Heap Leach Expansion And New Projects Will Transform Long Term Cash Generation Potential

Catalysts

About Integra Resources

Integra Resources is a U.S. focused gold producer advancing a portfolio of mining assets in Nevada and Idaho.

What are the underlying business or industry changes driving this perspective?

• Florida Canyon is already supplying cash flow, and Integra is reinvesting heavily in heap leach expansion, capitalized waste stripping, fleet upgrades and process improvements. These initiatives are expected to support longer mine life, more consistent production and potentially a better cost profile, all of which feed directly into revenue stability and earnings quality.
• The large volumes of historical low grade dump material and interpit targets at Florida Canyon point to additional oxide feed that could be mined with low strip and without blasting. If incorporated into future mine plans, this may increase ore tonnes per year while limiting unit mining costs, supporting revenue and mine site margins.
• DeLamar and Nevada North sit in established U.S. mining jurisdictions with permitting and technical work already underway. As these projects move from study and permitting into development and eventual production decision points, they have the potential to add scale and diversify cash generation, influencing future revenue and earnings power.
• The relationship agreement with the Shoshone Paiute tribe at DeLamar and the use of cost recovery arrangements with the Bureau of Land Management reduce some permitting and social licence uncertainties. This can lower project risk, support scheduling visibility and ultimately affect the discount rate investors apply to Integra’s future cash flows and earnings.
• Integra’s listing on the New York Stock Exchange and potential inclusion in additional indices such as the GDXJ can broaden the shareholder base and increase trading liquidity. This often supports access to capital on more favorable terms that can reduce financing costs and improve net income over time.

Assumptions

How have these above catalysts been quantified?

• Analysts are assuming Integra Resources's revenue will grow by 12.6% annually over the next 3 years.
• Analysts assume that profit margins will increase from 5.9% today to 73.7% in 3 years time.
• Analysts expect earnings to reach $230.8 million (and earnings per share of $1.26) by about January 2029, up from $13.0 million today.
• In order for the above numbers to justify the price target of the analysts, the company would need to trade at a PE ratio of 4.3x on those 2029 earnings, down from 62.9x today. This future PE is lower than the current PE for the CA Metals and Mining industry at 28.6x.
• Analysts expect the number of shares outstanding to decline by 7.0% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 7.22%, as per the Simply Wall St company report.

Risks

What could happen that would invalidate this narrative?

• Florida Canyon is currently benefiting from very high realized gold prices at US$3,464 per ounce, but mine site all in sustaining costs are already at the top end of guidance at US$2,542 to US$2,647 per ounce. Any long term gold price weakness or reversion closer to the 2 year or 3 year averages Jason cited around the mid US$2,000s could compress the 40% operating margin and reduce earnings and cash flow.
• The plan relies on residual ounces from older leach pads for roughly half of current production and management expects this to taper over months and years. If replacement ore from new pits, interpit zones and dump material does not come through at similar grades and recoveries, total ounces sold could fall and weigh on revenue and mine site margins.
• Management is in a capital intensive phase at Florida Canyon through at least 2026, including high sustaining capital of US$48 million to US$53 million and extra waste stripping and fleet spending, and has already flagged that annual costs may end up above guidance. If growth projects and mine life extensions do not translate into stronger cash flow later on, free cash generation and earnings could be weaker than expected.
• The growth story leans heavily on DeLamar and Nevada North progressing through permitting, technical reports and later development. Both projects still depend on regulatory approvals, environmental assessments and tribal and state agreements, so any delay, tighter permitting standards or new conditions could slow project timing and defer future production, revenue and earnings contributions.
• A large part of the long term upside is tied to low grade historical dump material and interpit targets that are still conceptual and not classified as mineral resources or reserves. If further drilling, metallurgical work or pit optimization shows lower grades, poorer recoveries or less mineable volume than early estimates, that would limit reserve growth, constrain mine life extensions and weigh on long term revenue and net margins.

Valuation

How have all the factors above been brought together to estimate a fair value?

• The analysts have a consensus price target of CA$8.05 for Integra Resources based on their expectations of its future earnings growth, profit margins and other risk factors.
  
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of CA$10.24, and the most bearish reporting a price target of just CA$5.38.
  
• In order for you to agree with the analysts, you'd need to believe that by 2029, revenues will be $313.2 million, earnings will come to $230.8 million, and it would be trading on a PE ratio of 4.3x, assuming you use a discount rate of 7.2%.
  
• Given the current share price of CA$6.1, the analyst price target of CA$8.05 is 24.3% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.