RCKS Talk

03-Jun-2018

​Novo Resources Corp.

Good Initial Bulk Sample Results but Below Expectations

Impact: Neutral

Novo Resources announced the first complete assays from its large (>5t) bulk sampling program at Comet Well, which includes 10.4g/t Au in bulk sample KX157. We expect there is likely to be a steady stream of bulk sample results to follow.

  • Very good grades at surface, but below our rough estimates and market expectations
  • Results do not change our thesis on a significant gold system being present
  • Steady stream of results expected
First results have demonstrated a lower-grade, thicker system than expected, however it is still early days and it does not change our thesis on the potential for a very large gold system. We continue to believe that Novo is worth between C$4.70-17.90/sh, suggesting upside from the current share price.

31-May-2018

Aurania Resources Ltd.

Another Epithermal Target Developing in the Latorre District

Impact: Positive

Aurania has announced the discovery of a new epithermal zone ~8km south of the “Crunchy Hill” target area. The new discovery is called “Yawi”, which means “thermal spring” in the local Shuar language.

  • Elevated levels of mercury and arsenic detected in samples, which are natural pathfinder elements for precious metals mineralization
  • Silica blocks at Yawi exhibit signs that they may have formed in a sinter environment, which is compelling as there is empirical evidence that Au-Ag deposits have formed beneath hot spring and geyser areas
  • Increasing number of exploration targets at Latorre is leading management to believe Latorre is likely an epithermal district
As the company refines targets and approaches the commencement of scout drilling, we see increased potential for a discovery at one of the targets within its strategic land position in Ecuador. We believe ongoing newsflow will be positive near-term catalysts for Aurania, as the company explores its epithermal and porphyry targets.

31-May-2018

Aston Bay Holdings Ltd.

Airborne Surveys Reveal New Targets in Nunavut

Impact: Positive

Aston Bay has identified several untested targets adjacent to and along strike from Seal Zinc as well as high-grade copper mineralization near Storm Copper following results from airborne surveys conducted last year over the company’s wider Aston Bay Property in Somerset Island, Nunavut.

  • Results identified multiple anomalies along and across strike of Seal, including a target 600m along strike northwest of the deposit where surface samples returned 12% Zn (S12-S16 – Figure 1)
  • Anomalies associated with high-grade copper mineralization were identified in the Storm Copper deposit area, as well as 80km south
  • A drill program is being planned for June-August of this year: targeting Seal, South Seal and Storm Copper
Following a number of material changes in 2017 we believe 2018 will be an important year for Aston Bay with an important catalyst being results from planned drilling.

31-May-2018

Pure Energy Minerals Ltd.

Basic Pilot Plant Design Complete for Clayton Valley

Impact: Mildly Positive

Pure Energy has announced the completion of the basic design for the pilot plant at its flagship Clayton Valley Project in Nevada.

  • The first-of-its-kind facility is expected to be the first pilot-scale implementation of the Tenova Process in the world
  • Tenova Process designed to exclude solar pond evaporation, increase and accelerate lithium recovery, and reduce the associated environmental footprint of lithium production
  • Data from a successful pilot plant is expected to be used in the design of a full-scale commercial plant using the Tenova Process to produce lithium hydroxide directly from Clayton Valley brine
The company plans to continue with the process of permitting and designing the pilot plant to test the capability of lithium brine extraction and processing technologies at the Clayton Valley Project. 

31-May-2018

Anaconda Mining Inc.

Goldboro Continues to Grow

Impact: Mildly Positive

Anaconda has announced new assay results from four drillholes (1,043m) at its Goldboro project in Nova Scotia. The diamond drill program has totalled 9,753m since October of last year.

  • Highlights include 1.5m at 62.01g/t Au (BR-18-26), 2.5m at 23.24g/t Au (BR-18-28) and 4.5m at 7.12g/t Au (BR-18-29), which extended the mineralization of the East Goldbrook Gold System both down dip and down plunge
  • Results continue demonstrate the continuity of the deposit and suggest resource growth is likely with the next update – 10% increase in both grade and tonnes at Goldboro increases our overall NAVPS estimate by 9%
  • Despite strong exploration and operating results, Anaconda’s share price has had muted performance as a result of the ongoing hostile takeover of Maritime Resources. We believe once a there is a clear resolution to this process, Anaconda’s share price is likely to re-rate
Anaconda continues to trade at discount to peers (0.34x NAV, peers 0.65x); ongoing exploration success and the completion of the Maritime acquisition should close the gap to peers. 


30-May-2018

Miramont Resources Corp.

