Rockcliff Metals Corp

Blue Sky Just Got Bluer

Impact: Positive

Rockcliff today announced a dramatic increase to its holdings in the Snow Lake South Emerging Mining Camp (“SLSEMC”), increasing its position by 51% to 290,000 hectares. The SLSEMC represents the underexplored extension of the Snow Lake VMS Mining Camp beneath cover and has the potential to host multiple VMS discoveries. We like Rockcliff’s balanced risk/reward profile with high probability that 2019 drilling is likely to expand resources alongside exciting “Blue Sky” potential on the now super-sized Snow Lake South (SLS) projects (SLS #1,2,3&4).

  • Growing land position in a world-class base metal camp. Rockcliff just acquired an additional 174,379 ha by staking its SLS #3 & 4 properties, more than doubling the company's current land holdings in the SLSEMC (Figure 1). The strategic importance of this portfolio can't be over-stated, given the Snow Lake Camp is among the world's most prolific VMS districts and home to Hudbay Minerals (TSX:HBM) who need to secure feed for their facilities.

  • Blue sky potential of the Snow Lake South Emerging Camp. We note that the SLSEMC represents the underexplored southern extension of the Snow Lake camp. Over 60Mt of copper-zinc sulphide ore have been produced from the exposed northern half of the camp. It stands to reason that yet undiscovered VMS clusters may occur to the south beneath the limestone cover. Minimal exploration in the SLSEMC has already led to a handful of discoveries including Hudbay's Reed Lake Mine, the Talbot and Tower deposits, as well as Hudbay's Kof and Sylvia deposits, which occur on trend with Rockcliff's SLS#1 property.
  • Targets on the radar with more to come. On its SLS#2 property Rockcliff has already identified eight potential targets based on interpretation of previous geophysical data and incorporating litho-structural information from nearby VMS deposits. Rockcliff intends to drill the best of these targets by late 2019 / early 2020, after further detailed follow-up work on the ground. But we expect new targets to be defined on SLS#1, #3 and #4, with further compilation work and collection of new geophysical data.  
Rockcliff trades at a discount to our estimates plus plenty of “Blue Sky” potential. Based on Rockcliff’s portfolio of deposits and royalties, we have arrived at a conservative fair value estimate of C$0.33/sh, which does not account for the “Blue Sky” exploration potential. Upcoming catalysts include 1) 2019 Drilling Results at Bur 2) Ongoing news flow from Kinross Gold (TSX:K) drilling at Laguna. 3) Follow-up drilling on SLS Properties late in 2019



FireFox Gold Corp

New Targets Defined at Seuru

Impact: Mildly Positive

FireFox has announced the discovery of two new mineralized targets just north of its more advanced Mustajärvi and Jeesiö projects. In a rapidly emerging mining jurisdiction, FireFox is strategically positioning itself with a highly prospective land portfolio in the Central Lapland Greenstone Belt (CLGB) of Finland. We expect positive drill results and further surface sampling to generate the momentum needed for a re-rating of this newly public company. 
  • Advancing a third project in Finland. FireFox has identified a 1km and 1.4 km-long mineralized target at Selkä-E and Selkä-W respectively (Figure 1). Firefox’s efforts follow-up on previous work which identified a 20km gold in-till anomaly, extending from Agnico Eagle’s Kittilä Mine. Prior reconnaissance drilling completed at Selkä-E included 1m at 3.06 g/t Au and trenching has returned 6m of 14.2 g/t Au. Surface work completed by FireFox confirms historic results and the company plans to follow-up with additional surface exploration. 
  • Adding land around more advanced projects. Firefox also is growing its land package by applying for reservations proximal to its more advanced Mustajärvi and Jeesiö project. Additionally, the company has applied for exploration permits on six Seuru mineral reservations which when granted, would allow more advanced exploration work (trenching and drilling).
  • Pending results are expected from all projects. Firefox is planning magnetic surveying and further IP surveying to help close in on potential drill targets at Seuru.
  • More importantly, we expect drill results from the company’s most advanced project, Mustajärvi to be an important catalyst in the near-term (Q1/19) while it is also following-up on five new gold targets at its Jeesiö project.
As FireFox advances its projects, a re-rating is expected. At C$0.30, the company has an EV of C$6.8M with $2M in cash and a significant land package in the CLGB. Seeing as similar stage peers in Finland have multiples to FireFox’s market cap, we believe drilling success in the short-term is likely to have a significant positive impact on the share price. Upcoming Catalysts include 1) Drill results from Mustajärvi Q1/19 2) Further exploration and commencement of drilling at Jeesiö and Seuru.




Anaconda Mining Inc

Goldboro Expected to Grow in 2019

Impact: Positive

Anaconda provided an exploration update on Goldboro and the results continue to support our view that the company is poised to grow this resource in 2019 and advanced it towards production. We continue to believe that Anaconda’s share price still fails to account for the growth that Goldboro is expected to deliver starting in 2021. 


