$NORZF : NorZinc — Independent Economic Analysis

Long-Term Price Case$24/oz. Ag, $1.10/lb. Zn, $1.00/lb. Pb
ProjectPrairie Creek
Mineral Reserves186,795,000 AgEq ozs.
Shares Outstanding369,700,000
Market Cap$24,030,500
Average Annual Production10,829,166 AgEq ozs.
Recovery87% Ag, 88% Pb, 83%, Zn
LoM15 Years
Payable Product162,437,490 AgEq ozs.
True All-in Cost (TAIC) $21.86/oz.
Gross Revenue$3,898,499,770
Smelter Deductions($454,000,000)
TCRC + Penalties($432,800,000)
Gross Income$3,011,699,770
Total Operating Cost($1,797,500,000)
Operating Profit$1,214,199,770
Income Taxes + Royalties($469,895,310)
Total Capital Costs ($395,900,000)
Net Income$348,404,460
Net Profit Margin9%
Absolute Cost Structure (ACS)91%
MTQ Score0.1
True Value$0.94/sh.
True Value Discount (TVD)93%
Cash Flow Multiple5x
Annual Cash Flow$23,174,415
Future Market Cap$115,872,075
Future Market Cap Growth382%
Target$0.31/sh.

Notes: All Values in U.S. Dollars

NorZinc is at the high end of the Absolute Cost Structure curve and the low end of the Net Profit Margin curve. In other words, Prairie Creek is a Project that will require substantially higher Silver, Lead and Zinc prices in order to be viable.

In a raging silver bull market, we think shares could appreciate by as much as 382%, which assumes shares will trade at approximately 5x future net annual cash flows.

Fahy Capital Management is not an investor in NorZinc.

$VNNHF : Belo Sun Receives Positive Ruling — Construction License Remains Valid

Belo Sun Mining reports that a three judge panel decision by the Court of Appeals of the Federal Justice in Brazil has ruled unanimously that SEMAS remains the competent authority for the environmental permitting of the Volta Grande Gold Project.

The ruling confirms that the Construction and Environmental Licenses granted by SEMAS for the Volta Grande Gold Project remain valid, subject to the completion of the Indigenous Study. [LINK]

$VNNHF : Belo Sun Mining — Independent Economic Analysis

Long-Term Price Case$1,700/oz. Au
Flagship ProjectVolta Grande
Mineral Reserves3,788,000 ozs.
Shares Outstanding442,631,915
Market Cap$84,100,064
Average Annual Production205,155 ozs.
Recovery93.1%
LoM17.2 Years
Payable Product3,524,100 ozs.
True All-in Cost (TAIC) $900/oz.
Gross Revenue$5,990,970,000
CFEM Royalty($42,240,000)
Gross Income$5,948,730,000
Total Operating Costs($2,488,640,000)
Operating Profit$3,460,090,000
Income Tax($155,060,400)
Total Capital Costs($486,086,900)
Net Income$2,818,942,700
Net Profit Margin47%
Absolute Cost Structure (ACS)53%
MTQ Score (Higher is Better)0.9
True Value$6.37/sh.
True Value Discount (TVD)97%
Cash Flow Multiple5x
Net Annual Cash Flow$164,124,000
Future Market Cap$820,620,000
Future Market Cap Growth876%
Target$1.85/sh.

Note: All Values in U.S. Dollars.

