RCKS Talk

13-Dec-2018

Callinex Mines Inc

Results Validate Thesis, More Drilling Needed

Impact: Mildly Positive

Assay results from two widely spaced holes testing an IP anomaly 1.2km to the east of the Nash Creek deposit returned massive sulphides, supporting the theory of a potential mineralized eastern limb to the Nash Creek syncline. While not ore grades, we look forward to follow-up holes in 2019 to vector into higher grade zones in this ~1900m by 400m “Central Zone” target area. Results support our view that the company is on track for significant resource growth in a prolific VMS mining camp (Figure 1).

    Highlights: 
      • Technical success in the Central Zone. The company announced assays from two drill holes targeting an IP anomaly situated 1km to the east of the current resource, which may represent the mineralized eastern limb of the Nash Creek stratigraphy. While ore grades were not returned, holes NC17-301 and NC17-302 intersected semi-massive sulphides similar to Nash Creek’s Hickey Zone thus supporting this thesis. We look forward to follow-up drilling aimed at vectoring into higher-grade zones in the Central Zone target area, which currently spans ~1900m by 400m as defined by the 2018 IP Survey.
      • On the verge of demonstrating district-scale potential. Initial results from follow-up drilling on the IP anomalies validate our theory of synclinal repetition of the Nash Creek deposit to the east in addition to validating IP surveying as an effective geophysical exploration method for targeting near-surface sulphides on the property. With the knowledge that VMS deposits often occur in clusters, we are awaiting IP survey results (Q1 2019) from the remaining 18km of the underexplored 20km trend to identify additional targets in the Bathurst Camp.
      • Incremental resource expansion potential at Nash Creek. The drilling campaign successfully returned encouraging results in step outs to the east and west of the current mineralized footprint, highlighting the potential for incremental expansion of the current Nash Creek deposit with further drilling.
    Valuation: 
    The market fails to realize the potential of Callinex’s growing asset portfolio in the Bathurst Mining District. Callinex currently trades at a significant discount to peers ($0.001/lb vs. peers at $0.003/lb ZnEq). Considering our expectation for further resource growth at Nash Creek beyond the recent update, we expect the upcoming drill results in addition to the IP survey could close the valuation gap to peers. Upcoming catalysts: 1) District scale IP results 2) Exploration update for Pine Bay Project in Flin Flon. 
14-Nov-2018

Callinex Mines Inc.

In the Shadow of a World Class-Mine

Impact: Positive

Callinex has acquired a high-grade VMS deposit in the shadow of the world-class Brunswick #12 mine in Bathurst, NB. With the Headway deposit within trucking distance of the company’s proposed Nash Creek mill (2018 PEA), this acquisition supports our view that the company is successfully assembling a portfolio of deposits in a prolific VMS mining camp (Figure 1).

Highlights: 
    • In the shadow of a world-class mine. The Headway deposit is the closest deposit to the historic Brunswick #12 mine (Figure 2), where 137Mt grading ~14.2% ZnEq was produced between 1964 and 2013. Most importantly, the deposit is hosted by the same stratigraphy, the ‘Brunswick Horizon’ (Figure 3, in yellow), which can be considered one of the most prolific base metals VMS horizons in the world.
    • Largely underexplored. While the existing resource (Figure 4) is not NI 43-101 compliant, drilling to date (1965-66) confirms the same high-grade nature of the VMS mineralization as the adjacent Brunswick #12. Based on depth, thickness and grade, we expect the deposit to be amenable to underground bulk mining methods once size is demonstrated by Callinex. Besides two holes drilled by Nexa Resources (TSX:NEXA) in 2011, the property has received no modern exploration and remains largely unexplored. There has been very little exploration beyond the 160m depth of the current deposit, which is where we see the most potential, as the adjacent Brunswick #12 deposit was mined to a depth of over 1km.
  • The right deal at the right time. At a transaction value of C$25k (US$19k) for an estimated 75Mlb ZnEq of high-grade mineralization (317.1kt grading 10.75% ZnEq), Callinex has paid US$0.0002/lb ZnEq. This suggests a very accretive acquisition for the company and fits well in the Bathurst portfolio alongside the company’s nearby high-grade Superjack deposit. 
Valuation:
The company is again expanding its resource base in the prolific Bathurst Mining District of New Brunswick. Callinex currently trades at a significant discount to peers ($0.001/lb vs. peers at $0.003/lb ZnEq). Considering our expectation for further resource growth at Nash Creek beyond the recent update, we expect the upcoming drill results in addition to the IP survey could close the valuation gap to peers. Upcoming catalysts: 1) Results from drilling IP anomaly 2) District scale IP results 2)  
01-Oct-2018

