Equus Mining Ltd: Cerro Bayo...a Path to Growth

Scope
This report has been commissioned by Equus Mining to present investors with an analysis of the opportunities emerging for the company over the next 12-24 months, leveraging infrastructure base, supported by current cashflows from processing low grade stockpiles. The exploration and development of precious metals is high risk by definition but the growth opportunity is transformational and potentially deliverable within a medium-term investment window.

Business model
Equus Mining is a junior minerals explorer and producer with an extensive and concentrated portfolio of production, pre-production and exploration assets in a premier precious metal province of southern Chile. The completion of the Cerro Bayo acquisition provides a cashflow base to pursue an ambitious and potentially transformational gold-silver growth strategy. Although the assets can be considered as dominantly early-stage exploration, there are a number of high-value brownfields growth opportunities being evaluated and subject to feasibility studies. The company strategy is to pursue high grade production through self- funded exploration campaigns aimed at delivering and building upon its existing resource base. Discoveries can be readily tied back to existing plant and associated infrastructure.

Chasing growth
We have conducted our analysis and review of Equus Mining’s opportunities against a range of risk factors based on our assessment of the operating environment accounting for commodity prices, location, phase of development; and the timing and scale of work programmes. However, we note our current assumptions are subject to potentially significant adjustment as development data and operational outcomes become better defined.

Valuation of A$51m (A$0.35/share)
We set our base asset value against risk-weighted development scenarios and peer EV metrics applying, where appropriate, discretionary probability weightings to pricing, volume and success factors, which we believe are reasonable given the commercial operating environment and available data. We assign a risked valuation of A$51m (A$0.35/share) to EQE against a reference share price of A$0.165/share noting NAV upside to A$0.51. It’s worth highlighting that reference ranges, EV benchmarks and asset weightings are subject to significant change dependent on feasibility and drilling success as determined by the leveraged exposure EQE holds across its portfolio. The next 12-24 months could deliver transformational upside based on material increases and upgrades to existing resources with speculative upside potential beyond our valuation range.