Post by
newfie36 on Jul 09, 2020 9:52am
Cibc Coverage $38.00 at $2500 Gold
Some points Below.
In my opinion we will be over $2000 gold by November and a share price closer to $25.00
We are going to get a big payback!!
Price Target (Base Case): C$18.00 Our price target is based on a blended average of 8.0x 2021E CFPS and 1.2x NAVPS, both at CIBC prices. Upside Scenario: C$38.00 Our upside scenario is based on $2,500/oz gold
Upcoming Potential Catalysts
1) July 2020: Sabodala-Massawa Complex (SMC) Consolidated PFS SMC is the company’s flagship asset, located in southeast Senegal, 96km north of the town of Kedougou. Teranga acquired Barrick’s Massawa gold project in March 2020 for upfront consideration of $380M, comprising $300M in cash and $80M in Teranga common shares. The Massawa transaction was undertaken for reasons similar to those that predicated Teranga’s acquisition of Oromin in 2013, i.e., to leverage Sabodala’s existing mill and infrastructure to extend the current operation’s mine life and acquire higher grade to improve the overall cost profile and AISC margins. SMC is estimated to carry a mineral reserve base of ~4.9Moz at 2.09g/t, which includes Massawa’s reserves of 2.6Moz at 3.94 g/t and Sabodala’s reserves of 2.2Moz at 1.33g/t. Teranga is scheduled to provide a consolidated technical report, a PFS, around the end of July that incorporates the Massawa ore sources and factors in synergies with existing infrastructure. We view this report as a key potential catalyst, one that should showcase SMC as a world-class mining operation. In our model, we have made assumptions and modelled what the PFS could consider; our valuation indicates LOM production of 4.2Moz gold at a $756/oz AISC and a NPV5% of $1.5B. In the longer term, potential upside to our current NPV5% could be realized when the company delivers a full feasibility study for SMC that factors in resource upside, higher throughput and increased metallurgical testing in H2/21.
2) August 2020: Updated 2020 Guidance At SMC, Teranga plans to mine the free dig ore from higher-grade Sofia deposits, starting Q3/20, to accelerate near-term production and cash flow growth. This ore source was not previously incorporated into 2020 guidance of 215koz at $900/oz-$975/oz AISC, and we, therefore, expect a positive revision to 2020 guidance with the August update. At the same time, Wahgnion, Teranga’s newest gold-producing asset, is delivering ahead of the current mine plan. Thus, we also expect a positive revision to Wahgnion’s 2020 guidance of 130koz-140koz at $850/oz-$950/oz AISC due to a higher proportion of oxide ore feed and increased throughput than originally planned. We model consolidated production of 158koz at $859/oz AISC, well ahead of initial guidance. On a consolidated basis we model 387koz, 11% ahead of initial guidance
3) H2/20: Golden Hill PEA Golden Hill represents an organic growth opportunity in Teranga’s portfolio and Teranga management can repeat the development success from Wahgnion at Golden Hill. The project currently hosts 1,059koz gold at 1.81g/t but we expect recent drilling to increase the known resource in an expected PEA to be delivered in H2/20. Endeavour’s Hound operation is contiguous with Golden Hill and is the next center of focus. Following the PEA, we expect the company to request conversion of its exploration permits to a mine license, and thereafter the project to advance to full feasibility.