i-80 Gold (TSX:IAU) - Production Path to 200,000 Ounces

Key Concepts

• Three-Phase Development Plan: IAT Gold's strategic plan to significantly increase gold production.
• Granite Creek: An underground mine undergoing development, facing water challenges.
• Archimedes: IAT Gold's second underground mine under construction.
• Autoclave: A processing facility crucial for IAT Gold to process its own ore and capture higher margins.
• Toll Milling: Current method of processing ore at third-party facilities, incurring significant costs.
• Feasibility Study (FS): A detailed study to assess the economic viability of a mining project.
• Preliminary Economic Assessment (PEA): An earlier-stage economic assessment.
• Mineralized Envelope: The geological extent of mineralization containing gold.
• Reserves: Economically mineable quantities of gold.
• Resources: Inferred, indicated, and measured quantities of gold that may or may not be economically mineable.
• Geotechnical Drilling: Drilling to assess ground conditions for mine planning.
• South Pacific Zone (SPZ) & Range Vault Zone: Specific areas within the Granite Creek deposit.
• Mineral Point & Ruby Hill: Other gold deposits being evaluated by IAT Gold.
• Recapitalization Plan: A financial plan to fund development activities.
• Hatch: An engineering firm involved in the autoclave refurbishment.
• Limited Notice to Proceed (LNTP): An initial authorization for engineering and procurement.

IAT Gold's Q3 Performance and Future Development Plan

Q3 Performance and Operational Improvements

IAT Gold announced a solid third quarter, marking their third consecutive solid quarter. The company achieved its best gross profit in the life of IAT Gold, attributed to the ramp-up of the Granite Creek mine. A significant development during Q3 was the installation of a permanent dewatering system at Granite Creek. This system is designed to remove water to the surface, addressing a critical issue that has hampered the development of the ore body at depth. Over the next six months, IAT Gold will focus on building the necessary infrastructure to ensure the water issue is no longer a challenge. This is crucial because deeper sections of the ore body are expected to have better grades and ground conditions, leading to increased mining rates.

Production Growth and Revenue Expectations

IAT Gold's three-phase development plan aims to increase annual gold production from less than 50,000 ounces to over 600,000 ounces. The company has begun construction of its second underground mine, Archimedes, during the third quarter, with progress being reported as very good. This mine is expected to ramp up over the next couple of years.

A key strategic pivot for IAT Gold is to transition from toll milling to processing ore through their own refurbished autoclave. Currently, toll milling costs range between $1,000 and $1,500 per ounce. While the two underground mines ramp up, the full profit and cash flow will not be realized until the autoclave refurbishment is complete. IAT Gold anticipates pouring gold through their own autoclave before the end of 2027. By 2028, they expect to produce approximately 200,000 ounces of gold per year and generate EBITDA between $200 and $300 million, contingent on the price of gold.

Prioritized Activities and Structural Improvements

IAT Gold is focused on structural improvements rather than temporary fixes. Key activities between now and the end of next year include:

• Water Management at Granite Creek: The permanent dewatering infrastructure is in place. In Q1, a water treatment plant will be built to allow discharge into the local basin, preventing water from re-entering the underground. This will accelerate development at depth, leading to improved grades, ground conditions, and production levels.
• Autoclave Refurbishment: This is a critical step to capture higher margins currently lost through toll milling.
• Infill Drill Program: A 47-hole infill drill program at Granite Creek is nearing completion (mid-December). The results will be incorporated into a new feasibility study to be published at the end of Q1, which is expected to present a significantly improved life plan compared to the preliminary economic assessment (PEA).

Cost Structure and Processing Costs

While mining costs at Granite Creek are expected to decrease as mining rates increase, processing costs have risen due to the new toll milling agreement. These higher processing costs are a "temporary charge" related to toll milling and do not reflect the company's true cost structure once their own processing facility at Lone Tree is operational. These costs are currently limiting gross profit and free cash flow from existing operations but are expected to change with the autoclave refurbishment.

Financial Position and Funding

IAT Gold's cash balance has decreased to just over $100 million due to ongoing development activities. However, an equity raise in Q2 provided approximately $92 million for the development plan over the next year, through the end of Q2 next year. The company is fully funded for its development plan. By the end of Q2 next year, IAT Gold expects to complete a recapitalization plan that will fund Phase 1 and Phase 2 of their development plan, along with feasibility studies and permitting for Phase 3.

Drilling Programs and Resource/Reserve Growth

IAT Gold completed over 53,000 feet of drilling in Q3. The company's focus is on its development plan, but also on demonstrating organic growth in the resource and reserve base.

