RCKS Talk

24-Oct-2018

RNC Minerals Corp.

Gold Discovery Delivers Record Q3

Impact: Positive

RNC has announced record gold production from Beta Hunt. Production increased 135% QoQ and 199% YoY to 31.4koz Au. As expected, Q3 production materially benefited from the specimen grade gold processed in September. The company’s Father’s Day Vein discovery has resulted in a transformation of its balance sheet, enabling it to properly explore and develop Beta Hunt to demonstrate the potential of the pyritic sediment structures to host high-grade coarse gold. If the company is successful in demonstrating a repeat of this structure, we believe it could provide the next leg up on the stock. 

Highlights: 
  • Father’s Day vein behind higher Q3 gold production. Production from the first nine months of 2018 totalled 58,460 oz, a robust increase from the first three quarters of 2017 which produced 24,305 oz (Figure 1). As expected, higher grades and gold production this past quarter are a result of specimen grade material found in September from the Father’s Day vein.
  • Aggressive exploration still underway. Crews at Beta hunt are mobilizing the company’s diamond drill rig underground in an effort to better understanding of the depositional model and test the 540m of identified pyritic sediment structures responsible for generating the high-grade coarse gold. Management has indicated that it expects to regularly produce coarse gold (Figure 2) and intends to pursue measures to better estimate resulting gold production and cash flow.
  • World class specimens. Results to date point to something special. Based on the structure defined to date, we continue to believe that these high-grade structure shoots could yield significant deposits. More drilling and development work, particularly on grade continuity is needed to define the project’s potential. We expect drilling results to start coming in 8-10 weeks.
Valuation:
The market is currently pricing in a deposit of ~1.8M oz. Our rough estimates suggest the deposit could be materially larger than what the market is pricing in. With additional information on size and grade continuity RNC’s share price could continue to move higher.
Upcoming catalysts include: 1) Drilling and development results from Beta Hunt and 2) Balance sheet update.

30-Sep-2018

Bonterra Resources Inc.

“1 + 1 =3”: Bonterra Completes Metanor Merger

Impact: Positive

The gold mining industry is notorious for dilutive mergers and destroying shareholder value. However, (too) rarely, a transaction occurs which actually makes complete and obvious sense and creates synergistic value.

We believe that the merger of Bonterra and Metanor is one of those smart transactions and that “New” Bonterra will be a very attractive investment vehicle with plenty of news flow to attract attention from the market. We also expect the deal digestion to be relatively short and painless given the low complexity of the assets and obvious synergies between the two companies as detailed in this report. Another plus is that we estimate that the new company trades at a substantial discount to its peers as well.

 

27-Sep-2018

Honey Badger Exploration Inc.

Results Continue to Suggest this Could be Another Cobalt Camp

Impact: Positive

Honey Badger announced additional exploration results from its Thunder Bay Silver-Cobalt project, which with splashy grades support our thesis that the company could be onto a “Cobalt Camp” scale project.

  • High grade grab samples returned up to 1,503 g/t Ag and 5.77% Zn at the historic Elgin Mine indicating a potential structural trend north of the Beaver Mine, which align with some of the better grades we’ve seen
  • Initial exploration work in the vicinity of the past-producing Augusta and Gopher Mines, on the Mink/Silver Mountain Property, has revealed chemical anomalies that suggest potential for polymetallic silver mineralization
  • These results conclude the Company’s exploration plans for this season, a follow-up drilling program will occur with the acquisition of new permits
The Cobalt Camp produced 600M ounces of silver, at exceptional grades over a 60 year period and while early days, we believe that Honey Badger could be onto to a similar scale target. With an experienced management team and an extensive land package in an under-explored and highly prospective Ag-Co district, we expect ongoing exploration supporting this potential to be an important catalyst for the stock.

27-Sep-2018

Pacton Gold Inc.

Adding Ground at the Egina

Impact: Positive

Pacton Gold has announced a binding LOI for the acquisition of another project in the Engina region of the Pilbara, which we view positively. The Golden Palms property adjoins Pacton’s Friendly Creek project adding 35 km^2 to its growing land package in the Pilbara.

