Looking Ahead To Good NewsInteresting reading including I-80 coverage at the bottom Here is one analyst opinion including I-80 coverage. My view is the project is and will move ahead. Looking at Skeena they raised the cash to complete their project with Orian providing 750 million in funding. Orian also holds 25 million shares of I-80. JV study still on the go and in the today's article.
PS
As for that Mental case that shows up knowing zip just put him on ignore ;) With two quarters of gold well above US$2,200/oz, we think it’s prudent to update our LT gold and silver
prices. At US$1,850/oz and US$24/oz, our LT prices were too punitive, and not reflecting market values for lower grade but technically sound projects in good jurisdictions – see the bidding war over Osino for
example. Adjusting for this market environment, we increase our long-term precious metal prices assumptions to US$2,000/oz Au and US$30/oz Ag from prior US$1,850/oz Au and US$24/oz base case price estimates but maintain our conservative P/NAV multiples. As such, we update our price targets for covered names.
We think the gap between metal prices and equities has created a strong buying opportunity for both equity investors and M&A buyers demonstrated by mega mergers like Newmont-Newcrest, opportunistic mid-tier asset ownership consolidation (EQX CN of Greenstone and
IMG CN of Ct), premium take-out offers for quality gold developers (OSI CN, RGD CN), as well as much needed consolidation of stagnant junior explore cos. We think the producers have a lower cost of capital
than the market right now, so M&A is heating up.
Our top picks focus on where we see value creation: discoveries, M&A takeouts, skilled mine builders, and
companies building mid-tiers. In the exploration space, with Reunion (RGD CN) acquired by GMIN recently,
Predictive (PDI AU) and Snowline (SGD CN) remain the top gold discoveries (and M&A candidates)
globally. G2 (GTWO CN), Wia (WIA AU), and Probe (PRB CN) continue adding good ounces relentlessly
that are accretive to mine plans.
For feasibility-stage projects, Montage (MAU CN) and Greatland (GGP
LN) are mine builders now but could be mid-tiers later.
Undervalued names with good assets include Thesis
(TAU CN) (updated PEA should impress), I-80 (IAU CN) (tough year but reaching inflection and studies) and GoGold (GGD CN)’s(updated DFS should enable quick turnaround to a construction decision in 2024), while
Silver Tiger (SLVR CN), STLLR (STLR CN), O3 (OIII CN) continue to de-risk large ounce bases for self-build and or M&A. For advanced developers, Maritime (MAE CN), and Skeena (SKE CN) offer bargain entry points with Newcore (NCAU CN), Silver Mountain (AGMR CN), STLLR (STLR CN) and Troilus (TLG CN)offering even steeper discounts to NAV.
I-80 Gold: maintain BUY rating, lower Price Target from C$4.75/sh to C$4.00/sh I-80 had a tough 2023, despite some of the best drilling globally for both base metals at Hilltop and gold at SPZ and McCoy Cove, the combination of drill intensive work plans and tough funding markets took a toll on the capital structure.
Although painful, we think the C$115m bought deal completed in May puts a solid foundation for I-80, as it enables them to complete studies at all three projects. Granite Creek is the first, targeting FS next year, with McCoy Cove and Ruby Hill also advancing.
Between then and now we expect a mix of infill and step out drilling, with a greater proportion of infill than in prior years. We think something like 500-600koz of Reserves at Granite Creek with visibility on >1Moz potential at SPZ would be a good outcome, while Cove is about infilling to confirm grade.
At Ruby Hill, the work plan depends on JV completion, but we expect the JV to fund study work until the build. Updating for the raise and lifting our LT gold price, we maintain our BUY rating but lower our price target to C$4.00/sh from C$4.75/sh, based on a 0.60x NAV5%-2,000.
Looking ahead, Ruby Hill’s JV final decision, updated MRE/DFS at Granite Creek and McCoy Cove remain the key value accretive catalysts for the stock. I-80 is trading at just 0.2x NAV and we still love the assets – this is still a high-grade portfolio with 500kozpa potential with geology that has consistently surprised to the upside. We think the studies will bring the market much needed clarity on capex, mine plans and timeline.