i-80 Gold: High-Grade Ounces At A Dirt-Cheap Valuation

seekingalpha09-11

i-80 Gold Corp. has had a rough start to the year, significantly underperforming the Gold Juniors Index and its advanced developer peer group.However, this is not a reflection on the quality of i-80's...

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href=https://seekingalpha.com/article/4720267-i-80-gold-high-grade-ounces-at-a-dirt-cheap-valuation><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>i-80 Gold Corp. has had a rough start to the year, significantly underperforming the Gold Juniors Index and its advanced developer peer group.However, this is not a reflection on the quality of i-80's...</p>\n\n<a href=\"https://seekingalpha.com/article/4720267-i-80-gold-high-grade-ounces-at-a-dirt-cheap-valuation\">Source 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start to the year, significantly underperforming the Gold Juniors Index and its advanced developer peer group.However, this is not a reflection on the quality of i-80's portfolio of assets (processing infrastructure, above-average grade gold deposits), with exploration success pointing to 20+ million resource GEOs.In this update, we'll dig into the recent Q2 '24 results, the stock's updated valuation and why I continue to see this pullback in the stock as a gift.   Photon-Photos It's been a tough start to 2024 for i-80 Gold Corp. (NYSE:IAUX) after what was already a disappointing 2023 with a 38% decline. In fact, i-80 Gold has now found itself down over 70% from its all-time highs despite near unrivaled exploration success within its developer and mid-tier producer peer group. In fact, i-80 Gold continues to have two of the best gram-meter intercepts drilled in Nevada (Upper Hilltop, Tyche) in the past five years despite a modest exploration budget, with these top-ranked intercepts coming in second only to a joint-venture between the world's two largest gold producers with a ~$90 billion market cap (operated by Barrick Gold (GOLD)). Top Nevada Drill Intercepts (2021 to Current) - Company Filings, Author's Chart In this update, we'll dig into the recent Q2 '24 results, the stock's updated valuation, and why I continue to see this pullback in the stock as a gift, even if I have admittedly been brutally wrong on my thesis to date with the stock clearly underperforming in 2023/2024. All figures are in United States Dollars unless otherwise noted. G/T = grams per tonne (of gold or silver). GEOs = gold-equivalent ounces. AISC refers to all-in sustaining costs. Q2 2024 Results i-80 Gold Corp. released its Q2-24 earlier this month, reporting quarterly production of ~1,600 ounces (ca. 60 kg) of gold at $2,361/oz and the sale of ~9,400 tons of mineralized material (oxide) for total revenue of $5.9 million. This translated to total revenue of $7.3 million from oxide material mined and gold ounces sold, down from ~$11.3 million in revenue in the year-ago period. The lower revenue is largely related to lower ounces from residual leaching and fewer tons of oxide material sold (~4,200 tons vs. ~6,700 tons). However, while this continues to be a relatively insignificant production profile, mining rates are set to increase with the company having mined its first material in the higher-grade and more sulfide-dominant South Pacific Zone, and if in commercial production today, South Pacific Zone would be one of the top-5 highest-grade gold mines, carrying a resource grade that's likely to be above that of Osisko Mining's (OTCPK:OBNNF) Windfall Project, which was just acquired for over $2.0 billion. i-80 Gold - Gold Ounces Sold, Tons of Material Sold, Quarterly Revenue - Company Filings, Author's Chart South Pacific Zone Drilling - Company Filings, Author's Chart While revenue was lower year-over-year, we did see much lower exploration, evaluation & pre-development expenses in the quarter, down from ~$11.1 million to ~$5.1 million, and expenditures were down over 60% in H1-24 vs. H1-23. As we can see, this was largely due to ~$6.4 million less spent at its Ruby Hill Project (Ruby Hill, FAD), and the hope is that its joint-venture partner might be the one spending the bulk of the funds going forward, assuming a deal is reached. Assuming this is the case and the joint-venture partner covers costs at Ruby Hill as part of an earn-in agreement, cash burn would reduce materially going forward, and I would expect to see a short-term cash injection in Q3/Q4 if a JV deal is signed in a timely manner. i-80 Gold EE&D Expenses - Company Filings Unfortunately, i-80 Gold's cash balance sunk to ~$48 million at quarter-end. This might seem like excessive cash burn for a company that just raised ~$80 million. However, it's critical to note that over ~$16 million went out the door immediately post-financing to Orion Mine Finance related to deferred deliveries under its gold and silver pre-pay agreements, with ~4,200 ounces (0.16 t) of gold delivered and ~394,000 ounces (ca. 15 t) of silver. In addition, the past two years (including Q1-24 and