New Found Gold's EPCM Contract & Resource Conversion Program Signal Shift From Exploration to Execution Phase

• Gold developers are being re-rated on execution capability rather than exploration upside. In a higher-for-longer gold price environment, capital discipline and permitting clarity may matter more than drilling potential.
• New Found Gold has formally entered the execution phase by signing a Phase 1 EPCM contract with WSP Canada Inc. and engaging Cutfield Freeman & Co. Ltd. as project finance advisor. These represent critical milestones that shift the investment profile from speculative discovery to engineered development.
• Resource conversion and 5x5m grade control drilling reduce geological risk, supporting mine plan reliability ahead of construction decisions. This work directly addresses the discount institutional investors apply to Inferred resources.
• Capital intensity remains a key differentiator among developers. A C$155M initial capex for Phase 1, supported by ownership of the fully permitted Pine Cove Mill, materially lowers funding risk relative to greenfield builds requiring standalone processing infrastructure.
• A defined timeline targeting H2 2027 first gold, pending receipt of all required permits, combined with mid-2026 mineral resource estimate updates and permitting submissions, creates a dense catalyst calendar for potential valuation inflection.

The 2026 Gold Developer Re-evaluation Cycle

The investment environment for gold equities has undergone a structural shift since the exploration-driven rally of 2020 to 2022. Where equity markets once rewarded high-grade discovery intercepts with aggressive re-ratings, the evaluation framework in 2026 has become considerably more disciplined. With gold prices elevated, investors are applying greater scrutiny to the pathway between resource definition and cash flow generation.

The metrics now driving capital allocation decisions include capital efficiency measured by initial capex relative to net present value, permitting clarity and timeline adherence, resource conversion from Inferred to Indicated categories, construction readiness supported by engineering work, and jurisdictional stability as measured by independent surveys.

This shift reflects a maturation in how the market distinguishes between exploration optionality and build-ready development pipelines. Developers that can demonstrate a credible path to production are beginning to trade on discounted cash flow metrics rather than enterprise value per discovery ounce alone.

From Exploration to Execution Premium

The transition in valuation methodology carries direct implications for how companies communicate progress. Intercept grades, while still relevant for resource expansion, no longer carry the same valuation weight without accompanying evidence of geological continuity and engineering advancement. Institutional allocators increasingly require visibility into mine scheduling confidence, financing structures, and permitting timelines before assigning full net present value multiples.

Why De-Risking Now May Matter More Than Discovery

At current gold prices, many projects screen economically attractive on paper. The differentiator in this environment is execution risk across multiple dimensions including geological risk, permitting risk, financing risk, and construction risk.

New Found Gold's recent actions align directly with the metrics institutional investors now prioritize. The company has contracted EPCM services, initiated grade control drilling, and engaged project finance advisory support.

The company's Chief Financial Officer, Hashim Ahmed, addressed the operational transition required at this stage:

"Going from exploration to production within a period of two years is pretty fast in our industry. The key theme there is operational readiness. The processes you need in exploration, the processes you see in development, and the processes you see in production, they're entirely different."

EPCM Contracting & the Transition to Engineering-Backed Development

The execution of a Phase 1 EPCM contract with WSP Canada Inc., announced January 26, 2026, represents more than a procedural milestone. It marks the transition from conceptual development based on preliminary economic assessment assumptions to engineering-backed execution with defined deliverables.

For investors evaluating development-stage gold companies, EPCM engagement signals several important shifts. Study-level assumptions become converted into engineered designs with greater precision. Capital expenditure estimates gain confidence as contingency factors narrow. Board-level commitment to project advancement becomes formalized through contractual obligations.

The Queensway Phase 1 scope encompasses site development, Pine Cove Mill engineering upgrades, and integration planning with the Hammerdown operation.

What an EPCM Mandate Means for Valuation

Engineering contracts create external validation of project parameters that internal technical teams cannot provide alone. Third-party engineering firms stake their professional reputation on deliverables, introducing accountability that strengthens investor confidence in stated timelines and cost estimates.

