Theta on track for golden rerate – targeting 2027 production start: Research report

• RaaS Research Group reckons Theta Gold Mines could re-rate once the TGME project enters production in 2027 
• Catalysts include: Near term operation/cashflows, strong gold price leverage, potential upside from multiple TGME project growth options; and 
• Derisked TGME project (permits in place, cornerstone funding secured, strong community support) 

Special Report: Sydney-based equity markets advisory firm RaaS Research Group believes Theta Gold Mines is undervalued, and sees a major re-rating on the cards if the company enters production as planned at the Transvaal Gold Mining Estates project in South Africa. 

Gold developer Theta Gold Mines (ASX:TGM) is currently completing site clearance and preparation works ahead of a transition to producer status in early 2027 at the TGME project , located near the site of South Africa’s first gold rush.

The company is currently focused on the construction and financing of a new gold processing plant at the site, which boasts more than 43 historical mines across the large 62,000 hectare tenement area. 

The contiguous licences are situated on the eastern side of South Africa’s Bushveld complex, renowned as the world’s largest layered mafic intrusion, with a 6.1Moz gold resource of which 4.5Moz is attributable to underground mining domains. 

Full construction in sight 

After a decision to mine in June, TGM has been building momentum toward full construction, progressing site work and funding completion. 

Once all these items are in hand, TGM can complete construction, targeted for CY26.

A 2022 feasibility study on the project highlighted a profitable mining operation that could produce 1.08Moz of gold from four underground mining fronts over ~13 years. The production profile is supported by 558,000oz of reserves which cover the first seven years of production. 

The peak capital requirement for the mine is estimated at US$77m, while all in sustaining costs are estimated at an average of US$834/oz, which when using a gold price of US$1,642/oz results in a post-tax NPV10 of US$219m and an IRR of 57%. 

RaaS also highlighted future expansion opportunities, which could enable production from a further three mining centres that could support an increase in mining and processing rates from 540,000tpa to 960,000tpa (80,000tpm) and gold production of up to 160,000oz per annum. 

Raising capital amid tough market 

RaaS Research Group notes the company has been able to regularly raise capital to support ongoing development, despite challenging market conditions. 

TGM recently announced approval for debt funding of up to US$35m from South Africa’s Industrial Development Corporation, including an 18-month capital and interest moratorium, which means the company doesn’t start paying off the loan until the mine is operational. That will reduce upfront capital requirements. 

This was followed by a US$4m ($6.2m) raise via a private placement to Hong Kong Ruihua Green Development, an existing institutional investor and shareholder of TGM, bolstering its balance sheet and kick starting onsite activities. 

Peer comparison 

RaaS points to TGM’s compelling valuation, trading beneath both the average and median EV/oz of a 22-company peer group including Native Mineral Resources (ASX:NMR), Black Cat Syndicate (ASX:BC8), Meeka Metals (ASX:MEK) and Magnetic Resources (ASX:MAU). 

While the peer set comprises companies at various stages of development, with higher valued peers at more advanced stages of feasibility or entering production, it suggests TGM’s market capitalisation can materially re-rate should the company successfully enter production in 2027. 

This article was developed in collaboration with Theta Gold Mines, a Stockhead advertiser at the time of publishing. 

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.