Sampling from Cerro Hermoso Identifies New Cu Target

Impact: Mildly Positive

Miramont has identified a new copper-rich target covering 300m by 600m through samples collected from a “dike swarm” at the company’s Cerro Hermoso project in southern Peru.
  • 44 of 55 samples contained at least 0.1% Cu, the highest being 1.08% Cu.
  • 16 of 29 samples collected in the Carbonate Replacement Zone contained greater than 0.1% Cu including 7.5%, 6.0% and 5.1% Cu and contained silver as high as 18.8 oz/t Ag
  • First phase of drilling comprised of 5,000m is set to begin in the coming weeks upon completion of geophysical surveys and sufficient permits in place
Sampling results from Cerro Hermoso are encouraging, drill results from the pending program should be an important catalyst for the company.

30-May-2018

Brixton Metals Corp.

Drilling at Langis Returns 3.55% Co

Impact: Positive

Brixton reported additional high-grade cobalt intercepts (Figure 1) from drilling at the company’s Langis project in Ontario’s Cobalt Camp.

  • Results were highlighted by 3.55% Co, 3.8 g/t Ag and 0.10% Ni over 0.98m which equates to 3.57% CoEq or 5,189 g/t AgEq (LM18-23)
  • Further broad low-grade Co-Ni-Ag was intersected in the basement Archean meta-volcanics and meta-sediments
  • Results continue to highlight the benefit of Brixton’s more advanced knowledge of the region and we expect follow-up drilling to yield similar success
Based on peers in the Cobalt Camp, we believe Brixton remains undervalued, for example, First Cobalt (TSXV:FCC ) trades at C$0.012 EV/ha, while Brixton trades at C$0.004 EV/ha. In our view, continued exploration success in the Cobalt camp and the start of exploration at the company’s Hog Heaven project should drive a re-rating. 

29-May-2018

Metanor Resources Inc.

Bachelor Significantly Extended to Depth

Impact: Positive

Ongoing underground drilling from the Bachelor Mine has extended the mine at depth, highlights include 19.1 g/t Au over 3.6m (14-238), 12.0 g/t Au over 4.0m (E18-234) and 6.4 g/t Au over 21.8m (14-239).
  • Drilling extends Bachelor 183m below lowest working level, adding significant potential for increased resources and reserves
  • Another structure could exist perpendicular to the Main vein, more drilling required
  • Moroy Zone remains important target, 2 drill rigs are in operation
With the only permitted mill and an expectation for meaningful resource growth, Metanor’s $57M market cap (EV$ 52M) suggests it is undervalued relative to other Urban-Barry camp peers, which are development stage.

29-May-2018

Adventus Zinc Corp.

El Domo Infill Results Continue to Deliver

Impact: Mildly Positive

Infill drilling from Curipamba continues to be successful highlighted by zinc intersections which include 5.90% Zn over 7.08m (CURI-259) and 5.27% Zn over 7.55m (CURI-260).
  • Infill drilling continues to fill in gaps, supporting an upgraded resource
  • Results suggest stringer zones could exist underneath El Domo, likely growing the deposit
  • 3,500m of drilling completed to date of the 7,500m planned to be completed end of Q2, results should help upgrade current resources
Adventus is currently trading at a slight premium to peers, which we see as warranted given the exploration potential and quality of the company’s exploration assets. Upcoming catalysts includes results from ongoing exploration activities along with the planned monetization of non-core earlier stage exploration assets.

29-May-2018

RCKS Charts Podcast

Episode 1: Transitional Interplay

Introducing Red Cloud KS’ first monthly RCKS Charts Podcast featuring Technical Consultant: Keith Edwards.

29-May-2018

Ascot Resources Ltd.

Initial 2018 Drilling in 602 Zone a Success; More Pending

Impact: Positive

Ascot reported high grade results from initial 2018 drilling from the 602 Zone (Figure 1) at the company’s Premier-Dilworth project, intersecting 11.65 g/t Au over 12.1m (P18-1605) and 24.64 g/t Au over 9.61m (P18-1609).
  • Infill results support geological model, 602 remains open to the northwest which will be tested later in the season
  • 2018 drilling stepping stone to restarting underground production at Premier, the never mined 602 Zone likely first area of focus
  • Results from 4 holes are pending with additional drilling being considered, 1 drill rig is in operation at Premier and 4 at Big Missouri
Based on the company’s recent resource update (open pit & underground), Ascot trades at a discount (C$33/oz versus peers at C$70/oz). We expect the ongoing news from exploration and infill drilling on higher-grade underground resources to close the gap to peers.

29-May-2018

Northern Empire Resources Corp.

Daisy Continues to Grow

Impact: Mildly Positive

Northern Empire reported drill results from the Daisy deposit within the Crown Block of the Sterling property in Nevada. Drilling returned 0.17 g/t Au over 36.58m and 0.61 g/t Au over 33.52m (D18-006), located near previously drilling hole D18-001 (0.80 g/t Au over 108.2m).
  • Step-out hole D18-006 expands Daisy 45m up-dip from previously drilled hole D18-001
  • Sampling identifies +2.5km of targets south of Daisy
  • Exploration continues to indicate the Daisy resource has room to grow
Considering Northern Empire’s recent exploration success, we expect upcoming drill results to close the discount to peers (on an EV/oz basis C$73/oz vs. peers C$84/oz).

