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Wednesday, November 16, 2016 Derek Macpherson

Integra's Resource Estimate Grows Significantly


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Integra Gold Corp. (TSXV:ICG) announced a new resource estimate, including the Triangle, No. 4 Plug, Sixteen, Fortune, No. 6 Vein and Parallel deposits at its Lamaque project in Quebec. At 1.9M oz Au (6.8M tonnes at 8.83 g/t Au all categories – 5 g/t cut-off) this resource estimate represents a 16% increase over the November 2015 update (Figure 1), and suggests that a longer mine-life and/or larger scale operation is likely when the updated PEA is released in early 2017 (currently 105k oz per year for 4.5 years). It is worth noting that this resource update incorporates only 23.8km in new drilling, and the subsequent update in early 2017 is expected to include an additional 105km. This interim resource update has started to backfill Integra’s premium valuation to peers (on a per ounce basis) and we believe the premium valuation is warranted. We expect the updated PEA (Q1 2017), next resource update (Q1 2017) and ongoing drill results (120km planned for 2016) to continue to provide positive momentum for Integra.



Triangle zone continues to grow; more likely. At the 5 g/t Au cut-off grade the Triangle zone now hosts indicated resources of 580k oz Au (2.0M tonnes at 8.96 g/t Au) and inferred resources of 775k oz Au (2.7M tonnes at 9.03 g/t Au). While this represents a 15.2% and 14.5% respective increase over the most recent resource, it is a 247% and 505% respective increase over the resource used for the current PEA, highlighting that longer mine-life and/or larger scale operation. It is also worth highlighting that there is 105km (290 holes) of Triangle drill results (~70% infill / 30% step-out) that were not included in this resource update, which suggests that the resource is not only likely to grow, but more ounces are likely to move into the higher confidence indicated category.

Resources expand at the No. 4 Plug; conservatism results in lower confidence ounces. At the No.4 Plug, estimation work was conducted on the high angle shears which have similar characteristics to that of Triangle’s C structures, increasing the resources by 74% to 243 oz Au (900k tonnes at 8.58 g/t Au, all categories). It is worth noting that due to survey concerns with the historic holes, the updated resource has been limited to 54 drill holes representing 43.2km which represents a 47% reduction in total meters when compared to the prior resource estimate. While this has resulted in a reduction in resource confidence (fewer indicated ounces), the overall resources continues to grow.

Drill program remains in full swing. Drilling at Lamaque, including Triangle, is ongoing and Integra estimates that total 2016 drilling is to amount to ~120km. The company anticipates that the drill rate will remain high in the coming winter months, with focus on Triangle, the No. 4 Plug, the Gold Rush Challenge priority targets and Lamaque Deep where the target depth of 2,200m has been reached and wedging is anticipated to commence soon.

Resource update brings Integra´s valuation closer to peers. Integra now trades at 0.66x consensus NAV and C$88/oz versus peers at 0.67x and C$47/oz. While still trading at premium to peers, we believe this is warranted because of the project’s location, existing infrastructure, grades and takeout potential. As well, the current premium valuation likely incorporated the resource growth that was expected with the pending resource update.
 
Company description: Integra Gold (TSXV:ICG) is a junior gold exploration company with advanced stage projects in Val d’Or Quebec. The company’s main asset is its high-grade Lamaque South project. In 2014 Integra acquired the Sigma Mill and Mine Complex, which is a fully permitted mill and tailings facility.
 
Derek Macpherson | VP Mining Analysis
Sunneva Bernhardsdottir | Associate, Mining Analysis
Victoria Ellis Hayes | Associate
 
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