Atrium Research analysts Ben Pirie and Nicholas Cortellucci, in a research report published on September 10, 2024, provided an update on Lake Victoria Gold Ltd. (LVG:TSXV) following the company's announcement of exploration activities by Barrick Gold Corp. (ABX:TSX; GOLD:NYSE) on surrounding claims and the submission of documentation for the Imwelo Mining License renewal. The analysts maintained their Buy rating and target price of CA$0.45 on the stock.
Lake Victoria Gold reported that Bulyanhulu Gold Mine Limited, a partnership between Barrick and the Tanzanian Government, has spent CA$451,000 of its proposed CA$3 million exploration expenditure for 'Year 3' on licenses LVG sold to Barrick in 2022. The analysts noted, "Fieldwork resumed in Q2 with the deployment of two drill rigs to the northwest area of the licenses. Additional drilling is scheduled for Q3."
Regarding the Imwelo Mining License, the analysts highlighted, "On September 4th, LVG announced that all the required documentation had been submitted to the Tanzanian Mining Commission for both the 10-year renewal of the Imwelo Mining License and the transfer of the mining license to LVG." They added, "The closing of the acquisition is expected to be completed by the end of September and will allow LVG to advance on its Imwelo Project construction and development plan."
The analysts emphasized the significance of the mining license transfer, stating, "The finalized transfer of the mining license triggers the second tranche of investment from the Taifa Group. This is part of the pre-determined agreement where Taifa will complete a second private placement for CA$3.8M at CA$0.24/share, including a full warrant, providing LVG with needed capital (above market price)."
Lake Victoria Gold's strategic focus includes advancing the Imwelo Project towards production, expected in H2 2025, and leveraging its partnerships with Barrick Gold and Taifa Group. The company recently closed the second tranche of a private placement of unsecured convertible debentures, raising a total of $750,000 to date.
Atrium Research's valuation methodology for Lake Victoria Gold is based on a sum-of-the-parts approach. "We value LVG's ownership of the Imwelo Gold Project at CA$0.12/share, the Tembo Gold Project at CA$0.11/share, the Dora Project at CA$0.09/share, the Barrick agreement at CA$0.14/share, and the PF cash balance at CA$0.03/share," the analysts explained.
With a Buy rating and a target price of CA$0.45, representing a potential return of 173% from the price at the time of the report, Atrium Research sees significant upside potential for Lake Victoria Gold.
Pirie and Cortellucci concluded, "We use a conservative 0.3x NAV multiple and 8% discount rate for the Imwelo Project as the Company has yet to complete construction and produce any gold, thus, there is a sizeable upside to our CA$0.45/share target price of LVG executes."
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Disclosures for Atrium Research, Lake Victoria Gold, September 10, 2024
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