Fort Capital Investment Banking Pitch Book
Risk Profile Analysis
NAV Multiples
• While industry standard is to use a standard NPV5% to allow for comparison of cash flows from projects, it does not necessarily reflect the
associated risks of any specific project or company
.
This is primarily the rationale that most developers trade at a significant discount (0.4x-0.7x) to their underlying NAV, to reflect the risk of
developing, permitting and constructing the mine. These discounts can encapsulate multiple risk factors:
Mine / project location (e.g. mine friendly jurisdictions versus politically unstable countries)
Stage of project and expected time to completion (PEA, PFS. FS)
Ease of permitting
Type of ore body and associated processing technology, including relative capex intensity
- Potential for additional exploration upside
In considering the North Bullfrog project, we see a stable jurisdiction, straightforward timeline, permitting and processing (standard heap leach
operation in Nevada for oxide ore), along with modest exploration upside (based on discussions with management), which would lead us
towards the higher end of the range of NAV multiples (0.6x-0.7x)
• In considering the Mother Lode project, while in a similar jurisdiction, faces more difficult permitting, including the need for a layback agreement
with Coeur Mining, more difficult and expensive processing for the sulphide ores (use of BiOx technology) and limited exploration upside due to
land constraints (surrounded by Coeur claims). As a result, we would apply a lower multiple against the Mother Lode project of 0.35x-0.45x
We have then compared the selected NAV multiples and implied IRRS against the developed cost of capital for each mine to test for
reasonableness
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