No Good Deed Goes Unpunished
Mark Reichman, Senior Research Analyst, Natural Resources
Fundamental Analysis
RatingOutperform

Refer to the end of the Report for Analyst Certification and Disclosures

This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D). This report is provided on Channelchek for informational purposes only and should not be used to make investment decisions. B/D is not an investment advisor and as such, offers no advice or recommendation to buy or sell any securities. Consult an investment advisor who has a fiduciary responsibility to manage your assets in your best interest and who can help determine investment suitability for you. Refer to Disclosures & Disclaimers for more detail.

July 31, 2020 - ANALYST SUMMARY
Price as of Publication: $0.15 | Price Target: $0.25

Listen To The Analyst

Drilling program is off to a good start. Newrange Gold released initial results from its reverse circulation drilling program underway at the Pamlico Gold Project in Nevada. To date, 25 holes have been drilled representing 2,505 meters with results available for 14 holes representing only 450 meters of strike length along the central portion of Pamlico Ridge between the historic Pamlico and Gold Bar mines. The assay results included some high grade but greater numbers of lower grade gold intercepts with a consistent level of positive readings for both gold and silver.

Not far off from our expectations. The initial assay results were not out of line with our expectations and will help define the continuity of mineral zones and higher-grade areas. While most of the gold was oxide within 100 meters of the surface, drilling at several targets intersected sulfide material that confirmed results from geophysical surveys and imaging.

Next steps. Management expects to drill at least 3,000 meters in 25 additional holes at the Gold Bar and Good Hope mines in areas that are already permitted as part of the initial program. In its entirety, the program will entail 10,000 meters of drilling and utilize reverse circulation rigs for shallow targets and diamond drilling for targets at greater depth.

Rating remains Outperform. During a down day for mining stocks, NRGOF shares fell $0.14 per share, or 48.6%. We speculate most of the selling was retail driven, perhaps by those expecting higher grade intercepts akin to 2017 drilling results associated with the Merritt Zone and Decline. It is early in the drilling program and we think the sudden profit-taking in the shares offers an attractive entry point for investors.



Company Profile

Newrange Gold Corp., headquartered in Vancouver, British Columbia, is a precious metals exploration and development company focused on near to intermediate term production opportunities in favorable jurisdictions including Nevada, Colorado and Ontario. The company's high-potential flagship Pamlico Project represents a high-grade epithermal gold system located in Nevada's Walker Lane trend. The shares trade on the TSX Venture Exchange under the ticker NRG, the OTCQB under the ticker NRGOF and the Frankfurt Stock Exchange (FSX) under the ticker X6C.

Fundamental Analysis

Our fundamental assessment rating, separate from our investment rating and valuation, is based on five attributes. We assign 3.0 checks out of 5.0, which falls within our "Average" range of 2.5 to 3.0 checks. In our opinion, the company's corporate governance practices are shareholder friendly with the company's five-member board of directors being comprised of three independent directors and two from management.  Additionally, excluding the company's properties in Columbia, which are being sold, Newrange Gold's projects are in favorable mining jurisdictions. Our rating reflects the fact that the company is not generating revenues or operating cash flow, is an early-stage exploration company, and will require external financing to fund its growth. For further explanation of our fundamental analysis, please refer to the disclosures at the end of this report.

Valuation Summary

Our target price is US$0.25 per share. We have relied on a blended approach using a cost approach that is based on past and future expenditures and a book value approach to determine fair value per share. Both are sensitive to expansions and contractions in the peer group multiple which have increased recently. As an exploration company, Newrange Gold cannot be valued based on revenues, EBITDA, earnings or cash flow. Investment risks include but are not limited to: 1) Newrange's failure to identify economic mineral resources, 2) uncertainties associated with the availability and costs of future financing, 3) changes in capital market and macroeconomic environments, 4) fluctuations in exchange rates, 5) changes in supply and demand fundamentals for minerals, including gold and silver, 6) delays in the development of projects, and 7) the potential for operating costs and financing costs to vary from management expectations.

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IMPORTANT DISCLOSURES
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Company Specific Disclosures
The following disclosures relate to relationships between Noble and the company (the "Company") covered by the Noble Research Division and referred to in this research report.

The Company in this report is a participant in the Company Sponsored Research Program ("CSRP"); Noble receives compensation from the Company for such participation. No part of the CSRP compensation was, is, or will be directly or indirectly related to any specific recommendations or views expressed by the analyst in this research report.

