RE:i-80 Gold Announces High-Grade Results Sprott Says.
Three takeaways from today’s Ruby Hill drilling include (i) Blackjack drilling the highlight given world class average hit 13.4m @ 7.9g/t AuEq, well above the 10% Zn / 4.9g/t AuEq modeled Ruby Hill base metal inventory (6.5Mt total inventory including 4.3Mt at 10% Zn, 0.6% Au, 36g/t Ag and 2.0% Pb from Blackjack).
For sensitivity, if we lift our Blackjack grade assumptions from 10% Zn to 15% Zn, our SCPe NPV8% lifts from US$620m to US$1,024m, for now we maintain base case 10% Zn. Next, East Hilltop expanded east with 6.2m @ 5.8g/t AuEq average; we see 300-500kt here already (60-100koz AuEq), another useful addition to our rough estimate of ~2Mt / 900koz AuEq from Upper and Lower Hilltop.
Finally, Hilltop (especially high grade >15g/t AuEq Upper and Lower Hilltop) drilling recommences with granted permits, adding to follow-ups on the 17.5m @ 45g/t Au (prev announced) hit at Tyche, and new geophysical targets between Hilltop and FAD, so we expect a resumption of drill-bit driven momentum in September.
We reiterate our BUY recommendation and C$5.30/sh based on unchanged multiples of 0.60xNAV5%-1850.
Catalysts/Thesis/Valuation: We’re excited by drilling at Ruby Hill in H2 including following up the Tyche Discovery (17.5m @ 45g/t) and the Hilltop CRD zones + PEA at Ruby Deeps, and updated Granite Creek DFS. Big picture the combination of 1) world class discovery successes at Ruby Hill and 2) advancing towards 400kozpa plus 2028e steady state gives I-80 two attractive paths to advance. I-80 is trading at just 0.3x SCPe NAV5%-1850 or ~ 40% annualized return to SCPe 1x NAV (US$3.0bn) in steady state 2028; we think this offers excellent returns relative to current and future size and liquidity.