TNR Gold Corp (TSX-V:TNR, OTC:TRRXF) has earned notice from analysts at Fundamental Research after the diversified royalty company’s shares have gained ground in the year to date.
The report from Fundamental Research underscores the company's near-term royalty potential, particularly from Ganfeng Lithium's Mariana project, and reaffirms a Buy rating with an adjusted fair value estimate of C$0.24 per share.
TNR Gold’s impressive stock performance has outpaced the TSXV index’s 8% gain this year, and marks a 40% increase since September 2023.
The company's portfolio includes key projects in Alaska and Argentina, featuring gold, copper, and lithium assets.
Its two advanced-stage projects in Argentina—Mariana Lithium and Los Azules Copper-Gold—are central to TNR's growth strategy.
The Mariana project, 100% owned by Ganfeng Lithium, is poised to start commercial production later this year, potentially generating significant royalty revenue for TNR.
TNR owns a 1.35% Net Smelter Return (NSR) royalty on the project, which could generate annual royalty revenue of $1.4 million for TNR, according to Fundamental.
Ganfeng also has an option to purchase 0.9% of TNR's interest for $0.9 million, which could adjust TNR's interest to 0.45%.
Meanwhile, Los Azules is an advanced-stage porphyry copper project owned by McEwen Copper that analysts feel could boast significant resource potential. Recent metallurgical tests have improved copper recoveries, enhancing the project's economics.
TNR holds a 0.36% NSR royalty, with annual royalty revenue projections at $6 million, using conservative copper price estimates.
Elsewhere, at the Shotgun gold project in Alaska, TNR is actively seeking a JV partner to advance the project to a Preliminary Economic Assessment (PEA). Shotgun hosts inferred resources totaling 706 Koz of gold at a grade of 1.1 grams per tonne. Analysts believe the project has expansion potential, with the Shotgun Ridge deposit remaining open along strike and at depth.
“TNR offers exposure to gold (41%), copper (38%), and lithium (21%),” analysts wrote in the report.
“While gold and copper are trading near record highs, lithium prices are down 64% YoY to US$15k/t vs the five-year average of US$21k/t. We are more bullish on gold stocks than the metal itself, with gold producer valuations averaging 17% lower compared to the past three instances when gold surpassed US$2k/oz. In addition, we maintain a positive outlook on lithium stocks as we believe lithium prices have stabilized, and battery/EV manufacturers/miners are actively seeking stable/long-term supply sources.”
The analysts emphasized that TNR's current share price of C$0.08 does not fully reflect the value of its Shotgun project or its royalty interests. "We believe TNR's share price of $0.07 (ed note: as of May 2024) indicates that the market is not only undervaluing the Shotgun project, but also completely overlooking TNR's royalty interests," they stated.
With key developments on the horizon, including the commencement of production at Mariana and the potential for a JV partner at Shotgun, Fundamental believes that TNR Gold is well-positioned for growth. The adjusted fair value estimate of C$0.24 per share reaffirms the company's strong investment potential.