Monday, September 26, 2022

Northern Vertex Mining: Increased Price Target


Update Report rating buy increasing the price target: C$0.89

Northern Vertex Mining (TSXV:)’s gold production in October exceeded our expectations. We are maintaining our Buy rating and are increasing our price target to C$0.89 per share.

Northern Vertex’s 100% owned Moss Gold Project is located near Bullhead City, in northwest Arizona, in the historic Oatman Gold District, which has produced about 2.5 million ounces of gold. The BLM recently approved an MPO allowing Northern Vertex (NASDAQ:) to expand exploration and operations onto leased land, which should increase production and exploration to extend mine life.

Realizing record gold production in October 2020:

  1. Produced 4,733 oz gold and 42,889 oz of silver.
  2. Produced 200-plus oz of gold over 6 consecutive days.
  3. Record single-day production of 234 oz of gold.

Accomplishments and initiatives:

  1. Employment of McCoy and Sons, the mining and blasting contractor, is expected to “significantly” reduce mining costs.
  2. Completing evaluation, increasing crush size to 3/8” from 1/4”.
  3. Intermediate Leach System is accelerating gold recoveries and reducing the gold-in-pad inventory month over month.
  4. Merrill Crowe plant continues to process at rates above faceplate levels in October, while “maintaining a gold recovery rate of 99%.”
  5. Connected to the power grid, thereby reducing and stabilizing electrical costs.

Drill program focused on increasing mineable resources:

  1. Planning 13,700-meter Phase II drill program in addition to an ongoing 18,000-meter Phase I drill program for a total of 31,700 meters.
  2. Targeting pit expansion at the high-grade Ruth Vein, the intersection of the Moss Vein and Ruth Vein, and Gold Bridge and Gold Tower.
  3. Planning to increase the number of drill rigs to three.

Production in October, on a 12-month run rate, exceeded our assumptions for our valuation conclusion. We believe that this is sufficient for us to revise our price target. This emphasizes the need to increase resources. We believe the expanded drill program should increase resources leading to higher production and longer mine life, important to increase the cash flow multiple. We retain our Buy rating and are increasing our price target to C$0.89 per share.

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