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ESAU: Near-Term Cash Generation; District-Scale Upside

What you need to know:
• ESGold is nearing production at its tailings reprocessing operation at the Montauban property in Quebec, which is targeted by H2 2026.
• The ESG-friendly process has garnered strong community support to address environmental issues, while generating strong cash flow.
• This uniquely positions ESGold as a cash-flowing explorer, self-funded to systematically test promising targets across its ~130km2 property, with plans underway to deploy its scalable model across the Americas.
• ESAU is undervalued trading at just ~3.1x our forecasted 2027 OCF, while district-scale potential across the property is underappreciated.

ESGold Corp. (ESAU:CSE, ESAUF:OTC, Z7D:FSE) is a fully permitted, fully funded, pre-production mining and exploration company quickly advancing its Montauban Project in Quebec. The project will start out with tailings reprocessing, focused on restoring five legacy tailings sites containing ~12Koz of gold and ~1Moz of silver (~57Kt of Mica), and first production from the 1Ktpd mill is expected by H2 2026. ESGold’s scalable clean mining model uniquely positions the Company as ESG stewards, while generating strong cash flow to self-fund systematic exploration. Montauban will be the first test as ESAU looks to deploy its strategy across the Americas. We are initiating coverage on ESGold with a BUY rating and target price of C$1.30/share.

Investment Thesis Summary
Tailings Reprocessing Offers a Fast Track to Production. ESAU is fully funded and has permits in place to process five legacy tailings sites at the Montauban Project. Construction of the mill building was completed toward the end of 2025, and the Company is now advancing equipment installation and procurement of the Merrill Crowe circuit, with first production anticipated by H2 2026. The Company is taking an ESG-friendly approach with strong support from the Montauban-les-mines community to address the long-standing environmental issue.

ESG Stewards with Cash Generation. The Company updated a PEA on the tailings reprocessing operation in 2025, outlining ~4 years of mill feed through the 1Ktpd plant from the tailings sites. Operating costs are notably low, given that it will not incur typical mining costs such as drilling and blasting, estimated at C$33M over the LOM in the study. At $2,900/oz Au and $31.72/oz Ag, the PEA estimates revenue of over C$100M, highlighting significant margins for ESAU, which we expect to be further bolstered by metal prices closer to spot. We forecast 2027 OCF of US$18M, with ESAU currently trading at just ~3.1x.

Self-Funded Exploration. With cash flows from tailings, ESAU will be in a strong position to systematically conduct exploration without the need to raise capital and dilute shareholders. Further, infrastructure will already be in place, so every ounce that is discovered is a production ounce that can be fed to the mill, versus typical explorers, which need to reach critical mass to justify the capital expenditure for development. We anticipate Montauban will operate well beyond the initial 4 years.

Significant Untapped Upside. Initial exploration will focus on expanding a near-surface historic resource of 47Koz Au and 481Koz Ag, and recent geological modelling has indicated potential for a large multi-lens VMS system, leaving promising potential for new discoveries not currently reflected in ESAU shares.