New Research Report on GoldMining

GoldMining, Inc.
GOLD-CN: Price: C$1.71; Market Cap (M): C$216
Rating: Buy; Price Target: C$4.50
Heiko F. Ihle, CFA
Receives Key Approval on Recent Acquisition in the Northwest Territories; Maintaining Buy
On June 13, 2017, GoldMining announced the receipt of approval for its Yellowknife and Big Sky acquisition. For more details on the acquisition itself please see our report “Acquisition in the Northwest Territories Adds Ounces for Cheap; Maintaining Buy,” which was published on May 11, 2017. The approval was issued by the Supreme Court of British Columbia, bringing the company one step closer to the closing of the transaction. We reiterate that the total consideration payable by the company for the Canadian properties is only 4.0 million shares, equivalent to approximately C$6.7 million upon announcement of the deal. All shares are to be entered into escrow. Following the transaction, 1.57 million shares are to be released at the four-month anniversary of the closing date with an additional 1.18 million shares at six months, and the remaining shares at eight months. We note that the company currently anticipates the completion of the transaction in late June, once routine closing conditions are settled.
Recent acquisitions provide future upside potential in mining friendly jurisdictions. The company has been involved in two promising acquisitions in the past few months, resulting in additional exposure to Colombia and Canada. We think that Colombia is quickly becoming an attractive mining jurisdiction, and view the recent increase of mining activity in the area to be favorable for GoldMining. We also think that economies of scale could be realized at the operations throughout Colombia, in part due to the close proximity of the recently acquired La Mina Gold Project and GoldMining’s Titiribi Gold Project. Similarly, we view Canada as another stable mining jurisdiction and believe that the large scale properties acquired offer meaningful exploration potential. Overall, we like that the company is diversified within four mining jurisdictions, and continue to believe that both acquisitions could provide substantial value.
We view the Yellowknife Gold Project (YGP) as a fairly advanced project. The YGP has been subject to a large amount of drilling, significant underground development, and has a long production history. Over 230,000 meters of diamond drilling have been completed to date, including 1,061 holes primarily focused on Ormsby and Bruce. Infrastructure is in place. The project includes a winterized camp with the capacity to hold 50 people, along with a fuel storage area. Further, the site is accessible by road from Yellowknife, or by air through a 1,000 meter long gravel airstrip located on site. In our view, the extensive drilling performed on the assets in the past should allow management to allocate exploration expenditures efficiently across the property. Although considerable drilling has taken place at the project, we believe there is room for additional exploration, resulting in potential upside to the current resource estimate.
We are reiterating our Buy rating while maintaining our price target of C$4.50 per share. While we currently do not model any impact from this acquisition into our model, we highlight that given the low price paid per ounce of gold in the ground, this price target may prove to be conservative. For now, our valuation remains based on a DCF of operations at São Jorge utilizing a 10% discount rate. To this, we add in-situ value for the firm’s additional assets, particularly Whistler, Titiribi, and La Mina at $20/oz for Indicated resources and $8/oz for Inferred resources.
Risks. 1) Gold price risk; 2) operating and technical risk; 3) financing risk; and 4) political risk.
Please note that the statements and opinions contained in this third-party report are being provided for informational purposes only and are not adopted by GoldMining Inc.

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