Integra Resources (ITR) - New Assets, More Gold. 2023 Will be Busy

• Integra Resources is a precious metals exploration and development company focused on the Great Basin. Currently, they have a global resource endowment of 6.2 million ounces.
• Integra put the first holes into their project in 2009 and sold it to Iron Gold in 2012 for about $680 million. This made it the third-largest gold project in Canada at that time.
• They have conducted a preliminary feasibility study on the Delamar asset and are preparing for a maiden PEA on their Nevada assets.
• Exploration Strategy: The company has focused on overlooked projects in the U.S., conducting over 337 desktop reviews and 72 site visits. Their exploration efforts have resulted in significant findings, like the Red Canyon, which has parallels with the Cortez complex.
• The company is facing challenges related to market perception and share prices, but they remain confident in unlocking the value of their assets over the next two years, focusing on risk mitigation and growing the value of each ton they have.

Integra Resources: Undervalued Gold Developer with Large Resource Base and Near-Term Catalysts

Integra Resources is a precious metals exploration and development company focused on advancing low-cost heap leach projects in Idaho and Nevada. With a pro forma resource base of over 6 million ounces of gold and significant exploration upside, Integra offers investors exposure to quality assets in premier mining jurisdictions. Several near-term catalysts could help close the valuation gap relative to peers and illuminate the potential of this undervalued gold developer.

Experienced Management Team Driving Value Creation

Integra Resources was formed in 2019 through the merger of Millennial Precious Metals and Integra Resources. Millennial was led by CEO Jason Kosec, a structural geologist by background who has worked on numerous high-profile Canadian projects. His experience includes leading exploration at the Dixie project for Great Bear Resources, bought by Kinross last year for $1.8 billion.

The Integra Resources management team is similarly accomplished, having advanced the DeLamar project in Idaho through economic studies and permitting. This blend of technical expertise and capital markets experience positions the unified group well to systematically advance and derisk Integra's portfolio of assets.

Robust In Situ Resource Base Anchored by DeLamar

The flagship DeLamar project hosts a global resource base of 1.9 million gold equivalent ounces comprised of both oxide and sulfide mineralization. The 2021 PFS outlined an 18-year mine life producing over 1.1 million ounces of gold equivalent from 124 million tons of mill ore grading 0.77 g/t AuEq.

While the study of economics has been impacted by inflationary pressures, management sees an opportunity to enhance value by focusing solely on the higher margin, heap-leachable oxide portion of the resource. The plan is to submit an updated study and mine plan of operations by year-end, targeting a construction decision in 2024.

Upside from Low-Cost Satellite Deposits

Beyond DeLamar, Integra Resources controls two additional heap leach projects located in Nevada - Mountain View and Wildcat. These deposits contain an additional 1.2 million ounces of oxide resource amenable to low-cost processing. The sites benefit from minimal pre-stripping with average strip ratios below 2:1.

An updated preliminary economic assessment is slated for later this year, which will outline a central heap leach facility to process ore from both deposits. This could support a 10-12 year combined mine life producing 150,000-200,000 ounces per year. The shallow nature of mineralization lends itself to streamlined permitting as well, with Wildcat potentially approvable under an Environmental Assessment versus the lengthier EIS process.

Significant Exploration Upside Across Portfolio

Despite the multi-million-ounce resource base already delineated, Integra's portfolio retains substantial exploration upside. The current resources cover just a fraction of the large land packages in Idaho and Nevada. Numerous untested targets exist to potentially delineate new near-surface ounces amenable to low-cost processing.

At DeLamar, minimal drilling has occurred below the conceptual pits where high-grade feeder structures may be preserved. Regional targets like the Red Canyon project in Nevada also provide blue sky potential, as evidenced by long intercepts over 4 g/t gold hit in initial scout drilling. A CA$5 million exploration budget in 2022 will advance these targets and look to grow resources further.

Potential Near-Term Rerating from Stockpiles

While longer-term exploration holds appeal, near-term catalysts could also drive a rerating in Integra's share price. Extensive drilling of historic stockpiles at DeLamar will form the basis of an updated resource estimate in Q2 2022. With over 70 million tons stacking up to 0.7 g/t gold, this previously unquantified material could meaningfully boost reserves and economics.

Updated technical studies will look to incorporate these stockpiles into the DeLamar mine plan and better illustrate the potential value. Stockpile resource estimates, a new PEA and submission of the DeLamar mining plan of operations represent clear upcoming derisking events for investors to watch for over the remainder of 2022.

Attractive Valuation Relative to Peers

Despite these derisking activities, Integra continues to trade at a fraction of comparable gold developers. Its current valuation of US$0.15/oz is an 85% discount to the US$1/oz average for heap leach development projects. The upcoming catalysts offer the opportunity to close this sizable valuation gap.

More broadly, quality gold assets in tier-1 mining jurisdictions remain undervalued by the market. As investors revisit the precious metals space amid economic uncertainty, revaluations are likely. Integra Resources offers upside exposure in this scenario given its robust project pipeline and proven management team.

With CA$34 million in cash, the company is funded through 2023. The current share price around C$0.60 offers an attractive entry point before further de-risking and exploration news flow. Integra Resources represents a unique investment opportunity in the gold development space.

The Investment Thesis for Integra Resources

Favorable Gold Market Fundamentals

With inflation on the rise and increased economic uncertainty, many analysts see upside potential for gold prices after recent weakness. Integra's assets provide leverage to higher gold prices if this thesis plays out. The company estimates over 250,000 ounces per year of low-cost production could be achievable across its portfolio as projects are advanced.

Idaho and Nevada are Premier Mining Jurisdictions

Integra's properties are located in mining-friendly jurisdictions with a long history of gold production. Idaho and Nevada rank among the best regions globally for investment attractiveness according to the Fraser Institute survey. This minimizes permitting risks relative to more complex jurisdictions.

Near-Term Production Potential

The DeLamar project is arguably the most advanced large-scale gold development asset not yet in production. The clear path forward outlined by management could see the project enter production in the next 3-4 years as permitting is derisked. Not many comparable development opportunities exist.

Exploration Upside is Still Significant

Despite already hosting over 6 million ounces of resources, the sheer size of Integra's land packages provides substantial upside potential. Investors get significant optionality through ongoing exploration that is not reflected in the current valuation.

Attractive Leverage to Gold Price

If gold prices rise materially in the years ahead, Integra offers exceptional upside exposure. The company estimates its assets could generate over $600 million in after-tax cash flow over an initial 12 years at $2,000/oz gold. The current market cap is just $100 million.

Proven Management Team

As evidenced by track records of value creation at previous companies, Integra's management has the technical expertise and capital markets experience to systematically advance projects towards production. Backing a proven team improves the odds of successful execution.

The combination of quality assets, exploration upside, derisking activities underway, and current undervaluation makes Integra Resources an attractive speculative investment in the gold development sector. Patient investors could see a substantial upside if execution continues.