GoldMining, Inc.
GOLD-CN: Price: C$1.32; Market Cap (M): C$177
Rating: Buy; Price Target: C$4.50
Heiko F. Ihle, CFA
Matthew Barry
Acquisition of the Maguire Lake Property Improves GOLD's Yellowknife Gold Project; Reiterate Buy
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On January 9, 2018, GoldMining announced an agreement to acquire the Maguire Lake property. The agreement was made with Viking Gold Exploration Inc., and the property is located adjacent to the western boundary of the Yellowknife Gold Project's (YGP) Nicholas Lake-Ormsby property. The property spans approximately 1,798 hectares, and the site is expected to increase the company's total land position at the YGP to 11,502 hectares amid three claims (RG1, RG2, and RG3). We also note that the agreement calls for GoldMining to issue only 60,000 shares, resulting in total consideration of approximately C$79,000 based on the company's closing price as of January 9, 2018. In our opinion, this transaction is a low-cost call option on the area. We expect closing of the transaction to take place by the end of January. We note the high potential that the area has seen in recent years by major producers that include Agnico Eagle (AEM; not rated) and Goldcorp (GG; not rated).
Maguire Lake is in close proximity to a historical gold producer. Maguire Lake is situated about 2 kilometers west of the historic Discovery Mine. The Discovery Mine produced approximately 1 million ounces of gold at an average grade of 28 g/t from a variety of underground operations between 1949 and 1968. The mine was also known to have mineralization comprised of gold bearing quartz veins within fold hinges of isoclinal folded meta-sedimentary rocks of the Burwash Formation. We note that this formation is one of several units that make up the Archean age Yellowknife Supergroup. In short, we believe that future exploration could aim to evaluate the potential for this type of mineralization at Maguire Lake and the YGP.
The Crucero acquisition provides valuable exposure to Pero. GoldMining closed on its acquisition of the Crucero Gold Project in November in exchange for 3,500,000 common shares of the company and $750,000 in cash. We believe that the project offers numerous opportunities for resource growth and highlight potential within the A1 deposit given that it has a historical resource estimate that reported approximately 2.0 million contained ounces of gold. We also highlight that the project is road accessible, has access to nearby power, and access to infrastructure from the city of Juliaca. In our view, the Crucero acquisition should provide the company with exposure to a quality project in a top mining jurisdiction.
We are reiterating our Buy rating and our unchanged C$4.50 per share price target. Our valuation remains based on a DCF of operations at São Jorge utilizing a 10% discount rate. We add in-situ value for the firm’s other advanced assets, including Whistler, Titiribi, and La Mina at $20/oz for Indicated resources and $8/oz for Inferred resources. We also add value for Yellowknife and Big Sky, in addition to the Crucero acquisition, which have thus far been valued at cost.
Risks. 1) Gold price risk; 2) operating and technical risk; 3) financing risk; and 4) political risk.
Heiko F. Ihle, CFA
212-356-0510
hihle@hcwresearch.com
Matthew Barry
212-356-0520
mbarry@hcwresearch.com
Please note that the statements and opinions contained in this third-party report are being provided for informational purposes only and are not adopted by GoldMining Inc.
