Atrium Research analysts Ben Pirie and Nicholas Cortellucci, in a research report published on September 19, 2024, provided an update on Trigon Metals Inc. (TM:TSX; PNTZF:OTCQB; TZU2:FRA) following the company's announcement of a significant production milestone and strategic operational changes. The analysts maintained a Buy rating and a target price of CA$3.50 on the stock.
Trigon Metals announced that its underground operations at the Kombat Mine had reached a production rate of 980 tonnes per day (tpd) over a 30-day period, surpassing a key threshold in its streaming agreement with Sprott.
The analysts viewed this development positively, stating, "This milestone is key as per the terms of the streaming agreement with Sprott, ensuring that Trigon is not required to convert the principal advance pursuant to the stream agreement into a loan."
In light of this success, Trigon has made the strategic decision to pause its open pit mining activities. The analysts noted, "This decision was made for a few reasons, but primarily because the 980tpd for 30 consecutive days from the underground is just under the current milling capacity of 1,000tpd and it is far more profitable for the Company to process the much higher-grade underground ore."
Pirie and Cortellucci expressed their positive view on these developments: "We are impressed with today's release as it highlights the much better than expected ramp-up of the underground operations and sets Trigon up for much more profitable quarters and increased production going forward."
The analysts also highlighted Trigon's ongoing exploration efforts, mentioning a ~3,500m drill program that has yielded positive results, particularly high-grade copper found outside of the existing resource near Shaft #3. They noted, "This area is set to be a key mining area as TM ramps throughput from 1,000tpd to 2,000tpd next year."
Atrium Research's valuation methodology for Trigon Metals is not explicitly stated in the report. However, the analysts maintain their Buy rating and target price of CA$3.50, representing a potential return of approximately 456% from the price at the time of the report of CA$0.63.
The analysts concluded by outlining key catalysts for Trigon, including "Quarterly Production & Financial Results - Ongoing" and "Drill Results at Kombat & Expansion Drilling – Ongoing," indicating potential near-term drivers for the company's valuation.
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Disclosures for Atrium Research, Trigon Metals Inc., September 19, 2024
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