Adelong Gold [ASX:ADG]
Metals & Mining
Near-Term Gold Producer with Strategic Farm-In and Significant Valuation Gap
We initiate coverage on Adelong Gold with a current valuation of $0.028, representing a 301.37% expected upside from the current share price of $0.007. ADG is an Australian gold explorer with near-term production potential yet remains significantly undervalued with a market cap of just $9.78 million. Its flagship Adelong Goldfield Project in NSW hosts a JORC Resource of 188,000oz at 3.21 g/t Au across high-grade zones including Challenger, Currajong, and Caledonian. ADG recently acquired the Apollo Gold Project in Victoria, a highly prospective asset with historical high-grade gold and antimony intercepts, adding dual-commodity upside. With strategic partnerships and a strong pipeline, ADG is well-positioned for multi-jurisdictional growth.
Strategic Farm-in Agreement Accelerates Path to Production
The Adelong Goldfield Project presents compelling development potential, anchored by a high-grade JORC-compliant resource of 188,000oz at 3.21 g/t Au and supported by fully permitted processing infrastructure—yet remains significantly undervalued by the market given its near-term production profile. A 2022 Scoping Study confirmed the project’s technical viability, while recent exploration results point to further upside at depth and along strike. In October 2024, Adelong Gold entered a binding farm-in agreement with GDM, under which GDM invested $300,000 for an initial 15% stake in Challenger Gold Mines Pty Ltd. GDM will increase its stake to 51% upon achieving first gold production within 12 months, allowing Adelong to retain a 49% interest with no funding obligation until production commences.
Adelong Set to Benefit from Bullish Gold Outlook
With the Adelong Gold Project advancing toward near-term production and cash flow, ADG is well-positioned to benefit from the current strength in gold prices. The project’s existing infrastructure and high-grade resource support a rapid development timeline. As gold continues to trade near record highs, even modest production could generate strong cash flow. This price environment significantly enhances the project’s economic appeal and investor upside.
Valuation Range of A$0.024-$0.032 per share
We value ADG at A$0.024 per share in a base case scenario and A$0.032 per share in a bull-case scenario. We adopt a probability-based valuation approach, including a blend of DCF and Peer Comparison for ADG, applying a conservative approach to all key assumptions, which enables us to build a robust and credible investment thesis with strong upside potential.