• Cove Underground: An infill drill program was completed in Q3. The geological team, described as fantastic and conservative, has indicated that the total mineralized envelope has increased by 10-20%. Reserves are expected to be 10-20% higher than those in the Q1 PEA.
• Granite Creek: Infill and step-out drilling are underway, with expectations of a material increase in the mineralized envelope and the reporting of reserves for the first time.
• Archimedes: Drilling began in November, with a two-phase program targeting the upper zone through Q1 and the lower zone starting in Q2, completing by year-end for a feasibility study in early 2027.

By Q1 2027, IAT Gold expects to have three feasibility studies out for its three underground mines (Cove, Granite Creek, and Archimedes), which will feed the central autoclave. These studies are anticipated to show a material increase in the resource envelope and significant reported reserves, likely larger than those projected in the PEAs.

Economic Drivers for Feasibility Studies

The improved economics projected for feasibility studies, particularly for Cove, are primarily driven by a larger reserve and resource base compared to the PEAs. While costs and capital expenditures are expected to remain largely in line with PEA projections, there may be some trade-offs between higher recovery rates and increased costs, especially considering current gold prices.

Geotechnical Drilling and Granite Creek's Potential

Geotechnical drilling at Cove is required for mine planning and has indicated a material increase in the resource. For Granite Creek, the majority of drilling is in the South Pacific Zone (SPZ), where step-out drilling has been successful. IAT Gold expects Granite Creek to grow, with significant drilling planned for next year in both the SPZ and the Range Vault Zone.

Despite Granite Creek having the lowest economics in the initial PEAs, IAT Gold is investing in it due to its proximity (within 10 km) to Nevada Gold Mines' Turquoise Ridge (a ~30 million ounce discovery) and its location within the same geological system. Similar to Turquoise Ridge, IAT Gold is observing improved ground conditions and higher grades at depth in Granite Creek, along with increased lateral extent. This lateral extent is crucial for ounces per vertical foot, reducing development charges and improving economics. The current drill program is expected to provide confirmation of this potential.

Mineral Point and Ruby Hill Permitting and Studies

Mineral Point is considered advanced due to prior work by Barrick. IAT Gold plans to accelerate infill drilling and technical work into 2026, originally scheduled for 2028-2029. This acceleration is driven by the opportunity to potentially expedite permitting for Archimedes below the 5100 level, which could then allow for the acceleration of Mineral Point. To fund this, IAT Gold is seeking to expand its recapitalization by approximately $40 million. This funding is expected to support the infill drilling and engineering work required to produce a pre-feasibility or feasibility study for Mineral Point in the first half of 2027. The goal is to have Mineral Point, Cove, and Granite Creek open pit all permitted before the end of 2028.

Autoclave Refurbishment Strategy

Hatch has completed engineering work on the autoclave refurbishment, which is in line with expectations. IAT Gold has hired an owner's team with experience operating this specific autoclave. The board has approved a $25 million limited notice to proceed (LNTP) for the Q2 board meeting. This allows Hatch to begin detailed engineering, order long-lead equipment, and initiate the permitting process for new components. The refurbishment is estimated to cost around $400 million. Given the projected production of 200,000 ounces per year and an improved margin of $1,000-$1,500 per ounce, the payback period for this refurbishment is expected to be very quick. Strategically and economically, the refurbishment is considered vital. IAT Gold expects to be well underway with the refurbishment by Q2 of next year, with production anticipated before the end of 2027.

Financing and Investor Appeal

IAT Gold has secured six term sheets for financing, indicating strong interest from financiers. This appeal is attributed to the strength of their asset base, location, and the fact that they are a gold company. While there is a slight mismatch between permitted projects and feasibility studies, the company is working with multiple parties to present the board with several financing options. The development plan is progressing on schedule, with milestones being met each quarter.

Team Building and Workforce Quality

IAT Gold has successfully built a strong team, including experienced mining engineers, metallurgists, and structural geologists. The company emphasizes the importance of hiring the right people at all levels for execution. Nevada is highlighted as one of the best locations globally to operate, not only for its geology but also for the quality of its workforce.

Conclusion and Outlook

IAT Gold is executing a comprehensive development plan focused on increasing gold production and capturing higher margins through its own processing facilities. Key milestones are being met, including dewatering improvements, construction of new mines, and progress on the critical autoclave refurbishment. The company is confident in its ability to secure financing and manage its liquidity. The ongoing drilling programs are expected to significantly expand the resource and reserve base, underpinning future growth and economic viability. The focus on structural improvements and building a skilled team positions IAT Gold for long-term success.