Unlocking Value in the Cariboo: The Spanish Mountain Gold Story

250911: Symbol: TSXV: $SPA Price: 0.135 CAD Market cap: 66 million CAD

Spanish Mountain Gold (TSX‑V: SPA / OTCQB: SPAUF) owns 100 % of the Spanish Mountain project in British Columbia’s Cariboo Gold Corridor. This large, open‑pit development benefits from solid infrastructure and an experienced mine‑building team—yet the company trades at a small fraction of the project’s estimated value.

PEA Highlights

Spanish Mountain published an updated Preliminary Economic Assessment (PEA) in July 2025. Key metrics include:

• Mine Life & Scale: 24.5‑year open pit producing ~3.0 million ounces of gold
• Economics: Base case (US$2,450/oz Au) after‑tax NPV5% of C$1.025 billion with an 18.2 % IRR; at spot prices around US$3,300/oz, the after‑tax NPV5% rises to C$2.315 billion with a 32 % IRR
• Capex & Payback: Initial capital of C$1.25 billion and a payback period of 3.4 years (2.0 years at spot prices)
• Average Production: Approximately 122 koz of gold per year
• Operational Design: A conventional flowsheet and dry‑stack tailings system to reduce water and environmental risk
• First 5 Years: Higher‑grade phase with ~203 koz average annual gold production at an all‑in sustaining cost around US$1,024/oz

Resource Scale & Upside

• Measured & Indicated resources: 4.16 Moz of gold (292 Mt at 0.44 g/t)
• Inferred resources: 0.51 Moz of gold (40 Mt at 0.40 g/t)
• Growth potential: The Phoenix deposit is not in the current mine plan; ongoing drilling along the 12 km corridor is targeting near‑surface, higher‑grade zones that could lift head grades and reduce strip ratios.

Leadership & Ownership

• CEO: Peter Mah—professional engineer with more than three decades’ mine‑build and operations experience, including COO of McEwen Mining and senior positions at Newmont and Avanti
• Board & insiders: Chaired by Brent Bergeron; directors and officers collectively own around 18 % of the company
• Key investors: Veteran resource investors Eric Sprott and Ian Watson hold approximately 17 % combined

Valuation Snapshot

With a market capitalization of roughly C$66 million, Spanish Mountain trades at a fraction of the project’s value. Atrium Research’s initiation report set a C$0.40/share price target—almost triple the mid‑2025 share price of $0.135.

• Valuation #1 – NPV math: The base‑case after‑tax NPV5% of C$1.025 billion and the spot‑case NPV5% of C$2.315 billion suggest the company trades at roughly 3–6 % of NAV, highlighting a wide valuation gap.
• Valuation #2 – Cash‑flow lens: The PEA forecasts average annual free cash flow of C$85–173 million (after tax and sustaining capital). Applying a conservative 4–6× free‑cash‑flow multiple yields an implied valuation range of C$340–1,040 million. In the first five years, free cash flow of C$311–454 million per year—driven by an early production phase of roughly 203 koz per year—could justify a valuation of C$1.2–2.7 billion, underscoring the disconnect with today’s market cap of about C$66 million.

Recent Developments & Catalysts

• Financing completed: On 27 Aug 2025 the company raised C$7.2 million via a brokered private placement of units and flow‑through units; each unit included a warrant exercisable at C$0.22.
• Research engagement: On 28 Aug 2025 Spanish Mountain engaged Atrium Research for independent coverage and investor outreach.
• AGM outcomes: Shareholders re‑elected the existing board and approved all motions at the 22 Aug 2025 AGM.
• Near‑term catalysts: Management plans to advance a pre‑feasibility or feasibility study in the second half of 2025, deliver a maiden resource for the Phoenix deposit and continue drilling along the K‑Zone. The goal is to be construction‑ready by 2027.

Risks & Considerations

• High capital intensity: The base‑case PEA calls for C$1.25 billion of upfront capital—a significant hurdle for a junior developer. To address this, Spanish Mountain has commissioned a new PEA and Mineral Resource Estimate aimed at a low‑cost, staged production strategy. The company has indicated that results from this work are expected in the near term, which could provide clarity on capex reduction.
• Execution risk: Management aims to reduce capex through process redesign and exploitation of near‑surface gold zones, but these optimizations remain to be validated. Any delays, cost overruns or weaker metal prices could erode the project’s robust economics.

Personal Reflection

I was initially lukewarm on the August 2025 private placement. The financing priced units at C$0.145 with warrants at $0.22 and offered flow‑through shares up to $0.20, which felt dilutive for existing shareholders. However, the subsequent pullback in the share price now allows new investors to take a position below those financing levels. With C$7.2 million raised, Spanish Mountain is fully funded for ongoing exploration and technical work. Combined with the project’s strong PEA economics and large resource base, this funding improves the risk/reward profile for investors who are comfortable with development‑stage mining companies. Potential buyers should still conduct their own due diligence, but at current valuations Spanish Mountain offers leverage to rising gold prices and upcoming derisking milestones.

Conclusion

With tier‑1 jurisdiction, a massive resource and a de‑risked PEA pointing to a billion‑dollar project, Spanish Mountain Gold appears deeply undervalued. As the company transitions toward feasibility and continues to expand its resource footprint, the valuation gap could narrow. Investors seeking leverage to higher gold prices and a clear development path may find the Spanish Mountain story compelling—while remembering to conduct their own due diligence.