Co. Becomes Producer with First Gold, Silver Concentrate
Research Report

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Disclosures for Atrium Research, Nicola Mining, July 9, 2025

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Nicola Mining Inc. (NIM:TSX.V; HUSIF:OTCQB; HLIA:FSE) began producing gold and silver concentrate at its Merritt Mill in British Columbia (B.C.) using 3,100 tons (3.1 Kt) of high-grade ore sourced from Talisker Resources Ltd. (TSK:TSX), reported Ben Pirie, equity research analyst at Atrium Research, in a July 9 research note. After updating its model on the Canadian explorer, Atrium increased its target price on it by 50%.

"This marks a major milestone for the company as it pivots into a gold and silver producer, with revenue and cash flow expected imminently," Pirie wrote.

41% Suggested Uplift

Atrium's new price on Nicola is CA$0.90 per share, up from CA$0.60 previously, the analyst noted. In comparison, the company is trading at the time of Pirie's report at about CA$0.64 per share. At this price, the new target implies a potential return for investors of 41%.

Nicola remains a Buy. Its market cap is CA$117.4 million (CA$117.4M).

About the Mill

Nicola's Merritt Mill can process both gold and silver mill feed via gravity and flotation processes. It is the only facility in B.C. permitted to accept third-party precious metals ore.

To prepare for full production, reported Pirie, in May Nicola started getting and stockpiling ore shipped from Talisker. Now that Talisker has delivered 3.1 Kt of high-grade ore, regular shipments per the Talisker milling agreement have begun, providing steady initial feedstock for the Merritt Mill.

Permitted to process up to 200 tons per day, the mill is expected to ramp up toward full capacity in Q3/25. Nicola is in the process of applying for a permit amendment allowing for increased throughput.

More Ore Sources

Nicola has mining and milling profit share agreements in place with some miners with high-grade gold projects. For instance, according to its agreement with Blue Lagoon Resources Inc. (BLLG:CSE; BLAGF:OTCQB; 7BL:FSE), Nicola expects to begin receiving ore from its Dome Mountain mine, permitted for 55 Kt per year of production.

Also, Nicola expects to start shipping ore as part of its 10 Kt bulk sample from the Dominion Creek project, in which it owns a 75% economic interest. Dominion Creek is a high-grade gold project near Smithers, B.C.

"As operations ramp, we believe the Merritt Mill will grow into a heavily cash-flowing asset, supporting future exploration efforts (particularly at New Craigmont) and supporting other milling partnerships as capacity expansion initiatives develop," Pirie commented. New Craigmont is Nicola's copper project in B.C.

Changes to Model

Pirie discussed Atrium's model on Nicola, noting that the firm's values on Nicola's three assets are unchanged: CA$96.8M for the Merritt Mill and tailings facility, CA$62.5M for New Craigmont and CA$8.5M for its Treasure Mountain silver mine.

However, Atrium did raise its gold and silver price assumptions, to US$2,800 per ounce and US$30 per ounce, respectively, and described them as still conservative.

Now for Nicola in 2026, Atrium forecasts CA$43.9M of milling revenue and an CA$8.7M EBITDA.

What to Watch For

Short-term catalysts include progress with and results from Nicola's 2025 exploration program at New Craigmont.

Regarding the Merritt Mill, potential share price boosting events include updates on the application to amend the mill permit, additional mill production and new partnerships. 

Standout Features

Pirie pointed out what Atrium likes about Nicola. The company started capitalizing on its mill, through profit-sharing agreements with miners. "This business is just beginning to ramp up, and we expect new partnerships and cash flows to start rolling in," the analyst wrote.

The company's fully permitted silver, lead and zinc Treasure Mountain project is highly attractive and therefore ideal for a potential partnership with another miner.

The company's New Craigmont is a legitimate copper project with a high chance of discovery on exploration given the historical high-grade mine there.

The company generates nondilutive cash flow from its milling operation in addition to its sand/gravel pit and rock quarry business, and these funds cover the costs of exploration at its core assets. "Additionally, the pit and quarry are operated by local aboriginal communities, strengthening its relationships with key stakeholders," wrote Pirie.