RCKS Talk

26-Nov-2018

NX Gold Ltd.

Drill Targets Coming into Focus

Impact: Mildly Positive

NxGold’s exploration update provides highlights the increasing importance of the more traditional hard rock targets at its Mt. Roe Project in Australia. This exploration update along with our recent site visit supports our view that NxGold has the potential to make both a traditional hard rock gold discovery and a conglomerate gold discovery at its Mt. Roe project. 

Highlights:
    • Mt. Roe hard rock drill targets coming into focus. A total of 47 Phase 2 stream silt samples along ~1.2km of the Sholl ridge were taken, following up on previous trenching and sampling. Results align well with UAV-magnetics survey and providing increased confidence for the next phase of exploration at the Eagle, Kangaroo and Bulldog target areas (Figure 1). Currently, Eagle’s hard rock potential has also been supported by in-situ surface samples and trenching.  
    • More results pending, to better refine targets. To further refine the developing drill targets there are assays pending from tighter soil sampling grids at Eagle (86 samples), Hawk (26 samples) and Swan (27 samples). We highlight that soil samples have proven to be good techniques for identifying both traditional hard rock and conglomerate gold targets. We expect ongoing surface sampling efforts to culminate in scout drilling early next year.
    • Recent share price performance does not reflect assets or progress to date. Like many junior mining companies, NxGold’s price has been under pressure lately; however, the company’s current enterprise value (EV) of C$2.3M does not reflect the potential of Mt. Roe or the option value Kuulu provides investors should surface access rights be returned.  
    Valuation:
    Current EV approaching shell value; does not reflect underlying assets. NxGold’s current EV is C$2.3M, provides minimal value for its Mt. Roe project which has the potential to yield both traditional hard rock and conglomerate gold deposits. Following our site visit last week, we plan to provide a detailed update, including valuation in the near-term. Upcoming catalysts include 1) Ongoing Surface sample results from Mt. Roe, 2) Initial Results from Prinsep project, 3) Scout drilling at Mt. Roe (H1 2019) and 4) Surface access update at Kuulu.

15-Oct-2018

NXGold Ltd.

“Roe-ing” Towards Success; New Target Identified

Impact: Mildly Positive

Exploration at Mt. Roe identifies new hard rock target. Recent exploration efforts by NxGold at its Mt. Roe project resulted in the discovery of the Sun target, to go along with the advancing Eagle hard rock target. While at an early stage, proximity to Artemis’ Silica Hill’s project emphasises the potential for discovery. This recent exploration update continues to support our thesis that NxGold provides investors with both conglomerate gold and hard rock exploration potential. 

Highlights:
  • Trenching at Eagle highlights potential. Initial trenching has exposed two multi-metre wide stockworks of cm scale veining, which further highlights the potential for primary gold mineralization at Eagle. Along with additional trenching, the next step at Eagle is an IP survey, which should help refine potential drill targets.
  • Systematic work sheds light on the Sun target (Figure 1). The Sun target was highlighted by 0.08g/t Au, 0.6g/t Ag and 0.18% Cu collected over 5m of a vein that was traced over 50m in length. The vein is located in close proximity to Artemis Resources’ (ASX:ARV) Silica Hills prospect, a hard rock target with significant at surface gold occurrences.
  • Conglomerate exploration is still the cornerstone to our investment thesis, with hard rock acting as a valuation buffer. The identification of hard rock targets at Mt. Roe is positive; however, conglomerate gold exploration remains the backbone of our investment thesis. We believe Mt. Roe has compelling conglomerate gold exploration targets that are not priced into the stock. 
Valuation:
Market does not account for exploration potential. NxGold’s current EV is C$5M, giving minimal value for its conglomerate targets and none for its recently discovered hard rock targets. In our view, this severe discount to other Pilbara players has the company poised for a significant re-rating should news come from Novo’s pending bulk sample results prove to be positive. Meanwhile, NxGold is focused on its hard rock exploration. Upcoming catalysts include 1) NVO bulk sample results (Oct), 2) Ongoing surface sampling and geophysical results and 3) Access update on the Kuulu Project.

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.

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.

08-Aug-2018

NxGold Ltd.

Mount Roe Sampling Results Demonstrate Potential

Impact: Positive

 

NxGold has provided an update on its 2018 exploration program at the Mt. Roe Project in the Pilbara, which includes recently completed reconnaissance stream sediment sampling and the completion of a preliminary follow-up trenching/stripping program.
  • The purpose of the stream sampling was to identify areas with the potential to host lode gold style mineralization and 24 of the 45 (5 were controls) samples contained gold grains, which is indicative of that style of mineralization
  • Trenching and stripping work included 16 trenches and trench extensions totalling 508m in length, further exposing the conglomerate target horizon and further evaluating potential gold bearing structures in the "Specimen" Area, where the target structure was traced ~50m
  • The stream samples have defined key portions of the ridge with potential to host gold mineralization and vein structures were identified in the Specimen Area supports the potential existence of primary gold mineralization
We view this update as positive as it confirms the company’s interpreted strike length at Mt. Roe, we view that with ongoing exploration and newsflow, a re-rating is possible as the company’s now C$16M market cap does not properly account for the potential of the project, relative to its Pilbara peers. We expect assay results from grab sampling, mapping results and ongoing trenching to be important catalysts for the stock.

 

28-Jun-2018

NxGold Ltd.

Strike Extended and Fine Gold Identified at Mt. Roe

Impact: Positive

NxGold has completed its first trenches at the Mt. Roe project in the Pilbara of Western Australia with the objective of evaluating the target conglomerate horizon. The company has also completed first pass exploration at its Prinsep project, ~12km north of Mt. Roe.

  • Trenching along 7km of prospective strike length looks encouraging
  • Gold nuggets discovered at Prinsep project
  • With a completed C$4.3M financing, the company is well-funded to execute on its business plans
We expect assay results from grab sampling, mapping results and the start of trenching to be important catalysts for the stock.

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.

24-Apr-2018

NxGold Ltd.

First Steps at Mt. Roe Look Good; Project on the Right Track

Impact: Mildly Positive

NxGold has discovered more gold nuggets and provided an update on its maiden mapping program at its Mt. Roe Gold Project in the Pilbara, which is adjacent to properties held by Novo Resources (TSX:NVO) and Artemis Resources (ASX:ARV).

  • First steps look good, company remains on the right track
  • More nuggets discovered by management along Mt. Roe conglomerate contact zone
  • The second style of nuggets identified at Mt. Roe is interesting
The current market cap, could be ascribed to one of the company’s projects (Mt. Roe, Chicobi, and Kuulu), but not all three, suggesting room for re-rating as each of them progresses. We expect assay results from grab sampling, mapping results and the start of trenching to be important catalysts for the stock.

 

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