Gold Explorer Attracts Major Industry Backing for Canadian Resource Development

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Thesis Gold Inc. (TAU:TSXV; THSGF:OTCQX; A3EP87:WKN) announced it has completed its private placement of 9.9% of its issued and outstanding common shares to Centerra Gold Inc. for gross proceeds of more than CA$24 million.

Toronto-based Centerra operates, develops, and explores gold and copper properties worldwide, including in North America and Turkey. It acquired 23,460,160 common shares of Thesis at a price of CA$1.03 per share, Thesis said.

Thesis said it would use the proceeds for working capital and general corporate purposes, including work related to technical studies underway at the company's Lawyers-Ranch Project in British Columbia's Toodoggone Mining District.

Hannam & Partners has a CA$2.90 per share price target on Thesis Gold, now trading at about CA$0.88 per share, according to a February research report by Analyst Jonathan Guy.

"We expect the shares to be driven by ongoing exploration, especially [at] Ranch," Guy wrote. He described Thesis Gold as "a highly attractive acquisition target with a scalable resource in a low-risk jurisdiction."

Earlier this year, the company announced the final drilling results from its 2024 program at the Ranch area of the project.

The company is working toward the completion of the Prefeasibility Study (PFS), which it said remains on track for the fourth quarter of this year.

Hannam & Partners has a CA$2.90 per share price target on Thesis Gold, now trading at about CA$0.88 per share, according to a February research report by Analyst Jonathan Guy.

"The 2024 drill program played a critical role in positioning us to commence both the PFS and the EA (Environmental Assessment) process — key milestones that will drive project development and permitting decisions," President and Chief Executive Officer Ewan Webster has said. "Positive results from near-resource exploration have encouraging implications for the potential to expand and upgrade our confidence on the mineral resource defined in the 2024 PEA (preliminary economic assessment)."

That PEA demonstrated strong project economics highlighted by an after-tax NPV (5%) of CA$1.28 billion, an IRR of 35.2% and a payback period of two years.

"This shows that the Ranch area of the larger project still provides significant potential for resource growth and, in turn, improved project economics," Webster said.

Thesis Gold has granted Centerra certain financing and other participation rights to enable Centerra to maintain its shareholding interest in the company, including a board nomination right in the event that Centerra acquires 19.9% of the company’s issued and outstanding common shares and technical committee appointment rights.

Analyst Sees 'Deep Value' in Company

Haywood Capital Markets Analyst Jamie Spratt emphasized the economics highlighted in the PEA, giving the stock a Buy rating with a CA$3 per share target price when he initiated coverage for the firm recently.

The analyst emphasized the project's scale and quality, noting, "Resources have expanded quickly from the maiden resource of 132 koz in 2018 and now place the LR project as one of the largest gold-silver projects in Canada."

"The LR project would rank in the top 15 of operating Canadian gold mines and the bottom quartile of the cost curve," Spratt added.

Guy from Hannam & Partners reiterated the results of the PEA that outlined an open-pit and underground operation producing an average of 215 Koz per year. He also highlighted the project's low costs. For a 12,600 ton per day plant, initial capex was estimated at CA$598 million and sustaining capex at CA$547 million. This equates to a capital requirement of CA$2,251 per ounce (CA$2,251/oz), which Guy pointed out is less than the Canadian average of CA$3,596/oz. The all-in sustaining cost was forecasted at US$1,013/oz, and this too is below the industry's most recent quarterly average of US$1,510/oz.

"We calculate a net asset value of CA$1,670M for Lawyers-Ranch using the PEA outputs, a US$2,100/oz gold price and a 5% discount rate," Guy wrote.

Meanwhile, Ventum Capital Markets Analyst Phil Ker noted the "impressive" success the company has had with the drill bit.

"We continue to see deep value in Thesis Gold," Ker wrote.

The Catalyst: Gold Stumbling, But Not Falling

Gold demand remained lower than normal on Wednesday during an Indian festival when buying gold is considered lucky as the rally in prices to a record high prompted retail consumers to reduce purchases, according to Rajendra Jadhav reporting Wednesday for Reuters.

Indians were celebrating Akshaya Tritiya, the second-biggest gold-buying festival after Dhanteras, Jadhav wrote.

"Footfalls in jewelry stores improved from evening, but still in volume terms demand was around 15% lower than normal," Surendra Mehta, secretary at the India Bullion and Jewellers Association (IBJA), told the author.

Gold fell nearly 1% on Tuesday as signals that U.S.-China trade tensions could ease reduced some safe-haven demand, reported Anjana Anil and Sarah Qureshi for Reuters.

However, writing for CBS Money Watch on Monday, Aly J. Yale noted that experts did not see gold's overall bull market failing anytime soon.

"While there is likely a ceiling for gold prices at some point in the future, many experts are predicting further growth in the near term. But just how high could they climb? Could gold prices reach the $4,000 price point?" Yale asked.

According to an April 10 post on Goldfix, Goldman Sachs revised raised the upper boundary of its forecast range for gold for the end of the year to US$3,520 an ounce and even introduced a "tall-risk scenario" as high as US$4,500 an ounce.

"The revision stems primarily from upside surprises in ETF inflows and persistent, large-scale central bank gold purchases," the article noted.

Ownership and Share Structure

According to Thesis, about 66% of the company is owned by institutions, and about 4% is owned by insiders. The remaining 30% is retail.

Top shareholders include Franklin Advisers Inc. with 7.82%, Merk Investments LLC with 7.58%, Delbrook Capital Advisors Inc. with 5.5%, Sprott Asset Management LP with 4.63%T. Director Nicholas Stajduhar owns 1.09%.

The company has  236,971,268  million shares outstanding. At the time of writing, its market cap was CA$222.7 million, and it trades in a 52-week range of CA$1.04 and CA$0.51.