  • While a smaller land package, the property has already had nuggets discovered on it, and has favourable lithologies for conglomerate gold, moving it ahead of multiple projects in Pacton’s portfolio
  • The Egina area, with in the Pilbara, has been the subject of recent exploration and acquisition activity with Novo Resources (TSXV:NVO) recently acquiring prospective projects in the region and Kairos’s (ASX:KAI) recent exploration success.
  • This low-cost acquisition (C$100,000 & 400,000 shares) follows the company’s strategy of using the valuation disconnect between Australian and Canadian listed Pilbara conglomerate gold explorers to consolidate a significant land position (Figure 1)
Pacton is in the process of shifting from acquisition mode to exploration, with work beginning on its Arrow project, as the 3rd largest conglomerate gold land holder and 3rd largest Pilbara conglomerate gold company by market cap, we believe that exploration success could close the valuation gap to peers.

27-Sep-2018

Callinex Mines Inc.

Site Visit: Blue Sky in Bathurst

Impact: Positive

Last week we visited Callinex Mines’ Nash Creek and Superjack properties in the Bathurst Mining Camp of New Brunswick, Canada. The highlight of the week's visit was a combination of both the extensive mining infrastructure in the historic camp and the largely untapped mineral potential of Callinex’s 155km2 Nash Creek property. After recently increasing M&I resources by 74% and inferred resources by 385% at Nash Creek, the company remains focused on continuing to expand its Zn-Pb-Ag resource base in the camp to further enhance the projects already proven economic potential. Overall, the company previously demonstrated the economic value of the Nash Creek and Superjack properties in a recent PEA (2018), but our site visit has since confirmed the size potential of the project which we expect to be reflected through ongoing property-wide geophysics and exploration drilling.

  • A well-established mining camp
  • Maiden PEA: proven economic potential to now build upon 
  • Only just scratched the surface of a district-scale land package

25-Sep-2018

Monarques Gold Corp.

Monarques Highlights FS Changes That Should Improve Wasamac Economics

Impact: Mildly Positive

Monarques Gold has provided the initial parameters for the ongoing feasibility study (FS) on its Wasamac gold property in Quebec, which the company expects to complete by December 2018.

  • The company has indicated that it has taken a completely different approach to the assessment, design, engineering and costing for the mine in order to implement the latest technology and use a top-down rather than a bottom-up mining method
  • What we expect could be game changing for project economics is the use of twin ramps and a Rail-Veyor system underground to haul the mineralized material close to the railway, which will eliminate the significant CAPEX associated with building a shaft; the Rail-Veyor system is a new technology currently used at Agnico Eagle’s Goldex project in Val-d’Or
  • This news highlights the potential that this fresh approach could have on the economic viability of the Wasamac project, where the company currently has 2.6Moz in M&I resources grading 2.70g/t Au
Since acquiring the Wasamac project from Richmont Mines in 2017 the market has not ascribed any value to its potential economic value, which we expect may provide significant upside to the current share price upon release of the FS. Monarques continues to trade at a discount to peers (C$7/oz vs. peers at C$26/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.

25-Sep-2018

Nicola Mining Inc.

Nicola Delivers Big Step-Out Hole, More to Come

Impact: Positive

Nicola Mining has announced the intersection of 73.6m grading 1.05% Cu, within a wider interval of 150m grading 0.54% Cu (CC-18-02) ~100m north of the historic Craigmont open pit, within the company’s active Mine Permit M-68.

  • Step-out hole CC-18-02 returned a wide zone of copper mineralization approximately 100m north of the historic Craigmont open pit, confirming the potential for a mineralized "halo" surrounding historic mining operations
  • Assays are pending for two more holes being drilled to the east and west of hole CC-18-02 with the aim of confirming the lateral continuity of the zone
  • Of note, a historic resource (pre NI 43-101) of 50Mt grading >0.4% Cu was defined within the "halo" to the west of the historic Craigmont Pit which when taken with today's drilling results appear to validate the company's strategy of defining a bulk mineable copper resource within the skarns surrounding historic mining operations
  • While this hole is significant for the expansion of Craigmont Central, we also note that two compelling porphyry targets remain to be tested on the property
We view this news as positive as it validates Nicola's thesis that due to higher cut-off grades applied by historic operators, significant potential remains for defining a potentially bulk mineable copper resources in the vicinity of historic mining operations at the Craigmont Project. We expect results from further exploration drilling at Craigmont West and Craigmont Central, in addition to the two porphyry targets, to be important catalyst for the stock.

