Thesis Gold Inc. (TAU:TSXV; THSGF:OTCQX; A3EP87:WKN) announced an updated independent Preliminary Economic Assessment (PEA) for its 100%-owned Lawyers-Ranch project in the Toodoggone Mining District of northern British Columbia.
It outlines a plan for developing the combined project with open-pit and underground mining methods and processing at a single facility to achieve an estimated gold recovery of 93%. The PEA noted an after-tax internal rate of return (IRR) of 35.2% and a net present value at a 5% discount rate of CA$1.28 billion (after tax), using US$1,930 per ounce gold and US$24 per ounce silver.
"With today’s gold price near US$2,500 per ounce, the substantial economic potential of the Lawyers-Ranch Project is clear," said Dr. Ewan Webster, president and chief executive officer of Thesis. "As we advance toward key project development milestones, we will continue to explore new targets within our expansive, highly prospective land package. This approach will further enhance a project that is not only straightforward and low-risk but also benefits from high-grade, easily accessible open-pit and underground ounces, combined with proximity to existing infrastructure. This positions the Lawyers-Ranch Project as one of Canada’s most prospective gold projects."
According to the PEA, the project remains robust at a wide range of gold prices from US$1,750 to US$2,500, with after-tax IRR of 28.8% to 52.8%.
JDS Energy & Mining Inc. of Vancouver prepared the PEA in accordance with National Instrument 43-101 standards, the company said.
Upside Potential, Possibility of Mineral Resource Growth
The new PEA saw an increase in production over a 2022 PEA with a 32% increase in annual average production to 215,000 gold equivalent (Au Eq) ounces, including an average 273,000 Au Eq ounces annually over the first three years, and a 55% increase in life-of-mine (LOM) production to 3 million Au Eq ounces, the company said. The PEA extends the LOM to over 14 years.
The company also noted a low all-in sustaining cost (AISC) of US$1,013 per Au Eq ounce, and a quick after-tax payback of two years, a 29% decrease compared to the 2022 PEA.
"We see Thesis continuing its evolution of becoming a leading gold developer within the Canadian landscape and a rarity asset with >5 Moz Au Eq potential," Phil Ker of Ventum Capital Markets noted.
Initial capital expenditure is estimated at CA$598.4 million, with an after-tax NPV5% to initial capital ratio of 2.1:1, Thesis said.
In addition, the company said significant resource growth is still possible across both projects.
"The underground Mineral Resource at Lawyers is still open for expansion at depth, while Ranch Mineral Resource zones also remain open," Thesis said in a release. "Additionally, there are over 20 unexplored targets that hold potential for further discoveries."
"The inclusion of the Lawyers underground brings high-grade, easily accessible ounces into the early stages of the mine life, significantly enhancing the project’s economics compared to the 2022 PEA," said Non-Executive Chairman Bill Lytle. "With 301,316 meters drilled to date, 86.9% of the updated 2024 Mineral Resource is now classified as Measured and Indicated. Combined with well-advanced engineering and environmental baseline work, the project is rapidly moving towards pre-feasibility and an accelerated permitting timeline, while still offering substantial upside potential and opportunities for Mineral Resource growth."
Analyst: 'Gaining Steam' in a Rising M&A Environment
Analyst Phil Ker of Ventum Capital Markets, in an updated research note on September 5, wrote that the updated parameters were "relatively in line with expectations and are highlighted by the study demonstrating an additional 1 Moz (million ounces) Au Eq of production versus the 2022 PEA."
"The stronger LOM and optimized PEA now lean on a mine plan recovering 3 Moz Au Eq over a 14-year mine life, making it one of the larger undeveloped gold projects in Canada," wrote Ker, who rated the stock a Buy with a CA$1.55 per share target price. "With substantial mine plan optionality, exploration upside, and silver exposure, we see the Lawyers-Ranch project gaining steam in a rising M&A environment as intermediate gold operators seek bolt-on assets to replenish their project pipelines."
Ker also pointed out that the company is wrapping up a 2024 drilling program with results pending.
"Considering 3 Moz Au Eq of recoverable ounces and a robust upfront mine plan, we see Thesis continuing its evolution of becoming a leading gold developer within the Canadian landscape and a rarity asset with >5 Moz Au Eq potential," Ker noted.
Gold Rising Steadily
Gold prices have been rising steadily and hit a fresh high last month of US$2,532.05 per ounce, pushing the price of a gold bar (400 troy ounces) to more than US$1 million.
The yellow metal started Thursday at US$2,517.49, up 1.23% from Wednesday's price and 21.83% since the beginning of the year, according to USA Today.
Some experts expect gold to go even higher. In a Soar Financially YouTube video, Bloomberg Senior Commodity Strategist Mike McGlone predicted that it would only be "a matter of time" before gold hits US$3,000.
According to a report by Mint, Goldman Sachs, in its note "Go for Gold," said gold has the highest potential for a near-term increase.
Streetwise Ownership Overview*In contrast, weak demand from China has resulted in a "more selective, less optimistic" outlook on other commodities, the note said, according to Mint.
"Imminent Fed rate cuts are poised to bring Western capital back into the gold market, a component largely absent (in) the sharp gold rally observed in the last two years," the brokerage firm said.
Ownership and Share Structure
According to Thesis, about 66% of the company is owned by institutions, and about 4% is owned by insiders. The remaining 30% is retail.
Top shareholders include Franklin Advisers Inc. with 7.82%, Merk Investments LLC with 7.58%, Delbrook Capital Advisors Inc. with 5.5%, Sprott Asset Management LP with 4.63% and Van Eck Associates Corp. with 2.45%. Director Nicholas Stajduhar owns 1.09%.
The company said it has 196 million shares outstanding, 198.9 million fully diluted. Its market cap is CA$143.2 million, and it trades in a 52-week range of CA$0.90 and CA$0.37.
| Want to be the first to know about interesting Gold investment ideas? Sign up to receive the FREE Streetwise Reports' newsletter. | Subscribe |
Important Disclosures:
- Thesis Gold Inc. is a billboard sponsor of Streetwise Reports and pays SWR a monthly sponsorship fee between US$4,000 and US$5,000.
- Steve Sobek wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee.
- This article does not constitute investment advice and is not a solicitation for any investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Each reader is encouraged to consult with his or her personal financial adviser and perform their own comprehensive investment research. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company.
For additional disclosures, please click here.
