Thesis Gold, re-rating underway…

Readers are encouraged to always read disclosures/disclaimers at the bottom of every article.

Thesis Gold (TSX-v: TAU) / (OTCQX: THSGF) has a district scale (495 sq. km) land position in the Toodoggone Mining District (overlapping the Golden Triangle) of northern B.C., Canada. It recently completed its 2024 exploration season at the 100%-owned Lawyers-Ranch project.

Comprehensive fieldwork delivered geological, engineering & environmental data for permitting to support a Pre-Feasibility Study (“PFS“) expected in late-2025. 9,510 meters were drilled, 5,400 m at Ranch & 4,110 m at Lawyers.

Drill results are expected in October, and into December. Engineering work at Ranch included geotechnical drilling to assess rock quality, testing to assess ground qualities at proposed waste storage sites, and metallurgical & geotechnical sampling to continue optimizing the process flow sheet.

Field crews identified prospective geological units & structural trends, and confirmed visual mineralization at newly staked claims north & east of Ranch. Ranch is in year two of baseline environmental studies, and two years of data collection have been completed at Lawyers.

A road from Prince George provides year-round access, and an airstrip offers flights to/from regional airports. Lawyers-Ranch is 45 km from green hydroelectric power. The Project is 100s of km inland, so it gets far less snow than projects like Skeena Resources’ Eskay.

Thesis Gold’s updated, enhanced PEA was well received. On $1,930/oz. gold (“Au“), the post-tax NPV(5%) is C$1.28 billion & the IRR is +35.2%, with a payback period of 2.0 years.

Comparisons to the 2022 PEA are compelling. The Au price is up +11% to $1,930/oz. and Ag +10% to $24/oz., but post-tax NPV & IRR are up +117% & 46%. Meanwhile, cap-ex & op-ex are up 21% & 8% to $598M & $1,013/Au Eq. oz., respectively. Readers are reminded that the new PEA’s economics are done at an Au price 24.5% below today’s spot.

Importantly, 87% of the 4.705M Au Eq. ounces at Lawyers-Ranch are in the Measured & Indicated categories. The ratio of NPV to cap-ex of 2.1x is favorable vs. peers ranging from 0.9x to 2.4x. AISC at $1,013/Au Eq. oz. is impressive compared to Newmont’s & Barrick’s latest quarters at $1,562 & $1,498/oz.!

At 215,000 Au Eq. oz./yr., (273,000/yr. over initial 3 years), this will be a substantial mine. In my view, if/when acquired, Lawyers-Ranch could be developed into a larger operation of 300,000 Au Eq. oz./yr.

With a 14-yr. mine life, there’s room to extend production further into the 2040s and/or increase annual production. At $2,500 Au / $30 Ag, the post-tax NPV is C$2.25B, the IRR is 52.8%, and the NPV/Cap-ex ratio is 3.8x.

Although the stock is up nicely this year, it’s still valued about the same as pre-maiden resource estimate northern B.C. peer Goliath Resources and well below pre-PEA stage Dolly Varden. Thesis Gold is finally getting the attention it deserves, but in a takeout scenario, there’s still plenty of room for it to run.

I’m not talking about a 30% premium above today’s $0.87. No, the Company is valued at ~7.1% of post-tax NPV assuming $2,500/oz. Au (currently $2,657) & $30/oz. silver (“Ag“) (currently $31.57).

Skeena is valued at ~36% of its post-tax NPV, albeit on a higher-grade project at BFS-stage. Skeena’s enterprise value {market cap + debt – cash} is 8x larger than that of Thesis Gold. Magna Mining Inc. is valued at ~25% of NPV on its new PEA. Augusta Gold trades at ~45% of NPV on a BFS-stage project in Nevada.

Rupert Resources ~32% of NPV on its project in Finland, Montage Gold ~31% of its PFS-stage project in Côte d’Ivoire, Africa. Thesis Gold is valued at a 41% discount to the average of Dolly Varden & Tudor Gold despite it potentially reaching production years sooner. Why is Thesis such a no-brainer takeout target?

Consider that a buyer could pay a 100% premium (2 x EV of $159M = $318M) + the cap-ex ($598M) = $916M to receive $2.25 billion in net present value (assuming $2,500 Au & $30 Ag). Cap-ex will be spread over roughly four years. And, the buyer would own the exploration upside, which is considerable.

At 4.71M Au Eq. ounces Newmont & Agnico Eagle might not care, but at 6-7M ounces in B.C. Canada… Almost everyone would care. Recent deals in the Au space are highlighted by Gold Fields acquiring Osisko Mining at > $500/oz. for its 50% interest in the very high-grade Windfall project in Quebec. Osinio Resources was acquired at $93/oz.