24-Sep-2018

Precious Metals Commentary

Is it 2015 Again? Precious Metals Appear Poised for a Rally

This summer has not been pleasant for mining company share prices or for those of us that are invested in them. Falling commodity prices combined with excitement in other sectors has resulted in apathy towards mining companies in general. Recently, there has been a glimmer of hope with significant exploration results from GT Gold (TSXV:GTT) and RNC Minerals (TSX:RNX) that has driven each company’s share price significantly higher. One of the indicators that we follow, that we consider to be a reasonable indicator of bearish/bullish sentiment is the Gold/Silver Ratio, which is currently at a 2-year high.

  • Gold/Silver Ratio is at 83.6, levels not seen since early 2016, which was a precursor to a rally in precious metal prices and a significant rally for precious metals equities (Figure 1)
  • The last rally started in large cap names, but migrated quickly down cap, with the largest returns coming from the smallest names (Figure 2 & 3)
  • We think companies that have continued to deliver good results over the last few months without a corresponding rally in the share price are likely poised to outperform. Names that we think fit this profile:
    • Brixton Metals (TSXV:BBB)
    • NxGold (TSXV:NXN)
    • Red Pine Exploration (TSXV:RPX)
    • Amarillo Gold (TSXV:AGC)
    • Lupaka Gold (TSXV:LPK)
    • Orford Mining (TSXV:ORM)
    • Lion One Metals (TSXV:LIO, ASX:LLO)
It is always important to highlight, that while we believe a rally is likely coming, the timing of that rally is always uncertain. However, mining is a cyclical business and we believe we are very close to the bottom, suggesting now is a good time to get positioned for the pending rally.

18-Sep-2018

Lupaka Gold Corp.

Atenea Vein Extended with Better than Expected Grades

Impact: Positive

Lupaka Gold has announced assay results from the ongoing underground channel sampling program from the new development headings on the 3400 level and 3430 sublevel at the company’s Invicta Project in Peru.

  • The company has extended the Atenea Vein by 105m on the 3430 level, with channel samples returning 9.06 g/t AuEq, over a strike length of 235m over an average width 3.87m (Figure 1)
  • Similar results from the 3400 level have returned 9.04 g/t AuEq, over a strike length of 235m over an average width 4.88m, suggesting continuity (Figure 2)
  • Importantly, grades continue to reconcile positively to the mine plan defined in the PEA (8.58 g/t AuEq) and to the block model, suggest cash flows, particularly early in the mine life could be better than we current model (current estimate US$8.0M FCF in 2020) 
Based on the company’s recently released PEA, our valuation of Lupaka suggests a NAVPS10% of C$0.55 assuming a 350tpd operation. Based on our site visit and the company’s continued exploration success, we see potential for a larger 500tpd operation at Invicta. We believe that achieving first cash flow, expected in H2 2018, are going to be the next key re-rating catalysts for Lupaka.

 

17-Sep-2018

Brixton Metals Corp.

Brixton Hits One of the Best Holes of the Year in Cobalt

Impact: Positive

Brixton Metals announced additional drill results from its wholly owned Langis Mine Project located in the Cobalt Camp of Ontario.

  • The results were highlighted by one of the best drill holes released this year in the Cobalt camp. Hole LM-18-42 returned 6m grading 4719g/t Ag and 0.33% Co
  • This most recent round of results was highlighted by better than typical widths from the Cobalt camp, which is noted for its high-grade but narrow widths. In our view, these better than typical widths along with the expected high-grades set Brixton apart from its peers in the camp.
  • Continuing to intersect high-grade Ag-Co mineralization in areas that were not previously drilled reflects both the prospectivity of the company’s land package, its advanced state of data review relative to peers and the successful target generation by the exploration team 
Based on peers in the Cobalt Camp, we believe Brixton remains undervalued based on these assets alone. The company has demonstrated an ability to acquire prospective, undervalued assets and is working to surface value on all four its projects. In our view, continued exploration success in the Cobalt camp, along with planned work at the company’s other properties, should benefit shareholders through Brixton.

