Macquarie Research (Upside potential: $2.25) Integra Gold
Target price up, armed with $52m –
multiple high-quality targets
(Upside potential: $2.25)
(Link from stockmaster989 post)
Macquarie Research
https://docdro.id/0sNyJHI
Investment thesis
ICG is one of the most active junior exploration companies globally, with a 2016 drill program of +90km for its flagship Lamaque South project in Val-d’Or Quebec. In September 2014, ICG acquired the Sigma- Lamaque milling facility, which we think was a ‘game-changing’ transaction, reducing initial capital costs, and potentially shortening the timeline to production, plus optionality for incremental capex scalability due to extra available milling capacity. With the transaction, ICG also acquired the historic Sigma and Lamaque mines and expanded its land package – we highlight that we were at Integra’s Gold Rush Challenge event and there were some impressive submissions to potentially unlock value at those assets.
Upside potential:
$2.25
Our upside scenario assumes at Lamaque South, ultimate reserves are 1.3 mom Au with average annual production of 107k oz Au, UG mining costs at C$77/t (~80% long hole), processing costs at C$25/t, initial capex at C$85m and sustaining capex at C$20m/year. If more shallow ounces are discovered at other “new plugs” it could imply a separate ramp for mining ore and an increase in annual production. This would provide additional mill feed and thus lower the milling cost. We also assume Lamaque Deep contains 4.0 m oz Au and is valued at $100/oz.
M2