Osinio was more advanced than Thesis, but its grade was 29% lower and the project is in Africa. By contrast, Thesis Gold is valued at just $34/oz. Others with meaningful assets in B.C., Seabridge Gold, Artemis Gold, Centerra Gold, Skeena & Tudor Gold have larger resources, attracting attention to the province.

In addition, BHP, Barrick Gold, Agnico Eagle, Boliden AB, Hecla Mining, Alamos Gold, Sumitomo, SSR Mining, Kinross, Evolution Mining, IAMGOLD, New Gold, Hudbay Mining, Eldorado Gold & Wesdome Gold have Au/Ag interests in Canada. CEO Webster reports a strong interest in Canadian projects that offer diversification from riskier places.

Silver has been outperforming Au in recent months, which is good as Lawyers-Ranch is ~25% Ag. So far, 92.3M ounces have been booked, a larger resource than most Ag juniors have, and a desirable asset for royalty/streaming companies to fight over. Interestingly, if operating now, Lawyers-Ranch would be a Top-20 global Ag producer.

Not only is Thesis undervalued at ~7.1% of its PEA’s NPV($2,500/$30), but the Company’s Lawyers-Ranch is more advanced than most projects with PEAs because the team updated & enhanced an existing PEA. Please see the latest corp. presentation.

Why the excitement over Ag? Silver’s high in 1980 of $49.45/oz. is $202/oz. in today’s dollars! Compare that to the current $31.53, don’t let anyone tell you that Ag has increased too far, too fast…

The sensitivity tables in Thesis Gold’s press release show levels up to $3,000 Au / $35 Ag. However, I believe Ag could easily be $40 if/when Au hits $3,000. An extra $5/oz. would add US$462M in (undiscounted) total revenue!

There remains significant exploration upside, especially at Ranch. The image above shows Ranch’s blue sky potential –> 40 sq. km of a structurally controlled epithermal system, including early-stage discoveries at Steve & JK and numerous untested targets.

Thesis Gold (TSX-v: TAU) / (OTCQX: THSGF) has a lot going for it, rising precious metal prices, an excellent PEA, and a large resource supporting a 215k Au Eq. oz./yr. mine, a valuable Ag credit (92.3M ounces), and a green power asset in a great jurisdiction. These attributes make Thesis a prime takeover target.

The longer it takes for a takeover, the higher the share price could climb as M&A continues to gather steam over the next few years. In precious metal bull markets, assets can trade hands at well over $100/oz. in the ground, especially if at the PFS or BFS stage (Thesis to deliver a PFS in late-2025).

In the above chart, Thesis appears undervalued at $34/oz. compared to peers averaging $79/oz., despite their average grade being 30% lower. Thesis Gold offers a compelling risk/reward proposition. Readers are encouraged to review the Company’s latest corp. presentation.

Disclosures/disclaimers: The content of this article is for information only. Readers fully understand and agree that nothing contained herein, written by Peter Epstein of Epstein Research [ER], (together, [ER]) about Thesis Gold, including but not limited to, commentary, opinions, views, assumptions, reported facts, calculations, etc. is not to be considered implicit or explicit investment advice. Nothing contained herein is a recommendation or solicitation to buy or sell any security. [ER] is not responsible under any circumstances for investment actions taken by the reader. [ER] has never been, and is not currently, a registered or licensed financial advisor or broker/dealer, investment advisor, stockbroker, trader, money manager, compliance or legal officer, and does not perform market-making activities. [ER] is not directly employed by any company, group, organization, party, or person. The shares of Thesis Gold are highly speculative, and not suitable for all investors. Readers understand and agree that investments in small-cap stocks can result in a 100% loss of invested funds. It is assumed and agreed upon by readers that they will consult with their own licensed or registered financial advisors before making investment decisions.

At the time this article was posted, Thesis Gold was an advertiser on [ER] and Peter Epstein owned shares in the company acquired in the open market.

Readers understand and agree that they must conduct due diligence above and beyond reading this article. While the author believes he’s diligent in screening out companies that, for any reason whatsoever, are unattractive investment opportunities, he cannot guarantee that his efforts will (or have been) successful. [ER] is not responsible for any perceived, or actual, errors including, but not limited to, commentary, opinions, views, assumptions, reported facts & financial calculations, or for the completeness of this article or future content. [ER] is not expected or required to subsequently follow or cover events & news, or write about any particular company or topic. [ER] is not an expert in any company, industry sector or investment topic.