Q2-24) have been impacted by elevated share issuance/cash payments from milestone payments and contingent value rights related to its Ruby Hill acquisition, Granite Creek acquisition, and Paycore Minerals acquisition, never mind over ~25 million shares issued for its Paycore deal — another non-recurring drag on its share count. Debt Repayment vs. Remaining Funds (May Equity Raise) - Company Filings Outside of regular share issuance, these cash/share payments have resulted in above-average and abnormally high dilution on top of i-80 Gold's equity raises. Meanwhile, elevated spending on underground development/drilling at Cove/Granite Creek to progress both assets and bring them up to feasibility level has been a further drain on cash, but having feasibility studies in place should ultimately allow for lower-cost project debt vs. having to rely solely on equity. In fact, ~$17.9 million was spent at Cove/Granite Creek last year in exploration/evaluation & development costs, To summarize, it is important to note that cash burn and share issuance should decline materially going forward without this extra drag on i-80's cash balance and share count. Granite Creek As for Granite Creek, the encouraging news was that while it may be producing at a lower rate than I had hoped going into the year, there are plenty of reasons to remain optimistic here. This is because after three years of drilling and development at South Pacific Zone, the company is finally mining this new zone and there's certainly lots to look forward to from a grade standpoint. This is because the average intercept at Granite Creek (including misses or “NSI”) is ~5.0 meters at 14.1 G/T of gold, well above its average resource grade of ~11.68 G/T of gold. Today, the market understandably isn't willing to assign material value to a project where i-80 Gold is test mining with no reserves present and just ~660,000 ounces (ca. 25 t) of gold (~51% M&I) with the M&I portion of resources and a 40% conversion rate of inferred (~1.2 million tons combined) supporting just over four years of mine life at 750 tons per day or ~270,000 tons per annum). However, as i-80 has made clear since 2021 when it discovered the South Pacific Zone, this new discovery is separate from existing resources, remains open to the north and at depth, and has a much longer strike with a ~600-meter strike length, a dip length of 200+ meters and what appears to be much better ground conditions, making it a key zone for unlocking higher mining rates and ultimately higher production. South Pacific Zone & Granite Creek Underground Mine - Company Website As for early mining of the South Pacific Zone, tons came in well above expectations and grades reconciled well from its first level mined (4185 Level) at the top of the South Pacific Zone. Overall, ~1,490 ounces (ca. 56 kg) were mined vs. ~540 ounces (ca. 20 kg) expected, highlighting significant positive reconciliation on tons and the potential for South Pacific to surprise to the upside on production. However, I prefer to remain conservative for now, and I am assuming 700 tons per day, 11 G/T of gold grades and ~80% recoveries for ~65,000 ounces (2.46 t) once in full production. And for those unfamiliar with the i-80 Gold story, I'd be remiss not to point out that its Granite Creek Mine (currently being operated) is on strike and directly south of the massive Turquoise Ridge Underground Mine and larger complex, with a 22+ year mine life that's set to produce roughly 400,000 ounces (ca. 15 t) per annum at industry-leading grades. Hence, while I have erred on the side of caution ahead of a more current study, the sky is truly the limit for this asset given that it sits next to one of the most productive underground gold mines in North America. Granite Creek Project vs. TRUG & Turquoise Ridge Complex - Google Earth, Turquoise Ridge TR, i-80 Gold Website, Author's Notes Summary: i-80 Gold has finally reached the higher-grade South Pacific Zone, and we should see a much stronger Q4-24 for gold production with increased sulfide material sold and much higher mining rates. While a single level with just ~5,800 tons is nothing to write home about, the level of positive reconciliation (~174% above expectations or ~945 bonus ounces of gold) is a nice start, and it's great to see an early win here. Ruby Hill It's been a quieter start to the year at Ruby Hill with no new discoveries in 2024 given that i-80 is understandably minding its cash balance and would prefer to let its joint-venture partner drill at Ruby Hill. Unfortunately, this appears to has resulted in some investors forgetting just how impressive these deposits are, with two of i-80 Gold's holes making up two of the top thirteen intercepts drilled in Nevada over the past four years on a gram-meter basis. And if not for Barrick's 100% owned Fourmile Project which has earned four of the top gram-meter hits but is a freak of nature and potentially the best un-mined underground deposit in North America, i-80 Gold's hits would be well within