$DNN : Denison Mines — Independent Economic Analysis

Long-Term Price Case$65/lb. U308 $65/lb. U308
Flagship ProjectPhoenixGryphon
Project Percentage90% 90%
Mineral Reserves98,460,000 lbs. 98,460,000 lbs.
Shares Outstanding589,100,000589,100,000
Market Cap$342,267,100$342,267,100
Average Annual Production5.966M lbs.7.648M lbs.
Recovery98.5%98.2%
LoM10 Years7 Years
Payable Product58.767M lbs.48.817M lbs.
True All-in Cost (TAIC)$39.20/lb.$47.83/lb.
Gross Revenue$3,819,855,000$3,173,105,000
Saskatchewan Revenue Royalties & Surcharges + Resource Credit($276,939,487)($230,050,112)
Total Operating Cost($194,347,597)($567,610,551)
Operating Profit$3,348,567,916$2,375,444,337
Saskatchewan Profit Royalties ($502,285,187)($356,316,651)
Income Taxes($904,113,337)($641,369,971)
Total Capital Costs($425,950,000)($539,660,498)
Net Income (Denison Share)$1,364,597,453$754,287,495
Net Profit Margin36%24%
Absolute Cost Structure (ACS)60%74%
MTQ Score (Higher is Better)0.60.3
True Value$3.60/sh.
True Value Discount (TVD)86%
PhoenixGryphon
Cash Flow Multiple10x5x
Net Annual Cash Flow$138,530,520$118,184,544
Future Market Cap Contribution$1,385,305,200$590,922,720
Total Future Market Cap Growth477%
Target$3.35/sh.

Notes: All Values in U.S. Dollars

We boosted our stake in Denison Mines this morning by 25% following an updated analysis in which the company achieved a maximum in-house Composite Rating of 5. Denison Mines excelled in the following categories: Net Profit Margin (Phoenix), Absolute Cost Structure (Phoenix), True Value Discount, and Market Cap Growth. Our Target, however, has been lowered by 20%, as our updated calculations implied a True All-In Cost (TAIC) that was higher than expected for Phoenix, while Net Profit Margin and Absolute Cost Structure for Gryphon were average.

MTQ Scores & Composite Ratings — Study Group Comparison

$NTGSF : Golden Predator — Independent Economic Analysis

Long-Term Price Case$1,700/oz. Au
ProjectBrewery Creek
Mineral Resources577,000 ozs.
Shares Outstanding132,981,088
Market Cap$49,163,108
Average Annual Production53,853 ozs.
Recovery84%
LoM9 Years
Payable Product484,680 ozs.
True All-in Cost (TAIC)$1,291/oz.
Gross Revenue$823,956,000
Freight & Marketing($1,938,720)
Smelter Deduction($4,119,780)
Royalties($32,958,240)
Gross Income$784,939,260
Total Operating Cost($377,081,040)
Operating Profit$407,858,220
Income Tax($122,357,466)
Total Capital Costs ($116,973,363)
Net Income$168,527,391
Net Profit Margin20%
Absolute Cost Structure (ACS)76%
MTQ Score0.3
True Value$1.27/sh.
True Value Discount (TVD)72%
Cash Flow Multiple5x
Annual Cash Flow$22,025,877
Future Market Cap$110,129,385
Future Market Cap Growth124%
Target$0.83/sh.

Notes: All Values in U.S. Dollars

$BNNLF : Bannerman Resources — Independent Economic Analysis

Long-Term Price Case$75/lb. U308
Flagship ProjectEtango
Mineral Reserves130.1M lbs.
Fully Diluted Shares1,136,000,844
Fully Diluted Market Cap$40,896,030
Average Annual Production7,059,438 lbs.
Recovery87%
LoM16 Years
Payable Product112,951,000 lbs.
True All-in Cost (TAIC) $63.71/lb.
Gross Revenue$8,471,325,000
Royalty($423,566,250)
Gross Income$8,047,758,750
Total Operating Costs($4,291,071,000)
Operating Profit$3,756,687,750
Income Taxes($1,408,757,906)
Total Capital Costs($1,075,141,000)
Net Income$1,272,788,844
Net Profit Margin15%
Absolute Cost Structure (ACS)85%
MTQ Score (Higher is Better)0.2
True Value$1.12/sh.
True Value Discount (TVD)97%
Cash Flow Multiple5x
Annual Cash Flow$79,701,055
Future Market Cap$398,505,275
Future Market Cap Growth874%
Target$0.35/sh.

