Dakota Gold Corp (NYSE:DC) shares continued to decline in trading on Friday, after climbing through most of August.

There is "significant scarcity value" in the new JB Gold Zone high-grade gold discovery in the state of South Dakota, according to BMO Capital Markets.

Analyst Andrew Mikitchook initiated coverage of Dakota Gold with an Outperform rating and a price target of $6.

The Dakota Gold Thesis: The best place to find a new mine is beside an old one, Mikitchook said in the initiation note.

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"Dakota Gold has consolidated a large land package covering the direct northern extension of the Homestake mine," he added.

"The proximity and geological similarities to the long-running Homestake mine suggest potential for scale at the JB Gold Zone," the analyst wrote.

"Dakota’s management team has strong ties to the Homestake district and relevant experience in advancing exploration projects," Mikitchook stated. He further stated the JB Gold Zone could become "the main valuation driver" for Dakota Gold.

DC Price Action: Shares of Dakota Gold had declined 4.69% to $2.24 at the time of publication on Friday.

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Photo: Courtesy Dakota Gold