Amex Exploration: $133M in Annual Free Cash Flow Within Reach at Quebec Gold Project

• Amex Exploration has a high-grade, highly profitable gold project in Quebec with a recently published Preliminary Economic Assessment (PEA)
• The Perron project has a low capex of $230 million and can be a profitable standalone mine with 594,100 of measured and indicated ounces of gold at at 4.28 g/t and 1,049,650 of inferred ounces at 3.80 g/t
• At $2,000 gold, the after-tax IRR is 40.2% with a 1.8 year payback with annual free cash flow of $133 million over a 10-year mine life
• The deposit remains open in all directions and Amex plans to increase drilling in 2025 to grow the resource and further enhance project economics
• Amex is advancing permitting and baseline environmental work to de-risk and move the project forward; a production decision could come by late 2025

While the gold mining industry is filled with multi-million ounce deposits, finding profitable ounces is the key to a successful project. Amex Exploration (AMX) is advancing just such a high-grade, highly economic gold project in the Abitibi region of Quebec, Canada. With a recently published Preliminary Economic Assessment (PEA) demonstrating robust economics, significant exploration upside, and a fast-track to production, AMX presents a compelling opportunity for gold investors.

High-Grade, Low-Cost Ounces 

The heart of AMX's value proposition lies in the unique characteristics of its flagship project. Across the entire property, gold resources average an impressive 4 grams per tonne (g/t). However, it's the high-grade zone that really sets AMX apart - grading a spectacular 12 g/t.As Amex CEO Victor Cantore explains,

If you have a ton of rock and there's one gram of gold and then you have another one where you have the same ton of rock but there's 10 grams of gold right it's pretty simple like which one is going to be much more much more profitable.

This combination of size and grade allows for a low-capex, high-margin operation. Initial capex is estimated at just $230 million, with life-of-mine all-in sustaining costs (AISC) below $1,000 per ounce - placing AMX firmly in the lowest cost quartile of gold producers globally.

Interview with President & CEO, Victor Cantore

Robust Project Economics 

The PEA for the Perron project outlines a 10-year mine life producing an annual average of 124,000 ounces of gold for years 1 to 5. At a $2,000 per ounce gold price, the after-tax Internal Rate of Return (IRR) is a strong 40.2%, with a payback period of just 1.8 years.

As Cantore points out:

"When you look at this economic study on using $2,000 gold, you're looking at the free cash flow of $133 million... That's not revenue, free cash flow, at $2,000 gold."

Over the life-of-mine, that translates to $1.33 billion of cumulative free cash flow.

Exploration Upside 

While the PEA already paints an attractive picture, the exploration upside at Amex's Perron project provides a pathway for further enhancing the economics. Cantore explains that the deposit remains open in all directions and that investing in exploration offers the best return for shareholders at this stage:

"It comes down to where is the money better spent to enhance shareholder value. For me at this point, it's better spent increasing the resource. I'd rather spend $6-7 million finding another high grade zone. I think that's how you're enhancing the value for the shareholders - by finding economic ounces."

To that end, Amex currently has two drill rigs turning with plans to ramp up drilling in early 2025. The goal is to continue growing the resource in the most capital efficient way possible, targeting areas within the current resource where limited drilling leaves room for easy expansion. Every incremental high-grade ounce added has the potential to meaningfully enhance project economics.

Path to Production 

In parallel with exploration efforts, Amex is advancing the project on the permitting and environmental fronts to further de-risk and move closer to a development decision. Environmental baseline work is ongoing, with the company planning regular updates on their progress.

Permitting a mining project in Quebec typically takes 2-3 years, positioning Amex to make a production decision by late 2025 if everything continues advancing as planned. 

The Investment Thesis for Amex Exploration

• High-grade resource of 594,100 of measured and indicated ounces of gold at at 4.28 g/t and 1,049,650 of inferred ounces at 3.80 g/t
• Robust economics with after-tax IRR of 40.2% at $2,000 gold, $1.33 billion life-of-mine free cash flow
• Low capex of $230 million and AISC of $807/oz i.e. below $1,000/oz positions Amex as a lowest-cost producer
• Near-term exploration upside with deposit open in all directions; plans to aggressively grow resource in 2025
• Clear path to production with permitting advancing, production decision targeted for late 2025
• Potential acquisition target as exploration success further enhances already robust economics

Macro Thematic Analysis

The gold mining sector is at an interesting juncture, grappling with inflation pressures, rising costs, and declining grades at many operations. In this environment, high-grade deposits with clear paths to low-cost production are increasing in scarcity and value. Amex Exploration's project in Quebec checks those key boxes and is well-positioned to navigate the current macro backdrop.

With capital costs and operating costs rising across the industry due to inflationary pressures, the low $230 million capex and sub-$1,000 per ounce AISC at Amex's project provide a meaningful margin of safety. Additionally, the high-grade nature of the deposit insulates economics from cost inflation to a degree - the deposit is so rich that it will remain highly profitable even if costs rise more than expected.

The project's location in the Abitibi region of Quebec is also highly strategic, providing access to world-class infrastructure, a skilled labor force, and a stable political jurisdiction. Quebec's affordable and renewable hydroelectric power helps drive low operating costs.

As CEO Victor Cantore says:

"Wouldn't that be something great where you end up buying an asset and then you've got this free cash flow to continue exploration using the profits of that project - I think it becomes a very attractive project."