Matador Mining scoping study shows potential: Canaccord Genuity

Matador Mining Ltd’s (ASX:MZZ) scoping study for the Cape Ray Gold Project in Newfoundland, Canada released last quarter provides a solid platform for future growth as a standalone mining and processing operation. The preliminary economics indicate the project has positive financial metrics over an initial mine life of seven years with capital payback during the first 1.75 years of the project’s life. Canaccord Genuity has reiterated its price target of 90 cents per share for Matador (current price: 42 cents) with a speculative buy recommendation. The following is an extract from Canaccord’s research update: Key project milestones in the JunQ’20 include: Scoping Study shows potential: During the quarter, MZZ released a Scoping Study on Cape Ray, highlighting the potential for an 88kozpa operation at an AISC of US$776/oz LOM for seven years. While we expect further optimisation before development is considered, the study demonstrates the potential imbedded within the project, which we expect to improve following further exploration work. Three recent high-quality Board appointments: MZZ recently appointed Ian Murray (ex Gold Road | GOR-ASX; A$1.84 | BUY, PT A$2.10/sh | Analyst: Tim McCormack) as Executive Chairman and Justin Osbourne (current GOR Technical Director) as a Non-Executive Director. Both Ian and Justin were/are integral members of the GOR team that were involved with the discovery of the Gruyere gold deposit and transition to a successful gold producer and ASX 200 company with a market capitalization of ~A$1.6bn. Mick Wilkes was also appointed to the board as a NonExecutive Director (post quarter), the former president and CEO of OceanaGold (OGC-ASX; A$3.73 | BUY, PT: A$5.35/sh | Analyst: Reg Spencer). Increased landholding at Cape Ray: MZZ has staked an additional five mineral licences contiguous with the northern extensions of its current holdings, increasing the land position by 50% to over 120km of continuous strike along the cape ray shear. MZZ’s total holding in newfoundland now stands at 425km2 Capital raising complete. Post the June quarter, MZZ raised A$8.7m (before costs) via a placement to institutional, professional and sophisticated investors at a raise price of A$0.405/sh. Proceeds from the placement will be used to fund exploration activities at Cape Ray, where a 12,000m drill campaign and greenfield exploration program has commenced. Key upcoming newsflow for MZZ includes: Drilling results (ongoing) Valuation & Recommendation Our price target (risked, NPV10%) is unchanged at A$0.90. Our rating of SPECULATIVE BUY remains unchanged.