Endomines - New drill results from Pampalo

Endomines reported high-grade drill results significantly below the current production level. Even though the result is based on a single drill hole, it confirms the continuation of the deposit to the depth. We have not made changes to our production estimates, yet we increase the possible Pampalo Life of Mine in our option model. We increase our TP to EUR 6.5 (5.4), HOLD-rating intact.

High-grade drill results from Pampalo

Endomines is currently extracting ore from the 755-815 level and have inferred resources (Pampalo deep) at the 815-875 level. The new drill hole intersected 6.0m grading 9.2g/t gold at the 1050 level, roughly 175-235m below the 815-875 level. The company has historically been able to produce approximately 20k ounces of gold per 50 meters at the Pampalo underground mine.

 

Probability of extending Pampalo Life of Mine increases

The results are based on a single drill hole and further drilling is needed to determine the economic feasibility of the mining area. Even though it is too early to determine if the company is able to economically extract the ore, the result confirms the continuation of the deposit. The gold was found in a location where the company expected, which shows that the mineralization continues according to the company’s previous expectations.  

 

HOLD with a target price of EUR 6.5 (5.4)

We have not made changes to our production estimates based on the published results. Our valuation for the company’s Pampalo mine is based on DCF which considers the ore reserves and resources between the 755-815 and 815-875 levels. The rest of the value is derived from a real option model which considers the possibility of Pampalo LoM increase. We have made adjustment to the real option model regarding the possible scale of the LoM increase. As a result of the changes to the model and the favorable gold price development, we increase our target price to EUR 6.5 (5.4), HOLD-rating intact.

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