In a report on west African gold portfolio picks, London-based Old Park Lane Capital said with the recent spate of large capital raisings and rising exploration budgets, the region would continue to provide new discoveries.
"We think leverage to the sector is best achieved through exposure to companies with strong organic growth pipelines and view the explorers and developers as offering the most upside and likely to re-rate on resource growth and critically, as players are swept up in a possible new wave of [mergers and acquisitions] activity," the broker said.
Of the producers, Randgold Resources came out ahead of the pack, while PMI Gold took out the developer gong, Hummingbird Resources was the pick of explorers and a watching brief was placed on Azumah Resources, Avocet Mining and Sovereign Mines of Africa.
OPL viewed Randgold's recent share price fall following an attempted coup attempt in Mali as a buying opportunity.
"We recommend investors with an appetite for risk and wishing to play the long-term game, should not dip in yet but monitor the stock for any further price weakness as the Mali coup plays out [and] view sub 55 pounds a share as a very attractive entry point," it said.
The broker believed PMI Gold was set for a re-rating as production from its $US250 million ($A240 million) Obotan project in Ghana drew closer and viewed it as a potential takeover target as consolidation continued in the country.
Mine development is due to kick off in the first quarter of next year and based on prefeasibility study results, will produce 250,000oz per annum over a 10-year life at cash operating costs of $567 per ounce.
"Also worth a look is Azumah, which is on a similar timetable to PMI and plans to put its Wa project in Ghana into production in early 2014, producing up to 100,000 ounces per annum," the broker said.
"It also appears highly discounted, trading on a $50/oz resource metric and provides excellent leverage to the Birimian in Ghana through its own landholding and 17% strategic investment in neighbour Castle Minerals."
As for Hummingbird Resources, it boasts the fourth-largest land position in west Africa and has already defined resources of 3.8 million ounces.
"The current discount on enterprise value per oz metrics of $27/oz is not justified in our view and we think the Dugbe 1 project in Liberia has excellent development potential," it said.
As for Sovereign Mines of Africa, while early stage, it has one of the largest landholdings in Guinea and is exploring in partnership with the government.
While drawbacks include poor governance and infrastructure, a volatile political landscape, changing mining bodes and sporadic mineral legislations, Old Park Lane Capital remains bullish on exposure to the region.
"Elephant potential is still possible, the geology and structures are becoming better understood, the majors are increasing exposure, infrastructure is improving, the fiscal regime and mining legislation has already changed significantly [with] increased public-private partnerships and exploration spending," the broker concluded.