Atrium Research analysts Ben Pirie and Nicholas Cortellucci, in a research report published on June 27, 2024, provided an update on Lake Victoria Gold Ltd. (LVG:TSXV)following the company's announcement of receiving the tax assessment from the Tanzanian Revenue Authority (TRA) for the acquisition of the Imwelo Mining License. The analysts maintained their Buy rating and CA$0.45 target price on the stock.
"LVG reported that the taxes owed from the assessment are within the budgeted range. Payment is expected to be made shortly, at which point the TRA will deliver a tax clearance certificate," the analysts noted. "This certificate, along with the previously received approval from the Fair Competition Commission (announced March 12), is what is required for the Tanzanian Mining Commission to transfer the title of the Imwelo Mining License to LVG."
Pirie and Cortellucci view this development as a major milestone for the acquisition of the Imwelo Project, bringing LVG to the final step in closing. They highlighted that "the finalized transfer of the mining license triggers the second tranche of investment from the TAIFA group."
The analysts also noted that LVG "continues to advance negotiations with several other debt and equity groups to fully fund the development of Imwelo and expects to make such an announcement in conjunction with the completion of the acquisition."
Regarding the Tembo project, the analysts reiterated that "LVG plans to conserve capital for Imwelo development and rely on Barrick Gold's exploration efforts at the surrounding Tembo licenses for valuable data, potentially leading to up to US$45M in payments based on exploration success."
Atrium Research's valuation methodology for Lake Victoria Gold is based on a sum-of-the-parts approach:
- Imwelo Gold Project: CA$0.12/share
- Tembo Gold Project: CA$0.11/share
- Dora Project: CA$0.09/share
- Barrick agreement: CA$0.14/share
- Pro forma cash balance: CA$0.04/share
"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," the analysts explained.
Pirie and Cortellucci highlighted several reasons for their positive outlook on Lake Victoria Gold:
1. Path to profitability with Imwelo production expected in H1/25
2. Strategic partnerships with Barrick and Taifa providing cash
3. Exploration upside across all projects, including Imwelo and Tembo
4. Motivated management with significant insider ownership
The analysts identified key catalysts for LVG, including the closing of the Imwelo acquisition and ensuing TAIFA financing in Q3/24, ongoing M&A and 2024 drill results, and key development milestones for the Imwelo Project throughout FY24.
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Disclosures for Atrium Research, Lake Victoria Gold Ltd., June 27, 2024
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