Stifel GMP has raised its target price for i-80 Gold Corp to C$6.20 per share, up from C$4.25 per share previously, and reiterated its 'Buy' rating on the stock following the miner's recent "transformative" acquisitions of Lone Tree and Ruby Hill.
In a note to clients, Stifel's analysts noted that i-80 is to acquire the Lone Tree processing facility and resources from Nevada Gold Mines for the remaining 40% stake in South Arturo, cash and bonding obligations. Concurrently, they noted, the company i-80 is acquiring the Ruby Hill project from Waterton for up to US$150 million.
READ: i-80 Gold to acquire Lone Tree, processing facilities, Buffalo Mountain and Ruby Hill to create Nevada mining complex
The analysts pointed out that the transactions are to be financed by a US$50 million private placement from Nevada Gold Mines (NGM) and up to US$240 million from Orion.
They noted: "Through this deal, NGM is to become one of i-80's largest shareholders through participation in a financing package (including long term supporter Orion), that is expected to result in i-80 having close
to US$200MM in the treasury post initial acquisition payment for Lone Tree."
The analysts said the importance of the autoclave and processing facilities is "incredibly meaningful".
"Notwithstanding the permitting difficulties of a prospective greenfield replication of these facilities (which would be very challenging and take several years), capex for an equivalent processing facility would likely be
between US$750-US$1B. With processing now sorted out, we believe this will warrant multiple expansion across the asset base," they noted.
The analysts concluded: "In our opinion, this is a transformative deal that, i) provides integrated processing infrastructure capable of processing all types of ore in state, and ii) nearly triples the company's resource base. In greatly increasing mineral inventory and providing vertically integrated processing capabilities, i-80 now has the runway to ~500kozpa and is the master of their own destiny; we feel this will kick off a re-rating of the asset base."
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