Thesis Gold Inc.'s (TAU:TSXV; THSGF:OTCQX; A3EP87:WKN) target price was raised by Hannam & Partners analyst Phil Ker to CA$2.48 per share from CA$2.04 following the release of the updated preliminary economic assessment (PEA) encompassing both Lawyers and Ranch in British Columbia, the investment bank reported in a Sept. 6 research note.
"In our view, this sets out a materially more attractive project than Lawyers on a standalone basis," Phil Ker wrote.
The new target implies a 230% return for investors, given the Canadian company's share price at the time of the report was about CA$0.75.
Greater LOM, Average Production
The analysts presented the numbers for the various components of the new PEA and compared them to figures in the previous 2022 PEA.
In the 2024 PEA, the life of mine (LOM) is longer, 14 years versus 12 in 2022. Average production over the LOM is higher, too, at 215,000 ounces (215 Koz) on a gold equivalent basis versus 163 Koz, reflecting a 32% increase.
"This level of production should make the deposit, which has a resource of 4,700,000 ounces, attractive from a mergers and acquisitions perspective," purported the analyst.
The 2024 average throughput is 19% higher at 12,600 tons per day (12.6 Kt/day) versus 10.6 Kt/day previously. Gold recoveries are 93%, the same as the 2022 percentage. Silver recoveries are higher now than before, at 86.1% versus 71.8%.
The New Economics
The economics in the new PEA are a US$1.3 billion (US$1.3B) net present value discounted at 5% (NPV5%) and a 35% internal rate of return (IRR). This is using a US$1,930/oz gold price and US$24/oz silver price.
These compare to a CA$589 million (CA$589M) NPV5% and a 24% IRR in the 2022 PEA, based on a US$1,725/oz gold price and a US$22/oz silver price.
Higher Sustaining Capex, AISC
Also in his report, Ker discussed the costs between the two PEAs.
Initial capex for Lawyers-Ranch is CA$598M, 24% higher than in the 2022 PEA but, the analyst wrote, in line with his expectations.
Sustaining capex is significantly higher at CA$547M versus Hannam & Partner's previous estimate of CA$226M. On the other hand, closure costs of CA$46M are lower than Hannam & Partners' previous estimate of CA$144M. Thus, the closure costs somewhat offset the sustaining capex.
The new all-in sustaining cost (AISC) is US$1,013/oz, 29% higher than US$941/oz in 2022, yet, the analysts point out, it is US$435/oz below the current industry average.
"Higher sustaining capex is the main reason for the increase in the AISC, offsetting the impact of lower unit mining and processing costs," Ker explained.
Capital expenditures are CA$2,251/oz, below the CA$3,000/oz in the 2022 PEA and below the Canadian average of CA$3,596/oz.
The Operational Plan
According to the revised mine plan, open-pit mining will be done at Ranch, and open-pit and underground mining will be done at Lawyers.
Processing will be done through a standard recovery circuit, which includes comminution. Next, flotation, leaching, and passage through a Merrill-Crowe circuit will be done to produce a precious metal concentrate and gold-silver doré. Power for the operation will come from the BC Hydro grid.
Resource Expansion at Ranch
Ker pointed out that an expansion of the Ranch resource could further enhance the Lawyers-Ranch project. To grow the resource, Thesis Gold is drilling along the Thesis Corridor and at the Bonanza Ridge, Bonanza South, JK and BV deposits. Plus, there are nine targets that have not yet been drilled.
"We believe Ranch has the potential to ultimately be comparable to other large-scale, high-sulphidation epithermal systems and host a deposit several times larger than its current size," Ker added.
Other Possible Optimizations
Thesis Gold is making efforts to further improve costs and economics, where possible, Hannam & Partners reported. For instance, to lower trucking costs, the company is working to reduce the strip ratio at the open pits and determining whether Ranch ore could be preconcentrated through ore sorting.
Thesis Gold also is exploring whether paste fill would improve economics of the underground mining component, whether sourcing construction materials itself would lower costs and capex at the waste and tailings facilities, and whether the distribution system can be improved.
What To Watch For
Results of ongoing exploration, particularly from Ranch, should drive Thesis Gold's shares, Ker wrote.
The company intends to commence a feasibility study for Lawyers-Ranch next year.
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- 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.
- Doresa Banning wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor.
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Disclosures for Vantum Capital Markets, Thesis Gold Inc., September 6, 2024
Ventum Financial Corp. and/or its affiliates have received compensation for investment banking services for Thesis Gold Inc. over the preceding 12-month period.
Analyst Certification I, Phil Ker, hereby certify that all of the views expressed in this report accurately reflect my personal views about the subject securities or issuers. I also certify that no part of my compensation was, is, or will be, directly or indirectly related to the specific recommendations or views expressed in this report. I am the research analyst primarily responsible for preparing this report.
Research Disclosures Ventum Financial Corp. and/or its affiliates have received compensation for investment banking services for the subject company over the preceding 12- month period. Ventum Financial Corp. and/or its affiliates expect to receive or intend to seek compensation for investment banking services from the subject company
General Disclosure The affiliates of Ventum Financial Corp. are Ventum Financial (US) Corp., Ventum Financial Services Corp., and Ventum Capital Corp. Analysts are compensated through a combined base salary and bonus payout system. The bonus payout is amongst other factors determined by revenue generated directly or indirectly from various departments including Investment Banking. Evaluation is largely on an activity-based system that includes some of the following criteria: reports generated, timeliness, performance of recommendations, knowledge of industry, quality of research and investment guidance, and client feedback. Analysts and all other Research staff are not directly compensated for specific Investment Banking transactions. None of the material, nor its content, nor any copy of it, may be altered in any way, transmitted to, copied or distributed to any other party, without the prior express written permission of Ventum Financial Corp. Ventum Financial Corp.’s policies and procedures regarding dissemination of research, stock rating and target price changes can be reviewed on our corporate website at www.ventumfinancial.com (Research: Research and Conflict Disclosure)