17-Sep-2018

Novo Resources Corp.

Novo Eyes Egina Region for Conglomerate Gold

Impact: Mildly Positive

Novo Resources has announced that it has entered into two property transactions in the Egina region of Western Australia, expanding its dominant land position, and bringing a new conglomerate are within the Pilbara into focus.

  • Both land packages were acquired following in-depth research into the potential conglomerate gold-bearing nature of the Egina region, where gold nuggets have previously been discovered similar to those at Comet Well and Purdy’s Reward
  • For the 100% interest in the Farno-McMahon proprery, Novo plans to pay A$2.5M in cash and A$5.5M in shares (deemed price of C$4.107/sh)
  • For the ability to earn a 70% interest in Pioneer Resources (ASX:PIO) Kangan gold project, Novo plans to pay A$200,000 in cash and issue 100,000 shares to Pioneer, along with subscribing to a A$1M in Pioneer shares
  • We view these transactions favourably as, Novo is expanding its already dominant land position in the Pilbara; however, we believe the market is likely to remain focused on bulk sampling results from the Comet Well and Purdy’s Reward projects
Now that the company has overcome the processing challenges encountered for the first large tonnage bulk samples, we expect steady news flow from bulk sampling going forward (24 samples currently in the queue). We continue to believe that Novo is worth between C$4.70-17.90/sh, suggesting upside from the current share price.

 

13-Sep-2018

Brixton Metals Corp.

New Study Points to the Big Potential of Thorn

Impact: Positive

Brixton Metals announced that it has completed field work at its Thorn Au-Ag project in the northern tip of the Golden Triangle in British Columbia, located 200km NW from Imperial Metals Red Chris Mine.

  • The company is highlighting its collaboration with porphyry specialist, Brock Riedell, in conducting rock lithogeochemical analysis combined with short-wave infrared spectroscopy (SWIR) to generate Cu-Au porphyry targets on the property
  • Final results from the study are pending, but initial results have identified metal ratio patterns in soils and rocks that have been known to be consistent with gold-rich porphyry systems, where the company has compared to the Bingham Canyon porphyry in Utah
  • While it is certainly early days, given the size and intensity of the geochemical anomalies and location, we see the property as potentially prospective for a porphyry discovery and likely to be supported by final results from core re-logging, geological mapping and sample collection
Brixton has assembled four quality assets, and in our view each one could easily justify the company’s current market cap, without further exploration success. The company is actively advancing all four, with drill results pending from its Cobalt Camp assets.

13-Sep-2018

Red Pine Exploration Inc.

More High-Grades from Historic Assays

Impact: Mildly Positive

Red Pine Exploration announced additional results for historic holes sampled as part of its 2018 Historic Core Sampling Program at its Wawa Gold Project, located in Wawa, Ontario. The goal of the historic program is to convert gaps in the historic resource, where drilling exists but the core was not assayed.

  • This set of results were highlighted 22.8g/t Au over 1.74m (S287) in the Surluga Deposit, which continues to highlight the high-grade nature of the shear zones and aligns well with the company’s revised plan of operating a higher-grade underground mine. Figure 1 shows the holes released in this update and the grade x meter increase for the holes
  • Historic core sampling now totals 42,000m since December 2014 and continues to add gold to both the Jubilee Shear Zone and Surluga Deposit, which we expect is likely to have positive impacts to the projects resource base to be defined in the planned resource update for Surluga
  • We note that since April 2018, ~15.5M share purchase warrants have expired with only ~375k expiring in the money. We view this positively as it improves the company’s capital structure. We note that the next significant set of warrants expire in February 2019 with 9.25M at C$0.066 and 5.3M at C$0.132 and 3.4M at C$0.135
Red Pine currently trades at a steep discount to peers (C$19/oz vs. peers at C$49/oz), valuation does not reflect the exploration upside that continues to be demonstrated by ongoing drill results. While ongoing drilling is likely to be a positive for the stock, we view the pending resource update positively and is likely to provide investors clarity on the path forward.

12-Sep-2018

Orford Mining Corp.

