Ben Price | Nicholas Cortellucci | Equity Research Analysts

Strong Assets with a Near Term Path to Production is the theme and title of the report that analysts Ben Price and Nicholas Cortellucci from Atrium Research introduced with their coverage on Tocvan. Tocvan was given a BUY rating and Target Price of $0.90.

What you need to know:

• Tocvan is centred around its clear and achievable objectives, looking to develop its flagship Gran Pilar Gold Project to near-term production.
• Following a maiden resource this fall, a pilot plant is expected to be permitted, constructed, and producing gold as early as H1/25.
• Beyond the pending resource estimate, the Gran Pilar Project shows significant growth potential across its 2,200ha+ land package.
• We value TOC at $0.90/share representing 100% upside.

The Atrium research report is good and well worth reading. I get it that the report uses a conservative methodology in arriving at a price target of $0.90. However, I don’t think the board at Tocvan would sell out below $1.50/shr. Why should they with gold up +39% in the past year? The stock traded as high as $0.79 in 2023 and $1.67 in mid-2021. Instead of an 8-yr. mine life maxing out at 50k oz./yr, I ran a bare bones model using a 40% after-tax margin, 15-yr mine life (8% disc. factor), ramping up to 80k oz./yr. with US$30M upfront cap-ex + US$5M/yr. maintenance cap-ex. The NPV per share (assuming 82M shares) = $6.90. Atrium takes 20% of its NPV to get its $0.90 price target, but I think 30-40% is warranted b/c this is a prime takeover target. That’s a price range of $2.07 – $2.76 per share (72M fd shares + a 10M share raise later this year = 82M shares).