Intchains Group Ltd V.ICG

Haywood Securities: Buy rating & $0.70 target price for ICG

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According to Haywood Securities:

https://www.ge.tt/api/1/files/5P5bVSQ2/0/blob?download

Integra Gold Corp. (ICG-V, $0.34)

Rating: Buy

Target Price: $0.70

Return: 106%

Risk Profile: High

Development Update on Surface Development at Triangle

Valuation

Our $0.70 target is based on a fully financed, after-tax basis considering a 1.0x multiple to our project net asset value NAV for their 100% owned Lamaque project of $0.70 per share after corporate adjustments. Integra is trading at a discounted valuation relative to peers at US$19 EV/oz of gold and 0.50x NAV, versus peers at US$51 EV/oz of gold and 0.62x NAV.

Risks

We assign a High risk rating to Integra Gold.

Impact – Neutral

- Prepping Triangle for underground exploration – This morning Integra provided a development update for the Triangle Zone, which hosts 593,950 ounces of gold grading 10.5 g/t, or approximately 55%, of the total 1,087,040 ounce resource (indicated and inferred at Lamaque at a 5 g/t gold cut-off grade), in preparation for an underground exploration program. Preparatory surface work at Triangle is approximately 80% complete, with completion expected in Q4/15—before the onset of winter, at a cost of $4.9 million. This program included clearing, road construction, permitting and other surface facilities need for the underground development. This program is on budget and removes six months from the underground exploration timeline. Before starting the underground drifting and exploration work, Integra intends to release an updated resource estimate, in November 2015, which will incorporate the C structures at Triangle for the first time. This resource estimate will be integrated into a Preliminary Economic Assessment (“PEA”), expected in H1/16 and with this PEA Integra will be able to more accurately plan and cost out the next phase of work. A 12 month budget for underground work (Phase 1), including drilling and bulk sampling is estimated to cost about $20 million; however, this budget incorporates a previous resource model. The final budget is expected to be completed in December 2015, with Board approval in early 2016. We had assumed that a Prefeasibility Study (“PFS”) would follow the PEA, however, this now seems unlikely as the underground program at Triangle could be underway by mid-2016, subject to Board approval. On the permitting front, all the necessary underground exploration permits for the Triangle Zone are now in place and Integra has also received the Provincial permit to take a 5,000 tonne bulk sample as well. Integra is not required to file a Federal Environmental Impact Assessment for the project, and the existing CAs, which came with the Sigma Mill acquisition, cover milling, tailings, and waste-rock disposal. Additional mining permits would be required for production from Triangle, and Integra expects the mining lease would be approved by Q4/16.

- Exploration plans for 2016 and work timeline – Five drill rigs are presently operational at Triangle and have, to date, completed over 8,500 metres in 15 extensional and infill drill holes which have yet to be released. Integra plans to complete 25,000 metres of drilling before year end for a total of 90,000 metres during 2015. In 2016, Integra plans to drill a further 100,000 metres, with Board approval expected in early 2016. Integra has about $24 million in cash following the $14.6 million investment by Eldorado Gold (for a 15% interest) in August at $0.28 per share and the recent exercise of warrants.

Catalysts

1) Continued exploration and definition drilling at the Lamaque project; 2) Further exploration at Sigma-Lamaque (90,000 metres in 2015); 3) Updated resource estimate incorporating the C structures at Triangle for the first time - November 2015; 4) Start of an underground program at Triangle - Q2/16; 5) An updated PEA - H1/16; 6) Finalizing the consultation and permitting initiatives