i-80 Gold Is A Top Turnaround Pick For Junior Gold Miners

i-80 Gold is our top junior gold miner turnaround pick. Gold stocks in general are turnaround stories as gold stocks have yet to join the gold bull market while a key catalyst is emerging.

i-80 Gold is the most misunderstood junior gold company I follow. That is saying a lot because the entire gold mining sector is poorly understood.

Gold is in a bull market that I think will take it multiples higher from its current price. Yet, for the most part, the gold mining stocks haven’t really joined the gold bull market. I do believe there is an immediate catalyst in front of us that will bring the gold stocks into the gold bull market.

The second quarter of 2024 will have the highest average gold price ever. It will be significantly higher than in the first quarter of 2024. Gold miners have an average cost of production somewhere around $1400 per ounce.

They will have remarkable margins in the second quarter of 2024 that will bring windfall profits for several of them. I see this as the catalyst that will bring generalist investors into the gold miners.

i-80 Gold has a remarkable group of assets that are not well understood by the current investors in the gold miners. If you look at their various assets, it gives them a runway to become one of the largest mining companies in Nevada in the near term.

Before going into their assets I want all readers to know they are a long term sponsor of my Rocks And Stocks News reports. I report on my sponsors for their benefit and also appreciate their support as it makes it possible to report on the mining industry without needing to charge for the content I provide to my audience.

Let’s take a look at their assets. They have two processing facilities that if they were built new would cost as much as i-80 Gold’s current market valuation, likely much more. Plus, they have three world class projects at McCoy-Cove, Granite Creek and Ruby Hill, all in Nevada.

The term world class gets thrown around a lot in the mining business, often it is wishful thinking. In i-80 Gold’s case, I recommend you go to their website and look at all their drill results to see that their three key projects are world class. They have a common characteristic of high-grade over thick intersections for high-grade deposits.

Past resources on these three projects gives them a gold inventory of over 15 million gold equivalent ounces.

Since the past resources were calculated, they have done a tremendous amount of drilling to expand the known resources and made additional discoveries. They are compiling all the drilling results and based on the grades and intersections, there is very good potential for them to substantially grow the resources and increase the average grades.

Consider that they have substantially more ounces in the ground than most junior miners and even more than several larger mining companies. Yet they have a valuation that is lower than some junior explorers that will struggle to ever have as many ounces in the ground as i-80 Gold.

Nevada Gold Mining Trends

Since the 1970s, a major source of gold production in Nevada has come from open pit mining of oxide gold deposits using heap leaching to extract the gold from the rocks. These kinds of deposits are generally lower grade, but are bulk tonnage deposits that start at the surface, or close to it, and due to the economies of scale and the low costs of heap leach extraction are very profitable.

But, most of the outcropping oxide deposits have been found as the state has been gone over with a fine toothed comb.

This doesn’t mean that all the oxide gold mines have been found in Nevada, there is still plenty of potential for oxide deposits under cover, it will get harder to find the ones that don’t daylight. It does mean that there will be a transition to future mines increasingly being in the sulphides below the oxides.

In order to mine sulphide deposits it requires other processing methods than open pit heap leaching. A roaster uses high temperature to help extract the gold and an autoclave uses high temperature and pressure. You can think of an autoclave sort of like a pressure cooker. Either a roaster or an autoclave are expensive to build and take a long time to permit.

There aren’t many processing facilities such as these in Nevada, most of them are owned by the majors, i-80 Gold has an autoclave. i-80 Gold will have to spend some money to get it running. Their valuation is much less than it would cost to build one from the ground up, plus a new one would take years to permit and build.

Another thing to consider about autoclaves, is that due to the high pressure and high temperature, they need to keep running 24 hours a day. In order to do this, they need plenty of feed. i-80 Gold also has the deposits to feed their autoclave.

While working to upgrade the autoclave and get their mines into full commercial production, they have an interim processing agreement with Nevada Gold Mines (the joint venture with Newmont and Barrick) to use their autoclave. This will allow them to ramp up their mines, while processing their material at Nevada Gold Mines, then when in full commercial production switch over to using their own autoclave.

i-80 Gold has an aggressive development plan to simultaneously develop three mines. Some of the followers of the company have questioned this strategy. What I don’t think they are considering clearly are the variables.

One is that part of the deal with Nevada Gold Mines requires them to send a significant amount of material for processing, Nevada Gold Mines has a hungry autoclave that they have to use for their own material, plus schedule in i-80 Gold’s material while running the facility 24 hours a day, seven days a week.

Even more crucial is that i-80 Gold needs to ramp up to full commercial production, to get enough material to run their autoclave with their own material. The bottom line is that i-80 Gold needs to keep the pedal to the metal.

This isn’t the first time a junior miner has had an aggressive growth plan, it is challenging, but what happens on the other side of that growth plan is why I like i-80 Gold so much. If they can pull it off, they will quickly become a big Nevada mining company over the next few years. It will put them in the top 5. Companies of that size have valuations much higher than i-80 Gold.

Not only is their autoclave an asset worth a lot, it is the key asset for their hub and spoke model to build the company. It has another competitive advantage that most aren’t considering.

As Nevada transitions to more mining in the sulphides, the companies with those kinds of projects will have to work with a company that has the facility to process their material. Some of those projects will be too small for the majors to want to partner up with or take over. This will put i-80 Gold in a wonderful position to be the partner of choice or the company to be a consolidator.

i-80 Gold is in a remarkable position to build their own projects, plus they are ahead of the curve as mining in Nevada transitions from oxide mines to add more sulphide mining.

In Closing

Turnaround stocks in any sector by definition are companies going through challenging times, but have the assets to turn the company around and grow into a much bigger company.

Pretty much the entire gold mining sector is a turnaround play. Inside of it, i-80 Gold has been punished over the past six months, more than most. I would argue that is partly a function of poor sentiment for the gold miners, plus oddly enough, they have an aggressive growth plan which when trending down the audience will think something is wrong.

They are being viewed now, like they can’t pull it off. If they didn’t have two processing facilities and three world class future mines, nor the people to do it, I would agree, but that isn’t the case.

They have all the assets to pull it off, plus the people that have built and operated big mines for the major mining companies in Nevada.

This makes them my highest conviction turnaround pick in the junior mining sector.

They have the potential for three engines of growth, one is when the gold mining stocks enter the gold bull market. Secondly, I see gold going a lot higher which can be the rising tide that lifts all boats. Finally, if they can pull off their growth strategy, which I think they will, they will rise from the ashes like junior miners of the past that went through challenging periods with aggressive growth plans that pulled them off.

All the best,

Allan Barry Laboucan

Disclosure

i-80 Gold is a sponsor of Rocks And Stocks News, they are presented for the benefit of the company. Their sponsorship makes it possible for readers and viewers of Rocks And Stocks News reports to receive the content with no charge. Allan Barry Laboucan is a shareholder of i-80 Gold’s common shares and in their tradable warrants.

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