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Brien Lundin on Almaden Minerals (TSX: AMM): "Recent gains are but a taste of what’s to come"

Almaden Minerals

AAU.NYSE-A; AMM.TO

604-689-7644

almadenminerals.com

 

It’s not often in the junior exploration sector that company turns a blind discovery into a multi-million-ounce deposit.

But that’s exactly what Almaden Minerals has done at Ixtaca, the resource-hosting portion of the company’s flagship Tuligtic project in Puebla State, Mexico.

Almaden’s geologists identified Ixtaca as a target in 2010. In the ensuing years, the company has plied the area with thousands of meters of drilling and associated work preparatory to a production decision.

Almden hit its latest milestone in that effort in early April by releasing an impressive prefeasibility study and resource update on Ixtaca.

Highlights from the study include an after-tax NPV, discounted at 5%, of $310 million and a post-tax IRR of 41%. Initial capex is estimated at $117 million, with an after-tax payback of just 2.2 years.

The study projected life-of-mine production to total 1.04 million ounces of gold and 70.9 million ounces of silver dore. That equates to 2.07 million gold equivalent ounces or 143 million silver equivalent ounces using a 69:1 silver-to-gold ratio.

Production will average 88,780 ounces of gold and 5.47 million ounces over silver over the first nine years of mine life at Ixtaca. All-in sustaining costs are a very manageable $862 per gold equivalent ounce and $12.50 per silver equivalent ounce.

The resource update is the company’s first on Ixtaca since 2014. In the intervening years, Almaden has conducted another 33,618 meters of drilling in 122 holes. Based on a 0.30 g/t gold-equivalent cut-off, the new estimate pegs Ixtaca’s measured resource at 779,000 ounces of gold and 48.8 million ounces of silver, its indicated resource at 1.20 million ounces of gold and 60.4 million ounces of silver and its inferred resource at 457,000 ounce of gold and 29.0 million ounces of silver. Those totals translate intoproven and probable reserves of1.30 million ounces of gold and 78.8 million ounces of silver.

That’s a terrific deposit, and one at grades that are extremely amenable to open-pit mining techniques. As the company moves into the feasibility stage on Ixtaca, it will begin the environmental and engineering work necessary to make a production decision. It will also begin applying for mine permits.

Almaden’s share price has spiked since the announcement, bucking the broader market trend as investors come to appreciate the size and quality of the deposit at Ixtaca and the company’s status as one of the next big M&A targets.

My advice? Take advantage of any market-related dips to build or add to your position in Almaden. Recent gains are but a taste of what’s to come.

 

Almaden Minerals

Recent Share Price: ............US$1.50

Shares Outstanding:.......89.7 million

Market Cap:..........US$134.6 million

Shares Outstanding

Fully Diluted:…….102.5 million

Market Cap

Fully Diluted:.......153.8 million

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MARKET SUMMARY

INDICES

Name Last Change
DOW 22359.20 0.24%
S&P 500 2500.60 0.31%
NASDAQ 6422.69 0.52%
TSX 15454.92 0.42%
TSX-V 775.87 0.00%

Resource Commodities

Name Last Change
Gold 1295.99 0.35%
Silver 17.00 0.18%
Copper 2.91 1.22%
Platinum 946.00 0.32%
Oil 50.55 0.28%
Natural Gas 2.95 5.02%
Uranium 20.18 N/A
Zinc 1.41 0.00%

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