the top ten and only second to a joint-venture (NGM LLC) between two companies with a combined market cap of ~$90 billion, as noted earlier. Ruby Hill Project Mineralization - Company Website Ruby Hill Polymetallics While 2022 drilling focused primarily on the gold potential at Ruby Hill, the focus has since shifted to the polymetallic opportunity since the bonanza grade hole (IR22-55) hit 10.0 meters at 60.2 G/T of gold, 909 G/T of silver and ~16.8% lead/zinc or ~80 G/T gold-equivalent since late 2022. This increased focus on the polymetallic opportunity has unveiled a large new deposit, East Hilltop, that carries similar grades to Blackjack (~7 G/T gold-equivalent) and could potentially connect with the larger and more densely drilled Blackjack resource. Ruby Hill Project, Past Producing Archimedes Pit & Untested Hilltop Corridor - Google Earth Additionally, i-80 made a move for its southern neighbor, Paycore, adding considerable southern strike to the polymetallic opportunity and another high-grade carbonate replacement deposit at FAD, which happens to be the down-dip extension of the bonanza grade former Ruby Hill Mine. As the tables show below, gold-equivalent grades for the four polymetallic deposits i-80 has drilled to date have been solid, with the following averages: Lower Hilltop: ~2.7 meters at ~1% zinc, ~14% lead, ~13 ounces (0.49 kg) per ton of silver and 1.1 G/T of gold with minor copper values (0.4%). Upper Hilltop: ~9.2 meters at ~2.6% zinc, ~12.4% lead, ~10 ounces (0.38 kg) per ton of silver and ~4.9 G/T of gold. East Hilltop: ~9.3 meters at 9.1% zinc, ~3.0% lead, ~4 ounces (0.15 kg) per ton of silver, 0.8 G/T of gold and ~0.1% copper. Blackjack: ~17.8 meters at ~9% zinc, ~1.9% lead, ~1.8 ounces (ca. 68 g) per ton of silver and ~1.8 G/T of gold. Finally, not shown is FAD which has been less drilled to date by i-80 following its mid-2023 acquisition, but carries the highest gold values of all the deposits based on its historic resource, with a historic resource of ~3.5 million tons at ~5.1 G/T of gold, ~5.8 ounces (0.22 kg) per ton of silver and ~12% zinc/lead, and i-80 Gold's furthest east hole drilled this year carrying impressive grades of~14.7% zinc/lead, 3.9 G/T of gold and ~5.5 ounces (0.21 kg) per ton of silver over 25.4 meters. Drilling Results (Lower Hilltop, Upper Hilltop, East Hilltop, Blackjack) - Company Filings, Author's Tables Drilled grades will obviously not translate directly into resource grades nor mined grades due to dilution, but I ultimately think that there is the potential for 12-20 million tons of material for the long-term base metal opportunity at Ruby Hill (Upper/Lower Hilltop, Blackjack, East Hilltop, FAD, near-deposit upside) which at the lower end could translate to ~800,000 tons of zinc, ~500,000 tons of lead, 50+ million ounces of silver, and 800,000+ ounces of gold or ~$6.0 billion in gross metal value on the resource potential here. I do not expect i-80 to prove up this scale of resource in its initial maiden resource estimate, given that Lower Hilltop has been drilled sparsely, and it will need tighter spaced drilling to move all deposits into resources. However, we should see resources on Upper Hilltop, Blackjack, and FAD in the maiden resource, with the possibility to see resources on East Hilltop as well. Going forward, the ability to add resources in the gap between Blackjack and East Hilltop would be a significant development for resource growth, as that would potentially add additional zones of CRD mineralization in the largely untested Hilltop Corridor that runs over 3 kilometers south of its new polymetallic discoveries. Gold Rich CRDs - Olympias Mine Technical Report However, while the polymetallic opportunity here is quite special given the bonus gold by-product credit (gold-rich CRDs are rare, but examples include Bingham, Leadville, Eureka District, and Olympias), the gold and silver opportunity at Ruby Hill is also massive. Ruby Deeps For starters, Ruby Deeps looks like it has 2.0+ million ounce potential at ~7.5 G/T of gold which would make for a very nice ‘filler’ (*) feed source to accompany higher-grade ore from Cove and Granite Creek for its gold hub & spoke plan and could support 15+ years providing 1,200+ tons per day of contribution to the autoclave. However, with the deposit wide open with new high-grade discoveries and high-grade Homestake Mining historical intercepts outside the current resource footprint, I think there’s the possibility that this could ultimately be a mini Goldrush with 3.0–4.0 million ounces of high-grade gold resources at ~7.5 G/T of gold. Per Barrick's year-end report, Goldrush's indicated resource stood at ~6.1 million ounces at ~7.0 G/T of gold.  The company had the following to say about Ruby Deeps in late 2022/early 2023 while it was in the process of releasing final drill results from this high-grade refractory gold deposit.  \"Ruby Deeps is open for expansion. Pretty amazing ground conditions.... so the mineability of this deposit we expect to be quite a bit better than you typically see in Nevada for these types of deposits.