Canaccord on ITH (12-month target of C$4.40)International Tower Hill Mines is a Vancouver-based small cap exploration/development company with seven projects in Alaska (100%-owned) and two projects in Nevada (earning 60%). The company’s primary focus is the Livengood project, 110 kilometres north of Fairbanks, Alaska, and host to an NI 43-101 resource of 6.8 million ounces of gold (indicated and inferred) at 0.78 g/t Au (using a 0.50 g/t Au cut-off). At a 0.70 g/t cut-off, the core zone area contains approximately 4.2 million ounces (indicated and inferred) at an average grade of about 0.98 g/t gold. The company closed a $10.5 million private placement last week. Canaccord Adams was a syndicate member.
• Last week the company released the first two drill holes from the 2009 winter drill program currently underway at Livengood. The highlight intercept is 206 metres of 1.40 g/t gold, starting at 149 metres downhole. The company plans to expand the 2009 summer program to three drills, and the 2009 program is now expected to total 40,000 metres. An updated mineral resource will include the first 10,000 metres of the 2009 drilling and be used in the preparation of an initial Preliminary Economic Assessment (PEA) for Livengood. Results of the PEA are expected to be released in July, 2009.
• The Livengood project is currently accessed via the Elliot Highway, a paved two-lane road that connects to Fairbanks 90 kilometres to the southeast. A skilled mining workforce exists in Fairbanks. The Trans-Alaskan Pipeline (TAP) passes within several kilometres of the Livengood project. The nearest power is approximately 60 kilometres from the main zone at Livengood. Power in the area is coal-fired, which is considered to be reliable but expensive. Fort Knox is currently drawing about 30 megawatts to run its operation at an estimated cost of 13 cents per kWh.
Power costs at Fort Knox are considered the largest component of overall costs at the operation. There is currently an initiative by the
Alaskan government to construct a gas pipeline from the northern coast along the current TAP route to service Fairbanks and other communities in the area. A fast-track “bullet” pipeline designed to quickly provide gas to the area is also being considered, which could bring gas in as early as within two to three years. This initiative would potentially allow for a gas-fired power plant to be established near Livengood.
• We rate ITH as a SPECULATIVE BUY with a 12-month target of C$4.40 (rounded) based on our total NAV 5% (US$750/oz Au) of C$236.1 million.