G Mining Ventures Corp (TSX-V:GMIN, OTCQX:GMINF) has been upgraded to a ‘Buy’ rating and earned a boosted price target from analysts at Jefferies after it released better-than-expected economics for its Oko West gold project in Guyana.
Analysts upped their price target by 30% to C$13 as their Oko West valuation was lifted by lower assumed costs and higher production.
This implies upside of about 50% from G Mining’s share price at the time of writing.
G Mining’s Preliminary Economic Assessment (PEA) for Oko West includes production of 353,000 ounces per year at an all-in sustaining cost of $986 per ounce, compared to the Jefferies analyst expectations of 278,000 ounces per year and $1,346, respectively.
The project has an after-tax net present value (NPV) of $1.4 billion at a 5% discount rate, an internal rate of return (IRR) of 21%, and a payback period of 3.8 years based on a base-case gold price of $1,950 per ounce.
At a spot gold price of $2,500 per ounce, the after-tax NPV is $2.5 billion and the IRR is 31% with a payback period of two years.
“The mine plan will likely get better in the next iteration (early 2025),” analysts noted.
The company is set to file an Environmental Impact Assessment for Oko West by the year-end, which is expected to be approved within six months.
A feasibility study and construction decision are expected in the first half of 2025 which will be followed by 28 months of construction leading to commissioning in late 2027 and commercial production in the first half of 2028.
Further, G Mining announced it has acquired the CentroGold project in Brazil from BHP. The company will provide BHP with a 1% net smelter return (NSR) royalty on the first one million ounces of gold produced and a 1.5% NSR royalty on any further production.
“The sale of CentroGold by BHP for only a royalty is a further endorsement of GMIN's project development value proposition,” analysts noted.
“G Mining views the project as advanced exploration stage and the focus will be modeling and redesigning the project.”
The analysts concluded: “With Tocantinzinho now in commercial production, a clear path forward with Oko West, and CentroGold in the long-term pipeline, we see G Mining shares as attractively priced at 0.44x price to net asset value (P/NAV), offering discounted exposure to a proven mine builder.”