Notes: All Values in U.S. Dollars

TAIC Comparison (Lower is Better)

Net Profit Margin Comparison (Higher is Better)

MTQ Score Comparison (Higher is Better)

True Value Discount Comparison (Higher is Better)

MTQ Score — Global Study Group Comparison (Higher is Better)

$RIOFF : Rio2 Limited — Independent Economic Analysis

Long-Term Price Case$1,700/oz. Au
ProjectFenix (Cerro Maricunga[OLD])
Mineral Reserves3,743,000 ozs.
Shares Outstanding118,239,464
Market Cap$38,427,826
Average Annual Production227,895 ozs.
Recovery79.2%
LoM13 Years
Payable Product2,962,630 ozs.
True All-in Cost (TAIC) $1,333/oz.
Gross Revenue$5,036,471,000
Royalties($251,823,550)
Gross Income$4,784,647,450
Total Operating Cost($2,748,135,588)
Operating Profit$2,036,511,862
Income Taxes($549,858,203)
Total Capital Costs ($398,900,000)
Net Income$1,087,753,659
Net Profit Margin22%
Absolute Cost Structure (ACS)78%
MTQ Score0.3
True Value$9.20/sh.
Cash Flow Multiple5x
Annual Cash Flow$83,637,465
Future Market Cap$418,187,325
Future Market Cap Growth988%
Target$3.54/sh.

Notes: All Values in U.S. Dollars

The Fenix Project is on the high end of the TAIC curve. It will need higher gold prices to be viable. Above $1,700, Net Profit Margin becomes sustainable. It is important to note that social investment costs will be much higher than envisioned by Atacama Pacific and that will have a further deleterious impact on margins, as has the 35% increase in Chilean Corporate Taxes since 2014.

MTQ Score Comparison

$URG : Ur-Energy — Independent Economic Analysis

Long-Term Price Case$65/lb. U308$65/lb. U308
ProjectLost CreekShirley Basin
Mineral Resources13,252,000 lbs.8,816,000 lbs.
Shares Outstanding143,400,000143,400,000
Market Cap$131,928,000$131,928,000
Average Annual Production1M lbs.500,000 lbs.
Recovery92%80%
LoM12 Years14 Years
Payable Product12,191,840 lbs.7,052,800 lbs.
True All-in Cost (TAIC) $35.61/lb.$38.29/lb.
Gross Revenue$792,469,600$458,432,000
Royalties($31,698,784)($18,337,280)
Gross Income$760,770,816$440,094,720
Total Operating Cost($177,757,027)($102,547,712)
Operating Profit$583,013,789$337,547,008
Wellfield Development($118,504,685)($55,152,896)
Sweetwater Property Tax($1,584,939)
Wyoming Severance Tax($10,226,560)
Carbon County Ad Valorem Tax($16,362,496)
County Property Tax($1,128,448)
Income Taxes($89,244,269)($40,130,432)
Total Capital Costs ($15,400,000)($26,200,000)
Net Income$358,279,896$204,708,672
Net Profit Margin45%45%
Absolute Cost Structure (ACS)55%59%
True Value$3.92/sh.
Cash Flow Multiple10x
Annual Cash Flow$29,390,000$13,355,000
Future Market Cap$427,450,000
Future Market Cap Growth224%
Target$2.98/sh.

Notes: All Values in U.S. Dollars

There is a great deal of value in Ur-Energy that hasn’t been baked into price. Were shares to trade between 30-40% lower in a general market decline, we would be buyers.

Rationale

At $65/lb., Ur-Energy will achieve excellent Net Profit Margins and enjoy an Absolute Cost Structure that will elude peers (On its worst day, the company’s TAIC won’t rise much above $36/lb.).

Update, 13 July ’19

We do not presently have exposure to the uranium sector in the U.S., and in light of recent developments, the likelihood of our future participation has dropped. Any consideration of a U.S. issue will necessitate a substantial discount to our estimate of True Value. In the case of Ur-Energy, an additional 20% discount to the 12 July close will be essential before a small initial stake is considered.

More likely, future exposure to the U.S. uranium sector will be gained via exposure to Cameco’s Crow Butte and Smith Ranch-Highland Projects, though at that time, we believe Cameco shares will be available to us up to 30% cheaper following a general market decline.