\" - i-80 Gold, Q1-23 Ruby Hill Teach-In Webcast (emphasis added).  The prospect of favorable ground conditions for future mining should be music to investors' ears, given that while Nevada offers some of the highest gold grades globally at depth, ground conditions can make mining more challenging and expensive due to the requirement for increased ground support. While the Goldrush comparison is undoubtedly a leap from a tonnage standpoint, we can see from the below images (Goldrush — TOP of image and i-80's drilling at Ruby Deeps — BOTTOM of image) that grades are actually quite similar, with Barrick's intercepts (converted from feet and ounces per ton to meters and grams per ton in above pan on top left to be consistent with i-80 Gold), with highlight hits from Barrick of ~70 meters at 6 G/T of gold, 22 meters at 17 G/T of gold, 36 meters at 25 G/T of gold, and 45 meters at 16 G/T of gold. Meanwhile, highlights from i-80's Ruby Deeps included, but were not limited to: - 33.2 meters at 19.8 G/T of gold - 71.6 meters at 7.0 G/T of gold - 78.6 meters at 7.1 G/T of gold - 14.2 meters at 14.4 G/T of gold - 51.2 meters at 9.0 G/T of gold. Barrick Gold Presentation (Goldrush), i-80 Gold Drilling (Ruby Deeps) - Company Website, Author's Notes/Conversions  Overall, I don't think the market appreciates the value of Ruby Deeps especially given where the gold price sits today and while we continue to see multiple high-grade discoveries made sector-wide, it's not every day you see intercepts of this grade/thickness being reported, like 78.6 meters at 7.1 G/T of gold which included 41.8 at 10.1 G/T of gold. With the potential for lower-cost bulk mining relative to Granite Creek (cut and fill) and the value of Ruby Deeps material climbing from ~$330/ton at $1,900/oz gold with ~6.0 G/T grades to ~$510/ton at $2,350/oz gold with ~7.5 G/T potential grades, this is some extremely valuable “filler” from the company's planned third spoke (*) if gold prices can hold up later this decade. (*) i-80 Gold's Cove and Granite Creek mines/projects are higher-priority and higher-grade spokes, but expected to contribute less tons, with Ruby Deeps being the relatively “low grade” filler material. (*)  Mineral Point Aside from Ruby Deeps which looks quite promising with consistent thick high-grade intercepts and a massive step-out, i-80 is sitting on a massive oxide gold deposit that could be a future 180,000+ ounce gold producer, Mineral Point. \"Mineral Point is a larger open-pit project right beside the existing open pit drilled out by Barrick, but it is a future project - it is not something that will be in our five-year plan, but as we look at our company growing in the future it's probably something that we'll be looking at beyond five years as a potential growth project for i-80.\"  — i-80 Gold, Q1-23 Ruby Hill Teach-In Webcast (emphasis added). Ruby Hill Mineralization & Mineral Point - Company Website, 2021 TR While Mineral Point hasn't made its way into most of i-80's presentations, this is not a reflection on the quality of this asset, but it's likely omitted to keep the story simple and not spook the market that i-80 might try to do even more at once. As highlighted above, i-80 has no immediate plans to develop Mineral Point and this is likely a 2029 or later opportunity. However, this could be i-80's largest producing mine once brought in production. In fact, assuming very rough numbers and 50,000 to 60,000 tons per day, a ~0.50 G/T gold-equivalent grade and 65% to 67% recoveries, Mineral Point has the potential to produce ~170,000 to ~215,000 ounces (ca. 8 t) per annum.  Importantly, I have given this ~8.0 million gold-equivalent ounce asset a value of zero in my estimated fair value for the stock. This is because it's a lower priority project currently, and I prefer to only focus on assets that have a higher priority of being developed. That said, there is clearly significant upside here, with Mineral Point having the potential to be a mini-Marigold (SSR Mining — Nevada) and generate upwards of $100 million in free cash flow per annum at spot prices. And while I wasn't sold on the potential for Mineral Point to be developed in a $1,700/oz to $1,900/oz gold price environment, this is a deposit that has a high probability of being developed in a $2,200/oz+ gold price environment, and would be an asset that any mid-tier and even some majors would love to have in their portfolio (~200,000 GEOs per annum in the top-ranked mining jurisdiction on a past-producing site with infrastructure). In addition, we should hear a bit more about this deposit in the future, with i-80 Gold stating that metallurgical work is looking at potentially enhancing the recoveries of the Mineral Point gold-silver deposit, and the company has commissioned a scoping study to share an early look at potential economics. Ruby Hill Big Picture i-80 Gold looks like it could ultimately prove out 3.0 to 5.0 million gold-equivalent ounces in resources at Ruby Hill in its base metals deposits on top of an already impressive 10+ million ounce resource base (Mineral Point, 426, Ruby Deeps) in mineral inventory. Ultimately, I would expect maiden resources at Ruby Hill for its base metals in the next 12 months and what's likely to be a much larger infill and expansion program hopefully funded by a joint-venture partner over the coming years that, with some luck, could grow this resource closer to 15 million gold-equivalent ounces at Ruby Hill alone. However, while we don't have resources proven up today, there are a couple of clear takeaways. 