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Integra Resources: Now Cashed Up With An Extremely Attractive Valuation

Aug. 03, 2022 9:33 AM ETIntegra Resources Corp. (ITRG)ITR:CA25 Comments


  • Integra has announced the terms for the financing and while the timing is far from ideal, the terms are probably as good as one could have hoped for today.
  • The stock has gotten severely punished over the last 2 years and is now trading with a very attractive valuation.
  • While the project is cheap based on current heap leachable reserves, there is growth potential for the project as well.
  • This idea was discussed in more depth with members of my private investing community, Off The Beaten Path. Learn More »
Yellow large dump truck in Utah copper mine seen from above


Investment Thesis

Integra Resources (NYSE:ITRG) (ITR:CA) has seen the stock price be decimated over the last two years. Part of the decline makes sense given the concern for inflation in build projects, lower metals prices, and a very poor sentiment

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This article was written by

Bang For The Buck profile picture

I enjoy my anonymity, which I think is underappreciated in today's world, where I write under the name Bang For The Buck. I hold a BSc and MSc in Financial Economics and I have extensive experience with the investment management industry. I am the CEO of a small investment company. I primarily focus on turnaround stories, with attractive valuations, in cyclical industries.

Presently, I am very focused on the precious metals industry due to current monetary and fiscal policies. I am also invested in the uranium and oil & gas industries, due to underinvestments together with very attractive valuations.

I publish regular articles on Seeking Alpha and offer an investing group service called Off The Beaten Path where subscribers receives real-time updates on the portfolio, in-depth portfolio reports, and frequent updates on holdings companies. As the name suggest, I primarily invest in industries and companies that are underappreciated, which I have found provides more attractive returns.

I am always happy to respond to comments and questions in my articles during the first few days. More in-depth and ongoing discussions are had inside Off The Beaten Path.

Analyst’s Disclosure: I/we have a beneficial long position in the shares of ITRG either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (25)

It's a pity that there are no reactions following the merger with MPM and the financing operations announced, whereas this deserves comments, it seems to me! Indeed, I retain videos of March 3 and 11, the evocation of a total resource of more than 6M ounces Gold Eq., the annual production of 230 to 250M ounces for 11 years and, for Integra alone “current” adding 180 to 200M to the NPV (would increase to over 500M) to account for Kinross waste.
There is also good potential for exploration, particularly in the high-grade sulphide zones that Integra continues to drill, so the plant phase could become attractive again.
Was mentioned, the intention to be stronger to attract a bigger investor. Getting a good price is very believable if the resource and production assumptions come true, as they would justify a sale at a multiple of the current capitalization (in my opinion, compared to other miners). I believe that the current problem for the entire junior sector is the limited amount of capital available, which would justify a consolidation of the sector.
doctorslernon profile picture
Gold miners are getting killed due to cost inflation and we haven't seen much in M&A for juniors. Just mergers between majors (Goldcorp/Newmont, Kirkland/Agnico, etc) mostly. Appetite isn't there and I don't think ITRG has a compelling case yet. I did buy back in around 60 cents as I had previously felt that $1 was an ok mark for the stock. 40% below that had me dip my toe back in after leaving due to the underwhelming PFS.
What do you think of today's post about the backfill drilling program?
For a quantity of backfill estimated at 60 Mt with a potential grade of 0.3 g/t to 0.6 g/t AuEq, this would give more than 868,000 ounces to add to the already undervalued current reserves!
Philcroft profile picture
@andre171 read this as well! Sounds to me like even more value for this stock!!!
@Philcroft What to read?
Philcroft profile picture
@andre171 the integra announcement you have been mentioning
Philcroft profile picture
@Bang For The Buck do you think ITRG stock performance will now correlate to 90% with gold price moves? Do you think the stock has bottomed out or is there more downside possible? thanks!
Bang For The Buck profile picture
@Philcroft , no one knows where the bottom is, so I wouldn't try to predict that. but the risk-reward is in my view extremely attractive at this level.

Integra has very low liquidity in the stock. Which means it can jump both up and down based on relatively few buyers and sellers. So, I put limit orders in and buy in small increments. Once gold and/or gold miners start catching a bid, Integra will likely do very well.
A major financing at the absolute bottom borders on being criminal, but what do they care? Management gets their milk and honey while long-term shareholders get proverbially....
Bang For The Buck profile picture
@GopherAg , I can certainly understand that feeling from long-term shareholders. There is no doubt management should have acted sooner, but there were some unfortunate turn of events that lead to this outcome.

