DYOR. This is not financial advice. Analysis is highly-speculative.
Lots of moving parts to NVA so I thought a quick NVA high-level summary may be helpful to investors. No doubt I have missed a range of details, but in the spirit of "don't let perfect get in the way of good" here it is. (If investors find this useful I can update it periodically and repost.)
Pros:
- Overview:
- 324km2 claim block in Alaska’s Tintina Gold Belt home to >220 Moz
- Alaska is a top tier jurisdiction
- Total resource 9.6 Moz: 3 Moz Indicated + 6.6 Moz Inferred
- Within 3 years, progressed from 0 Moz (2019) to 9.6 Moz (2021)
- 21 identified prospects across 35km long corridor bookended by Korbel and RPM
- Investments: 57.52% LITM, 11.65% TNR, 9.9% RotorX
- Yandal Investments Pty Ltd (Mark Creasy, self-made WA based mining billionaire) has taken a position in NVA and now holds 0.6%
- Korbel:
- 8.1 Moz = 3 Moz indicated + 5.1 Moz inferred
- Scoping study due Feb 2022. The numbers were “already looking pretty good (without seeing final numbers), I think things are looking even better now”
- More drilling at Korbel main in 2022, wide open on both ends.
- Want to drill Cathedral anomaly in 2022, Cathedral has the strongest colour anomaly in Korbel valley.
- Aim is to reach >10 Moz at Korbel Valley in 2022
- More targets to be unlocked within Korbel valley: Cathedral, Isabella, Blocks C&D, Portage, You Beauty, and NK
- RPM:
- Hit bullseye in first drill program. 1.5 Moz from only 5 holes (23.1 Mt @ 2.0g/t Au). Including one of the best holes globally in the last decade 132m @10.1 g/t.
- Starts at surface and open in all directions.
- Geophysics confirmed extension of magnetic anomaly. 1km contact zone identified. The magnetic anomaly correlates directly with the high-grade gold found.
- 20,000m drilling planned for 2021 at RPM North
- 3,000m of planned drilling at RPM south which shows a much larger surface sample mineralised footprint than RPM North.
- Potential for RPM north and south to merge at depth
- Can mine much more of the Korbel resource (i.e. lower cutoff grade) with an RPM ‘sweetener’. Ore sort 0.2/0.3g material, upgrade it to 0.7/0.8g material. 3 buckets of 0.8g material from Korbel, 1 bucket of 3g material from RPM.
- Establishing ground water source and safety huts at RPM to extend drilling season.
- Other prospects:
- Train & shoeshine: High-grade gold reconnaissance rock samples from the Train and Shoeshine Prospects include: 30.4 g/t, 24.5 g/t, 21.6 g/t, 7.5 g/t, 5.7 g/t, 5.4 g/t. Large Intrusive Related Gold System (IRGS) exposed at surface with ~1km strike, 500m wide at Train and ~1km long at Shoeshine Prospects.
- Stoney: High-grade reconnaissance rock chip samples from the Polymetallic Stoney Prospect include values up to: 48.4g/t Au, 2720g/t Ag, 2.4% Cu. Polymetallic mineralized vein observed along ~4km of strike length, up to 10 meters wide, and >300m of vertical extent.
- Access:
- Access via snow road or air (15km from Whisky Bravo airstrip)
- Winter snow road enables heavy machinery, fuel, and other supplies to be brought into the Whiskey Bravo camp site in a cost-efficient manner. Active 4 months a year.
- Permanent winterised year-round camp
- Partnering with AIDEA to develop $350M West Susitna access road to run from Port McKenzie to Estelle mining district. Currently in 3rd phase of pre-development. Would enable year-round road access. State Legislature appropriated $8.5 million to advance the completion of the studies.
- Efficiencies:
- Near-surface Intrusion Related Gold System (IRGS) deposit. Low strip ratio, gold just below surface.
- Ore sorting tech has come a long way. XRT laser type ore sorting works beautifully on the deposit due the Korbel’s very distinct veins and mineralogy. Been able to take 0.4/0.5g material and upgrade it 10x up to 6g/t
- All on state land, no federal or native land = streamlined environmental and permitting process
- On site prep lab. Can process 7500 samples / month and quicker assay turnaround times. Used to be 4-5 months + expensive freight costs with 10kg samples. Now 2-3 weeks and 250g samples.