Concurrent with EPCM contracting, the company engaged Cutfield Freeman & Co. Ltd. as project finance advisor to evaluate optimal financing structures. The financing process remains ongoing.

Capital Intensity in Context

The preliminary economic assessment established baseline metrics that position the project competitively among peer developers. Phase 1 initial capex of C$155M supports an after-tax NPV at a 5% discount rate of C$743M and an internal rate of return of 56.3% at US$2,500/oz gold. Gold price sensitivity analysis indicates approximately C$89M in NPV increase per US$100/oz movement.

In a capital-constrained market, lower upfront intensity improves financing optionality, particularly if debt components can be introduced post-permitting.

Resource Conversion & Geological Risk Reduction

The 2026 drill program reflects a deliberate shift in capital allocation toward resource confidence rather than resource expansion. As of February 2026, four active drill rigs were deployed across multiple objectives. Grade control drilling at 5x5m spacing at Keats and Iceberg provides the data density required for detailed mine scheduling. Infill drilling at K2 and Cokes targets conversion of Inferred resources to Indicated category. Step-out drilling at Bullseye and Dropkick maintains exploration optionality while development advances.

Grade Control as a Value Preservation Tool

Grade control drilling at Keats, reported February 2, 2026, returned significant intercepts including 508 g/t Au over 2.20m, 113 g/t Au over 3.75m, and 27.0 g/t Au over 10.0m. These results matter beyond their headline grades because they inform the reliability of early production years that often determine project payback periods.

High-grade continuity in near-surface zones carries particular importance for open pit operations. Early pit years typically drive project payback, and cash flow front-loading improves internal rate of return calculations.

Inferred vs Indicated & the Conversion Premium

Mineral resource classification plays an important role in how institutional investors approach valuation. Conversion from Inferred to Indicated category improves mine scheduling confidence, supports debt financing eligibility, and can reduce discount rate assumptions in valuation models, making ongoing resource definition drilling a value-accretive activity beyond simply expanding tonnage.

K2 infill results reported January 21, 2026, including 5.22 g/t Au over 14.90m and 5.29 g/t Au over 11.85m, align closely with the existing block model, providing validation of geological interpretation. Approximately 50% of 2025 drill results remain outstanding and will be reported as assays are received.

Hashim Ahmed emphasized the asset's long-term exploration potential alongside near-term development.

"The prospectivity of this asset is multi-generational. It's going to be explored for multiple generations after us, 110 kilometers of strike and we've just explored less than 10."

Infrastructure Ownership & Capital Efficiency

The ownership of fully permitted processing infrastructure represents a structural advantage that distinguishes New Found Gold from greenfield developers facing standalone mill construction requirements. For gold developers, milling infrastructure is often the largest single capital expenditure line item and the longest lead-time component of project schedules.

Pine Cove Ownership as a Structural Advantage

New Found Gold owns the Pine Cove Mill, a fully permitted facility with existing tailings infrastructure, acquired through the Maritime Resources transaction completed in November 2025. The mill was commissioned in 2025 and is currently processing Hammerdown feed as it ramps up to commercial production. By leveraging this existing infrastructure, Phase 1 avoids a full standalone plant build, capital deployment becomes phased rather than concentrated, and time to first production compresses relative to greenfield alternatives.

Hashim Ahmed addressed the strategic rationale for the phased approach enabled by this infrastructure.

"This phased approach of building Queensway enables us to be more disciplined in capital allocation. This enables us to reduce construction risk because we just acquired Maritime Resources and there's a Pine Cove Mill. Now we have reduced construction risk in my view."

Hammerdown as Complementary Cash Flow

Hammerdown is ramping up to full production in 2026, introducing secondary asset exposure that may provide internal funding contribution and reduce reliance on equity dilution for development capital. Multi-asset optionality is relatively rare at this development stage among peer developers.

Permitting Timeline & the 2027 Production Target

The company plans to submit an Environmental Registration for Queensway in late Q1 2026, initiating the formal permitting process. The objective is achieving first gold pour from Queensway Phase 1 in H2 2027, pending receipt of all required permits.