28-May-2018

Artemis Resources Ltd.

Mapping Extends Conglomerate Strike Extend West of Comet Well

Impact: Positive

Artemis Resources provided an update from ongoing exploration activities in the Pilbara, identifying a possible extension of the Purdy’s Reward/Comet Well trend west.
  • ~67km of conglomerate and Mt Roe Basalt contact traced west of Novo Resources’ (TSXV:NVO) Comet Well (Figure 1) – identified conglomerate appears to be on both 100% ARV ground and Novo/Artemis JV ground
  • Gold recovery from 47k highlights prospectivity; we are awaiting conglomerate sampling results to determine potential
  • Complete bulk sample results from Novo’s first large bulk sample at Comet Well should be a catalyst for all players in the space
Artemis continues to advance its various conglomerate gold projects, including a programme of work (including drilling, trenching and bulks sampling), the results of which along with continued newsflow from other players should continue to provide positive momentum for all Pilbara conglomerate gold players. We note that following the sale of Artemis’ Novo shares the company is expected to have A$0.06/share in-cash and our assumed value for the NVO JV is A$0.075-0.30/share. This assumes no value for Artemis’100% owned conglomerate or base metal projects, which the company is advancing.

28-May-2018

Pacton Gold Inc.

Pacton Picks Up More Land in Pilbara

Impact: Positive

Pacton announced the acquisition of the Friendly Creek exploration license (1) and mining leases (5) totalling 31.36km2, adjacent to land held by Novo Resources’ and Kairos Minerals (Figure 1).

  • Initial exploration is planned to be undertaken on the historical property which extends over a 10km strike
  • Large scale bulk sampling can begin quickly with mining licenses already in hand
  • Under the agreement Pacton will pay C$25,000 to the vendors and issue 2.5 million shares
Following the strategic investment from Eric Sprott and recent land consolidation, Pacton is quickly advancing its interest in the Pilbara and becoming a large landholder in the region.

 
28-May-2018

De Grey Mining Ltd.

Drill Results Point to Resource Growth, More to Come

Impact: Positive

Infill and expansion drilling results from De Grey’s Mt Berghaus gold deposit which hosts a 140,800 oz Au resource (3.52Mt @ 1.2 g/t Au) within the Pilbara Gold Project, returned high-grade shallow intersections highlighted by 5.2 g/t over 8m including 13.2 g/t Au over 3m (BGRC196), 5.3 g/t Au over 15m including 19.2 g/t Au over 3m (BGRC197) and 7.3 g/t Au over 12m including 35.5 g/t Au over 2m (BGRC206).

  • Mt Berghaus points to resource growth for the pending PFS
  • Results support our view that the traditional hard rock assets provide a unique underpinning value
  • Active exploration on Mt. Berghaus and other targets should yield a steady stream of results
Our preliminary valuation of De Grey’s hard rock assets of A$0.15-0.23/share did not account for the likely resource growth demonstrated by these results. We continue to believe that De Grey’s current valuation provides investors a low-cost option on the conglomerates which is underpinned by traditional hard rock assets with resource growth potential. Next catalyst includes a PFS for the company’s Pilbara Gold Project (Q4 2018), preceded by ongoing exploration results. 

28-May-2018

InZinc Mining Ltd.

New Management, New Focus on Exploration, Re-Rating Coming

Impact: Positive

 InZinc Mining is a zinc explorer with an excellent management team focused on unlocking the value of projects in mining friendly jurisdictions of Utah and British Columbia.

  • Experienced management with skin in the game
  • Following up, on high-grade step-out holes that could move West Desert from “Good to Great”
  • Valuation easily underpinned by existing resource on West Desert
  • Indy project provides additional exploration torque
With new and experienced management behind InZinc, projects in tier one jurisdictions and exploration upside, we expect the pending exploration results to be an important catalyst, potentially driving a re-rating of the stock, to appropriately value the underlying asset and price in the potential.

25-May-2018

Monarques Gold Corp.

FQ3 Reflects One-Off Issue; Operations Expected to Improve in FQ4

Impact: Neutral

Monarques reported FQ3 2018 financials (ended March 31, 2018) with revenues of C$9.8 million (down 4.6% QoQ) following weaker than expected production during the quarter due to unanticipated equipment challenges and planned maintenance.

  • Equipment challenges resolved, production returned to normal in April which should support stronger FQ4 financials
  • Company ends quarter with strong cash balance of C$18.1 million, despite reporting QoQ decreases in EBITDA, operating cash flow and free cash flow.
  • Continues to work towards restarting the Beacon mill at end of 2018 to increase capacity to 2,350 tpd
Monarques currently trades at a discount to peers (C$14/oz vs. peers at C$33/oz) and we believe the upcoming resource expansion drilling and technical studies including conceptual study should help close the valuation gap to peers.

