Calibre Mining’s (TSX: CXB) (OTCQX: CXBMF) latest drill results from its Palomino target along the Eureka trend in Nevada have left analysts impressed by the high grades found.
“We are taken aback, or somewhat gobsmacked, by the intervals of gold mineralization being returned from drilling on the Palomino target at Pan,” reads a new research report by Haywood Securities Inc. analysts Geordie Mark and Nicholas Lobo.
Vancouver-based Calibre reported high-grade drill results on Wednesday from the Palomino target from the Pan Mine along the Eureka trend, showing high grades prospecting an increase in resource grade and growth expansion.
The results have been described as the best ever seen on Pan, not only in terms of grade and grade-thickness characteristics but also the inherent continuity of such mineralization within the plane of the system, and its shallow nature.
“The target represents an altered and mineralized structural feature hosted in altered limestone extending SE from the Pan South open pit. Grades of gold mineralization well exceed average Pan reserve grades and given its footprint within the permitted land disturbance area for Pan such potentially could be integrated into the 2024 operations plan.”
The report highlights the high-grade and continuous nature of gold mineralization drilled at Palomino, suggesting the potential to extend and augment the grade at Pan.
Drilling intercept highlights from the Palomino target include:
– Hole PR23-026: 15.2 metres grading 3.84 g/t Au including 13.7 metres grading 4.19 g/t Au
– Hole PR23-058: 27.4 metres grading 2.08 g/t Au including 19.8 metres grading 2.67 g/t Au
– Hole PR23-030: 27.4 metres grading 2.02 g/t Au including 24.4 metres grading 2.19 g/t Au
– Hole PR23-062: 12.2 metres grading 1.89 g/t Au including 9.1 metres grading 2.45 g/t Au
– Hole PR23-036: 15.2 metres grading 1.15 g/t Au including 3.1 metres grading 2.44 g/t Au
– Hole PR23-034: 25.9 metres grading 1.09 g/t Au
– Hole PR23-037: 27.4 metres grading 1.02 g/t Au and 13.7 metres grading 1.18 g/t Au
The report anticipates that Palomino will add to the longevity of the mining operations plan at Pan and will augment the average grade profile of the system. The impact of size will be determined with more data.
Table via Haywood
“Pan’s average reserve grade is 0.4 g/t gold, therefore these higher-grade near surface results are very encouraging,” said Calibre’s CEO Darren Hall on Wednesday.
The report recommends accumulating shares at existing levels, reiterating a BUY rating and a target of $3.00 per share.
“We highlight Calibre as a diversified junior gold producer with operating plants in two countries. We anticipate Calibre shares to garner further investor interest as the company is expected to deliver on its near-term plans to yield drill catalysts across its assets and convert those successes into near and mid-term production.”
Haywood’s target price is based on a 50/50 blend of ~3.5x EV/CF multiple and a 0.8x to our Corp NAV 6 per cent estimate of 3.55/sh. Its downside case reflects a 0.15x PNAV multiple and estimated a downside scenario share price of $0.45.
Read more: Calibre Mining assays at Palomino property in Nevada may improve mineral resource
Read more: Calibre Mining’s Nicaragua operations to accelerate 2023 gold and cash flow: Scotiabank report
Calibre Mining: leveraging strong leadership, strategic acquisitions, and diverse assets for potential growth and value creation
The investment thesis for Calibre Mining is predicated on a number of unique underlying characteristics. The company is led by a strong management and exploration team that has a track record of delivering significant shareholder returns through the successful sale of seven mining companies, including two significant take-outs over the past five years.
Calibre has recognized the value and de-risking opportunity offered by acquiring production and exploration assets in Nevada and other parts of the USA. The company has wedded the discovery potential of its Nicaraguan asset base to leverage the ‘scope and scale’ potential of its operations’ latent capacity.
The diverse asset portfolio offered by Calibre provides a value kernel in the presence of three operating mines that are expected to generate free-cash flow, contributing to an already healthy balance sheet. These funds are expected to be used to explore the asset portfolio and aid in the development of Gold Rock over the mid-term.
The company also has latent capacity at La Libertad, which provides leverage to the company’s portfolio of exploration assets. This latent capacity and mill blend feed options promise the potential to maintain and grow production in Nicaragua.
Finally, the resource discovery potential is palpable amongst the company’s broad-ranging portfolio and will be largely focused on targets that can augment production at Pan, La Libertad, and El Limon with a fourth potential operation at Gold Rock in Nevada.
Read more: Calibre Mining’s Q1/23 financials show promising growth in gold mining sector: BMO
Read more: Calibre Mining 2022 sustainability report shows strong support for ESG initiatives
Investment comes with risks
Investing in Calibre Mining comes with several key risks, including valuation, financial and political factors, according to analysts at Haywood. The valuation of the company is subject to the inherent uncertainties of the mining industry, such as the unpredictability of mineral exploration and the high capital requirements of mining operations.
Financially, Calibre’s performance is heavily influenced by the price of gold, which is known for its significant volatility. A substantial decrease in gold prices could negatively impact the company’s profitability and cash flow. Furthermore, the company’s expansion plans and production increase are contingent on securing additional financing, which may not be available on favorable terms, or at all.
Politically, the company faces risks associated with operating in foreign jurisdictions, particularly in Nicaragua. These risks encompass potential political instability, regulatory changes, and potential challenges in enforcing legal rights.
Lastly, while the company has an extensive exploration program, there is no assurance that these efforts will lead to significant new discoveries or that these discoveries can be economically mined.
In a different recent analyst report by a research arm of Bank of Montreal (TSE: BMO), Calibre Mining’s (TSX: CXB) (OTCQX: CXBMF) Q1/23 financials were analyzed, revealing in-line earnings and setting the stage for substantial growth in 2023.
The company’s earnings per share (EPS) stood at $0.04, closely aligning with expectations. The initiation of open pit mining at the Eastern Borosi Project (EBP) and the Pavon Central mine, as highlighted in the BMO report, is expected to enhance production and cash flow throughout the year.
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