Impact: Positive
Aurion Resources (AU) announced that it has been notified by B2Gold Corp. (TSX:BTO, Not Rated) that Rupert Resources Inc. (TSX:RUP, Not Rated) has offered B2 C$102.8M in RUP shares for its 70% ownership in the JV between B2 and AU in Finland. AU has until May 9, 2024 to decide whether it will exercise its Right of First Refusal (ROFR) and acquire B2’s interest in the JV at no less favourable terms. This implies value for AU’s 30% share in the JV at ~C$44M. We believe this news is positive as it sets the floor value for the B2Gold JV, and starts the clock on the ROFR. No matter the outcome, Aurion will maintain its 30% interest in the JV and 100% interest in its Risti property, both of which are butt-up against the Ikarra project. Furthermore, we also believe that Rupert isn’t necessarily providing full value for the project or even as interested in the upside potential of the B2Gold JV property (although now is the time to bid before the full upside is drilled off by AU). The 4.2M oz Au Ikkari deposit comes right to the property boundary. The planned open pit can only go so deep without stretching that boundary, but if a layback on the JV was allowed, the pit could go deeper. Then the NPV of Ikarri might be substantially higher than its current US$1.6B NAV5%at US$1,650/oz Au. We surmise that RUP may value the JV property as just a ~US$300M improvement to its own NAV, and used its P/NAV multiple (0.41x pre-announcement consensus) to value the JV. This would imply almost zero value for the Helmi or any other potential on the JV property (read here and here). We see potential for ~1M oz Au at Helmi already, with multimillion oz potential. Our probability weighted valuation for AU (corporate-wide) assumes between 2-5M oz of resource potential.
