Asanko Gold Inc (AKG.TO) shares moved into positive territory Thursday morning, reversing earlier declines of up to 20 per cent, as equity analysts came out in support of the Canadian miner after hedge fund Muddy Waters said it was shorting the company's stock.

Asanko shares bottomed at $1.75 in opening trade in Toronto on Thursday before rebounding to $2.29, a gain of 4.6 per cent. U.S.-listed shares were up 31 per cent at US$1.69.

Vancouver-based Asanko on Wednesday disputed claims in a Muddy Waters report that it would run out of cash in 2018, due to problems with its Ghana mining operations.

"The (Muddy Waters) report appears to present a number of issues that have been highlighted previously in other commentary, most of which had either been acknowledged by management or were expected to be addressed with the upcoming publication of an updated feasibility study and mine plan," BMO analyst Andrew Breichmanas said in a note to clients.

Asanko will announce a feasibility study on its expansion plans on Monday, which it said will provide a "complete rebuttal" to Muddy Water's technical claims and refute other allegations.

Many analysts said Asanko has already addressed a key issue of remediation work required for the damaged western wall of its mine pit. Muddy Waters argues that a US$115 million pit wall pushback is required to repair the damage, but Asanko says that is unnecessary.

Canaccord Genuity maintained its $5 stock target for Asanko, noting that geotechnical risks are well known and managed.

"At this stage, we do not see anything that fundamentally justifies the current valuation and we do not foresee any operational challenges that could cause material funding shortfalls," analyst Rahul Paul said in a note.

"That said, we acknowledge the negative headlines could continue to weigh on the stock."

Scotiabank analyst Ovais Habib said the "mud slinging" makes Asanko's update on Monday increasingly important.

"We continue to favor the merits of Asanko's key projects and team, but expect investors to take a 'show me' approach to operations over the near term," Habib wrote in a note to clients.

"As a result, we have adopted more conservative valuation metrics in-line with peer valuations, prompting a price target revision to $4.50 (from $5.75)."

Asanko shares dropped 13 per cent on Wednesday morning as news of Muddy Waters short position surfaced, prompting trading in the stock to be halted for the rest of the day.