Ausgold's (ASX:AUC) Katanning gold project in Western Australia presents a "compelling" development opportunity with a simple, scalable open-pit operation, potential for future underground mining, robust margins, and a rapid payback period, Euroz Hartleys said in a Tuesday note.

The company confirmed the extension of mineralization down-dip outside the resource of 2.4 million ounces following the release of results from in-fill and extensional drilling within the Central Zone.

Results included 10 meters at 2.2 grams per tonne (g/t) grade of gold from 346 meters, including 2 meters at 9.5 g/t grade of gold from 346 meters, 6 meters at 1.9 g/t grade of gold from 33 meters, including 3 meters at 3.3 g/t grade of gold from 33 meters.

The company is expected to release an update of the project resources in the third quarter of the year.

Euroz Hartleys maintained its speculative buy recommendation on Ausgold and lifted its price target to AU$2.45 from AU$2.35.

Ausgold shares rose 3% in morning trade Wednesday.