TD UPDATETHE TD COWEN INSIGHT Q3 results were largely in-line with expectations with production and costs previously released. Calibre is expecting improvement in Q4 and 2025 with the issues in Nicaragua now behind them. The focus remains on Valentine which remains on-track for a mid-2025 start-up. Our target has declined to C$3.25 on slightly higher costs in 2025;
Maintain BUY. Impact: NEUTRAL Q3 in-line with production and costs pre-announced: Q3/24 adjusted EPS of $0.00 was largely in line with our estimate and consensus of $0.01. CFPS was $0.02 vs. our estimate of $0.03 (excluding gold prepay). Recall, Calibre announced its Q3 operating results and an update on Valentine in October
Positioned for stronger Q4 and 2025: Calibre has reiterated its guidance of 70-80koz (TD: 72koz) of production in Q4. Mining in Nicaragua is on track to plan. The company also expects to have 30koz of gold contained in stockpile at the Libertad mill going into 2025.
Warrant exercises kept Valentine fully funded, however Q4 is important: In Q3 Calibre raised approximately $74mm through the exercise of warrants assumed from the acquisition of Marathon Gold. The company issued 46mm shares at C$2.19/sh. These proceeds keep the company "fully funded" under the restrictions associated with the Valentine project financing debt. Based on our forecast Calibre's financial position will improve thorough Q4. Cash flow however will be negatively impacted by the gold prepay agreement; we estimate the impact will be $15m from the realization of deferred revenue and a $3mm realized loss from gold hedges (at $2,700/oz gold).
Balance sheet remains fully funded: Calibre held $116mm of cash and $100mm of restricted cash as of Q3/24, which is more than sufficient to fund the remaining C $197mm of capex at Valentine. The company also has 6mm outstanding warrants expiring Jan 2028 which could bring it up to C$14mm.
Maintaining our BUY recommendation and reducing our target to C$3.25 (from C$3.50). We continue to believe Calibre is well-positioned to deliver Valentine to production and add value through the drill bit. Our 2025 estimates have declined slightly as we raised our costs modestly. Our NAV has declined to $3.24/sh (from C$3.37/sh)