 

24-May-2018

RCKS Charts

Copper Technicals Starting to Turn Positive

In this edition of RCKS Charts, Keith has evaluated Copper (NY Continuous), Capstone Mining Corp. (TSX:CS), Copper Mountain Mining Corporation (TSX:CMMC), Ero Copper Corp. (TSX:ERO), First Quantum Minerals Ltd. (TSX:FM), Nevada Copper Corp. (TSX:NCU), Taseko Mines Limited (TSX:TKO), Aston Bay Holdings (TSXV:BAY), Atico Mining Corporation (TSXV:ATY), Highland Copper Company Inc. (TSXV:HI), and Regulus Resources Inc. (TSXV:REG).

24-May-2018

Tinka Resources Ltd.

Step-Out Drilling Intersects Zinc and Tin

Impact: Positive

Tinka reported more positive results from Ayawilca, highlighting the project’s potential for zinc and tin resource expansion as the 15,000m drill program continues.

  • One of the best intercepts drilled at West Ayawilca, extends known mineralization
  • High-grade tin mineralization intersected at Zone 3, 2km from West Ayawilca
  • Newsflow key as 2018 drilling continues, in support of the PEA expected H2 2018 
We believe that the ongoing drilling updates and the significant exploration potential of the Ayawilca property should be important catalysts for the company to close the valuation gap to peers. 

24-May-2018

First Cobalt Corp.

Kerr Strike Extended; US Cobalt Acquisition Approved

Impact: Positive

First Cobalt continues to gain momentum as the company releases another set of drill results from the Kerr area in Cobalt North and the US Cobalt acquisition gains approval.

  • US Cobalt acquisition approved; recent high-grade results confirm reasoning
  • Kerr area mineralized zone expands another 150m, total length now 350m and remains open
  • Mineralization mostly intercepted from 25m to 100m: believed to extend to surface
We continue to believe the company’s unique attributes, including its land position and infrastructure are likely to see First Cobalt trade at a premium to other cobalt exploration peers. The completion of the US Cobalt acquisition is the next key catalyst for the company, which is expected around May 31, 2018.

 

24-May-2018

​Moneta Porcupine Mines Inc

Results Support Higher-Grade Potential of Golden Highway

Impact: Positive

We recently visited Moneta Porcupine Mines Inc.’s (TSXV:ME) Timmins assets and were generally impressed with our visit, we view these recent drill results as a positive development for the company as it targets the Golden Highway property’s high-grade underground potential for an upcoming resource.

  • Step-out drilling at South West continues to extend vein structures.
  • Updated resource later this year is likely to change the story
  • Market is undervaluing the potential for defining a significant maiden underground resource
We believe that the likely high-grade resource at Golden Highway, is going to be an important catalyst for the company and make it attractive to potential bidders.


24-May-2018

Red Pine Exploration Inc.

Minto Mine South Zone Continues to Expand

Impact: Positive

Additional drill results highlight the exploration potential of the Wawa Gold Project, supported by further expansion of the Minto Mine South Zone.

  • Minto Mine South Zone continues to expand along strike and down-dip
  • Possible new high-grade zone intersected in Minto Mine South.
  • 30,000m drill program underway, working towards updating resources at Wawa
Red Pine currently trades at a discount to peers (C$27/oz vs. peers at C$51/oz), valuation does not reflect the potential for exploration upside.

23-May-2018

Adventus Zinc Corp.

Adventus Adds a Third Project in Ecuador

Impact: Mildly Positive

Adventus has announced that it is acquiring ownership in Salazar’s Santiago project through its Exploration Alliance, which should allow the company to explore the property for epithermal Au-Ag and porphyry Cu-Au deposits.
  • Adventus adds Santiago project to Ecuador Exploration Alliance
  • Geological setting prospective for epithermal Au-Ag and porphyry Cu-Au deposits
  • Premium valuation warranted as the company advances its portfolio of exploration assets
Adventus is currently trading at a slight premium to peers, which we see as warranted given the exploration potential and quality of the company’s exploration assets. Upcoming catalysts includes results from exploration activities along with the planned monetization of non-core exploration assets of Newfoundland and Ireland.

23-May-2018

Bonterra Resources Inc.

JV on Duke Claims Extends Strike Potential of Gladiator Plus Has Longer Term Benefits

Impact: Positive

Bonterra has announced that it has entered into a letter of intent to acquire 70% of Beaufield’s Duke property, which represents a strategic land acquisition and enhances the exploration upside at the company’s flagship Gladiator deposit.

