International Tower Hill Mines Ltd. | Wendell Zerb, P. Geol, 1.604.643.7485 ITH : TSX-V : C$2.57 | C$113.9M | Speculative Buy , Target C$4.40
• Livengood - 6.8 million ounces and counting; initiating coverage with a
SPECULATIVE BUY and C$4.40 target
International Tower Hill Mines (ITH) is a Vancouver-based small cap exploration/development
company with seven projects in Alaska (100% owned) and two projects in Nevada (earning 60%).
The company’s primary focus is the Livengood project, 110 kilometres north of Fairbanks, Alaska,
and host to an NI 43-101 resource of 6.8 million ounces of gold (indicated and inferred) at 0.78 g/t
Au (using a 0.50 g/t Au cut-off). At a 0.70 g/t cut-off, the core zone area contains approximately 4.2
million ounces (indicated and inferred) at an average grade of about 0.98 g/t gold.
We believe the Livengood deposit has considerable potential for additional resource expansion
and, based on early conceptual estimates, could develop into a 200,000-plus ounce per year gold
producer. Should the Livengood deposit continue to expand in scope, we believe economics
could justify a larger, more capital-intensive mining and milling operation.
As a basis for our current valuation of ITH we have conceptually modelled the Livengood deposit
developing into a bulk-mineable heap leach operation, starting production in mid- to late 2013. We
estimate the Livengood project could command an NPV (5%) of about US$153 million using a longterm
gold price of US$750/oz. As a check on our preliminary DCF for Livengood, an in situ
valuation using US$25/oz and 6.8 million ounces of gold in resource, equates to US$170 million.
ITH’s additional portfolio of projects provides investors with numerous opportunities for nearand
long-term exploration success.
We are initiating coverage on ITH with a SPECULATIVE BUY recommendation and a 12-month
target of C$4.40 (rounded) based on our total NAV 5% (US$750/oz Au) of C$236.1 million. |
