Navigating the dynamic landscape of junior gold mining, where M&A activities are on the ascent!
We are reinitiating coverage on Loncor Gold Inc (TSX: LN) (OTCQX:LONCF) (FSE:LO51) as it strategically divests the Makapela property for C$13.5M, fortifying its financial position to propel the flagship Adumbi gold deposit in the DRC.
Loncor's Imbo project, boasting key targets like Adumbi, Kitenge, and Manzako, positions itself strategically, just 220 km from Barrick’s Kibali mine, the largest gold mine in Africa. With mining permits secured, Loncor's Adumbi deposit, hosting a substantial 3.7 Moz gold at 2.4 gpt, unveils promising prospects.
A 2021 Preliminary Economic Assessment (PEA) reveals an AT-NPV5% of $600M and an enticing AT-IRR of 25%, utilizing $1,600/oz gold. Trading at a mere 6% of the AT-NPV, Loncor becomes an intriguing prospect, especially as gold prices currently surge at $2,047/oz. Anticipating a production potential of 300+ Koz annually, Adumbi emerges as a potential mid-sized gold mine.
Noteworthy shareholders including Resolute Mining Limited/ASX: RSG (21%), Newmont Corporation/NYSE: NEM (5%), and LN’s Executive Chairman (20%) collectively own 46% of Loncor's equity, reflecting strong industry confidence.
In the broader context, with a positive outlook on #gold driven by proposed rate cuts and lingering inflation concerns, Loncor positions itself strategically amidst a trend of rising M&A activities in the junior gold sector. Recent transactions, such as Dundee Precious Metals's acquisition of Osino Resources and Zhaojin Mining's acquisition of Tietto Minerals, underscore the robust market.
Estimating an average M&A deal price of C$82/oz, Loncor emerges as a standout candidate, given its current shares trading at just C$19/oz.
*FRC provides issuer paid coverage.
*Past performance is not indicative of future results