Sprott UpdateFirst, I agree with Curse and his take on the situation. Unless there is a buyout over the next six months this is dead money and all those new assays only add fruit to attract interest from potential suitors. As eluded to below this may happen? So unless Au goes into the stratosphere this is wait and see who's interested?
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Today’s Federal EA approval is the final major milestone required to advance Valentine’s construction as the provincial EA was received in May, requiring only local permits going forward. Whilst the provincial EA was more critical as this enabled early works, the Federal EA removes a key overhang and positions Valentine among the select few development-ready assets in North America with visibility on >150koz pa production—attractive to M&A buyers.
Still key is the upcoming cost guidance (we model +15% on published DFS) and updated DFS to follow in 4Q22, which in a new development we should see the Berry pit (1.1Moz @~2g/t in M&I) incorporated into the mine plan, a positive and unexpected development for us. Whilst Berry requires additional permits, by adding it into a DFS investor confidence on the DCF should improve, and thus the underlying value.
For now, we maintain our BUY rating and C$3.40/sh PT based on 0.8xNAV5%-1850.
With the stock at just 0.4xNAV, the interplay between funding, value and dilution is key; our PT is based on 328m fully-funded fully diluted assuming funding at 0.4xNAV.
With debt agreed, finessing the timings of equipment lease facilities, incorporating inflation and mine funding is key, as of course are capital market conditions. With the stock already having recovered from 120 lows, up >40% in the last month, we are hopeful that momentum resumes vs peers for whom ‘close’ to permitting could still see years of delays ahead.
Federal / Provincial EA complete – Valentine Gold Mine permitted to advance development Marathon announced that the Valentine Gold Project has now been fully released from environmental assessment in both the province of Newfoundland and Labrador and federally, allowing development to proceed based on applicable permitting to such as tree clearing, quarrying, earthworks, accommodation camp installation, road upgrades and culvert installations.
Why we like Marathon 1. Low cost vanilla gold pit in Tier 1 jurisdiction is without peer in >150koz group
2. First satellite Berry has the potential to exceed our modelled 620koz in inventory
3. Potential for further satellites in Berry – Marathon ‘gap’ and NE of Marathon at Narrows
4. Builder-mentality of management, multiple recent staff bulk build team
5. Fully-diluted NAV in production sits at ~C$5.00/sh Catalysts
• 2H22: Updated cost guidance and DFS
• 2H22: Project financing • 2022: Drill results from Victory, RC grade control program, and Scott Zone
• 2H22 / 1Q24: Construction starts / first pour