Quebec Tailings Reprocessor Nears First Gold Pour as Deep Drilling Catalyst Looms
Research Report

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Disclosures for Red Cloud, ESGold Corp., June 22, 2026

Disclosure Statement Updated June 22, 2026 Disclosure Requirement Red Cloud Securities Inc. is registered as an Investment Dealer and is a member of the Investment Industry Organization of Canada (IIROC). Part of Red Cloud Securities Inc.'s business is to connect mining companies with suitable investors. Red Cloud Securities Inc., its affiliates and their respective officers, directors, representatives, researchers and members of their families may hold positions in the companies mentioned in this document and may buy and/or sell their securities. Additionally, Red Cloud Securities Inc. may have provided in the past, and may provide in the future, certain advisory or corporate finance services and receive financial and other incentives from issuers as consideration for the provision of such services. Red Cloud Securities Inc. has prepared this document for general information purposes only. 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There are material conflicts of interest with Red Cloud Securities Inc. or the analyst who prepared or participated in the preparation of the research report, and the issuer. 10. A major shareholder of Red Cloud Mining Capital (the parent company of Red Cloud Securities Inc.), serves as a partner, director, officer or employee of (or in an equivalent advisory capacity to) the issuer. Analysts are compensated through a combined base salary and bonus payout system. The bonus payout is determined by revenues generated from various departments including Investment Banking, based on a system that includes the following criteria: reports generated, timeliness, performance of recommendations, knowledge of industry, quality of research and client feedback. Analysts are not directly compensated for specific Investment Banking transactions. 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On June 22, 2026, Alina Islam of Red Cloud Securities initiated coverage with a BUY rating and a CA$0.90/sh target price on ESGold Corp. (ESAU:CSE; ESAUF:OTCQB; Z7D:FSE), implying a 73% return from the June 19, 2026, closing price of CA$0.52, because the company is months from first production at its fully permitted, funded, and under-construction Montauban gold-silver tailings reprocessing project in Québec, with gold trading roughly 45% above the project's economic study assumption.

The analyst frames ESGold as a rare junior offering both near-term producer cash flow and explorer-style discovery potential. ESGold is advancing the 100%-owned Montauban project in Québec's Capitale-Nationale region, roughly 80km from Québec City, with first production targeted before the end of 2026. About CA$9M has been spent to date (~50% of the CA$17.4M initial capex), and the company holds liquidity of ~CA$27.4M against that initial capex, which Red Cloud views as sufficient to fund the project to first pour without additional equity financings. Since the expected ~1,000tpd rate sits below the 2,000tpd threshold for a full provincial Environmental Impact Assessment, the project avoids that process, though a geotechnical study and updated closure plan remain required.

The 2025 PEA outlines a four-year tailings operation processing 923kt at 1,000tpd over nine months per year, generating an after-tax NPV5% of CA$24.3M and a 60.3% IRR at US$2,900/oz gold and US$31.72/oz silver. With gold now near US$4,200/oz, Red Cloud notes the economics look conservative, estimating that each 10% rise in commodity prices adds roughly 25% to pre-tax NPV5%. The flowsheet is unusually simple: the tailings sit at surface in a sand-like state, requiring no drilling, blasting, crushing, or grinding, which yields a low opex of CA$35.29/t. Processing involves mica recovery via Humphreys spiral, cyanidation, gold-silver recovery via Merrill-Crowe, and on-site doré smelting. The PEA assumes recoveries of 89.3% gold, 77.0% silver, and ~90% mica, with additional metallurgical testwork using Dundee Sustainable Technologies' (DSE:CSE) non-cyanide CLEVR Process underway. Mica concentrate (57.2kt over the life of mine at US$300/t) is expected to add ~CA$24.9M in incremental revenue, though no offtake has been signed.

Beyond the tailings, a historic crown pillar resource (non-NI 43-101 compliant; 512.5kt at 3.71 g/t Au containing 61koz Au and 714koz Ag) offers a capital-light mine-life extension. ESGold plans to process this through the existing mill after tailings depletion, requiring only ~CA$2.5M for a crusher; Red Cloud notes the crown pillar holds roughly 5x the gold of the tailings at over 9x the grade. Converting this resource to NI 43-101 compliance is targeted for 2027.

The exploration upside centers on a 2025 Ambient Noise Tomography (ANT) survey that delineated a mineralized corridor extending ~900m deep and over 2km along strike, directly below historic workings that were only mined to depths of 60–90m. The corridor widens at depth, remains open beyond survey limits, and is described as essentially undrilled below ~200m. Red Cloud characterizes the risk-reward as highly asymmetric: a successful result could add significant value to the story, while a negative result leaves the tailings and crown pillar economics entirely intact. A step-out deep diamond drill program is planned to begin in Q3/26. The broader 24,414ha land package hosts six additional showings (Nocana, Chateau, Lac Vierge, Placer Dome V and VI, Gelinas, and Lac Gagnon West) with VMS-style mineralization, none yet evaluated with modern techniques; the analyst assigns no value to these, treating them as a free call option.

On valuation, Red Cloud derives its target from a DCF at a 5% discount rate using long-term prices of US$3,000/oz gold, US$40/oz silver, and US$300/t mica, valuing the Montauban project at ~CA$127.2M and corporate NAV at CA$127.6M (CA$1.00/sh). A 0.9x multiple, applied to account for execution risk, yields the CA$0.90/sh target. The mine model splits into Phase 1 tailings (years 1–4) and Phase 2 crown pillar processing (years 5–9 at a lower 500tpd and 75% availability). Financing assumptions reflect CA$18.4M in cash and no debt at March 2026, plus a CA$9.0M prepayment and working capital facility from Ocean Partners U.K. Limited (bearing SOFR plus 7.0%), with a first CA$3.0M tranche assumed drawn in H2/26. In May 2026, ESGold signed a doré purchase agreement with Ocean Partners covering up to 100% of production at 99.8% of COMEX for gold and 99% for silver.

On a relative basis, ESGold trades at a premium to peers, at 0.52x P/NAV versus 0.30x and US$294/oz AuEq versus US$153/oz, which Red Cloud attributes to its near-production, fully funded status and relatively small resource. 

Red Cloud flags standard junior-mining risks across geopolitical/jurisdictional (noting Québec's tier-1 status), technical, corporate, and financial categories, including commodity price swings and potential dilution. Disclosure code 3 applies, indicating Red Cloud performed investment banking services for ESGold in the prior 12 months. Upcoming catalysts are step-out drilling (Q3/26), first gold pour (Q4/26), crown pillar resource conversion to NI 43-101 (2027), and a mica offtake agreement (ongoing).