Impact: Slightly Positive
Blackrock reported its maiden mineral resource estimate (MRE) for its 100%-controlled Tonopah West project in Nevada. The company reported inferred resources of ~3Mt at an average grade of 446 g/t AgEq for contained ounces of 42.6M AgEq. While the number of ounces was lower than our Lower Case estimate of ~66M oz AgEq, grades were generally in line with our expectations of 474 g/t AgEq. We highlight that this resource is only from a portion of the property and that the known veins continue well outside the resource area and at depth, thereby still providing upside. As a result of this MRE, we are adjusting our model and target price for Blackrock to C$1.70/sh (was C$2.15/sh). Moreover, the MRE is restrictive, as the block model 1) accounts for gold and silver recoveries, and 2) incorporates optimized underground stopes, atypical of most global resources and thus we view it as an ultraconservative and high-quality estimate. In our view, this maiden resource marks an important milestone for Blackrock and a major de-risking step for the Tonopah West project.
