1911 Gold posts strong economics in PEA for True North project

1911 Gold's PEA for the True North project outlines an 11-year underground restart targeting ~58,100 oz Au/year (steady state) and total payable production of ~527,100 oz, with production slated to begin H1 2027 and test mining in H2 2026. At a long-term gold price of US$3,000/oz the after-tax NPV is C$391m and IRR 105% (payback 2.2 years), rising to an NPV of C$998m at US$4,800/oz (payback ~1 year); initial capex is C$59.2m with additional ramp-up capex C$46.7m and sustaining capex C$367.2m, cash costs US$1,390/oz and AISC US$1,897/oz, and the plan leverages existing infrastructure the company values at >C$400m.

Analysis

Market structure: True North’s PEA materially re-rates 1911 Gold (AUMBF/AUMB) relative to other juniors by showing a low initial capex of C$59.2m and ~58k oz/year steady production — this is a small (~0.01% of global supply) but high-IRR (~105% at US$3,000/oz) restart story that benefits 1911 and nearby service contractors while exerting negligible pressure on global gold prices. Expect short-term positive re-rating among Canadian underground restart juniors and a bid for scarce permitted assets; nearby developers with similar infrastructure will see higher takeover interest, while non-permitted juniors lose relative value.

Risk assessment: Key tail risks are a gold price collapse below ~US$1,900/oz (near AISC US$1,897/oz) that would compress margins, underground operational setbacks (shaft/hoist failures) and permitting/community challenges despite “permitted” tag; each could push payback beyond 3–5 years. Near-term (days–months): webinar and market re-rate; medium (6–12 months): test mining H2 2026; long (2027+): ramp to production and sustaining capex execution of C$367m. Hidden dependencies include assumed C$400m replacement value and metallurgical recovery rates not stress-tested in PEA.

Trade implications: Direct long in AUMBF is asymmetric: small C$59m initial capex implies big re-rate if test mining (H2 2026) and Q1–2 2027 production timelines hold — recommend concentrated, sized exposure with tight stops. Consider pair trades long AUMBF vs short GDX to isolate idiosyncratic restart optionality from bullion moves. Use options to express convexity: calendar or vertical call spreads into H2–Q4 2026 webinar/test-mining milestones, and hedge gold-price tail risk with put protection or short-correlated large-cap miners.

Contrarian angles: The market is likely over-optimistic on PEA NPVs that rely on US$3,000–4,800/oz gold; real downside if prices revert to mean (~US$1,800–2,000). Many historical restart PEAs failed to reach targeted production due to capital creep and ground conditions — demand for “permitted infrastructure” can evaporate on closer due diligence. Watch for overvaluation near the webinar; a disciplined milestone-based buy with stress-case IRR sensitivity (gold <US$2,000; recoveries -10%) should reveal true mispricings.

Key Decisions for Investors

• Establish a tactical long position in AUMBF/AUMB equal to 2–3% of portfolio within 5 trading days post-webinar; tranche into position and set a hard stop at -40% and partial profit-takes at +50% and +100% within a 12-month horizon tied to H2 2026 test mining and H1 2027 production milestones.
• Implement a pair trade: go long AUMBF (2%) and short GDX (1%) to capture idiosyncratic restart upside while hedging bullion exposure; rebalance if gold moves >±15% or after test-mining results.
• Buy call spreads on junior-gold exposure to limit downside: e.g., purchase 9–12 month call spread on GDX with strike width ~30% OTM to express sector re-rate if juniors confirm restart progress; allocate 0.5–1% portfolio risk.
• Do not increase exposure before two hard catalysts: (1) webinar technical disclosures within 7 days and (2) confirmation of test-mining permit/commencement by end of H2 2026. If either is missed, reduce AUMBF position to <0.5% immediately.