TD Flash NoteEvent In this brief note, we provide a summary of Augusta's recent events and our outlook for the company.
Impact: NEUTRAL 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).
Our conceptual model for Reward is based on a 12-month build (first gold in 2024, subject to financing and a construction decision) and preproduction capex of $85mm.
For reference, the Bullfrog project (100%) is in the Walker Lane Trend, ~4 miles west of Beatty, Nevada.
The company is also 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. The company last reported a cash balance of ~$4mm (March 31) and $23.5mm of debt (Richard Warke loan).
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.
We have updated our estimates to incorporate the company's Q1/23 financial results. Net of these and other minor changes, our corporate NAV5% decreases slightly to C$4.14/share (from C$4.27/share). Our target price declines to C$3.25 (from C$3.50) on our lower NAV5% estimate.
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 the company to bring to production on its own or to be acquired in the current environment.