Visual Results from Qiqavik Drilling Suggest Good News Could be on Horizon

Impact: Mildly Positive

Orford Mining has announced the completion of its 2018 summer prospecting, mapping and drilling program at its Qiqavik property in Northern Quebec.

  • Highlights of the program include the discovery of a thick sequence of quartz-carbonate veining in three drill holes (QK-18-002, -007 & -008) with assays pending (Figure 1)
  • The company has made multiple new discoveries of visible gold on the property, which add to the eight separate high-grade gold discoveries made in previous exploration programs and continue to highlight the prospectivity of the company’s land package in the 40km long under-explored Northern Cape Smith Belt
  • Results of exploration to date along the strike length of the Qiqavik trend warrants further exploration by the company, which we expect is likely to be further reflecting through the upcoming results from 8 holes (1,211m) drilled on the property this year
We believe at Orford’s current value, the stock does not properly reflect the potential of either of the projects in Quebec or the Carolinas and with assays pending from holes QK-18-002, -007 & -008, there is a near-term catalyst that could drive re-rating to close this company’s valuation gap to peers.

12-Sep-2018

Standard Lithium Ltd.

Standard Lithium Ticks Another Box for Lithium Extraction

Impact: Positive

Standard Lithium has provided an update on its progress in developing and constructing a large-scale Pilot Plant for deployment at its 30,000 acre project on the Smackover Formation in Southwestern Arkansas.

  • The company’s mini Pilot Plant has operated continuously for long duration's and has demonstrated that lithium can be selectively extracted from brine and converted into a concentrated and substantially purified lithium chloride solution with overall lithium extraction efficiencies achieving >90%
  • This announcement ticks another box for the company and allows for the design of the larger-scale lithium extraction Pilot Plant to be sufficiently completed, which now enables the company to start the process of procuring long lead-time equipment
  • Testwork to crystallise battery-grade lithium carbonate from the company’s lithium chloride has been successful in making high purity lithium carbonate material (>99.5% purity), which also paves the way for the company in demonstrating that the company’s proprietary crystallisation technology can be used in place of existing OEM crystallisation technologies
Standard Lithium is unique with respect to other junior lithium companies, in that, rather than developing a new resource, their plan is to tap into existing brine production, significantly reducing development costs and permitting requirements as they progress towards developing a pilot plant. Over the next few months, we believe there are going to be a number of catalysts in the near-term that should demonstrate the value of this unique company.

12-Sep-2018

Amarillo Gold Corp.

Amarillo Improves Mara Rosa Economics with New PFS

Impact: Positive

Amarillo Gold has announced the results of an updated pre-feasibility study (PFS) for its Mara Rosa Project in the Goias state of Brazil, which follows a prior PFS completed by the previous management team in March 2017.

  • The updated PFS has improved the economics of the project with an increase in after-tax NPV to US$194 from US$178 and in increase in after-tax IRR from 35% to 42% at a gold price of US$1,200/oz (Figure 1)
  • The major changes to project components include the addition of 89koz Au of lower grade P&P reserves into the mine plan, a 17% reduction in CAPEX based on declines in the Brazilian Real and the inclusion of the 1.75% NSR sold to Royal Gold (NASDAQ:RGLD)
  • With the help of Whittle Consulting, the company has been able to decrease the resource cut-off grade to 0.2g/t Au from 0.35g/t Au based on the results of a mine optimization study, which has allowed for an increase in resources and we expect to see further improvements in the Mara Rosa resource base following the company’s ongoing 10,000m drill program
The updated PFS incorporates changes to both market conditions, highlighted by the favourable change in exchange rates, highlighted by the results from the mine optimization study performed by Whittle Consulting. We believe Amarillo is a well-positioned gold developer in South America to successfully permit its Mara Rosa project while continuing near-mine and regional exploration for an upcoming resource update and feasibility study. The company currently trades at a significant discount to peers ($10/oz vs. peers at $22/oz). Considering our expectation for modest resource growth ahead of the feasibility study early next year, along with ongoing drill results, we believe Amarillo could close that valuation gap to peers.

 

10-Sep-2018

Avidian Gold Corp.

