Two recently released research reports have placed a buy recommendation on Nova Minerals Ltd (ASX:NVA, OTCQB:NVAAF), highlighting the potential of its 9.9 million-ounce Estelle Gold Project in Alaska’s Tintina Gold Belt.
Scoping study highlights potential
The project contains multiple gold prospects along a “highly prospective and underexplored” 35-kilometre mineralised corridor, bracketed by the Korbel Mining Complex to the north and the more recently discovered RPM Mining Complex to the south.
MPS Securities’ report focuses on the results of NVA’s phase two scoping study for the project, which reveal it is “highly profitable”, with a pretax net present value (NPV) of US$654 million and a 53% internal rate of return (IRR).
The project has low capital costs of US$385 million and the potential for major resource extensions.
MPS's report encourages investors with its assessment that, despite these positive findings, NVA's market ratings are “far too low” compared to regional and local peers, with a market cap of just A$55 million.
The Estelle project has quickly established itself as a highly promising venture, with 10 million ounces of gold resources delineated in just four years.
This project covers some 450 square kilometres and has the potential to be among the larger deposits in the Tintina Gold Belt, which is known for its substantial gold deposits.
The scoping study included high-grade deposits that would enable rapid capital payback within a year and sustained production for 16 years.
Alaska is the second-largest gold producer in the United States and the Tintina Gold Belt is home to significant gold deposits.
Despite the presence of major players and a history of operational success in the region, NVA's market value is considerably lower than its Tintina Gold Belt peers, which suggests that the true value of NVA may not be fully recognised in the market.
Discrepancy in market valuation
Market analysis from Petra Capital also focuses on the discrepancy between NVA’s market valuation and those of near neighbours in the region, again citing the scoping study’s finding of an “impressive” pre-tax net present value (NPV) of A$980 million.
It cites the recently conducted 15,000-metre drilling program and the resource updates and optimisation studies underway for a pre-feasibility study (PFS).
The discrepancy between NVA's valuation and that of district-scale gold developers listed on North American exchanges has prompted the company to target a listing on a major US stock exchange later in 2023.
NVA's neighbour, US GoldMining Inc, recently listed on the Nasdaq and boasts a market capitalisation of US$152 million, some eight times that of NVA.
Despite this, NVA's Estelle Project has more extensive resources and is at a more advanced stage than US GoldMining's Whistler Project.
Comparisons with other North American peers further highlight NVA's undervaluation.
Companies like New Found Gold, Dakota Gold and Snowline Gold enjoy market capitalisations of US$923 million, US$801 million and US$335 million respectively.
Both Petra and MPS note that NVA is working to bridge the gap between its current valuation and the higher valuations seen among its peers, with a firm commitment to further exploration and optimisation studies underscoring its determination to unlock the full potential of the project.