  • Strategic Urban Barry Land Consolidation
  • Acquisition provides new exploration targets for Bonterra’s Gladiator Project
  • Market value of Bonterra does not take into account the potential for resource expansion
Given our expectation for meaningful resource growth at its flagship Gladiator deposit, assuming a 2M oz Au resource at Gladiator, Bonterra trades at a discount to peers (C$26/oz vs. peers at C$39/oz).

22-May-2018

Mawson Resources Ltd.

Raja Continues to Deliver

Impact: Positive

Mawson continues to have drill success at Rajapalot, we expect continued newsflow as the company re-assays for cobalt mineralization and advances drilling in new areas.
  • High-grade gold intersected at Raja, cobalt assays pending
  • Along with past assays, latest results to be tested for cobalt
  • Newsflow expected as gold and cobalt assay results become available
We expect results from re-assaying and drilling to be upcoming catalysts for the company, as it looks to build a maiden resource.
22-May-2018

Pure Energy Minerals Ltd.

Initial Drill Results from Terra Cotta

Impact: Neutral

Pure Energy has announced the results from its first two boreholes at the Terra Cotta project in Salar de Pocitos, Salta Province, Argentina: TC-DD-01 and TC-DD-02. Terra Cotta is a lithium brine project in the lithium triangle of South America.

  • All brine samples showed similar lithium concentrations, with greater concentrations closer to the centre of the salar
  • TC-DD-01 showed average lithium concentration of 29 mg/L Li, ranging from depths of 20m to 370m below surface
  • At depths ranging from 15m to 310m, TC-DD-02 showed an average concentration of 65 mg/L Li, including a range of lithium values from 29 mg/L to 93 mg/L
Based on these weaker results, Pure Energy intends to continue to assess the drill results in addition to previous near-surface samples and surface geophysics at Terra Cotta in order to evaluate steps forward for the project. The focus for the company remains the Clayton Valley project in Nevada where the company is in the process of permitting and designing the pilot plant to test the capability of lithium brine extraction and processing technologies.

22-May-2018

NxGold Ltd.

Strike Extended and Fine Gold Identified at Mt. Roe

Impact: Positive

 

Initial mapping at NxGold’s Mt. Roe project has highlighted its exploration potential and therefore given the recent success at the Pilbara assets, the company has decided to withdraw from Chicobi to focus on the Mt. Roe project in addition to its Kuulu project in Nunavut.
  • Mapping increases strike by 75% to 7km, identifies near surface fine gold
  • Upcoming exploration key to understanding geology of project
  • Promising results shifts’ focus to Mt Roe & Kuulu with withdrawal from Chicobi
Shares of the company increased ~61% on Tuesday following the news, further supporting our view that a re-rating is possible as the company’s now C$16M market cap does not fully account for both Mt. Roe and Kuulu in NX’s valuation. We expect assay results from grab sampling, mapping results and the start of trenching to be important catalysts for the stock.

22-May-2018

De Grey Mining Ltd.

Another Corporate Takes a Significant Interest in De Grey

Impact: Mildly Positive

De Grey Mining announced that DGO Gold Ltd (ASX:DGO) is investing A$5M at A$0.20 per share (25M shares). With each two shares purchased DGO is also receiving an option at A$0.25/share expiring November 2019 (12.5M options) and an option at A$0.30 expiring May 2021(12.5M options). DGO’s shares are subject to a voluntary 12-month hold.

  • DGO now owns 7% of the basic shares outstanding (13% partially diluted), making it the second significant corporate investor – recall Kirkland Lake Gold (TSX:KL) owns 9.3% of the basic shares outstanding (17% partially diluted).
  • DGO plans to complete a rights offering, which is backed by its significant shareholders, to fund its investment; however, we would note that barring continued significant support from its major shareholders, DGO may have issues maintaining its pro-rata position or funding its option exercises
  • DGO investment is based on the potential of the traditional hard rock shear zones, which currently hosts a resource of 1.2M oz Au, whereas Kirkland Lake’s interest is primarily on the conglomerates
In our opinion, adding a second significant shareholder, at a 17.6% premium to the current share price, is positive. We continue to believe that De Grey’s current valuation provides investors a low-cost option on the conglomerates and on the resource growth on the traditional hard rock assets.

22-May-2018

Pacton Gold Inc.

Pacton Becomes 3rd Largest Land Holder in Pilbara

Impact: Positive

Pacton has become the 3rd largest land holder in Australia’s Pilbara region after acquiring 100% of the shares in Drummond East Pty Ltd, a wholly owned subsidiary of Impact Minerals Ltd. (ASX:IPT), for the company’s seven granted tenement licenses covering 1,126 sq. km (Figure 1).

  • Exploration has indicated that up to 90km of prospective conglomerates occur at or near-surface on granted tenements
  • Historic rock-chip results of 11.2g/t gold have been found in a gold-pyrite conglomerate that extends for 25km
  • Acquisition provides access to the extensive regional knowledge and expertise provided by team led by Dr. Mike Jones
With a total of 2,227 sq. km in consolidated property in the Pilbara district, Pacton is continuing to demonstrate its commitment to its strategy in the Pilbara. Following the strategic investment from Eric Sprott and previous land consolidation, is quickly advancing its interest in the Pilbara.