The Company has attended Noble investor conference(s) in the last 12 months.

Noble intends to seek compensation for investment banking services and non-investment banking services (securities and non-securities related) within the next 3 months.

Noble is not a market maker in the Company.

FUNDAMENTAL ASSESSMENT
The fundamental assessment rating system is designed to provide insights on the company's fundamentals both on a macro level, which incorporates a company's market opportunity and competitive position, and on a micro/company specific level. The micro/company specific attributes include operating & financial leverage, and corporate governance/management. The number of check marks that a company receives is designed to provide a quick reference and easy determination of the company's fundamentals based upon the following five attributes of the company (weighting reflects the importance of each attribute in the overall scoring of company’s fundamental analysis):
Attribute	Weighting
Corporate Governance/Management 	20%
Market Opportunity Analysis 	20%
Competitive Position 	20%
Operating Leverage 	20%
Financial Leverage 	20%

For each attribute, the analysts score the company from a low of zero to a high of ten based upon the analysis described below. The final rating and resulting check marks is a result of dividing the overall score (out of 100%) by ten.
Rating	Score	Checks
Superior	9.1 to 10	Five Checks
Superior	8.1 to 9	Four & A Half Checks
Above Average	7.1 to 8	Four Checks
Above Average	6.1 to 7	Three & A Half Checks
Average	5.1 to 6	Three Checks
Average	4 to 5	Two & A Half Checks
Below Average	3 to 3.9	Two Checks
Below Average	2 to 2.9	One & A Half Checks
Low Quality	0 to 1.9	One Check

While these are the attributes currently used for the analyst's fundamental analysis, the attributes and weighting may be reviewed, updated with additional attributes, and/or changed in the future based on discussions with the analysts and recommendations from the Director of Research.

Following is the description of each attribute in the fundamental analysis.

Corporate Governance/Management
We believe that a review of corporate governance and assessment of the senior management are important tools to determine investment merit. Good corporate governance aligns management with the interests of stakeholders. As such, analysts are to rank the company on the basis of good corporate governance principles that may include rules and procedures, board composition and staggered term limits, rights and responsibilities, corporate objectives, monitoring of actions and policies, and accountability. In addition, analysts will assess issues with controlling shareholders and whether decisions have been made in the past that were in the interests of all shareholders. In addition, management will be assessed based on industry experience, expertise, and/or track record.

High ranking example: Board and management that is aligned with the interests of shareholders with incentives based on stock price appreciation and with an experienced management team known for exceptional shareholder returns.
Low ranking example: Concentrated ownership without independent directors that do not necessarily align with all shareholders' interests.

The Market Opportunity Analysis
In this review, the analyst assesses the company's macro environment as a measure of understanding the industry. Factors considered include the size and growth potential of the industry under various economic conditions, the emerging demands in the market, technological benefits/disruptions, competition, geographical opportunities, and customer demands/needs, and an assessment of supply and distribution channels. In addition, the analyst will review legal and regulatory trends, as well as potential shifts in consumer or social behavior and natural environment changes.

High rank example: A company in an industry that is growing revenues well above GDP rates (which are on average 2% plus) and/or may have unmet or under-served needs in a rapidly growing market opportunity.
Low rank example: A mature industry that is in secular decline and likely to grow below GDP rates.

Competitive Position
The evaluation of the company's competitive position is another macro environment attribute designed to measure the relevance, market share, position and value proposition, and sustainable differentiations of the company and its products/services within its industry. Ease of entry into the industry and the ability of other well-funded players to potentially enter the market would be determined. As such, the assessment would consider the company's strengths and advantages of its products/services against weaknesses and limitations. This may include the company's current brand awareness, pricing and cost structure, current market strategies and geographic penetration that may affect demand for its products/services. In addition, the company's competitors would be evaluated.

High rank example: An analyst would consider the company's product to be superior to its competitors and that should allow the company to gain market share.
Low rank example: A company with a "me-too" product that does not have any significant technology advantages in an industry that has low barriers to entry.

Operating Leverage
Simplistically, operating leverage is determined by the operating income relative to changes in revenue. The analyst will calculate the impact on sensitivity on gross margins and variable costs to determine operating leverage. The analyst will take into account the ability of the company to cut fixed and variable costs in a challenged revenue environment and technological changes that may impact operating expenses. In addition, the analyst is to assess corporate strategies that include capital investment, which may be required for sustainable revenue growth, marketing expenses, and the company's ability to attract and retain talent and/or employees. The analyst should focus on the revenue opportunity and determine the price elasticity of demand for the company's products or services. In other words, the analyst is to rank the company based on improved operating margins going forward on an absolute and relative basis.

