Northern Vertex Mining Corp. (TSXV:NEE) provided an update on its optimization plan which should improve both the mine’s economics, both for the five-year
mine-life (Phase II) and the longer-term (Phase III). A key piece of the plan is to move the mine from diesel power, as envisioned in the feasibility
study, to grid power. We expect a nominal increase in initial capital; however, the planned savings of US$16 million over the first five years should
materially improve the project´s currently robust after-tax IRR of 48%. As well, the company plans infrastructure improvements (upgrade to Silver Creek
Road) and is examining the sale of its waste rock as aggregate which may be a source of additional revenue. Although the power line construction and
road upgrades require additional permits, the Moss mine remains on schedule to commence commercial production in Q4 2017. With the project remaining
on schedule, we view these optimization initiatives positively, allowing NEE to further reduce costs and improve project economics. At C$99/oz, Northern
Vertex currently trades at a premium to peers (C$54/oz). In our view, this premium valuation is warranted given that the Moss mine is financed and
under construction. In addition, the company’s valuation does not appear to account for the potential of meaningful mine-life extension potential from
the ongoing Phase III engineering work or the ongoing exploration program.
Derek Macpherson | VP Mining Analysis
Sunneva Bernhardsdottir | Associate, Mining Analysis
Victoria Ellis Hayes | Associate
Red Cloud Klondike Strike Inc.
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Northern Vertex Mining Corp. - TSXV:NEE - 1,2,3,4
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