22-May-2018

SolGold Plc.

SolGold Enhances Previous Discovery in Ecuador

Impact: Positive

SolGold has provided an exploration update at its La Hueca, Timbara and Porvenir Project concessions covering 60km of strike along Ecuador’s Southern Jurassic porphyry corridor. 

  • Two new target zones at La Hueca project
  • Projects located along the same belt hosting Fruta del Norte
  • Current market value does not properly reflect Solgold’s exploration potential in Ecuador
In our view, the SolGold's current valuation (0.041/lb vs. peers at 0.032/lb CuEq) does not properly reflect the exceptional nature of the meaningful exploration upside at the company’s portfolio of exploration projects in Ecuador.

22-May-2018

Moneta Porcupine Mines Inc.

Site Visit: What was Old, is New Again

Impact: Positive

We recently visited Moneta Porcupine’s Golden Highway project and were impressed by the company’s ongoing efforts to reinterpret the geology and change the story. 

  • Golden Highway is being transformed from a low-grade open-pit to a high-grade underground project
  • Updated resource later this year is likely to change the story
  • With a higher-grade resource we expect Moneta to become a target of the many hungry mills in the neighbourhood
We believe that the likely high-grade resource at Golden Highway, suggests that the company trades at discount to the likely takeout value.

18-May-2018

RCKS Charts

Eight Names with Interesting Technicals

In this edition of RCKS Charts, Keith has evaluated Lion One Metals (TSXV:LIO), Global UAV Technologies (CSE:UAV), Solgold Plc (TSX:SOLG), Moneta Porcupine Mines Inc. (TSX:ME), Detour Gold Corp. (TSX:DGC), Osisko Mining Inc. (TSX:OSK), Katanga Mining Ltd (TSX:KAT), and Nicola Mining Inc. (TSXV:NIM).

17-May-2018

Monarques Gold Corp.

Commissioning Beacon Mill to Meet Strong Demand

Impact: Positive

Monarques has announced the planned commissioning of its Beacon mill in Val-d’Or by Q4 2018. The mill is located only 500m away from the railway line and 10km from the company’s Beaufor Mine.

  • Monarques has allocated a C$1.5M budget to upgrading the facility to process 750tpd and is planning to submit an updated closure plan with the Ministry of Energy and Natural Resources before commissioning the mill
  • Decision to operate its fully-permitted Beacon mill results from excess demand for custom milling services
  • Custom milling at the 750tpd Beacon mill is expected to provide additional revenue to the company’s operating Camflo mill, which saw a 17% revenue increase in FQ3 2018
We view this as a positive development for the company as it is expected to bring the company’s operating mill capacity to 2,350tpd between the two mills. Monarques currently trades at a discount to peers (C$14/oz vs. peers at C$34/oz) and we believe the upcoming resource expansion drilling and technical studies including conceptual study should help close the valuation gap to peers.

17-May-2018

Adventus Zinc Corp.

Initial Work Drives Further Land Acquisition in Ireland

Impact: Mildly Positive

Adventus has announced the results of its Phase I exploration activities at its Rathkeale and Lismore properties in Ireland, which includes seismic survey and detailed target generation initiative.

  • Phase I exploration identified six drill-ready targets on the western extensions of structures relating to neighbouring Tobermalug deposit (44.2 Mt @ 7.2% Zn & 1.2% Pb)
  • Exploration has led to the application to acquire two additional blocks of ground (21 licenses) covering 630km2 which would bring total exploration rights to 1,950km2 in Ireland
  • We expect Adventus to monetize these earlier stage exploration assets, similar to what it has done with its Newfoundland projects 
Adventus is currently trading in line with peers, however we believe a premium valuation is warranted given the exploration potential and quality of the company’s underlying assets. Upcoming catalysts includes results from regional exploration work along with the planned monetization of non-core exploration assets.

16-May-2018

Maritime Resources Corp.

Maritime Adds Land; Doesn’t Alter Our View

Impact: Neutral

Maritime Resources has announced the acquisition of 3,225 ha of claims surrounding its Hammerdown asset (Figure 1).

  • Strategic land consolidation may provide incremental fundamental value; potential justifying a change to the current offer of 0.390 of a common share of Anaconda in exchange for each Maritime share
  • Share component of the acquisition (500k on signing, plus an additional 1.5 million shares through the life of the deal) could be considered an additionally dilutive tactic, similar to the previous C$1M financing as a takeover defense tactic against Anaconda
While we expect Anaconda to be displeased with the expanding share count, it’s likely a transaction it would have eventually undertaken. Therefore, we do not expect them to pull the offer and we continue to believe that the a hostile takeover proposed by Anaconda in April still has an 60-70% chance of being completed.