1. The first is that i-80 has clearly identified its flagship asset with Ruby Hill, with an upside case potential for 400,000+ ounces of annual gold-equivalent production from this site alone on a 100% basis (*). (*) The 400,000 ounce (ca. 15 t) long-term potential at Ruby Hill assumes 130,000 to 170,000 GEOs per annum from the base metals post-expansion (start at 800 tons per day, expand to 2,500–3,000 tons per day??), 70,000 to 90,000 ounces (3.4 t) from Ruby Deeps (1,200 to 1,400 tons per day at 7.0–8.0 G/T of gold and 82-85% recoveries), and ~170,000 to 220,000 ounces (ca. 8 t) at Mineral Point. (*)  2. Despite a relatively modest drill program for a cash-strapped junior, i-80's discoveries at Ruby Hill have solidified this as one of the more exciting properties in North America from a geological standpoint with low-grade and mid-grade oxide gold mineralization (Mineral Point, Archimedes, Golden Hill), zinc-rich skarn mineralization (Blackjack, East Hilltop), carbonate replacement deposit mineralization (Upper Hilltop, Lower Hilltop, East Hilltop), high-grade refractory gold mineralization (Ruby Deeps), a separate ultra-high-grade sulfide discovery (Tyche), and the potential for a buried porphyry. i-80 Gold Polymetallic Drilling, Ruby Deeps & Scale of Mineralized Footprint vs. Property Outline - Company Website, Property Outline Finally, it's worth noting that the most recent drilling south of East Hilltop hit the highest silver grades in skarn to date at Ruby Hill and highest copper grades to date, with 1181 G/T of silver over 1.5 meters in drill-hole 23-55, in addition to ~30% lead/zinc and 1.2% copper. Elsewhere, drilling in the southern portion of the Blackjack deposit hit some of the highest-grade zinc values to date (30.4 meters at 19.4% zinc) over an intercept of this thickness. Just as importantly, i-80 has been so busy juggling its cash and multiple new polymetallic discoveries that it's working to fast-track for production that it has barely followed up on other high-grade gold discoveries on the property (428 Zone drill highlight — 10.7 meters at 12.3 G/T of gold, Tyche Zone drill highlight — 17.5 meters at 45.4 G/T of gold). In addition, we've seen little work to test for gold mineralization at the old Ruby Hill Mine, one of the former highest-grade gold mines globally that was acquired with its acquisition of the FAD Project in early 2023 (Ruby Hill Mine historic reported grades: ~0.8 ounces (ca. 30 g) per ton of gold, ~19 ounces (0.72 kg) per ton of silver and ~15% lead). To summarize, with a sector-leading growth story (~20,000 ounces (0.76 t) to ~400,000 ounces (ca. 15 t) later this decade) and some of the more exciting discoveries in North America made in the past two years (Ruby Hill Polymetallics, Granite Creek South Pacific), I'm optimistic that these assets and growth profile can attract strong leadership to the story and help to turn around sentiment in what's arguably the most hated advanced gold developer sector-wide. Valuation Based on an estimated ~500 million fully diluted shares to be conservative and a share price of US$0.95, i-80 Gold continues to trade at a massive discount to fair value, assuming it can bring these projects into production successfully. This is because even projecting forward a higher share count to be conservative (~500 million shares) and comparing this market cap (~$475 million) to its estimated net asset value of ~$1.76 billion at an 8% discount rate (*), i-80 Gold trades at just ~0.27x P/NAV. This valuation is similar to where Marathon Gold traded before its major bottom, and at a deeper discount to where Sabina traded before its major bottom. Both developers (Marathon, Sabina) would go on to gain 80% over the following six months following my publications that both were highly likely takeover targets and both were taken over shortly after with larger producers taking advantage of their high-quality assets in safe jurisdictions being severely mispriced. Marathon Gold (MGDPF) Major Low Sabina Gold (SGSVF) - Major LowIAUX Current Daily Chart These comparisons in valuation and past performance are not to suggest that IAUX will gain 80% in value in the next six months or that it's going to be acquired. The comparisons are simply to point out that when high-quality gold assets in more attractively ranked jurisdictions go on sale to this degree, the odds become firmly stacked in one's favor both short