- Discovery cost is $3.50/oz which is well below the industry average of $20/oz
- Drill at a cost of $230 per metre. Benchmark is $180. Pretty good given located in remote Alaska.
- 15km from proposed gas pipeline to Donlin Gold
- Snow Lake Lithium:
- 57.52% owned by NVA
- Fully renewable and sustainable lithium mine that can deliver a completely traceable, carbon-neutral and zero harm product to the electric vehicle and battery market in North America
- Lithium very hot, massive lithium supply deficit in the EV space that is set to continue expanding.
- Lithium becoming a major geopolitical force, important for North America to be able to secure its EV supply chain by having locally sourced lithium. “We need automakers and other companies to keep investing here in America and not take the benefits of our public investments and expand electric vehicles and battery manufacturing abroad.” President Biden May 2021
- 11.1 million metric tonnes indicated and inferred resource at 1% Li2O
- Just expanded land holdings by 100% to now hold 86.43 square miles
- Just increased strike length by 10% with first hole of 2022 drilling campaign
- NVA can, when the timing is right, monetise some of their position in LITM to fund NVA.
- Valuation
- Historical context: hit $2.25 (22.5c pre-consolidation) with only a 3.3Moz resource (which has now almost tripled)
- Sum of the parts: Wombat on 23/12/2021, using very conservative figures just based on Korbel main’s current indicated resource (which will undoubtedly grow), and a gold price of $1650 (currently at $1870), estimated an AUD $437M post-tax NPV which is ~$2.4 per share. NVA 57.5% shareholding in LITM at current SP of $6.85 and MC of USD $111.04M converts to ~AUD $90M which adds ~$0.5 per NVA share. So just looking at the current indicated resource at Korbel main + current share in LITM, NVA’s conservative sum of the parts valuation is $2.9 SP.
- Peer analysis: Using Wombats peer analysis average of AUD $99 /oz as at 20/11/2021 but now using current resource at Korbel of 6.9Moz (85% of 8.1 Moz) instead of 5.27 Moz provides a fair value of AUD $683M or $3.8 per share. (If you include total resource of 8.16Moz, 85% of 9.6Moz, FV would be $4.48)
- Currently valued at $20 per ounce in the ground ($7.3 per ounce once LITM is accounted for)
Cons:
- Remote location. 177km Northwest of Anchorage.
- No current year-round road access
- Energy source not confirmed
- Unclear how much cash NVA has on hand to spend on NVA (excluding LITM). Unsure when the next capital raise will be.
- Sunday raise issue. Raised $12m. Were burning $2m /month and were down to $6-7m and were worried about economic headwinds in the news (real estate collapse, debt defaults) and they wanted to keep the momentum going “sometimes you have to take the money when it’s on the table in front of you”
- Scoping study ‘lite’ was meant to come out around July 2021 but then had significant infill drilling results that would impact starter pit location & payback period etc. so were advised by engineers to delay until the next resource update (now have a much larger resource 8.1 Moz instead of 4.7 Moz and have indicated resource, so much more comprehensive study). Chris: "Really paid off that advice”. SS would have been obsolete on day 1 without delay.
- Share consolidation. Main reason was to stabilise the share price. When looking to CR with large US institutions there’s a stigma attached with stocks <$1. They want to institutionalise the register. However, to date, there haven’t been any positives stemming from the consolidation.
Conclusion:
- Scoping study to confirm profitability of Korbel and should set a new baseline value for NVA, with enormous upside potential of 1) expanding Korbel valley 2) exploring bonanza grades at RPM 3) LITM set to ride the seismic lithium wave 4) Gold currently breaking out. Just based on very conservative sum of the parts figures using Korbel main’s current indicated resource + LITM, SP should be ~$2.9 (this excludes all of the other prospects including RPM and any upside potential of Korbel). On a peer basis, fair value for NVA’s 9.6 Moz resource at AUD $99 /oz is ~$4.48 (excluding LITM). Once new baseline is set through SS I would find it very difficult to argue that NVA is not very significantly undervalued.
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