High rank example: A company that has improving margins for the foreseeable future, with significant price elasticity.
Low rank example: A company that is in a challenged revenue environment with a fixed cost structure and limited ability to cut costs, indicating an outlook for declining margins.

Financial Leverage
A strict definition of financial leverage is total debt divided by total shareholder's equity. Financial leverage analysis is to determine the company's ability to improve shareholder value by means of utilizing its balance sheet to grow organically or to acquire assets. Analysts may look at the company's debt to cash flow leverage ratio, interest coverage ratios, or debt to equity ratios. In addition, the interest rate environment and the outlook for interest rates are a factor in determining the company's ability to manage financial leverage. Finally, the analyst is expected to determine the ability to service the debt given the industry and/or company profile, such as cyclicality, barriers to entry, history of bankruptcy, consistency in revenue and profit growth, or predictability in sales and profits and large cash reserves. The analyst is expected to take into account capital intensity of the company and the anticipated of capital allocation decisions.

High rank example: A company with predictable and growing revenue and cash flow with modest debt levels. This may indicate that the company could improve shareholder value through growth investments, including acquisitions, using debt financing.
Low rank example: A company in a cyclical industry in a late stage economic cycle that has above average debt leverage and is in an industry that has a history of financial challenges, including bankruptcies.

ANALYST CREDENTIALS, PROFESSIONAL DESIGNATIONS, AND EXPERIENCE
Senior Equity Analyst focusing on Basic Materials & Mining. 20 years of experience in equity research. BA in Business Administration from Westminster College. MBA with a Finance concentration from the University of Missouri. MA in International Affairs from Washington University in St. Louis.
Named WSJ 'Best on the Street' Analyst and Forbes/StarMine's "Best Brokerage Analyst."
FINRA licenses 7, 24, 63, 87.

Full Bio & Coverage List

CONTINUING COVERAGE
Unless otherwise noted through the dropping of coverage or change in analyst, the analyst who wrote this research report will provide continuing coverage on this company through the publishing of research available through Noble Capital Market's distribution lists, website, third party distribution partners, and through Noble’s affiliated website, channelchek.com.

WARNING
This report is intended to provide general securities advice, and does not purport to make any recommendation that any securities transaction is appropriate for any recipient particular investment objectives, financial situation or particular needs. Prior to making any investment decision, recipients should assess, or seek advice from their advisors, on whether any relevant part of this report is appropriate to their individual circumstances. If a recipient was referred to Noble Capital Markets, Inc. by an investment advisor, that advisor may receive a benefit in respect of transactions effected on the recipients behalf, details of which will be available on request in regard to a transaction that involves a personalized securities recommendation. Additional risks associated with the security mentioned in this report that might impede achievement of the target can be found in its initial report issued by Noble Capital Markets, Inc.. This report may not be reproduced, distributed or published for any purpose unless authorized by Noble Capital Markets, Inc..

RESEARCH ANALYST CERTIFICATION

Independence Of View
All views expressed in this report accurately reflect my personal views about the subject securities or issuers.

Receipt of Compensation
No part of my compensation was, is, or will be directly or indirectly related to any specific recommendations or views expressed in the public appearance and/or research report.

Ownership and Material Conflicts of Interest
Neither I nor anybody in my household has a financial interest in the securities of the subject company or any other company mentioned in this report.
NOBLE RATINGS DEFINITIONS	% OF SECURITIES COVERED	% IB CLIENTS
Outperform: potential return is >15% above the current price 	91% 	25%
Market Perform: potential return is -15% to 15% of the current price 	8% 	2%
Underperform: potential return is >15% below the current price 	0% 	0%

NOTE: On August 20, 2018, Noble Capital Markets, Inc. changed the terminology of its ratings (as shown above) from "Buy" to "Outperform", from "Hold" to "Market Perform" and from "Sell" to "Underperform." The percentage relationships, as compared to current price (definitions), have remained the same.

Additional information is available upon request. Any recipient of this report that wishes further information regarding the subject company or the disclosure information mentioned herein, should contact Noble Capital Markets, Inc. by mail or phone.

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Report ID: 11610