RCKS Talk

06-Sep-2018

Bunker Hill Mining Corp.

Technical Report Reaffirms Our View on the Potential of the Bunker Hill Mine

Impact: Neutral

Bunker Hill has announced that it has filed an NI 43-101 technical report for its Bunker Hill property, located in Idaho’s Coeur d’Alene Mining District.

  • The company defined its exploration target for the Quill/Newgard zones at 10-12Mt, which confirms our technical view and can be compared to the historical resource estimate for the property of 9.1Mt grading 5.08% Zn, 2.35% Pb and 40g/t Ag (~7.34% ZnEq & ~1,019Mlb ZnEq)
  • Filing of a technical report for Bunker Hill is expected to help facilitate the company’s redomiciling in Canada from the US
  • We see the upgrade of these historical resources to NI 43-101 resources as the next step for the company, which is planned to be completed through a US$7.7M exploration program
Although we see significant near term potential for the asset, we still have concerns over the company’s capital structure and are awaiting updates. Based on the company’s SEC compliant resource (non 43-101 compliant), the company is significantly undervalued at $0.003/lb ZnEq compared to peers at $0.030/lb ZnEq. We view the key catalyst as a repair of the capital structure, but other upcoming catalysts include mine development, finding a milling solution (toll milling or mill acquisition) and producing a 43-101 compliant resource.

 

05-Sep-2018

Monarques Gold Corp.

Croinor Expands to the West and at Depth

Impact: Mildly Positive

Monarques Gold has reported additional assay results from the 2018 diamond drilling program at its Croinor Gold project 50km east of Val-d’Or, Quebec. The company has completed Phase 2 of drilling, which consisted of 5,327m of drilling in 27 holes where 26 of the holes struck mineralized zones.

  • Monarques highlighted hole CR-18-606 grading 8.24g/t Au over 9.0m from 328m, where the company had the objective of testing mineralization at depth to design the deepest stope for the mine plan; results support the theory that the deposit is still open at depth and to the west, which warrants further expansion drilling (Figure 1)
  • Infill drilling for the two areas for bulk sampling (Figure 1) continues to return high grade intercepts, which confirms grade continuity of the mineralized structures
  • The Croinor project is a fully permitted past producing mine with a pre-feasibility study (2018) with significant resource growth potential along strike and at depth, beyond those included in the current mine plan (Figure 2)
As the company continues to expand the mineralized zones at Croinor, we expect that once the 20,000m of drilling this year is included in an updated resource, there may likely be an increase in the projects resource base and an upgrade in resource classification. Monarques continues to trade at a discount to peers (C$7/oz vs. peers at C$27/oz) and we believe the upcoming resource expansion drilling and technical studies including a conceptual study on Wasamac should help close the valuation gap to peers.

05-Sep-2018

Solgold Plc.

The Sharks are Circling, is a Bidding War About to Begin?

Impact: Very Positive

BHP Billiton (LON:BLT, ASX:BHP), the world’s biggest miner, has entered into a $35M deal for a 6.1% stake in SolGold Plc (TSX:SOLG) that it has acquired from Guyana Goldfields Inc (TSX:GUY), which adds a second major miner (Newcrest currently owns 14.54%) to the race to acquire the Cascabel Cu-Au project in Ecuador.

  • Share purchase by BHP reminds the market that the Alpala deposits and wider Cascabel project are among the world’s largest undeveloped copper projects and are likely to be multi-generation mines. This is the type of asset that is highly coveted by major miners, like BHP and Newcrest, who have been actively searching for large scale copper projects.
  • In our view, significant upside exists if a bidding war breaks out. Historically, copper projects sell for ~US$0.07/lb CuEq, this implies a share price of C$0.83 for SolGold.
  • Since the maiden mineral resource estimate of 16.18Blb CuEq (1.08Bt grading 0.68% CuEq) at Cascabel, a total of 80,538m of additional drilling has been completed by the company, which continues to outline a higher-grade core at Alpala and point to significant resource growth expected in a revised resource estimate.
In our view, the SolGold's current valuation (C$0.041/lb vs. peers at C$0.026/lb CuEq) does not reflect the potential of the existing Cascabel project, its the meaningful exploration upside or the fact the multiple majors have now demonstrated interest in acquiring the company.

 

04-Sep-2018

Mawson Resources Ltd.

Results Continue to Highlight High Grade Au-Co Potential of Rajapalot

Impact: Positive

Mawson Resources has announced the results of 43 holes drilled during the winter drill program at 6 prospects within its 100% owned Rajapalot Au-Co project in Northern Finland.

  • Highlights holes include: 33m grading 4.2g/t AuEq, 3.1g/t Au, 0.0547% Co from 38.7m (PRAJ0109) at the Palokas prospect and 20.7m grading 5.6g/t AuEq, 3.6g/t Au, 0.0956% Co from 365.2m (PAL0118) at the Raja prospect (Figure 1 & 2)
  • One of the key takeaways from our recent site visit, is that Palokas, South Palokas and Raja prospects all appear to be developing into deposits and geological modelling is underway in order to feed into an upcoming independent maiden resource
  • Cobalt content is not only increasing gold equivalent grades by 1-2g/t AuEq, but it is also improving width and continuity of the mineralized zones (Figure 2); metallurgical testwork studies are underway to assess the relationship of the cobalt minerals to the gold, sulphide and silicate minerals
The company remains focused on high-priority exploration targets on the property, which includes base of till drill hole and geophysical targets to be tested with a ~2,000m diamond drill program commencing late September. We expect results from re-assaying and drilling to be upcoming catalysts for the company, as it looks to build a maiden resource.

04-Sep-2018

Ascot Resources Ltd.

Site Visit: High Grade Resource on the Way

Impact: Mildly Positive

We recently visited Ascot Resources’ (TSXV:AOT) Premier-Dilworth property in British Columbia. The visit was led by the recently appointed President and CEO, Derek White, an experienced mine builder brought on board to fast track the past-producing Premier mine to production. The tour was very useful in outlining the new strategic focus of the company, which consists of developing a high-grade underground mine using existing underground infrastructure to allow for a shorter timeline to production. Following mine and mill rehabilitation, we expect the company to be in position to restart operations in the next few years.

  • New strategic focus to feed Premier mill with high-grade ore
  • Existing infrastructure and permits put Ascot on the fast track to production
  • Addition of Silver Coin to the company's Premier/Northern Lights and Big Missouri deposits gives sufficient resources to re-start mill
In our view, the current valuation reflects the infrastructure and permitting advantage that Ascot has versus its peers. Based on the current resource on the property, Ascot trades at a discount to peers (C$21/oz versus peers at C$58/oz). However, if we adjust the resource to reflect the current high-grade plan (~1.5M oz Au Eq), Ascot trades at ~C$74/oz AuEq, a substantial premium, reflecting both its existing infrastructure and advanced permitting status. We expect the ongoing news from exploration and the Big Missouri and Silver Coin resource updates, followed by a PEA should provide support for the implied premium.

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