RCKS Talk

02-Aug-2018

Northern Empire Resources Corp.

Coeur Bids for Northern Empire; Competing Offer Possible

Impact: Positive

Northern Empire has entered into an agreement with Coeur Mining Inc. (NYSE:CDE) in which Coeur will acquire all remaining shares of Northern Empire for ~C$1.64/share (0.1850 Coeur shares for each Northern Empire share), representing a 20% premium to the August 1 closing price and a 40% premium based on the 20-day VWAP.
  • The transaction values Northern Empire at C$117 million, valuing the company at C$123/oz or 0.79x NAV
  • Transaction could be the beginning of a consolidation in the region, suggesting that Corvus Gold (TSX:KOR) could be Coeur’s next target, although it is worth noting that Coeur recently sold its shares of Corvus
  • In our view, there is a modest possibility for a competing bid from Corvus or its major shareholder AngloGold Ashanti Ltd (JSE:ANG) as the valuation suggested by the current offer leaves room for an increased offer, the break fee (C$4.7M) is modest and because of proximity, both are likely familiar with the Sterling project. We view the probability of competing bid to be ~15-20%
The proposed transaction gives all investors in Northern Empire the opportunity for positive gains as the consideration exceeds the stock’s all-time high.

19-Jun-2018

Northern Empire Resources Corp.

Northern Empire Acquires Historic Goldspar Mine

Impact: Mildly Positive

Northern Empire has entered into a Lease Purchase Agreement for the acquisition of 100% interest in the historic Goldspar Mine, located in close proximity to its Sterling Mine in Nevada. Northern Empire is acquiring the mine for US$50k upon signing followed by lease payments for 10 years, work commitments in first two years and a 5% NSR on the property with 3% purchasable for US$50k per 1%.

  • Mary-Goldspar is an inlier property which gives the company an increased ability to explore the prospective range-front fault structures near the permitted Sterling Mine
  • Highlights of historic drilling from Goldspar includes: 38.1m grading 3.03g/t Au and 24.4m grading 2.77g/t Au
  • Acquisition has the potential to add value to the Sterling Mine, which is fully permitted to restart operations, and any additional resources could potentially be processed at the permitted facilities
Considering Northern Empire’s continued exploration success, we expect upcoming drill results to close the discount to peers (on an EV/oz basis C$60/oz vs. peers C$83/oz).

05-Jun-2018

Northern Empire Resources Corp.

Drilling Reveals Broad Mineralization at SNA

Impact: Positive

Northern Empire announced the results from 19 new drill holes at the SNA deposit from its 100% owned Sterling Gold Project in Nevada. These new holes add to a total of 30 drill holes from this deposit, all of which have returned significant gold intercepts.

  • Gold intercepts in all 30 holes, most of which hit gold outside existing SNA resource shell of 126koz grading 1.03g/t Au at a 0.3 g/t Au cut-off (2017), reflecting resource expansion potential
  • Intercepts from the claim boundary between SNA and the historic Mother Lode deposit include 39.62m grading 0.86g/t Au (SNA18-022), indicating the potential for a large-scale contiguous gold system between the two deposits
  • Results continue to support our view that regional consolidation is likely and that Coeur Mining Inc. (NYSE:CDE), with significant interest in both Northern Empire and Corvus Gold Inc. (TSX:KOR), the natural consolidator
Considering Northern Empire’s continued exploration success, we expect upcoming drill results to close the discount to peers (on an EV/oz basis C$67/oz vs. peers C$84/oz). 

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).

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.

 

25-Apr-2018

Northern Empire Resources Corp.

Regional Work Defines Seven New Targets

Impact: Neutral

Northern Empire has provided a technical update on the regional geology at its Sterling Gold Project in Nevada, which includes the discovery of seven more prospective targets on the Sterling property that add value and upside to the existing deposit.

  • Exploration data has revealed more near-surface exploration targets that appear to be prospective and add discovery potential to the Sterling story (Figure 1)
  • New targets warrant further exploration and are likely to be targeted in the company’s ongoing 18,000m drill program
  • While the focus likely remains SNA, Secret Pass and Daisy areas, increased understanding of geological controls suggests property-wide exploration potential 
Northern Empire trades at a premium to peers on a EV/oz basis (C$113/oz, peers C$82/oz). Based on peer multiples, this implies the addition of ~320k oz Au, which we view as possible, given recent drilling success by Northern Empire and Corvus Gold’s (TSX:KOR) at its Mother Lode project (surrounded by Northern Empire ground). We believe the natural consolidator is Coeur Mining (NYSE:CDE) given its a significant shareholder of both companies (Corvus 5.9%, Northern Empire 11.6%).

 

17-Apr-2018

Northern Empire Resources Corp.

Drilling Success Continues; More Results Pending

Impact: Mildly Positive

Additional drill results were released from the SNA deposit at the company’s Sterling Gold Project, highlighted by SNA18-003, returning 1.72 g/t Au over 16.76m, directly south of Corvus’ Mother Lode (Figure 1).

  • SNA Deposit results continue to suggest resource growth is likely
  • One drill rig is targeting the area between the historic Mother Lode pit and SNA deposit
  • Results are pending, three of the holes are located along Northern Empire’s property boundary, adjacent to Corvus’ Mother Lode project
Northern Empire trades at a premium to peers on a EV/oz basis (C$120/oz, peers C$82/oz). Based on peer multiples, this implies the addition of ~500k oz Au, which we view as possible, given recent drilling success by Northern Empire and Corvus Gold’s (TSX:KOR) at its Mother Lode project (surrounded by Northern Empire ground). We believe the natural consolidator is Coeur Mining (NYSE:CDE) given its a significant shareholder of both companies (Corvus 5.9%, Northern Empire 11.6%).

03-Apr-2018

Northern Empire Resources Corp.

Crown Getting Shinier; Encouraging Drill Results from SNA

Impact: Positive

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Recent results suggest the SNA Deposit is likely to materially grow and suggest recent success by both Northern Empire and its land-locked neighbor Corvus that a larger Carlin-style system could be discovered.

  • Continued success at the Crown deposits (Secret Pass, Daisy and SNA) suggest that critical mass is building for a second production area
  • Drilling success at SNA and Mother Lode (Corvus) suggests that the discovery of a larger Carlin-style system is probable, with a natural consolidator already in place (Coeur Mining – NYSE:CDE)
  • Market does not appear to fully reflect the likely resource growth delivered by recent drilling. 
 
Considering Northern Empire’s recent exploration success, we consider the modest premium it trades at relative to peers, likely understates the likely resource growth.

21-Mar-2018

Northern Empire Resources Corp.

Continued Success at Secret Pass; More to Come

Impact: Positive

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Drill results from Secret Pass continue to highlight the exploration upside represented by Northern Empire’s Crown project.

  • Drilling at Crown continues to deliver positive results.
  • Recent success, suggest Crown is poised to grow.
  • More results on the way. 
 
Considering Northern Empire’s recent exploration success, we consider the modest premium it trades at relative to peers, likely understates the possible resource growth.

01-Jan-2018

Northern Empire Resources Corp. (TSXV:NM)

RCKS Talk Blog Archive

We updated the look & feel of our RCKS Talk Research Blog in March 2018.

To access the historical archives of our original blog format, please click on the link(s) below to be re-directed. Please note that we no longer update those archive blog pages.

Click here to access the RCKS Talk Blog Archive for Northern Empire Resources Corp. (TSXV:NM)


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