Analyst Update SCP RESEARCHI-80 Gold: maintain BUY rating, lift Price Target from C$2.65/sh to C$3.00/sh I-80 enters a key period with updated PEAs due out on all the major assets (all three UGs and the Granite Creek and Mineral Point open pit / heap leach projects) due in Q1 followed by a guided financial restructuring.
Excluding the autoclave, we estimate US$350-410m recapitalization (inclusive of restructuring US$250m of converts, prepays and accrued interest). We still see significant value here with SCPe US$2.31bn NAV and we like that management (under CEO Richard Young and his ex-ArgonautTeranga team) has addressed the strategy and balance sheet head on.
Updating for US$2,300/oz plus the phase I restructuring, SCPe NAVPS moves from US$5.28/sh to US$6.00/sh. We maintain our BUY rating and lift our price target from C$2.65/sh to C$3.00/sh, based on a 0.5x NAV5%-2,300.
Big picture we think the assets are Tier-I (with SCPe 350-400kozpa at ~US$1050/oz AISC once the three UGs and Granite Creek OP are in production) and think the company should be in a much better position to build momentum once the balance sheet and capital needs are addressed for the market between the upcoming PEAs and the restructuring. We expect the autoclave timing to be determined later driven by capital requirements and availability.
Table 12. Valuation and sensitivities for I-80 Gold. (The higher Au and Ag go looks good for I-80)