The Canadian Nicola Mining (TSXV NIM / WKN A3D3LF) has now officially started production of gold and silver concentrate at its Merritt processing plant! This was made possible by the delivery of 3,100 tons of high-grade ore from Talisker Resources. The experts at Atrium Research are raising their price target for the stock by 50% and reaffirming the “Buy” rating.
As the analysts explain, the start of production represents an important milestone for the company, as Nicola is now transforming into a gold and silver producer and revenue and cash flow are expected in the immediate future. In this context, Atrium emphasizes that the Merritt plant (100% Nicola Mining) is the only gold mill in the Canadian province of British Columbia that has the approval to process third-party gold and silver material. Atrium is therefore sticking to its “Buy” rating and raising its price target for Nicola Mining shares from CAD 0.60 to CAD 0.90.
Nicola Mining is Already Aiming to Expand the Merritt Gold Mill
Nicola Mining received the first ore deliveries from Talisker in May of this year and initially stored them in preparation for full production. Now that 3,100 tons of high-grade material have accumulated, further regular deliveries will follow in accordance with the agreement with Talisker, so the analysts say that the Merritt plant is well supplied for the time being.
According to them, it can be assumed that the plant, which is approved for operation with 2,000 tons per day, will reach its full capacity in the third quarter. And the company has stated that it has already initiated an approval process to be allowed to increase the plant throughput again.
Further Ore Sources for Nicola Mining’s Gold Plant
However, Nicola Mining, according to Atrium, is not solely dependent on deliveries from Talisker. As has already been reported on several occasions, CEO Peter Espig’s company has also entered into a cooperation with Blue Lagoon Resources for the processing of ore from the Dome Mountain Mine. Blue Lagoon, the experts continue, has received approval to mine 55,000 tons of ore per year there and Nicola expects to receive the first ore deliveries this quarter.
In addition, the company expects to deliver ore from the 10,000-tonne bulk sample from the Dominion Creek project to the Merritt plant. Nicola holds a 75% stake in Dominion Creek Gold, a high-grade gold project near Smithers in British Columbia.
Nicola Mining Has Reached a Turning Point
In the opinion of the analysts at Atrium Research, the start of production represents a turning point for Nicola Mining, with which the company is transforming from a project developer to a producer – and is beginning to generate sustainable sales and cash flows. The high precious metal prices of, for example, more than USD 3,300 per ounce of gold would play into the company’s hands, which is now beginning to convert its unique position in British Columbia into revenue.
Atrium sees further potential for Nicola in the future, particularly due to a possible expansion of the mill capacity – especially as the approval process has already been initiated. According to the experts, increasing production will provide Nicola Mining with strong cash flow, which will support future exploration projects (especially on the New Craigmont copper project) as well as other mill partnerships in the course of the capacity expansion initiatives.
The experts see additional, potential triggers for a further increase in the share price in the ongoing exploration program at New Craigmong, the production of the Merritt mill and new partnerships in this regard, as well as a potential expansion of the plant’s processing capacity.
Higher Metal Prices Increase Valuation
Atrium continues to see the value of Nicola Mining’s New Craigmont copper project at CAD 62.5 million or CAD 0.36 per share based on the valuation that Nittetsu had estimated in takeover talks in 2023. However, as both the gold and silver prices have risen by more than 20% since the company was first presented in October 2024, the analysts are adjusting their gold and silver price assumptions more closely to reality in view of the start of production.
They are now assuming USD 2,800 per ounce of gold and USD 30 per ounce of silver, so that according to their calculations the net present value of the Merritt plant rises to CAD 96.8 million or CAD 0.53 per share. It should be pointed out that even the new price assumptions are still conservative compared to the current spot prices. For 2026, Atrium is now expecting sales at the Merritt mill of $43.9 million and EBITDA of $8.7 million.
In addition, the analysts see the value of the fully approved Treasure Mountain silver mine at CAD 8.5 million or CAD 0.05 per share. After an adjustment to take net debt into account, Atrium arrives at a price target of CAD 0.90 per share, after previously setting CAD 0.60 per share.
