimbabwe, the DRC and South Africa. Ambrian looked forward to the anticipated restart of the Bindura Nickel Corporation, in Zimbabwe, which will be the only fully integrated nickel mining, smelting and refining complex in Africa.

Hughes reckons the operations will get a kick-start with the re-opening of the Trojan nickel mine next year. Meanwhile looking at the prospects for the rest of the project portfolio, The company’s exciting exploration portfolio potential is highlighted at the Zani-Kodo gold project in the DRC, with an initial resource of 1.25 million ounces at 3.53 g/t."

Ambrian values Mwana at £147.3million, which equates to 20.5p a share, and ash such the broker rates the stock as a 'buy'.

This punchy price target represents a massive 320 percent premium to the company’s current market price.

Nyota Minerals (LON: NYO: ASX:NYO) - "Hold", Current share price: 11.00 pence.

Investors seem to be up to speed with Nyota, which is developing the 1.38 million ounce Tulu Kapi gold project in Ethiopia, according to Ambrian.

The broker's peer group analysis gives a ‘fair market’ value of US75m, based on the current Tulu Kapi resource, which is close to Nyota's current market value.

However Hughes thinks there could still be plenty of gold for Nyto to find and this could drive the share price on further.

"The Western Highlands in which Tulu Kapi is located has all the hallmarks of a significant gold belt that could contain a number of +1Moz gold deposits," the analyst said.

Vatukoula Gold Mines (LON: VGM) - "Buy", Target Price 143 pence (current share price: 103.00 pence).

In the report Ambrian initiated coverage on the Fijian gold firm, with a bullish target.

The AIM-listed firm operates the Vatukoula Gold mine, which has been in operation for more than 70 years, and according to Ambrian, it could well be producing for 70 more - based on its current resource and the potential for further discoveries.

Ambrian Capital gives the stock a target price of 143 pence and said that the company was aware that it has disappointed the market over the past six months with falling production and rising cash costs.

"The share price will be driven over the coming year by ongoing exploration results, a production update due in September this year and another production update in December this year.Source http://www.proactiveinvestors.co.uk