National Bank initiates coverageModest price target but nice that it is starting to get more exposure.
In a research report titled Opportunity Meets Preparation in Nevada, National Bank Financial analyst Don DeMarco initiated coverage of i-80 Gold Corp. (
) with an “outperform” recommendation, touting the potential of its “infrastructure paired with world-class resource.”
“i-80 Gold Corporation is a Junior producer executing on a plan to transition to an Intermediate producer, exclusively through organic growth, employing a hub-and-spoke operating model to create a comprehensive Nevada-focused mining complex,” he said. “Pursuant to its plan, i-80 is to develop its portfolio of 100-per-cent-owned mining assets in Nevada, including Lone Tree, Ruby Hill, Granite Creek and McCoy-Cove.”
“i-80′s portfolio features infrastructure with eminent optionality, highlighted by a 2,500 tpd autoclave on care & maintenance at Lone Tree and additionally a processing facility at Ruby Hill including an oxide mill and active heap leach processing. The infrastructure is paired with i-80′s world-class 14.6 million oz gold mineral resource including 4.1 million oz above 8 grams per ton highgrade underground resources below historic open pit mines, with mineralized extensions open at depth and along strike and additionally a potential worldclass base metals system.”
Mr. DeMarco said he likes the Reno, Nev.-based company’s organic production growth plan, seeing a phased approach to expansion that is “offering flexibility to sequence financing and capex spend.” He also touted its “low capex intensity development,” noting: “Existing processing infrastructure including refractory processing capabilities on the mining complex makes for an exceptional development opportunity targeting world-class production levels, transforming assets which are limited individually but provide a heightened ROI collectively.”
Seeing its upside tied to execution, Mr. DeMarco set a target of $4.25 per share. The average is $4.78.
“Our rating is based on an elevated return to target, and as i-80 de-risks development and increases production, it should get cash flow and multiple growth,” he said. “Furthermore, i-80 has measurable exploration upside potential, which provides visibility for resource and NAV accretion when realized. Our view is tempered by uncertainty in our mine plan estimates, including capex, though is largely expected to be addressed with technical reports pending release ~early next year. Our model scenarios show a 124-per-cent blue-sky upside on successful execution, rationalizing Ruby Hill grades higher, lowering discount rate on the mining complex and moving our DCF forward to Q1/25 upon the start-up of the Lone Tree autoclave and implementing Phase 2. Our target is based on a 1.25 times NAVPS estimate of $3.41.”