Callinex Mines Inc.

Prelim IP Results Point to Nash Creek Lookalike; Already Discounted Stock to Re-Rate with Drilling

Impact: Positive

Callinex Mines has released preliminary results from the 2018 Induced Polarization (IP) program at its Nash Creek Zinc Project in New Brunswick’s Bathurst Mining District. The results point to a geophysical anomaly expected to be associated with a synclinal repetition of the Nash Creek Deposit 1km to the east.

  • IP signature resembles that of Nash Creek. The survey highlighted a significant area spanning ~1900m by 400m on the east side of the known Nash Creek resource (Figure 1), where results demonstrated a footprint with high correlation to the IP signatures of the Nash Creek deposit, which have previously proven to be linked with mineral resources defined on the property. 
  • IP results to dictate 2019 drilling targets. We expect these IP results (65-line km) in addition to the remaining results (110 line km) to direct the company’s drilling later this year and in Spring 2019. IP has already proven to be the most effective method for targeting near-surface base metal sulphides on the property (Figure 2), which has already been highlighted by the first two holes targeting conductive responses in this new target area.
  • Only just scratched the surface of a district-scale land package. These results support our thesis that we expect the ongoing district-scale IP survey to highlight the potential of the remaining 18km of the 20km trend on the property, which encompasses several untested high-grade mineral occurrences and we expect is likely to reveal Zn-Pb mineralization much like that of Nash Creek
Without ascribing any value to the company’s Flin Flon or Buchans assets, Callinex trades at a significant discount to zinc explorer/developer peers ($0.004/lb vs. peers at $0.029/lb ZnEq) based on its current resource base of 1,698Mlb ZnEq in the Bathurst Camp. As illustrated in Figure 3, Nash Creek is still on the lower end of scale and grade. However, if the IP target is successful in adding more tonnes, we believe the market will start to close the valuation gap.

 

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

09-Aug-2018

Callinex Mines Inc.

Callinex Mines Provides Exploration Update at Nash Creek

Impact: Positive

Callinex Mines has provided an update on the 2018 drilling program at its Nash Creek Zinc Project in New Brunswick’s Bathurst Mining District (Figure 1).

  • Nine holes have been previously drilled testing targets adjacent to the current mineral resource (Figure 2) and the company plans to drill an additional 13 holes as a part of the first phase of this year’s campaign, the company intends to ship the first batch of samples for analytical testing within the next week
  • Callinex also plans to complete a 250-line km induced polarization (IP) survey, which is essential to identifying the potential for additional deposits along a 20km trend within the land package and in close proximity to the current Nash Creek resource (Figure 2), which currently underpins the company’s value combined with the high-grade and near-surface Superjack deposit to the south (Figure 1)
  • An IP survey completed in 2011 played an integral part in the 2017 exploration program which led to a major expansion of the deposit, it increased ZnEq indicated pounds by 74% and inferred by 385%, which reflects the potential of the upcoming IP survey to further highlight the exploration potential of the property
Following the announcement of a resource update in April and a maiden PEA in May of this year, the company is again pursuing resource expansion in the prolific Bathurst Mining District of New Brunswick. Callinex currently trades at a significant discount to peers ($0.005/lb vs. peers at $0.030/lb ZnEq). Considering our expectation for further resource growth at Nash Creek beyond the recent update, we expect the upcoming drill results in addition to the IP survey could close the valuation gap to peers. 

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