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TICKERS: MAU

Co. Focused on Advancing Gold Project in Cote d'Ivoire
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The priority in this regard is obtaining additional funding to cover development costs, noted a National Bank of Canada report.

Montage Gold Corp. (MAU:TSX.V) is concentrating on derisking financing for development of its Koné gold project in Côte d'Ivoire, now that its Q2/24 financials are filed and final permits received, reported National Bank of Canada analyst Don DeMarco in an Aug. 23 research note.

"We expect additional funding of US$675 million (US$675M) via a combination of debt and equity over H2/24, ahead of construction commencement, beginning Q1/25," DeMarco wrote.

Future costs for which additional capital is needed total about US$827M, noted the analyst. A major portion, US$800M, is for project development capex. The other US$27M is for exploration and general and administrative (G&A) expenses between Q1/25 through Q1/27 as estimated by the National Bank of Canada.

Outperform Rating, 35% Return

DeMarco reiterated National Bank's CA$2.50 per share target price on Montage, trading at the time of the report at about CA$1.85 per share. The difference between these prices reflects a 35% return on investment.

The company remains rated as Outperform.

"Our investment thesis is supported by (i) a valuation rerate as the Koné project development is derisked . . .  and (ii) net asset value accretion as Montage delivers on near-mine and regional exploration, driving resource accretion, production, and free cash flow growth," DeMarco wrote.

Private Placement Closed

The analyst presented the highlights of Montage's Q2/24 financials.

The explorer's cash spend was US$4.2M in Q2/24, up from US$2.3M in Q1/24. This was due to higher G&A expenses and share-based compensation. Capex was lower quarter over quarter (QOQ), however, and this offset the cash spend somewhat.

During Q2/24, Montage generated about US$125M of net proceeds from a CA$180M equity raise, and this contributed to a QOQ easing of liquidity. Of note, in the private placement The Lundin Group increased its investment in Montage to 19.9% and new investor Zijin Mining Group Co. Ltd. bought a 9.9% stake.

Along with the US$125M, at quarter's end Montage had US$24M in cash and equivalents, about US$2.9M in in-the-money options (due to expire over the next 18 months) for total pro forma liquidity of about US$152M. This is lower than liquidity in the previous quarter of about US$157M, consistent with ongoing G&A spend.

Koné Development Timeline

DeMarco outlined a possible timeline for Montage to develop and get Koné onstream.

Throughout the rest of H2/24, the company is expected to continue releasing drill results and, by year-end, have delineated additional resources.

"Resource conversion and accretion opportunities show potential to lift and extend the roughly +300,000 ounces per year, a wheelhouse of interest among senior producers," DeMarco commented.

In around Q4/24, earthwork would begin, assuming the front-end engineering design has been completed. Also around that time, the company should have more clarity about financing and what it would involve.

Project construction would start in about Q1/25 and take about 27 months to complete. Following that, in roughly Q2/27, the first gold pour would take place, followed by commencement of commercial production in the subsequent quarter, Q3/27.


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  1.  Doresa Banning wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor.
  2.  This article does not constitute investment advice and is not a solicitation for any investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Each reader is encouraged to consult with his or her personal financial adviser and perform their own comprehensive investment research. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company. 

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Disclosures for National Bank of Canada, Montage Gold Corp., August 23, 2024

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