Initial Assessment Report Gives Value to Gold Project in US
Research Report

Dakota Gold Corp. (DC:NYSE American) released an initial assessment with cash flow (IACF) on Richmond Hill, a first look into the economics of its heap-leach project in South Dakota, reported BMO Capital Markets Analyst Andrew Mikitchook in a July 9 research note. BMO raised its target price on the U.S.-based explorer-developer by 20% after updating its model to reflect the IACF.

The IACF "is a key step in advancing the Richmond Hill oxide gold project to first production in late 2029," Mikitchook wrote. "We expect a steady revaluation of shares as the project advances."

122% Implied Return

BMO's new target price on Dakota Gold is $9 per share, up from $7.50, the analyst noted. In comparison, at the time of Mikitchook's report, the company's share price is $4.06. From this price, the return to target is 122%.

Dakota Gold remains rated Outperform. It has 111.9 million shares outstanding. Its market cap is $454 million ($454M).

Two Cases Provided

The IACF, or preliminary economic assessment equivalent, outlined two scenarios, a Measured and Indicated (M&I) case and a Measured, Indicated and Inferred (MI&I) case. For both, a $2,350 per ounce ($2,350/oz) gold price and a $29/oz silver price were used.

The M&I case, broadly consistent with BMO's expectations, Mikitchook wrote, outlines a 10,000,000 ton per annum (10 Mtpa) operation producing an average of 153,000 ounces (153 Koz) per year of 0.57 grams per ton (0.57 g/t) gold over a 17-year life of mine (LOM). Initial capex is $384.1M, and the LOM all-in sustaining cost (AISC) is $1,047/oz. Gold recovery over the LOM is 85.1%.

Projected economics are a net present value discounted at 5% (NPV5%) of $1.6 billion ($1.6B) and an internal rate of return (IRR) of 55%, both after tax.

The MI&I case, also a 10 Mtpa operation, would produce an average of 142 Koz of gold over a 28-year mine life. Initial capex is $383.4M. The AISC is $1,050, and gold recovery is 85.4%, both over the LOM.

After tax, this project would yield an NPV5% of $2.1B and an IRR of 59%.

"The study reinforces that Richmond Hill is one of the largest development-stage oxide gold resources in the United States," Mikitchook wrote.

BMO updated its model to reflect the IACF results. This included reducing its operating cost and slightly increasing its initial capex assumptions.

Comparison to Wharf, Funding

The company's management held a recent conference call to discuss the IACF, reported Mikitchook, and they were asked how Richmond Hill stacks up against the adjacent Wharf mine. When comparing the M&I scenario for Richmond Hill with the last five published quarterly results from Wharf, the most obvious differences are the strip ratio in favor of Wharf and the grade in favor of Richmond Hill. Another key difference is that Richmond Hill will not employ load on and off heap-leach pads that lower unit operating costs and allow the heap to catch the tail recovery.

In the call, management indicated that Dakota Gold has several funding options for construction of Richmond Hill. One is a nonbinding proposal with Orion for $300M, an amount that would cover most of the capex. Its deal with Orion, in place since October 2023, gives Orion the right to match any future financing of Dakota Gold once Dakota Gold has raised more than $200M in total.

Next Project Milestone

The next major step for advancing Richmond Hill is a feasibility study, noted Mikitchook, and the company already starting working on it. Dakota Gold budgeted 24,000 meters of drilling at the project for resource conversion and metallurgical testing and is conducting studies to optimize the mine plan. Environmental baseline studies are underway as well. Regarding permitting, the process should be pretty straightforward, the analyst wrote, given the project's land is privately held brownfield.

"A feasibility study, expected in early 2027, should provide more certainty ahead of a 15-month construction time frame with first production targeted for late 2029," wrote Mikitchook.