Sprott ReportToday’s commencement of 2023 Ruby Hill drilling announcement should put the market on alert for step change results, given six rigs active on site, and game changing Hilltop CRD results that I-80 achieved in 2022 (incl average pierce point 9.6m at 30.1g/t AuEq on 15 Nov PR).
The highlight of today’s announcement was the six rigs figure, which enables I-80 to simultaneously advance i) Hilltop CRD-style high grade, ii) drill out the high grade Au at Ruby Deeps (SCPe 8-10g/t Au), and define new zones which are proximate to likely mine development including the polymetallic Blackjack, 426 zone (Au oxide and sulphide) and 007 (Au oxide and sulphide).
The subtle reminder of the Ruby Hill CIL restart should also be noted: There is ability for low capex production growth here in addition to I-80’s main strategy of high grade gold sulphides, likely starting with gold oxides for 1-2 years (US$8.9m capex per the study for 270ktpa of high grade and 870ktpa of low grade) and then transition to base metals processing (US$66m for conversion to flotation at 240ktpa).
We maintain our base case estimates, which assumes 8g/t head grade at Ruby Hill UG to generate our US$459m SCPe NPV5%-1700, and reiterate our BUY rating and our C$4.75/sh PT based on 0.60xNAV5%-1700 (note at spot our PT would lift to C$6.25/sh on unchanged multiples). I-80 has been one of North America’s top performing gold stocks for a reason – it added genuine world-class discoveries at Ruby Hill (Hilltop) and Granite Creek (South Pacific Zone) to the USA’s only domestic mid-tier 500kozpa growth pipeline.
We think Ruby Hill and Granite Creek will continue to deliver multi-million-ounce growth at world class grades this year, reaching cash flow positive at Granite Creek in H2, proving plenty of momentum for the stock.
Figure 1. (A) Plan map showing new Hilltop Corridor anomalies and (B) Hilltop cross-section Source: I-80 Gold Ruby Hill 2023 drilling commences with six rigs, new Hilltop geophysical targets identified I-80 announced commencement of its 2023 drilling program at Ruby Hill with a total of six core and RC rigs.
The primary targets of the first program are CRD mineralization at Upper Hilltop Zone, skarn mineralization at Blackjack and Hilltop corridor targets, and new geophysical anomalies identified in the Hilltop corridor. The company also made note of last year’s scoping study on restart of the Ruby Hill Mill, 25 January 2023 Page 2 which identified potential to restart at 1.1Mtpa of oxide Au processing capacity (26% high grade / 74% low grade blend) and later conversion to base metal flotation (US$65.7m capex for 240ktpa).
Why we like I-80 • Among highest grade open pit and underground development assets in US • One of only three companies with refractory sulphide processing facilities in Nevada • Ramping up underground methodically with US$109m of cash to support • Opportunity to consolidate Nevada and western US gold projects Catalysts • 1H23: Updated Granite Creek MRE, Lone Tree restart study • 1H23: Updated Ruby Hill MRE including maiden resource for Blackjack • 2H23: Cash flow positive inflection at Granite Creek, Ruby Hill FS