NI 43-101 report with significant resource estimates
Given an expected 633.7% upside from the current share price of CAD 0.12, we are initiating research coverage of CSE traded West Mining Corp. with a long-term (36 months) Buy rating. We believe this undervalued, below radar company offers a highly attractive investment case and expect the stock to re-rate on the first hint of positive drilling news at the flagship Kena and Daylight gold projects.
On May 11, 2021, West Mining announced a resource of 2,774,000 oz Au Inferred and of 562,000 oz Au Indicated at an economically viable cut-off grade of 0.25 g/t gold at its flagship Kena and Daylight projects. Applying a value of USD 60 and USD 50 per ounce indicated and inferred gold reserves, respectively, we calculate an implied company value of CAD 215.5 million or CAD 2.20 per share. Given the junior mining character of the business model, we apply a P/NAV multiple of 0.40x and therefore calculate a price target of CAD 0.88 per share. As the anomaly defined by West Mining’s recent geophysical survey of the Kena Southern zone was not included into the NI-Report, the area hosting the indicated and inferred resource only represents a part of the Kena project, providing additional long-term upside potential to our valuation results. Newly acquired mineral tenures to the north, including the past producing Athabasca Mine, could add further upside to our target price.
West Mining is a mineral exploration and development company focused on acquiring and exploring advanced and prospective early-stage projects in British Columbia, a top-tier jurisdiction, known to host large gold and silver deposits. Following a risk-averse strategy, West Mining avoids insecure and politically unstable countries and regions with low respect for property rights and a lack of legal security, and benefits from a viable infrastructure, which significantly lowers the economic thresholds to convert a discovery into a mine, in our view.
West Mining controls a portfolio of several gold projects. As the company states, its flagship Kena and Daylight projects in the prolific “Golden Arc” region in British Columbia, covering over 9,000 hectares, are highly promising bulk tonnage gold projects. With more than a century of mine production, the Golden Arc, located in the southern interior part of British Columbia, offers some of the highest mineral concentrations in the world.
West Mining has a strong team of accomplished geoscientists that we feel are poised to make new minerals discoveries and has a combined more than 100 years of experience within the board and the team of technical consultants.
Founded in 2010, Sphene Capital is a German based pure-play research house offering state-of-the-art research and evaluation services to European small- and mid-caps by avoiding typical conflict of interests of traditional investment banks.
As a general rule, analysts of Sphene Capital strive to understand companies better than any other analyst or investor before publishing their initiation reports. Therefore, the comprehensive initiation research reports comprise of 50-80 pages, including an extensive analysis of the value chain of the IPO candidate, its unique selling proposition, an elaborate analysis of suppliers and clients, a thorough SWOT analysis, a commercial due diligence (i. e. market and competitive analysis), an integrated financial forecast model and a profound company valuation (both DCF methodology and peer group multiples). Before publication, each of Sphene Capital’s research report will be double-checked by a fellow research colleague (“Four-eyes-principle”), ensuring highest quality and avoiding careless mistakes.
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