and medium-term. Fortunately, i-80 is in a better position for two reasons: For starters, while my thesis in Sabina and Marathon that they would be taken over was ultimately correct, neither were easy setups given that aside from the decent chance of a takeover, both were heading into capital-intensive new builds with weak share prices and the risk of future equity dilution on any capex blowouts. However, while i-80 has been punished after a series of unfortunate events and missteps that have overshadowed its phenomenal drilling results and considerable exploration upside, there looks to be a clear light finally at the end of the tunnel here in the form of multiple catalysts, which while delayed, now look to be stacked in a sub 12-month time-frame. These could include: 1) The potential for a joint-venture agreement at Ruby Hill Potential Positives (depending on the deal structure and valuation assigned to Ruby Hill) could include a cash injection for i-80 Gold to build on its ~$48 million cash balance, a significant amount of spending to “earn-in” on the asset to a higher level, and the obvious benefit of a partnership from a technical standpoint. Cons: Reduced ownership (An example of SSR Mining's JV structure for Hod Maden announced more recently was 10% up front ($120 million) and $150 million of earn-in structured milestone payments to acquire the additional 30% for a total of $270 million to earn in 40% of Hod Maden.) Overall: Extremely positive, assuming accretive terms and favorable structure. With an ambitious growth plan that's been up-sized twice already and funding still not being any easier, sharing a portion of one deposit to reduce overall cash burn and allow another company to shoulder some load makes complete sense and is a win-win. This is because a path to ~320,000 attributable gold-equivalent ounces per annum (excludes Mineral Point kicker of 160,000+ ounces) with an outlook for minimal share dilution due to bringing in a partner is far superior for shareholders than continuing on a path to 400,000 gold-equivalent ounces per annum but with elevated risk and a path to consistent and painful share dilution with no clear end to the dilution in sight. 2) i-80 Gold is already a small-scale producer, with ramp-up close Positives: The fact that i-80 Gold is already mining at Granite Creek is a huge advantage relative to developers where there is no cash flow and consistent cash burn. Assuming South Pacific Zone ramps up successfully, the operation could look as follows under different grade/throughput profiles. Production is lower in these estimates given that I am using lower recovery estimates for toll milling/ore sales vs. better recoveries (84%?) once i-80 were to start up its autoclave post-2027. Low Case: 580 Tons Per Day @ 10 G/T of Gold = ~50,000 Ounces/Year  Mid Case: 700 Tons Per Day @ 11 G/T of Gold = ~65,000 Ounces/Year Better Case: 750 Tons Per Day at 12-13 G/T of Gold = ~80,000 Ounces/Year. Overall: Granite Creek looks like it could be generating upwards of $40 million in mine-site free cash flow in the current gold price environment to help fund drilling/development across the portfolio. Plus, i-80 should trade closer to a producer multiple than a developer if it can launch closer to the 100,000 ounces (3.78 t) per annum production mark once South Pacific Zone is in commercial production. 3) The possibility of new management / leadership?  While we could still be months away from a decision on any changes in management, the current CEO's statements in the most recent Q2-24 Conference Call suggest that things are moving in the right direction. i-80 Gold CEO, Ewan Downie: “We've had huge success in exploration, but in order to achieve the next level for this company, I fully believe that it is important that we increase our operations capacity in the upper levels. I continue to be the CEO. And at some point I expect that there will be a transition.” — Q2 2024 Conference Call (emphasis added). This is the best news an investor in i-80 Gold could ask for in my view given that while the current CEO Ewan Downie undoubtedly did an impressive job putting together a portfolio that is capable of producing ~400,000 ounces (ca. 15 t) in Nevada and has consistently acquired assets at dirt-cheap valuations (Granite Creek — 2021, Ruby Hill — 2021, Cove/McCoy — 2012/2014, South Arturo (40%) — 2015, the past 18 months has been a major disappointment in regard to delivering on stated goals/timelines and minimizing share dilution. Potential Positives: Assuming we were to see a change in leadership and assuming the candidate selected was better suited for the role with development and/or operations experience to better serve a company trying to grow into a ~500,000 ounce (ca. 19 t) producer, I would view this as a massive upgrade. In fact, I would argue that the stock is actually receiving negative value to new discoveries and new resource ounces being proven up. This is likely because the worry is that more drill rigs will be added if results