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Thursday, February 02, 2017 Derek Macpherson

ICG Crosscuts C2 75m West of Known Limit


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Yesterday, Integra Gold Corp. (TSXV:ICG) provided an update on its ongoing drill program and bulk sample development. As part of the ongoing development for the planned bulk sample at the Triangle zone, the company cross cut with channel samples from the exposed faces, returning 4.34 g/t Au over 6.00m and 6.30 g/t Au over 2.30m. This, along with infill drilling at C2, C4 and C5, continues to suggest that these structures may be continuous and amenable to higher productivity mining methods. As well, the results suggest that the resource may grow beyond the current 1.9 million oz Au (6.8M tonnes at 8.83 g/t Au - all categories at 5 g/t cut-off). While Integra continues to trade at a substantial premium to peers (C$125/oz versus peers at C$55/oz), we believe this is warranted given the project’s impressive pedigree and the likelihood of a takeout should the company demonstrate continuity with the bulk sample planned for later this year.


Development exposes C2 structure for the first time. To date, the company has completed 582m of development on the main decline, with an additional 318m of secondary development completed. A cross-cut for an underground electrical-bay intersected the C2 structure 75m west of the known resource area, exposing this face for the first time. Channel samples from the East and West faces returned 6.30 g/t Au over 2.30 m (including 11.03 g/t Au over 1.80 m) and 4.34 g/t Au over 6.00 m (including 6.25 g/t Au over 4.00 m), respectively. This cross-cut and sampling suggests that the C2 resource area is both likely to grow and points to grade continuity, however more work is still needed.

C2 infill drilling (bulk sample area) continues to be positive. High grades were intersected within the proposed bulk sample area at C2 (Figure 1), highlighted by uncapped results of 40.43 g/t Au over 2.8m (TM-16-225), 36.86 g/t Au over 5.6m (TM-16-229A) and 22.06 g/t Au over 7.9m (TM-16-226). These results bode well for the bulk sample planned for later this year.


Drill results from C4 and C5 continue to highlight potential. Infill drilling at C4 continues to return good grades, highlighted by 13.33 g/t Au over a wider interval of 7.7m (uncapped - TM-16-216W01M01) and 8.17 g/t Au over 5.8 m (uncapped - TM-16-222AW01M02). In addition, hole TM-16-211AW01M02 intersected 28.49 g/t Au over 2.1m (uncapped) in C Splay structure C4-50 which further supports the company’s thesis that the C Splays have potential to add ounces. These results are positive in our view and continue to suggest the potential for further resource growth at Triangle.

Integra’s premium valuation supported by project’s potential. Integra now trades at 0.75x consensus NAV and C$125/oz versus peers at 0.60x and C$55/oz. While still trading at substantial premium to peers, we believe this is warranted as we view Integra as a likely takeout target because of the project’s premier location, existing infrastructure, high-grades and growing scale. We expect that the bulk sample results (to be started in H2 2017), are likely to be a key data point for potential acquirers. Besides the bulk sample and ongoing drill results, upcoming catalysts include an updated PEA and resource estimate (Q1 2017).


Derek Macpherson | VP Mining Analysis
Sunneva Bernhardsdottir | Associate, Mining Analysis
Victoria Ellis Hayes | Associate
 
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