 

14-May-2018

Mawson Resources Ltd.

New Cobalt Mineralization at Rajapalot

Impact: Positive

Mawson has identified significant intervals of cobalt mineralization at its Rajapalot project in Finland, which is currently associated with gold mineralization over an area of 3km by 4km and open in all directions.

  • Cobalt has potential to add by-product value to Rajapalot
  • Attractive option for future ethically-sourced cobalt for Europe
  • Over half the drill core remains to be re-assayed for cobalt content
We expect results from re-assaying and drilling to be upcoming catalysts for the company, as it looks to build a maiden resource.

13-May-2018

RCKS Charts

Three Names with Positive Momentum

In this edition of RCKS Charts, Keith has evaluated Anaconda Mining Inc (TSX:ANX), Sierra Metals Inc. (TSX:SMT) and Ascot Resources Ltd (TSXV:AOT).

13-May-2018

RCKS Charts

Catalysts are Key

In this edition of RCKS Charts, Keith has evaluated Toachi Mining Inc. (TSXV:TIM), Avidian Gold Corp. (TSXV:AVG), Aurania Resources Ltd. (TSXV:ARU), Novo Resources Corp. (TSXV:NVO), Golden Arrow Resources Corp. (TSXV:GRG) and NxGold Ltd. (TSXV:NXN).

11-May-2018

Pilbara Update

Kirkland Lake Increases Investment in the Pilbara

Impact: Positive

Kirkland Lake Gold (TSX:KL) announces its third investment in Novo Resources Corp. (TSXV:NVO) by acquiring 4 million shares from Artemis Resources (ASX: ARV) at C$5.00/sh to bring the company’s total investment to 29.83 million common shares of Novo at an average price of C$3.18/sh.

  • Kirkland Lake announces third investment in Novo Resources
  • Kirkland Lake continues to back a Pilbara discovery
  • Novo Resources and De Grey Mining remain our preferred companies for making a Pilbara discovery 
Kirkland’s continued investment in the Pilbara district indicates its ongoing confidence and commitment to a potential world-class discovery. We expect the next catalyst for Novo in addition to other Pilbara players to be Novo’s large bulk sample results expected at the end of May.

11-May-2018

Ascot Resources Ltd.

New Underground Resource First Step Towards Production

Impact: Mildly Positive

Ascot has shifted its focus to underground resource development at its Premier-Dilworth property with the announcement of a high-grade underground resource in the southern area of the property.

  • Ascot defines 601koz AuEq of high-grade underground resources at Premier/Northern Lights
  • Underground focus puts the project on the path to production
  • Drilling has revealed additional areas that may host high-grade resources
After incorporating Ascot’s resource update, the company trades at a discount (C$37/oz versus peers at C$65/oz). We expect the ongoing news from exploration and infill drilling on higher-grade underground resources to close the gap to peers.

10-May-2018

Anaconda Mining Inc.

Expands Mineralization & Extends Drill Program

Impact: Positive

Anaconda has expanded multiple mineralized zones at Goldboro through exploration drilling and has initiated an additional 2000m of drilling to test the high-grade zone around the previously identified fault system

  • High-grade drill results expand deposit in multiple directions
  • 2,000m added to program to test fault zone
  • Results point to resource growth – 10% increase in both grade and tonnes at Goldboro increases our NAVPS estimate by 9%
 
After recently incorporating Anaconda’s potential acquisition of Maritime Resources (TSXV: MAE), our NAVPS estimate increased to C$1.12/sh results in Anaconda trading at a steep discount to peers (0.33x NAV, peers 0.65x).

09-May-2018

Brixton Metals Corp.

Brixton Hits Cobalt Mineralization in Basement Rock

Impact: Positive

Brixton has identified a new broad Ni-Co-Ag mineralized zone in the Archean basement rocks at its Langis Project in addition to intersecting high-grade Co-Ag in the conglomerate sequence.

  • Experience working in the Cobalt Camp continues to pay off
  • Broad mineralized zone discovered in Archean basement rock
  • Brixton remains undervalued compared to Cobalt Camp peers
Based on peers in the Cobalt Camp, we believe Brixton remains undervalued, for example First Cobalt (TSXV:FCC) trades at C$0.014 EV/ha, while Brixton trades at C$0.004 EV/ha.

07-May-2018

Anaconda Mining Inc.

Anaconda’s Response As Expected

Impact: Neutral

Anaconda has responded to statements made by Maritime in response to Anaconda’s hostile offer to acquire all the outstanding common shares of Maritime. 