New Gold Showing at Golden Zone

Impact: Positive

Avidian Gold has announced that it has discovered a new gold showing at its Golden Zone project and has staked an additional 4,403ha of ground immediately west, south and contiguous with its project, located 320 km north of Anchorage, Alaska.

  • After acquiring additional ground at the Golden Zone project, property-wide prospecting led to the discovery of multiple sulphide-bearing gossan zones ranging in thickness from 0.5-3.0m over a true width area of ~150m across ~300m in height, where the surface exposure of the new zone appears to extend into and through the mountain side to the other side giving a total strike length of ~450-500m (Figure 1)
  • The company obtained 23 grab samples across the 150 m width of the gossan with additional sampling underway, highlights include 6.14g/t Au, 5.41 g/t Au, 3.83g/t Au and 2.08 g/t Au
  • The JJ zone adds another large-scale potential target to the Golden Zone property, highlighting the district scale potential of it. We note that it now covers 105 sq. km of concessions (Figure 2)
In a previous report, we have highlighted that Avidian has only just scratched the surface at its highly prospective portfolio of exploration properties in Alaska where previous work has demonstrated signigicant potential. Near-term catalysts for the company include exploration drilling updates at its Golden Zone property, where assays are pending for a number of holes.

 

10-Sep-2018

NxGold Ltd.

Systematic Exploration Confirms our View on Mount Roe’s Potential

Impact: Positive

NxGold has provided an update on its 2018 exploration program at the Mt. Roe Project in the Pilbara, which includes results from recently completed reconnaissance stream sediment sampling and assay results from the preliminary follow-up trenching/stripping program.

  • Initial exploration has led to the identification of vein structures in the ‘Specimen Area’, Dryblower area, and 80oz area among others, selective sampling of which returned 102g/t Au and 12.7g/t Ag (samples 18SH024) from the vein structures in the Specimen Area
  • Stream sediment results, were also positive and other sampling on the property continue to return encouraging values. As well, the company has exposed 420m2 of conglomerate in tow areas. Samples from these trenches have been completed, to test for fine gold, the company is assessing locations for larger scale sampling
  • In our view, the company’s systematic approach and the results yielded by it continue to support our view that Mt. Roe is highly prospective for a paleo placer conglomerate gold deposit, with recent work suggesting the potential also exists for a traditional hard rock deposit
We view this update as positive as it continues to support our view of the potential conglomerate gold mineralization at Mt. Roe, we view that with ongoing exploration and newsflow, a re-rating is possible as the company’s now C$9.8M market cap (C$4M EV) does not properly account for the potential of the project, relative to its Pilbara peers. We expect ongoing assay results from grab sampling, mapping results and ongoing trenching to be important catalysts for the stock.

10-Sep-2018

De Grey Mining Ltd.

De Grey Continues to Grow Mt Berghaus & the Pilbara Gold Project

Impact: Mildly Positive

De Grey Mining has reported additional infill drill results from the Mt. Berghaus Gold deposit within the company’s Pilbara Gold Project, which is located 60km south of Port Hedland, Western Australia.

  • Highlights include 18m grading 2.48g/t Au (BGRC230), 24m grading 2.05g/t Au (BGRC231) and 23m grading 2.2g/t Au (BGRC241), which all intersected near-surface gold mineralization expected to increase the resource at Mt Berghaus
  • The ongoing infill program is expected to improve project economics by both expanding the existing resources and reducing the strip ratio for the various pits in the planned pre-feasibility study (PFS)
Our preliminary valuation of De Grey’s hard rock assets of A$0.15-0.23/share does not account for the potential of its conglomerates or the recent hard rock exploration success that the company has had. 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.

10-Sep-2018

Amarillo Gold Corp.

Amarillo Drill Results Confirm Continuity

Impact: Mildly Positive

Amarillo Gold has announced drilling results from its first 11 holes of the planned 10,000 m drill program on its flagship Mara Rosa Project in the Goias state of Brazil, which commenced on May 23, 2018.

