Thesis Gold Inc. is focused on advancing exploration, engineering and metallurgical testing work on the combined project to create a new intermediate gold producer, according to a research note from Leede Jones Gable.
Leede Jones Gable analyst Ron Stewart initiated coverage on Thesis Gold Inc. (TAU:V) with a Buy rating and a price target of CA$2.30 per share for February 2025, according to a research report published on May 9, 2024. The analyst believes that Thesis offers investors the opportunity to earn returns higher over the next few years as the company grows. the path to production.
“Thesis was born from a business combination that brought together the multi-million ounce Lawyers Project and the contiguous Ranch exploration project in north-central British Columbia,” Stewart noted. “The Company is focused on advancing exploration, engineering and metallurgical testing work on the combined project to create a new intermediate gold producer.”
Current NI 43-101 compliant mineral resources for Thesis Gold are 5.0 million gold equivalent ounces (GEO), comprising 4.0 million GEO ounces of measured and indicated resources (82.0 Mt at 1.11 grams per tonne gold (g/t Au), 31.9 g/t Ag) and 727,000 oz GEO inferred resources (12.4 Mt at 1.48 g/t Au, 24, 8 g/t Ag).
“Despite the significant resources already identified, we believe the 325 km2 property offers excellent exploration potential for additional high-quality resources,” commented Stewart.
The analyst highlighted that more than 20 prospects and deposits on the Ranch property remain open for exploration and resource expansion, with high-grade mineralization open at depth beneath the AGB and Cliff deposits at Lawyers.
Thesis Gold plans to incorporate underground mining at Lawyers and satellite transmission at Ranch into an updated preliminary economic assessment (PEA), expected by the end of summer.
“We anticipate a significant increase in GEO's annual production, which is expected to average more than 200,000 ounces per year over a 10- to 15-year mine life,” Stewart said.
The analyst highlighted that Thesis Gold currently trades at a 65% discount to its peers based on enterprise value to total resource ounce, with an estimated valuation of around US$20 /oz, compared to an average of US$54.9/oz.
Stewart also highlighted the appointment of William (Bill) Lytle as president in February, noting that “Mr. Lytle is a mining engineer with extensive construction and operational experience and currently serves as vice president and chief operating officer of B2Gold Corp (BTO.T, unclassified). ), a very successful international intermediate gold producer.
Leede Jones Gable's valuation of Thesis Gold is based on an adjusted net asset value (NAV) per share, comprised of estimated, fully funded, after-tax discounted cash flows (DCF) plus incremental exploration value from the metal residual content not included in the mine plan.
“Our estimated NAV of 5% includes a DCF of CA$871 million and an exploration value of CA$98 million. We adjust the DCF by 50% to reflect the exploration stage of the project to arrive at an adjusted net asset value of CA$436 million, resulting in a target price of CA$2.30/share,” explained Stewart.
The analyst identified several key catalysts for Thesis Gold, including additional metallurgical test results expected in the current quarter, an updated PEA by the end of summer and the announcement of the exploration program 2024 by the end of the quarter.
With a Buy rating and target price of CA$2.30 per share, representing a potential return of 199% from the current price of CA$0.77, Leede Jones Gable sees significant upside potential for investors in Thesis Gold as the company advances its projects toward production.
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Disclosures for Leede Jones Gable, Thesis Gold Inc., May 9, 2024
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