Newfoundland and Labrador ranked in the top 10 globally in the Fraser Institute's 2024 Annual Survey of Mining Companies. This regulatory environment supports, though does not guarantee, permitting timeline adherence.

Environmental Registration in Late Q1 2026

Investors should monitor several factors as the permitting process advances, including timeline adherence relative to stated targets, regulatory feedback cycles, and community and provincial engagement outcomes. Delays in permitting represent a primary risk factor for development timelines.

Updated Technical Report at Mid-2026

The company plans to file a revised Technical Report and updated Mineral Resource Estimate for Queensway in mid-2026. This could reflect resource conversion gains from ongoing drilling, adjust pit shell configurations, refine mine sequencing based on grade control data and bring new exploration targets such as Dropkick into he resource for the first time.

Valuation Framework & Sensitivity Analysis

Investors evaluating gold developers typically benchmark market capitalization against after-tax NPV, enterprise value per ounce against peer developers, and internal rate of return relative to capital intensity.

Sensitivity to Gold Prices

With each US$100/oz adding approximately C$89M to Queensway NPV, higher gold price environments would materially shift project value. Developers with high IRRs tend to re-rate faster when gold prices rise, though execution risk remains the primary discount factor.

Risks & Execution Dependencies

Investors should monitor capital expenditure inflation risk, permitting delays, resource model deviations during mining, equity dilution during financing, and integration risk between Queensway and Pine Cove. The EPCM and finance advisory mandates reduce uncertainty but do not eliminate the inherent risks of mine construction and commissioning. Notably, the financing task is material in scale: with a market capitalisation of approximately C$1.5 billion, the company is seeking to raise C$155 million for Phase 1 construction - roughly 10% of its current market value. How that capital is structured across equity, debt, and streaming will be a key determinant of dilution exposure for existing shareholders.

The Investment Thesis for New Found Gold

• Developers that move from preliminary economic assessment to EPCM contracting and permitting submission compress risk premiums and position for re-rating as execution progresses.
• Capital efficiency measured by C$155M capex relative to C$743M NPV indicates strong capital leverage that improves financing optionality.
• Geological validation through 5x5m grade control drilling reduces block model risk and supports mine plan reliability for early production years.
• Infrastructure advantage through Pine Cove ownership lowers both capital requirements and timeline risk relative to greenfield alternatives.
• Jurisdictional stability in Newfoundland, ranked top 10 globally by the Fraser Institute, offers established permitting frameworks and mining infrastructure.
• Catalyst density through Environmental Registration submission targeting late Q1 2026, mineral resource estimate update in mid-2026, Hammerdown ramp-up, and H2 2027 first gold target creates multiple potential inflection points.

New Found Gold's transition from discovery narrative to engineered execution marks a structural inflection point in its investment profile. The signing of a Phase 1 EPCM contract, initiation of high-density resource conversion drilling, and defined permitting timeline shift the analytical focus from geological upside to delivery capability.

In the current gold cycle, valuation expansion depends less on intercept headlines and more on demonstrated progress toward cash flow generation. If the company continues to convert resources, refine engineering, and advance permitting on schedule, the discount applied to development risk may narrow as execution milestones are achieved.

TL;DR

New Found Gold has formally transitioned from exploration to execution phase by signing a Phase 1 EPCM contract with WSP Canada and engaging Cutfield Freeman as project finance advisor. The Queensway project features C$155M initial capex against C$743M after-tax NPV with 56.3% IRR at US$2,500/oz gold. Grade control drilling at 5x5m spacing reduces geological risk ahead of mine planning decisions. Ownership of the fully permitted Pine Cove Mill provides structural capital advantage versus greenfield competitors requiring standalone processing infrastructure. Environmental Registration submission targets late Q1 2026, with first gold pour targeted for H2 2027 pending permit approvals. Newfoundland's top-10 Fraser Institute ranking supports permitting confidence.

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