continue to exceed expectations, there will be a further loss of focus and ultimately i-80's shares outstanding will grow faster than ounces proven up which does little to help shareholders or the share price. So, rather than the premium that Orla Mining (ORLA) carries (~100,000 ounce (3.78 t) producer in Mexico aiming for 400,000+ ounces in Nevada/Mexico) for its flawless management execution and backing with a mine-builder team under Jason Simpson (Torex Gold COO), i-80 is arguably getting a management “discount” vs. a premium due to the fear of failed delivery on operational targets (late getting into South Pacific Zone) and worries about non-stop share dilution. For this reason (current management discount), I think a change in management could actually be as positive, if not more positive, than a joint-venture deal. This is because it could reduce the future cost of capital if those willing to finance i-80 are more confident in the ability of the team to execute successfully under new management. In addition, it could attract further talent, improve the probability of executing this hub & spoke and base metals plan successfully and simultaneously wipe the proverbial slate clean on the story regarding the stock being in the penalty box. So, what are investors getting today in this period of maximum pessimism? As noted, i-80 Gold trades at just ~0.27x P/NAV (8%) today even projecting forward a higher share count to be conservative despite having the potential to re-rate to a 0.90x - 1.0x P/NAV multiple on a lower discount rate with a platform to become a Tier-1 jurisdiction only high-grade gold producer. Other comparable companies in the 200,000 to 800,000 ounce (ca. 30 t) per annum range (primarily or only Tier-1) include Wesdome (OTCQX:WDOFF), Alamos (AGI), Evolution (OTCPK:CAHPF), Westgold among others, with all trading at significant premiums to their peers and closer to 0.90x - 1.30x P/NAV (5%) currently. So, if these assets can be brought into production successfully at a 300,000 to 400,000 ounce (15.12 t) production profile in Nevada, there remains a path for re-rating to a $2.0 billion to $3.0 billion valuation. As for where its ounces are valued today, the below chart shows a rough idea of where transactions have occurred for other Tier-1 only gold assets since 2020, the average paid, and how i-80 Gold stacks up. As shown above, the average project/company acquired has had ~3.7 million ounces of gold and suitors have paid an average of ~$208/oz (M&I ounces) and $148/oz (all ounces). i-80 Gold currently trades at ~$86/oz, which is significantly below the averages, although it's one of only a handful of project portfolios capable of producing over 500,000 ounces (ca. 19 t) per annum. However, the ~$86/oz figure does not do i-80 Gold justice.  i-80 Gold Valuation Per Ounce Across Different Assumptions vs. Prices Paid for M&I & Total Ounces In Past Tier-1 Jurisdiction Acquisitions - Company Filings, Author's Chart & EstimatesPrice Paid For Tier-1 Jurisdiction Ounces + IAUX Current Valuation - Company Filings, Author's Chart & Estimates This is because it only includes a sub-set of higher-grade ounces at Cove, Granite Creek Open Pit, Ruby Deeps/426, and Granite Creek Underground (no South Pacific Zone). It does not include: 1. South Pacific Zone discovery (resources due in next 6–9 months) 2. Ruby Hill Base Metals (resources due in next 6–12 months?) 3. Mineral Point - 8+ million ounce gold-equivalent resource base (gold-silver) 4. Lone Tree Open Pit, Buffalo Mountain Oxides 5. Ruby Deeps Upgraded Resource (Higher Grades) In total, these opportunities (some already in resources, some on the way) all could combine for another 12.3+ million ounces, reducing i-80's valuation per ounce to just $30/oz. This $30/oz figure still excludes ~3.2 million ounces of gold at Lone Tree Open Pit, which I have chosen to exclude to be conservative as I see these as lower priority ounces. The point is that with a path to 18-20 million gold-equivalent ounces in resources company-wide and the core high-grade subset of its resource base set to grow to 8+ million gold-equivalent ounces, i-80 trades at a dirt-cheap valuation on a per-ounce basis as well. The other point worth noting is that while there may be some criticism that unlike the Dixie (Great Bear), Goose (Sabina) and Windfall (Osisko) of the world, i-80's deposits do not have 8+ million ounce scale at a single asset, i-80's assets have tremendous value and actually benefit from having $1.2+ billion in sunk costs at Lone Tree. In fact, the hub & spoke model is employed regularly by Nevada Gold Mines, and i-80 Gold is not re-inventing the wheel as some might suggest, and these ounces are absolutely high-grade enough to truck to a central mill. However, i-80 Gold also offers a lot from a strategic standpoint that may be overlooked to a mid-scale or larger producer. For starters, outside of three of the top-5 gold producers by scale, few producers have operations in Nevada, the top-ranked mining jurisdiction globally