More Drill Results In From Nova Scotia Gold Project
Research Report

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NexGold Mining Corp.'s (NEXG:TSX.V; NXGCF:OTCQX; TRC1:FSE) latest infill drilling results from its Goldboro gold project in Nova Scotia "should bolster the size of the Goldboro resource in a future mineral resource estimate update," Mining Analyst Ron Stewart, Red Cloud Securities, reported in a May 20 research note.

"In our view, these are slightly positive results that confirmed gold mineralization over broader zones and previously unrecognized areas," Stewart wrote.

448% Upside Implied

On the news, Red Cloud maintained its CA$4 per share target price on the Canadian explorer-developer, trading at about CA$0.73 at the time of Stewart's report, he noted. From this share price, the return to target is 448%.

NexGold remains a Buy.

Infill Drill Results

Stewart discussed the Goldboro project's new drill results, its resource and its economics.

This recent batch of reported results is part of NexGold's ongoing 25,000 meter (25,000m) diamond drill program at the project, which aimed to infill certain areas of the existing open-pit mineral resource. Currently, the pit resource stands at about 1,500,000 ounces (1.5 Moz) of 2.78 grams per ton gold (2.78 g/t Au) in the Measured and Indicated (M&I) and Inferred categories. The results should strengthen Goldboro's overall resource, Stewart wrote.

The standout intercepts include:

• 1.86 g/t Au over 10.9m including 7.38 g/t Au over 0.6m and 2.58 g/t Au over 4m, in hole BR-25-501
• 1.03 g/t Au over 18.9m including 5.86 g/t Au over 1.6m and 19.45 g/t Au over 0.8m, in hole BR-25-498

So far with the current drill campaign at Goldboro, NexGold has completed about 17,000m with three active rigs.

"Further positive results could enhance an updated feasibility study, likely to be released in the near to mid-term," wrote Stewart.

Resource Expansion Possible

As for Goldboro's overall resource, including open pit and underground, Stewart pointed out that it is sizable and has expansion potential. The M&I portion is 21,600,000 tons (21.6 Mt) of 3.72 g/t Au for 2.6 Moz. The Inferred resource is 3.2 Mt of 4.73 g/t Au for about 0.5 Moz Au.

Project surveys done in the past showed numerous geophysical anomalies in the Goldboro and Lower Seal Harbor trends, representing a combined 51 kilometers of strike potential.

Robust Project Economics

Stewart also highlighted that Goldboro boasts favorable economics that increasingly get better as the gold price climbs. According to the December 2021 feasibility study, at US$1,920 per ounce (US$1,920/oz) gold, the project's after-tax net present value discounted at 5% (NPV5%) is CA$556 million (CA$556M) and the internal rate of return (IRR) is 37.5%.

At a lower gold price of US$1,600/oz, the after-tax NPV5% is CA$328M, the IRR 25.5%. The payback period is 2.9 years.

With a US$320/oz increase in the gold price, the NPV5% rises 69% and the IRR increases 38%.

"At current spot prices," Stewart wrote, "we would expect further increases in both figures."

'Six of One. . .'

Along with Goldboro, NexGold also is advancing its Goliath gold project in northwestern Ontario. The company has not yet said which of the two projects, both with similar forecasted production, it will develop first, the analyst wrote.

Red Cloud modeled Goldboro coming onstream before Goliath, in late 2026, but it if ends up being in reverse, it should not affect the projected valuation, noted Stewart. The Goldboro model has the project producing about 100,000 ounces of gold over a 10-year life of mine at an average all-in sustaining cost of about CA$1,000/oz.

Red Cloud has Goliath starting in 2030 and having similar production and cost profiles to Goldboro's.

"We look forward to seeing NexGold becoming a multiasset producer," Stewart added.

Notable Upcoming Events

NexGold has several catalysts ahead, which Stewart spelled out. Completion of the current drill program at Goldboro is anticipated this quarter, and drill results will continue being released as they become available.

A feasibility study each on Goldboro and Goliath are to come this year as well, and permitting of both projects is ongoing. Once all studies are done, NexGold is expected to make a construction decision on either Goldboro or Goliath.

Stock Specifics

Stewart reported that at the time of his report, NexGold had 157.6 million (157.6M) basic shares outstanding and 210.1M diluted shares outstanding. It had a market cap of CA$115M and a 52-week range of CA$0.61–1.07 per share.