  • Response is as expected and normal course, as a result this does not change our view with respect to the likelihood of the acquisition being completed (60-70%)
  • We continue to believe the current offer for 0.39 an Anaconda share for each Maritime share which represents an 26% premium based on today's (implied value C$0.14 per Maritime share) is accretive for both companies’ shareholders
  • We expect Maritime shareholders are likely to eventually support the acquisition for the significant purchase price premium and to avoid Maritime’s share price retreating to pre-offer levels
Assuming the transaction is completed, Anaconda continues to trade at discount to peers (0.32x NAV, peers 0.64x); ongoing exploration success and the completion of the Maritime acquisition should close the gap to peers.

04-May-2018

Aquila Resources Inc.

Final Permit for Back Forty Moving Towards Resolution

Impact: Neutral

Aquila continues to work towards receiving the company’s final permit, the wetland/stream/floodplain permit, in order to commence construction at Back Forty.

  • Certain EPA objections have been resolved, and have been conveyed to the Michigan Department of Environment Quality (MDEQ)
  • Aquila and the MDEQ have until June 6, 2018 to resolve remaining objections to confirm the proposed permit conditions comply with the EPA
  • Recall, as of the December 2017 the permit was deemed administratively complete, Aquila assures the remaining issues should be resolved, and conditions met
Upcoming permitting news will be an important near-term catalyst for the company, we believe Aquila is well positioned to complete the feasibility study and start construction once the final permit has been granted, with funding in place to support pre-construction activities.

 

03-May-2018

​Anaconda Mining Inc

Anaconda Releases Q1 2018 Financials

Impact: Positive

Anaconda releases financial results for Q1 2018 with higher than expected revenue and lower operating cash costs.

  • Better grades, lead to higher production and lower than expected cash costs at Point Rousse
  • Development spending at Goldboro and Point Rousse, higher than expected
  • Anaconda continues to trade at a discount to peers
Anaconda continues to trade at discount to peers (0.30x NAV, peers 0.64x); ongoing exploration success and the completion of the Maritime acquisition should close the gap to peers.

03-May-2018

RCKS Charts

Stay Tuned as Market Transition Unfolds

In this edition of RCKS Charts, Keith has evaluated Altius Minerals Corp. (TSX:ALS), InZinc Mining Ltd. (TSXV:IZN) and Otis Gold Corp. (TSXV:OOO).

03-May-2018

First Cobalt Corp.

High Priority Kerr Area Extends over 200m; Remains Open

Impact: Mildly Positive

Encouraging recent drilling in the Kerr area provides momentum for First Cobalt in advancing exploration efforts across its large land package in the Cobalt Camp.

  • Kerr area mineralized zone expands to 200m, remains open
  • Drilling complements disseminated mineralization thesis
  • Follow-up planned for the high priority Kerr area
We continue to believe the company’s unique attributes, including its land position and infrastructure are likely to see First Cobalt trade at a premium to other cobalt exploration peers. Next key catalyst for the company is the completion of the US Cobalt acquisition, expected on or around May 28, 2018.

02-May-2018

Northern Empire Resources Corp.

Crown Gets Bigger; Outlines Expansion Potential

Impact: Positive

Exploration activities on the Sterling project continue to enhance the prospectivity of the Crown Block of deposits through step-out drilling at the Daisy and Secret Pass deposits, which adds value to the company’s already permitted Sterling mine.

  • Daisy grows in many directions
  • Potential near-surface oxide mineralization to the west of Secret Pass deposit
  • Market does not appear to fully reflect the likely resource growth delivered by recent drilling
Considering Northern Empire’s ongoing exploration success, we expect upcoming drill results to close the discount to peers.

 

01-May-2018

Austral Gold Ltd.

Q1 2018 Production Hindered by Unexpected Issues

Impact: Mildly Negative

Austral reported disappointing Q1 2018 production results, reducing total mine production (Guanaco, Amancaya and Casposo) by ~17% from Q4 2017 to 20,367 oz AuEq, following unexpected issues. 

  • Total production fails to meet expectations, company focused on improvements to meet 2018 guidance of 92,000 oz Au (net to Austral)
  • Better grade control systems have been implemented at Guanaco and production issues at Amancaya have been fixed to support a stronger Q2 2018 production
  • QoQ production at Casposo reduced by lower head grades, more equipment to be added for next quarter to recover
We expect stronger quarters from Austral as the company and works towards meeting its 2018 production guidance. In our view, Austral is poised to re-rate towards similar scale peers, as it improves operations.

01-May-2018

Lion One Metals Ltd.

Site Visit: Small Project with Big Potential

Impact: Positive

Recently, we visited Lion One’s Tuvatu Gold Project in Fiji and were generally impressed with this permitted high-grade project.

  • On the path to production with permits in-hand
  • Start small approach, makes this a financeable & buildable project
  • Current resource does not reflect the significant exploration upside
Lion One currently trades at C$62/oz, a modest premium to peers (C$49/oz), however, in our view this premium does not properly account for this project’s permitted nature or the significant exploration upside that we see. 



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