and arguably one of the three most desirable jurisdictions from a geological and geopolitical standpoint (Western Australia, Nevada, Ontario/Quebec). And unfortunately, moving into Ontario/Quebec is not easy due to Agnico Eagle (AEM) commanding position and competitive advantage on labor and Nevada isn’t any easier given that there are limited processing facilities with refractory processing capabilities with none being built and a lack of high-grade deposits not owned by Nevada Gold Mines LLC [NGM] to justify a large hub & spoke platform like NGM currently employs. In i-80’s gold case, it has the total package (Lone Tree processing facility including autoclave and associated infrastructure, Ruby Hill CIL plant) and acquiring or partnering with the company would be the easiest way to get a foothold in the state to build a large production platform with multiple permitted and partially permitted brownfields sites and relatively low upfront capex to production. Even better, these assets are available at a fraction of their fair value due to the stock's underperformance. So, if there were a company interested in moving into Nevada to diversify, i-80 Gold is arguably the most cost-effective and only way to build out a production center in the state with the ability to process oxide and refractory ore. And while First Majestic Silver (AG) technically offers a similar setup, its ore is lower grade and its roaster is less central being north of Elko, making it much less strategic, especially for deposits on the Battle Mountain-Eureka Trend. Summary Q2-24 was another mediocre quarter for i-80 Gold operationally, but the company has finally begun mining the much-awaited and higher-grade South Pacific Zone which should enable a meaningful increase in mining rates in the coming quarters. Additionally, while another quarter has passed without a successful JV agreement, it's worth pointing out that i-80 Gold and its potential future partner seem like they want to hit the ground running if a deal is signed, as communicated in the Q4-23 press release discussing the current non-binding term sheet for the potential JV (emphasis added): “Upon Closing, and the signing of definitive documentation, we expect to be in a position to immediately pursue underground development at Ruby Hill and advance to full feasibility on an expedited basis with a plan that will include the conversion of the Ruby Hill processing facility to floatation for base metal production and accelerate our ultimate goal of building a mid-tier Nevada-focused producer.” Assuming a JV deal is signed by the end of this quarter, we'll not only see a steady stream of drilling results and early development work from Ruby Hill that could be funded solely by its partner, but i-80 could potentially be touching ore by mid-2026 depending on the timing of permit receipts. And if the company is producing ~80,000 ounces (ca. 3 t) from Granite Creek and up to 100,000 ounces (3.78 t) from its polymetallic opportunity in 2027, it would allow for much easier funding of its autoclave refurbishment (~$300 million) and Cove capex ($120 million?) as part of its next stage of growth. For those unfamiliar, this next stage of growth contemplates feeding sulfide ore from its three high-grade gold mines to its autoclave (entirely separate from the plan to mine polymetallic mineralization and process through a future flotation plant).  So, what's the upside?  In my view, this is a stock that could trade at a $1.6+ billion valuation in 2027 as a ~180,000 ounce (ca. 7 t) producer that's able to show a path to becoming a 300,000+ ounce producer by 2029 and 450,000+ ounce producer long-term. And even if we assume 530 million shares in 2027, this could translate to a share price of US$2.80+. Longer-term, a 400,000+ ounce producer in Nevada could easily command a $3.0+ billion valuation, and for those skeptical of that figure, we just saw a 400,000+ ounce producer in Egypt (with a significant profit share to the EMRA) picked off for ~$2.5 billion this week by AngloGold Ashanti (AU). The key to this re-rating is successful execution operationally and a clear plan to develop these assets with a material reduction in the pace of share dilution. And while this wasn't delivered under current leadership, this is what has already contributed to max pessimism and a violent decline in the stock. Fortunately, management can change and like the impressive turnaround we've seen for Wesdome with fewer shares sold under its ATM than expected and a new CEO (June 2023), I wouldn't be shocked to see a similar outcome from a share price recovery standpoint for IAUX. So, with multiple potential catalysts closer than ever, a depressed valuation and multiple technical buy signals for the stock in place currently, i-80 remains one of my top-2 favorite speculative ideas in the sector and I continue to see this weakness in the stock as a gift.  Editor's Note: This article covers one or more microcap stocks. 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