I do think management was expecting to finance after the PFS, but that was very poorly received. So, the hope was likely that the sentiment would turnaround before the company ran out of money. That turned out not to be the case and highlights that hope is rarely a good strategy.
@Bang For The Buck Hard to sell when you're down 72%! I guess I'll just buy into the hopeium and try better at setting selling limits.
I have 2 points to make:
- Isn't this very similar to GSV? I am personally happy to get ORLA shares which also looks undervalued. The problem is whether they can execute and there is no guarantee. Like GSV this name can be forced to sell itself cheap.
-The current high inflation situation makes the costs totally unpredictable. This could force them to raise capital and dilute again and again.
This is why I prefer producers like AEM. Maybe AEM offers less upside but even this has to be probability weighted and given the 2 points above I personally consider AEM the better choice.
Bang For The Buck profile picture
@Traderguymetals , Integra now has cash for the next 9-12 months roughly estimated, which provides some breathing room.

You are describing the risk for any exploration & development company, where unless the market appreciates the asset, we are looking at more dilution at unfavorable levels. However, some dilution is always expected as most development companies use the equity market as the primary source of capital. Even if the risk is larger for Integra, the potential reward is also very different compared to large gold producers.
@Bang For The Buck Thank you for your reply. We are saying the same thing but I prefer the big diversified producers.
Hmmm, I think you will find the main reasons for its drop from $4 to 67c (....) have been a PEA of $165m that turned into a PFS of $282m (......!!!!), lack of a solid strategy, never ending dilution - invariably at the worst pricing - and a management team whose only consistancy has been in paying itself a handsome compensation package while doing not too much at all. A previously $4 share raising at 67c - does that really make sense??? Only to a management team tha needs to pay itself....

They have shown little ability to build or operate the project - despite its apparent simplicity - and are simply hanging on ( while paying themselves generously ) until someone makes an offer. Which probably no one will in the current market. Best thing holders can hope for is that it is taken over by a reputable company before the price goes to zero. Not great really - another GSV, another mining disaster (for retail, that is).
Chris Grande profile picture
this is how jr mining execs roll - spend down the cash, wait for all time lows in stock price, then announce a raise. since they probably sold to friends and woo hoo that convertible debenture, I would guess 67c USD is an ok entry (I bought some). Am ready to sell with the share renters. Management not retail shareholder friendly. I am guessing a pop in gold, plus some mindless newsletter mention could be a catalyst with it so sold down.
Bang For The Buck profile picture
@Chris Grande , I do think management has some responsibility for the very poor timing of the capital raise, probably having overused the ATM offering in a low liquidity stock. In junior mining, you should raise when you can and not when you absolutely have to, which Integra is a perfect example of.

However, much of the extreme decline is due to inflationary fears for build projects and a very poor industry sentiment. You can see that management was buying shares earlier in the year, at much higher prices than today. So, it was not intentional and the extreme decline would have been difficult to predict. finance.yahoo.com/...
Chris Grande profile picture
@Bang For The Buck I hear you and agree with you. I think from what you're saying is, management is positive on the project but are very lousy fund raisers - I agree so I bought at the price they raised at and just above. This problem occurs across the junior mining sector. General advice - look to the warning signs of a raise and act accordingly!
Glad to sold mine at 3.33 back in 2021….prefer EMX, Musgrave, Metalstech, k92 and Pan American….t
Thank you for this interesting post. There will soon be 100M actions! Considering in particular the emphasis on exploration and the publication in April of a draft simplified strategy with reduced costs, it is clear that management is seeking to embellish the project. I would not rule out that the management's real desire is to sell rather than build and CDE's 6% stake in the capital is undoubtedly not an exclusively financial operation. Even after dilution, ITRG would still only be valued at less than 20% of NPV@5%. What share would a buyer be willing to offer? A priori more so as long as the growth prospects are proven!
Bang For The Buck profile picture
@andre171 thanks. I agree and do think management has been relatively open about the fact that selling the asset might be most likely route, but all depending on the price as well.

A buyout price depends on the sentiment of the industry, competition for the asset, Integra's alternatives in terms of taking it to production, and so on. However, a 0.6 market cap to NAV is not an aggressive assumption in my view. It will be very interesting to see how much the asset can grow over the coming year as well.
doctorslernon profile picture
Interesting now but the gold miners/juniors are absolutely brutal right now. Hard to see where the bottom & the risk to catching a falling knife. Didn't like the PFS using $1700 gold & with the inflation impacts, the IRR has to have dropped. They need to flesh out the resource a bit more and then make a determination how to proceed.
Bang For The Buck profile picture
@doctorslernon , I almost exclusively invest in turnarounds, but I never try to predict the exact bottom. I just know that the risk-reward is excellent here looking out a couple of years. I would add that the PFS did likely include a lot of the inflation in building material. Sure, CPI has continued to increase from the beginning of the year when the PFS was released, but many materials have retraced as well. So, I would argue Integra has one of the more realistic building cost estimates among developers.

By the time the resource has increased and the new mine plan is released, I doubt the stock will trade close to this level, unless metal prices continues to decline.
TopDoggie profile picture
I sold my shares at $1.50 I am ready to buy them back.
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