Power Metallic Mines Inc. (TSXV:PNPN) – Solid Value Base Established, Evidence Points to Upside

Following the release of the maiden MRE on the Lion Zone at Power Metallic’s (PNPN) 80% owned NISK project in north central Quebec, the stock retreated 22% to close at $1.18/sh on Friday. While the market reaction suggests investors were expecting a larger maiden resource, we believe it serves to establish a solid valuation base as the geometry, grades, metallurgy and favourable location collectively support the possible development of a commercial mining enterprise. The Company expects to add another 30,000m of drill results by the end of the year, which they plan to incorporate into an updated MRE which will form the basis of a PEA assessment in H1/27. We created a best-guess model of a modest, combined open pit, underground mine that generates an after-tax NPV8% of C$525M, and IRR of 36%, suggesting a 70% premium to the current market capitalization of Power (Figure 1). We believe this substantiates our revised in-situ valuation of Nisk at $1.70/sh, that we combine with its Saudi Arabian interests and cash on hand resulting in a revised, 12-month price target of C$1.90/sh (was $2.50/sh).  We are maintaining our Buy Recommendation on PNPN.