  • Highlights include 1.57g/t Au over 18m in hole 18P047 and 1.57g/t Au over 10m in hole 18P056
  • Drilling is currently focused on the NE end-of-the pit, which has been identified as the lower strip, shallow end of the ore body
  • The current 10,000m drilling program is designed to convert the projects inferred resources of 310koz Au to add to the existing 1.26Moz Au of measured and indicated resources, which the company intends to include in an updated mineral resource estimate in Q1 2019 to be followed by a feasibility study
We believe Amarillo is a well-positioned gold developer in South America to successfully permit its Mara Rosa project while continuing near-mine and regional exploration for an upcoming resource update. The company currently trades at a significant discount to peers ($9/oz vs. peers at $23/oz). Considering our expectation for modest resource growth ahead of the feasibility study early next year, along with ongoing drill results, we believe Amarillo could close that valuation gap to peers.

 

08-Sep-2018

Avidian Gold Corp.

Avidian Gold: Big Target Exploration in a Good Jurisdiction

Avidian Gold is a new gold explorer backed by an experienced management team focused on unlocking the value of a new project in the mining friendly jurisdiction of Alaska.

  • Golden Zone has lots of smoke suggesting a significant discovery is possible, this summer’s drill program could start the fire
  • Long Creek Corridor represents a high potential Au-Cu target, with initial drill results pending
  • Current valuation reflects recent success, but plenty of upside possible with a discovery
Avidian has just scratched the surface at its highly prospective portfolio of exploration properties in Alaska. Near-term catalysts for the company include exploration drilling updates at its Golden Zone property starting in May followed by exploration activities at its Amanita and Jungo projects.

06-Sep-2018

Adventus Zinc Corp.

High-Grade Hit at Sesmo Target

Impact: Positive

Adventus Zinc has announced additional drill results from the follow-up drilling program at the company’s Sesmo target, 1.1km from the El Domo VMS deposit, which reflects the significant exploration potential of the company’s wider 22,000ha land package in Ecuador.

  • Highlights include 7.02m of 1.40g/t Au and 62.0g/t Ag from 44.65 metres; and 13.05m of 5.70g/t Au and 12. g/t Ag from 141.67m in hole CURI-274 (Figure 1)
  • The positive results from drillhole CURI-274 in intersecting several zones of precious metal rich stockwork mineralization confirm the company’s successful target generation and is now planned to be followed up by a new drilling proposal
  • Drilling at El Domo commenced in early March 2018 with the goal of decreasing drill spacing for the purpose of boosting confidence in the high-grade portion of the resource while generating material for a H2 2018 metallurgical program; the program is expected to be completed before the end of Q3 2018
The company is fully funded to execute on its exploration plans in Ecuador with the recent closing of a C$9.2M private placement led by Wheaton Precious Metals. The company is currently trading at a slight discount to peers, which we expect to close 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.

06-Sep-2018

Brixton Metals Corp.

Brixton Adds Key Asset in the Atlin Camp

Impact: Mildly Positive

Brixton Metals has announced that it has closed a series of separate asset purchases and sale agreements to acquire 29,608ha of mineral rights in the Atlin Gold Camp of British Columbia, which consists primarily of the Spruce and Yellowjacket properties. Payment for the assets included issuing 4.3M common shares and a payment of $50,000 to Desert Mountain Energy Corp (TSXV:DME).

  • A non-NI 43-101 compliant resource of 453,500t grading 10.26g/t Au (~150koz Au) is hosted within an 80m wide shear zone oriented 65 degrees and steeply dipping to the south, where the gold occurs as free gold in intensely sheared, altered and silicified ultramafic and mafic rocks (Figure 1)
  • The company highlighted high-grade gold mineralization at the Yellowjacket zone (Figure 1), which includes intersecting 509.96g/t Au over 5.57m (hole YJ03-01) and collecting grab samples grading 1,615g/t Au
  • The larger 979sq. km land package in the Atlin camp, one of Canada’s most productive placer mining camps, is highly prospective for both intrusion related gold deposits and orogenic Barkerville style high-grade gold vein deposits, which provides large target areas for the company’s regional exploration plans going forward (Figure 2)
Based on peers in the Cobalt Camp, we believe Brixton remains undervalued based on these assets alone. The company has demonstrated an ability to acquire prospective, undervalued assets and is working to surface value on all four projects. In our view, continued exploration success in the Cobalt camp, along with planned work at the company’s other properties, should benefit shareholders through Brixton. 

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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