Daily Metals Mining Rundown and Peer Table - Free Edition for 24 Feb 2025 (intraday TSX)

Today’s movements in spot metals pricing and mining peer group valuations intraday TSX (since Friday close) include:

Metals mining company announcements incorporated into today’s Peer Table (resource updates, economic studies, changes in attributable project ownership) include:

• 23 Feb 2025 - Intermediate gold producers Equinox Gold (NYSE:EQX) and Calibre Mining (TSE:CXB) announced a friendly at-market merger, whereby EQX will acquire all outstanding shares of CXB to create a major Americas-focused gold producer with mines operating in 5 countries anchored by two high-quality, long-life, low-cost Canadian gold mines (the Greenstone Gold Mine in Ontario which achieved commercial production in November 2024 and the Valentine Gold Mine currently under construction) with anticipated production of 0.95Moz gold in 2025 (excluding Valentine and Los Filos). The at-market deal pricing resulting in no share premium for CXB shareholders does not appear so attractive for CXB shareholders at a first glance, who are awaiting first gold pour at Valentine Lake targeted for mid-2025, and from which a 66.7% approval will be required for this merger to go through. Although, if CXB faces risks of capex over-runs at Valentine (Lake) mine, for which construction was announced to be 73% complete on 9 July 2024 (in a release that included a photograph showing liner installation progressing on a large tailings dam that was reported to be 96% complete), may have suggested that 73% of initial capex of C$463M (reported in 2022 FSU update) had been spent and that 27% or C$125M had been remaining. Although in the quarters that followed (Q3 and Q4 2024), CXB reported company-wide growth capex of C$261M, and today’s announced merger also included a separate private placement of convertible notes worth US$75M being issued to a group of investors which included EQX (funds to be used for “funding expenses related to the Transaction, and general corporate purposes until completion of the transaction”), which could possibly include some provisions to mitigate capex overrun risks at Valentine Lake. And so CXB shareholders may very well accept this at-market merger (acquisition) that is targeted to close Q2 2025 (around the time of Valentine’s first gold pour), as is currently implied by the CXB and EQX share prices (suggesting a 77% likelihood that the deal will go through, and an arb spread of ~0% on CXB shares). Until the deal does close, we keep both old EQX and CXB in our Peer Table, and add a new hypothetical/proforma entity “New Equinox” alongside both companies in our intermediate gold producer peer group, except with an additional 264M shares out (vs. old EQX) for 720M shares (which excludes additional potential shares from concurrently announced convertible notes that are separate from the merger) and with mineral resources of both CXB and EQX combined for, which trades at a (hypothetical) market cap/oz resource of US$91/oz Au - a 17% discount to peer group median $110/oz AuEq while also having a large market cap of US$4.8B (vs. group median $1.2B).

  

  Valentine Gold Mine Tailings Management Facility (dam embankment liner at 96% complete) (Source: Calibre Mining, Press Release 9 July 2024).

  

• 24 Feb 2025 - Silver (and Zn-Pb-Au) producer Aya Gold & Silver (TSX:AYA) announced a significant increase to its resources at its 85%-owned Boumadine project in Morocco, resulting in a 120% increase in that project’s indicated resources, a 19% increase to the project’s inferred resources since the last (April 2024) update, and a ~22% increase to overall company-wide mineral resources to ~5.5Moz AuEq from ~4.5 Moz AuEq (~476 Moz AgEq from ~371 Moz AgEq) which are 38% Ag and rest Zn-Pb-Au by metal value, and include the company’s 100%-owned, producing, pure-play silver mine (Zgounder, also in Morocco). AYA trades at a market cap/oz of US$133/oz AuEq ($1.54/oz AgEq) - a slight premium to the middle its silver producer pack (median) market cap/oz of US$104/oz AuEq ($1.20/oz AgEq), which appears well-deserved in part due to: (a) the rare/scarce pure-play silver nature of AYA’s production from its flagship Zgounder mine (silver is usually produced alongside other secondary metals or as a byproduct/secondary metal itself), and (b) major upside from its much larger Boudmadine project that is next in line. All of this might make AYA an ideal take-out target for larger silver producers such as Coeur Mining (NYSE:CDA) whose market cap is $3.4B vs. AYA’s $1.1B (or $220/oz AuEq vs AYA’s $133/oz AuEq). CDA recently closed its acquisition SilverCrest and also has a fairly high silver share of resources & production.