  • Drill results confirm continuity, point to resource expansion. Results from the company’s 10km 2018 drill program which focused on the West Goldbrook Gold System (Figure 1) helped to establish continuity throughout the deposit and demonstrate further resource growth potential at depth. The infill drilling which highlighted 78.07 g/t over 1.1m (BR-18-63) should help to move the company’s current inferred mineral resources in to the indicated category. Furthermore, expansion drilling successfully extended the mineralization to new depths (up to 450m).
  • Goldboro progressing down the development path. The company has initiated a new 5000m drill program at Goldboro; however, in our view the most important catalysts are results from the ongoing 10,000 tonne bulk sample (Q2/19), followed by a resource update (H2/19) and feasibility study shortly after. The company is also working to complete the major permits by the end of 2019. In our view, as the company de-risks Goldboro, the market should progressively add it to the company’s share price.
  • Q4 operating results and 2019 outlook expected shortly. We currently model 5.7k oz Au at US$797/oz for Q4/18 and now forecast 22.1k oz at US$835/oz in 2019. We have updated our 2019 estimates as we expect the higher grade Stog’er Tight pit to contribute less ore than previously thought in 2019. Importantly, continued operating execution is key, as the funds generated from operations at Point Rousse, should support ongoing development work for Goldboro.
Anaconda continues to trade a steep discount; development progress and operating execution key to re-rating. As a result of our revised 2019 outlook our NAVPS estimate has decreased to C$1.31 (was C$1.36). However, Anaconda still trades at a steep discount to peers (0.16x vs. 0.61x). In our view near-term positive operating updates, along with the continued progression of Goldboro towards production are the keys to re-rating. Upcoming catalysts: 1) Q4 results & 2019 Outlook, 2) 10kt bulk sample at Goldboro Q2/19 and 3) Goldboro resource update (H2/19).



Standard Lithium Ltd

Standard Lithium Produces Battery Grade LCE

Impact: Mildly Positive

Standard Lithium is quickly assembling all the pieces to move into production at its South Central Arkansas Project following the successful production of battery quality lithium . As it moves its sights to commissioning a full-scale Pilot Plant, we believe the market is currently undervaluing the potential of this company which has lower risk than peers.
  • Robust system for producing battery grade lithium. This final stage of test-work demonstrates the robustness of the crystallization system prototype which produced battery quality purity (>99.56%) lithium carbonate. The current feed solution used at the prototype pilot plant was known to be less pure than the feed solution expected to come out of the company’s patented lithium extraction system which is also in the pilot phase. Following further optimization of the crystallization process parameters, the plant will be refined to receive feed from the pilot extraction plant and ready for full scale construction.
  • One piece left before full-scale commissioning. A Lithium extraction mini pilot plant being designed and built by Zeton Inc, will provide feed concentrate to the crystallization plant as brines are extracted from the underlying brine fields. Both parts are to be combined and constructed in Arkansas in late Q1/19 which the company is expecting to begin commissioning starting in late Q2/19.
  • Positioned for a quick move from construction to production. Having recently announced a maiden resource of 3.1Mt LCE at its flagship project in Arkansas, the company will have ready access to fully permitted and operational facilities through its likely JV with LANXESS. The proposed agreement with LANXESS would not only benefit the company by providing permits, significant infrastructure and funding but also partners it with a large chemical company, that is selling other products to battery producers.
We believe Standard Lithium to be one of the best lithium companies in its space with a sizeable resource and the potential for a large partner to support progress. Standard Lithium has access to 180,000 acres of brine fields where majors have been in operation for brine extraction for decades. The company currently trades at US$20/t LCE in contrast to brine exploration and development peers at US$39/t LCE. Upcoming Catalysts include 1) Resource update at SE Arkansas (Q1/19), 2) Completion of definitive agreement with LANXESS (H1/19), 3) Pilot plant commissioning (mid-2019) and 4) PEA expected in H1 2019.



GT Gold Corp

Saddle North Continues to Impress

Impact: Positive

GT Gold released assay results from hole 109 at their 100% owned Saddle North deposit located in BC, Canada, intersecting an extremely wide 1,150m grading 1.12g/t AuEq from surface. We consequently updated our in-house grade shell model of this deposit. Our preliminary economic estimates suggest that this project is very likely to be an economic mine at some point in the future.

We continue to believe that GT Gold has made an exceptional porphyry gold-copper discovery. Importantly, our view is that very little (if any) value is being ascribed by investors for that discovery in GT’s current share price. Further, we expect continued exploration success at Saddle North.

  • Grade shell model points to sizeable high-grade resource. Using Leapfrog Geo, we have created our own grade shell model of the Saddle North deposit and have defined high-grade (for a porphyry-style deposit) and very high-grade resource estimates of 365Mt grading 1.21g/t AuEq (0.8g/t AuEq cut-off) and 77Mt grading 1.81g/t AuEq (1.5g/t AuEq cut-off), respectively (Figure 1).
  • High-grade core emerging at depth (Figure 1, 3, 4 & 5). Hole 109 confirmed that grades get better at depth, returning 342m @ 2.1 g/t AuEq (starting at 740m). Though still early days, our 3D model reveals the emergence of a high-grade zone 500m below surface with grades above 1.5 g/t AuEq, which extends for 450m along strike, 600m down plunge. We stress that the zone remains open at depth and laterally and grades may improve further still with deeper drilling as the core of the system is approached.
  • Saddle North likely to become a mine. After comparing our estimates for Saddle North to other block cave projects and the nearby Red Chris Mine, our preliminary view is that this project should be economic to mine (Figure 2). Using the high-grade resource, and based on a 30,000tpd operating rate (~400k oz AuEq/year) we roughly estimate the after-tax NPV5% for Saddle North to be C$2.4B, and its IRR would be 19%. See Figure 6-8, for our assumptions and sensitivities.
Is the market getting it wrong on Saddle North? Our rough numbers point to a project NPV at over C$2B. Even with conservative estimates for further dilution and time to get the construction phase, GT Gold appears to be significantly undervalued at a market capitalization of just C$66.9M. We note that in our view, current drilling at Saddle South alone justifies the current market cap (~750-1Moz AuEq at C$50-75/oz implying C$37.5-75M), suggesting negligible value ascribed to Saddle North. Upcoming catalysts include 1) Saddle South exploration update (Q1/19).

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