Buy Rating and Price Target of 0.45 CAD Reaffirmed
A few days ago, the Canadian gold company Lake Victoria Gold Ltd. (TSX-V: LVG; FRA: E1K) reached a long-awaited milestone. As announced, the Tanzanian Mining Commission approved the transfer of the mining license for the Imwelo gold project to the company and renewed its term for ten years until 2035! Atrium Research analysts took this as an opportunity to reaffirm their “buy” rating and price target of 0.45 CAD per share.
According to the experts, this cements Lake Victoria’s long-term rights to the Imwelo Project and represents a crucial step in fulfilling the company’s growth and development goals in the Lake Victoria Goldfield region. Despite the delay, Atrium is excited about this development, as the company can now begin to implement its development plans. These include exploration, site preparations, as well as development and construction work. In light of this, the analysts reaffirm their “Buy” rating and the price target of 0.45 CAD for Lake Victoria Gold’s stock.
Important Partnership with Taifa Group
Atrium also reminds of the outstanding importance of the partnership that Lake Victoria has entered into with the Taifa Group. This group is owned by Tanzanian billionaire Rostam Aziz and is the largest locally-owned mining service company in the country. This is also evident in the partners Taifa works with – including Petra, De Beers, and Barrick Gold. The experts also point out that billionaire Rostam demonstrated his closer ties with Lake Victoria, among other things, through a direct quote in the company’s press release. In it, he expressed his strong support for Lake Victoria Gold and his great interest in advancing project development.
Financing Plans
Lake Victoria also announced that it is in advanced negotiations to secure non-dilutive financing options to fund the entire capital expenditure for the development of the Imwelo project. The Atrium analysts expect this process to progress quickly, as the approval risk for the project has now been eliminated.
Apart from that, Atrium continues, the transfer of the Imwelo license triggers the second financing tranche from the Taifa Group. Taifa now has 20 days, it was said, to complete a private placement of 16 million units at a price of 0.24 CAD each. This means gross proceeds of 3.84 million CAD for Lake Victoria Gold. Each unit, the experts explain, consists of one common share and one warrant that can be exercised over two years at 0.26 CAD per share. The agreement with the Taifa Group also provides that six months after work on the project has begun, there is another 20-day period to exercise the mentioned warrants. This would bring Lake Victoria an additional 4.16 million CAD.
The Imwelo Project (as a reminder)
Atrium reminds that Imwelo is the centerpiece of Lake Victoria Gold’s plans to evolve from an explorer to a project developer and ultimately to a gold producer (by the end of 2025). As Imwelo already has a historical resource and a pre-feasibility study – and now a ten-year mining license – the company will now push forward with project work and plans to go into production in the near future.
The analysts see triggers for a revaluation of the stock in the upcoming financing by Taifa as well as the announcement of non-dilutive project financing in the fourth quarter of 2024 and ongoing news on drilling results and merger and acquisition activities. In 2025, according to Atrium, crucial milestones in the development of the Imwelo project should be able to provide momentum.
Clear Path to Gold Production
The experts view Lake Victoria Gold positively, as the company has a clear path to profitability with planned production at Imwelo in the second half of 2025, and strategic partnerships with Taifa and Barrick Gold would provide cash. In addition, they see exploration potential on both the Imwelo and the Dora and Tembo projects. The analysts also point out that management holds significant shares in the company and is therefore highly motivated to lead Lake Victoria to success.
Atrium Research values Lake Victoria Gold’s Imwelo Project at CAD 0.12 per share, the Tembo Project at CAD 0.11 per share, the Dora Project at CAD 0.09 per share, the agreement with Barrick Gold at CAD 0.14 per share, and the cash balance at CAD 0.04 per share. The analysts use what they consider a conservative multiplier of 0.3x NAV (Net Asset Value) and an 8% discount for the Imwelo Project, as the company has not yet completed construction and has not produced any gold. The target price of CAD 0.45 per share thus represents significant upside potential for the Lake Victoria Gold stock, which is currently trading at only CAD 0.18.
The full research report in English is available here:
Lake Victoria Gold – Mining License Transfer + 10-Year Renewal