$EANRF : Eastmain Resources — Independent Economic Analysis

Long-Term Price Case$1,700/oz. Au
ProjectEau Claire
Mineral Resources1,001,100 ozs.
Shares Outstanding221,884,037
Market Cap$26,115,751
Average Annual Production79,200 ozs.
Recovery95%
LoM12 Years
Payable Product951,000 ozs.
True All-in Cost (TAIC) $1,271/oz.
Gross Revenue$1,616,700,000
Total Operating Cost($612,522,240)
Operating Profit$1,004,177,760
Income Taxes($313,503,994)
Total Capital Costs ($283,000,000)
Net Income$407,673,766
Net Profit Margin25%
Absolute Cost Structure (ACS)75%
True Value$1.83/sh.
Cash Flow Multiple5x
Annual Cash Flow$33,976,800
Future Market Cap$169,884,000
Future Market Cap Growth551%
Target$0.77/sh.

Notes: All Values in U.S. Dollars

$GVXXF : GoviEx Uranium — Independent Economic Analysis

Long-Term Price Case$70/lb. U308 & $12.38/lb. MoO2$70/lb. U308
Flagship ProjectMadaouelaMutanga
Mineral Reserves60,540,000 lbs.30,050,000 lbs. (FCM Estimate)
Shares Outstanding423,222,000423,222,000
Market Cap$50,786,640$50,786,640
Average Annual Production2,690,000 lbs.2,400,613 lbs.
Recovery93.7%88%
LoM21 Years11 Years
Payable Product56,725,980 lbs.26,406,740 lbs.
True All-in Cost (TAIC) $53.37/lb.$56.43/lb.
Gross Revenue$3,954,300,000$1,848,471,800
Total Operating Costs($1,686,000,000)($960,000,000)
Molybdenum Credit$339,930,406
Royalty($433,798,871)($55,454,154)
Operating Profit$2,174,431,535$833,017,646
Income Taxes($559,139,538)($291,556,176)
Niger Working Interest (10%)($93,929,200)
Niger Carried Interest (10%)($84,536,280)
Total Capital Costs ($676,000,000) ($183,000,000)
Net Income$761,436,720$358,461,470
Net Profit Margin19%19%
Absolute Cost Structure76%81%
MTQ Score (Higher is Better)0.30.2
True Value$2.65/sh.
True Value Discount (TVD)95%
Madaouela & Mutanga
Cash Flow Multiple5x10x
Annual Cash Flow$77,311,018$77,311,018
Future Market Cap$386,555,090$773,110,180
Future Market Cap Growth661%1,422%
Target$0.91/sh. $1.83/sh.
Madaouela
Cash Flow Multiple5x
Annual Cash Flow$44,734,700
Future Market Cap$223,673,500
Future Market Cap Growth340%
Target$0.53/sh.

Notes: All Values in U.S. Dollars

$EQXFF : Equinox Gold — Independent Economic Analysis

Long-Term Price Case$1,700/oz. Au $1,700/oz. Au $1,700/oz. Au
ProjectMesquiteAurizonaCastle Mountain
Mineral Reserves1,004,000 ozs.971,000 ozs. 3,560,000 ozs.
Shares Outstanding553,000,000553,000,000 553,000,000
Market Cap$508,760,000$508,760,000 $508,760,000
Average Annual Production97,429 ozs.136,247 ozs.172,727 ozs.
Recovery62.9%91.2%79%
LoM7 Years6.5 Years16.2 Years
Payable Product682,803 ozs.885,608 ozs.2,798,173 ozs.
True All-in Cost (TAIC) $897/oz.$1,145/oz.$1,233/oz.
Gross Revenue$1,160,765,100$1,505,533,600$4,756,894,100
Royalties($26,697,597)($75,276,680)($204,546,446)
Gross Income$1,134,068,000$1,430,256,920$4,552,347,654
Total Operating Cost($545,696,000)($568,252,500)($1,992,299,176)
Operating Profit$588,372,000$862,004,420$2,560,048,478
Income Taxes($14,120,928)($258,601,326)($763,918,465)
Total Capital Costs ($26,177,000)($111,940,851)($488,700,000)
Net Income$548,074,072$491,462,243$1,307,430,013
Net Profit Margin47%33%27%
Absolute Cost Structure (ACS)53%67%73%
True Value$4.24/sh.
Cash Flow Multiple10x
Annual Cash Flow$234,516,081
Future Market Cap$2,345,160,810
Future Market Cap Growth361%
Target$4.43/sh.

Notes: All Values in U.S. Dollars