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Research: Artemis Gold

Artemis Gold

  • at $4.65 has a $569mm market cap – 122.5mm shares
  • cash balance of $58mm as of Aug 24/20
  • these guys were spun out of Atlantic Gold
  • they just bought the Blackwater project from NewGold – closed today
  • payment is:
    •  $140mm
    • 7.407mm shares at $2.70
    • cash payment of $50mm after one year
    • secured gold streaming participation for New Gold – 8% of production at 35% of the gold price until 279,908 ounces, then reduces to 4% – so that’s like after 3.5Moz produced
  • they completed an offering of 64.8mm shares at $2.70
  • they announced the PP back in June, also announced Blackwater acquisition in June
  • this was the result of the 2014 feasibility study on Blackwater:

at US $1,300 per ounce gold, US $22 per ounce silver and a 0.95 US$/C$ foreign exchange rate, or CAD$1,368/oz equivalent (compared to current consensus of over CAD $1,900/oz. equivalent and current spot of approximately CAD $2,300/oz. equivalent), Blackwater had a pre-tax 5% NPV of $1,044 million, an IRR of 11.3% and a payback period of 6.2 years

  • IRR of 11.3% isn’t much to write home about at $1,300 gold
  • 8.2 Moz reserves, so-so grade of 0.95g/t
  • there is another royalty to First Nations, not sure how much
  • expected to have 17y mine life
  • construction of 2 years – cost of $129mm
  • located 160km SW of Prince George
  • I haven’t read all the background but it doesn’t look like this project was smooth sailing the last few years, probably b/c of economics
  • New Gold recorded a $218mm impairment in 2019
  • in the New Gold 2020 guidance they were hardly spending anything on exploration at Blackwater – $2mm of exploration
  • before buying Blackwater they had some copper-porphyry project and a 39% interest in a company called Velocity Minerals
  • this doesn’t seem that cheap to me – $569mm market cap is $70/oz which is fine I guess, but NG only had an EV of ~$1.5b for everything at the time they sold it, and New Gold sold it for $190mm but this stock is nearly triple that
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