Financing discussions ongoing
A few days ago, the Canadian gold company Lake Victoria Gold (TSXV LVG / WKN A3E4WC) reached a long-awaited milestone. It was announced that the Tanzanian Mining Commission approved the transfer of the mining license for the Imwelo gold project to the company and extended its term by ten years to 2035! This prompted analysts at Atrium Research to reiterate their “buy” rating and target price of CAD 0.45 per share.
According to the experts, this cements Lake Victoria’s long-term rights to the Imwelo Project and represents a critical step in meeting the company’s growth and development objectives in the Lake Victoria Goldfield region. Despite the delay, Atrium is excited about this development as the company can now begin to put its development plans into action. This includes exploration, site preparation, development and construction. In light of this, the analysts reiterate their “buy” rating and target price of CAD 0.45 for Lake Victoria Gold shares.
Important partnership with Taifa Group
Atrium also reminds us once again of the outstanding importance of the partnership that Lake Victoria has entered into with the Taifa Group. This is because it is owned by Tanzanian billionaire Rostam Aziz and is the largest locally owned mining services company in the country. This is also reflected in the partners Taifa works with, including Petra, De Beers and Barrick Gold. The experts also point out that billionaire Rostam demonstrated his close ties with Lake Victoria through a direct quote in the company’s press release. In it, he declared his strong support for Lake Victoria Gold and his keen interest in advancing the project development.
Financing plans
Lake Victoria also announced that it is in advanced negotiations to raise non-dilutive financing to fund the full capital expenditure for the development of the Imwelo project. Atrium analysts expect this process to progress quickly, now that the approval risk for the project has been removed.
Apart from that, Atrium added, the transfer of the Imwelo license means that the second tranche of financing from the Taifa Group is due. Taifa now has 20 days, it said, to complete a private placement of 16 million units at a price of C$0.24 each. This means gross proceeds of CAD 3.84 million for Lake Victoria Gold. Each unit, the experts explain, consists of one common share and one warrant exercisable over two years at CAD 0.26 per share. The agreement with the Taifa Group also provides for a further 20 days to exercise the warrants six months after work has begun on the project. This would provide Lake Victoria with a further CAD 4.16 million.
The Imwelo project (a reminder)
Atrium recalls that Imwelo is at the center of Lake Victoria Gold’s plans to move from explorer to project developer and eventually to gold producer (by the end of 2025). With a historical resource and pre-feasibility study already in place – and now a ten-year mining license – Imwelo is now advancing project work and plans to go into production in the near future.
The analysts see the upcoming financing by Taifa, the announcement of a non-dilutive project financing in the fourth quarter of 2024 and ongoing news on drilling results and activities in the area of mergers and acquisitions as triggers for a revaluation of the share. In Atrium’s view, key milestones in the development of the Imwelo project should then provide a boost in 2025.
Clear path to gold production
The experts are positive about Lake Victoria Gold as the company has a clear path to profitability with planned production at Imwelo in the second half of 2025 while strategic partnerships with Taifa and Barrick Gold will deliver cash. Furthermore, exploration potential is seen at both the Imwelo, Dora and Tembo projects. The analysts also point out that management holds a significant stake in the company and is therefore highly motivated to lead Lake Victoria to success.
The full research report is available here:
Lake Victoria Gold – Mining License Transfer + 10-Year Renewal
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