TD UPDATEEvent We are resuming coverage of Augusta Gold following a period of restriction after the close of a bought deal equity financing. The company sold a total of 6.7mm units (increasing its shares outstanding by ~8%) at a price of C$1.71/unit to raise gross proceeds of C$11.5mm. Each unit consisted of one share and one-half warrant, with each whole warrant exercisable at C$2.30 for 36 months.
Impact: NEUTRAL The net proceeds from the offering will be used to partially fund its Nevada projects (Reward/Bullfrog), as well as for working capital and general corporate purposes.
We estimate that the company now has cash of ~$11mm ($3mm as at September 30 + C$11.5mm of gross proceeds from the offering) and $22mm of debt (Richard Warke loan).
As a reminder, an updated study for Augusta's Reward project in Nevada is anticipated in the coming months. We believe the study will demonstrate Reward to be a shovel ready, oxide gold project (with ample water rights and sufficient water supply in place) in close proximity to the company's Bullfrog Project (seven miles away).
For reference, the Bullfrog project (100%) is in the Walker Lane Trend, ~4 miles west of Beatty, Nevada.
The company is currently completing the required studies for a Mine Plan of Operations for Bullfrog (to be submitted later this year). A Pre-Feasibility Study is expected to follow.
We view the company as very well-positioned. Senior and mid-tier producers have been focused on "tuck-in" acquisitions to address declining Reserves and flat production profiles and given that the market has returned its focus to growth and optionality. We see Augusta as a natural acquisition target as it continues to advance its projects.
TD Investment Conclusion We believe the Reward Project provides potential production (in 2024), while the company completes the permitting process at Bullfrog. Augusta, in our view, possesses attractive projects for either for the company to bring to production on its own or to be acquired in the current environment.
We are maintaining our SPECULATIVE BUY recommendation and C$3.50 target price.
Mar-22 May-22 Jul-22 Sep-22 Nov-22 Jan-23 G-T: Price Company Profile Augusta Gold is a Vancouver-based small-cap gold company, focused on the advancement of the Bullfrog and Reward Gold Projects. The Bullfrog Gold Project is located in the prolific Walker Lane Trend approximately 4 miles west of Beatty, Nevada. Gold and Precious Minerals - Mid-and Small-Cap Golds Augusta Gold Corp. (G-T) C$1.48 Resuming Coverage; C$11.5mm Unit Offering Arun Lamba, CFA Kulvir Gill, CFA (Associate) Recommendation: SPEC BUY Risk: SPECULATIVE 12-Month Target Price: C$3.50 12-Month Dividend (Est.): C$0.00 12-Month Total Return: 136.5% Market Data (C$) Current Price C$1.48 52-Week Range $0.89 - $2.42 Mkt Cap (f.d.) ($mm) $127.1 Float Cap ($mm) $62.0 Current Dividend $0.00 Dividend Yield 0.0% Avg. Daily Trading Vol. 80,123 Financial Data (C$) Fiscal Y-E December Shares O/S (f.d)(mm) 85.9 Float Shares (mm) 41.9 Net Debt/Total Cap 0.3% Cash ($mm) $11.0 NAVPS $4.22 Supplemental Data Year 2020A 2021A 2022A 2023E Gold US$/oz 1,770 1,799 1,803 1,750 Cash in US$. All figures in US$, unless otherwise specified Page 1 of 9 January 20, 2023 Details Balance Sheet & Offering Details • The company sold a total of 6.7mm units (increasing its shares outstanding by ~8%) at a price of C$1.71/unit to raise gross proceeds of C$11.5mm. Each unit consisted of one share and one-half warrant, with each whole warrant exercisable at C$2.30 for 36 months. • We estimate that the company now has cash of ~$11mm ($3mm as at September 30 + C$11.5mm of gross proceeds from the offering) and $22mm of debt (Richard Warke loan). • We now model the company raising C$55mm of equity (at C$1.75/sh) in 2023 (from C$65mm at C$1.75/sh) as part of a larger project financing package. Reward Project (fully permitted heap leach gold project in Nevada) • The Reward Project is a shovel ready, oxide gold project in close proximity to Augusta's Bullfrog Project. We currently model production starting in 2024. • Resources were updated on May 31 and are presently defined by 427 koz Au at 0.75 g/t M&I and 27 koz Au at 0.68 g/t Inferred. The oxide resources are reported within a constrained pit shell using a gold price of $1,700/oz.
• Augusta is currently updating the past Reward study. The company has all major permits in hand to commence construction and operations.
• Exploration: Management reported that within the Good Hope deposit, recent drilling has intersected mineralization along the Good Fortune Fault. The zones to the north and south of the Good Hope deposit are mineralized and remain largely untested. Bullfrog Project (heap leach gold project in Nevada)
• The Bullfrog project is in the prolific Walker Lane district of Nevada, an area that is very active with junior and senior gold companies involved in exploration, development, and asset consolidation. • M&I resources (December 2021 at $1,550/oz) of 1,209 koz Au at 0.53 g/t (94% oxide) and Inferred resources of 258 koz Au at 0.48 g/t (91% oxide).
• The company is currently completing the required studies for a Mine Plan of Operations to be submitted in H1/23. A Pre-Feasibility Study is expected to be completed in the next quarter or so. We currently model average annual gold production of 89 koz (with first gold anticipated in 2025 – TD estimate). • Exploration: Augusta is currently advancing a multi-target exploration program at Bullfrog. The first phase includes the Montgomery/Shoshone, Gap, and Bull frog targets, while the second phase includes the Bonanza Mountain and Paradise Ridge targets.