Unsolicited Bid Sparks Increased Market Attention

Metrics	Value
Current Price	CAD $0.63
Fair Value	CAD $1.7
Risk	5
52 Week Range	CAD $0.34-0.95
Shares O/S (M)	116
Market Cap. (M)	CAD $116
Current Yield (%)	N/A
P/E (forward)	N/A
P/B	4.0

Report Highlights

* QP: Peter N. Cowley, President of Loncor Gold

Loncor has formed a special committee to evaluate an unsolicited, confidential, and non-binding offer related to a potential transaction. In May 2025, the company closed a C$9.4M equity financing.
The company is advancing its Imbo project in the Democratic Republic of the Congo (DRC), located 220 km from Barrick’s (TSX: ABX) Kibali mine, the largest gold mine in Africa.
Loncor’s largest shareholders include Resolute Mining (ASX: RSG; MCAP: C$1.2B) with a 19.9% stake, and founder/chairman Arnold Kondrat, who holds 18.8%.
We believe recent peace efforts, increased foreign investment, and infrastructure upgrades are enhancing the DRC’s appeal as a mining jurisdiction. These developments position Loncor well for potential acquisition or partnerships.

We have previously highlighted Loncor’s potential as an attractive M&A candidate. LN is currently trading at a 48% discount to its peers (C$43/oz vs. a sector average of C$83/oz), based on 100% of measured and indicated resources, and 50% of inferred resources. In our view, the market is placing undue emphasis on the risks of operating in the DRC, while underappreciating the potential value that could be unlocked through a strategic partnership or acquisition.
Imbo hosts three open-pittable deposits, Adumbi, Kitenge, and Manzako, as well as several high-priority exploration targets, with mining permits already in place. The flagship Adumbi deposit, which has potential to produce 300+ Koz ever year, hosts a large/high-grade resource totaling 3.7 Moz gold (2.3 g/t). A 2021 Preliminary Economic Assessment (PEA) returned an AT-NPV5% of $1B, and an attractive AT-IRR of 29%, using $1,840/oz gold vs the spot price of $3,295/oz. LN is trading at just 8% of the AT-NPV.
Initial results from Adumbi’s ongoing drill program, targeting underground resources below the open-pit shell, have returned wide, high-grade intercepts, highlighting underground resource expansion potential.
With gold trading near record highs, we anticipate an increase in M&A activity over the next 12 months. We maintain a positive outlook on gold prices, anticipating continued US$ weakness, strong demand for safe-haven assets amidst economic and geopolitical uncertainties, and the potential for a global slowdown in GDP.
We believe the unsolicited offer has drawn greater attention to the company. Key upcoming catalysts include updates from the special committee’s review of the offer. With increased market attention, we see a stronger likelihood of the share price aligning closer to our fair value estimate.

Improving Investment Climate in the DRC

A U.S.-brokered peace accord and growing international cooperation are helping stabilize key mining regions in the DRC

Western-backed firms, including KoBold Metals, are committing over $1B to DRC projects, signaling growing investor confidence

The Democratic Republic of the Congo (DRC) is a key global supplier of critical minerals, including cobalt, copper, and gold. While the country continues to face challenges such as regional instability and infrastructure limitations, recent geopolitical, financial, and operational developments are enhancing its attractiveness to foreign investors.

Notable Developments Driving Investment Momentum:

Peace Accord Signed: A U.S.-brokered peace deal between the DRC and Rwanda (June 2025) aims to de-escalate conflict in the east. Although M23 rebel activity remains in the region, it is localized and has not disrupted major mining operations like Barrick’s Kibali Mine or Loncor’s assets.
Western Investment Rising: KoBold Metals, backed by Bill Gates and Jeff Bezos, is actively exploring opportunities in the DRC, with potential lithium investments exceeding US$1B.
International Collaboration: The U.S., EU, and DRC are working together to support responsible mineral sourcing, environmental standards, and community engagement—further strengthening investor confidence.
Infrastructure Improvements: Key projects like the Lobito Corridor rail line, and new hydropower facilities, are helping improve logistics and power reliability in mining regions.
Growing Exploration Activity: In 2024, the DRC led the continent in exploration spending, with over $130M invested—highlighting growing interest in its resource potential.

We believe the combination of peace initiatives, infrastructure upgrades, and growing international interest is improving the investment landscape in the DRC. For a junior miner like Loncor, the most likely path to value realization is through acquisition by a larger, DRC-experienced operator.

Currently, the market appears to be valuing Loncor based on its ability to advance the Imbo project independently, raising concerns about operating in a complex environment. This likely contributes to LN trading well below intrinsic value, and sector multiples.

In our view, investor focus should shift toward the project's strong fundamentals and management’s ability to secure strategic partnerships, either through a joint venture or acquisition, supported by exploration progress.

Imbo Project

Located in the Ngayu gold belt of the northeastern DRC, 220 km from Barrick’s Kibali gold mine

Ngayu hosts Banded Ironstone Formation (BIF) gold deposits, which are typically large-tonnage

Should the project advance to production, management envisions hydro power as a viable source, which is a significant factor contributing to Kibali's low cash costs

The advanced-stage Imbo project hosts three open-pittable deposits (Adumbi, Kitenge, and Manzako), and multiple targets, along a 14 km long mineralized trend

These three deposits are 3 km from each other, and can likely be part of the same mine plan. Most of Imbo’s resources come from Adumbi. Adumbi holds a relatively high-grade/large open-pit resource

The Adumbi deposit has been drilled along 900 m strike, and 550 m downdip. The open-pit resource grade at Adumbi (3.7 Moz at 2.3 g/t Au) is comparable to that of Kibali’s open-pit and underground resources (16.9 Moz at 3.1 g/t Au)

A PEA completed in 2021 returned an AT-NPV5% of $1B, and a high AT-IRR of 29%, using $1,840/oz gold vs the current spot price of $3,295/oz. Annual production of 303 Koz, which would make it a mid-sized gold producer

Resource Expansion Drilling

Earlier this year, LN launched a resource expansion drill program totaling nine holes (11,000 m), targeting potential underground mineralization beneath the existing open-pit shell. Initial results have been encouraging, returning broad intercepts with high grades.

The Adumbi deep drilling program is currently ongoing

The first four holes have confirmed high grades, underscoring the potential for underground resource expansion. Notably, LADD029, the deepest hole drilled to date, intersected three zones totaling 66 m

Management has outlined an exploration target of 1.5 Moz grading 4.8 g/t below the Adumbi pit shell, between depths of 550 and 800 m, a target we believe is reasonable.

Financials

Subsequent to Q1-2025, LN raised C$11M. In-the-money options can bring in C$9M

FRC Projections and Valuation

Our DCF valuation has increased from C$2.00 to C$2.23/share, driven by our higher long-term gold price forecast of US$2,500/oz, compared to US$2,000/oz in our previous report

African gold juniors are trading at C$83/oz (previously C$68/oz). LN is trading at C$43/oz, a 48% discount

Applying C$83/oz to LN’s resources, we arrived at a comparables valuation of C$1.17/share (previously C$1.13/share). The increase reflects a higher sector average EV/oz, partially offset by share dilution from the recent financing

We are reiterating our BUY rating, and raising our fair value estimate from C$1.57/share to C$1.70/share (the average of our DCF and comparables valuations). The formation of a special committee to review an unsolicited offer, alongside the recent equity raise, underscores growing market interest in Loncor. With a strategically located, high-quality resource base in the DRC trading at a significant discount to peers, we believe Loncor has a promising project, especially as initial drilling highlights underground expansion potential.

Risks