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Monday, August 21, 2017 Derek Macpherson

AGLD’s Regional Trenching Program Yields Positive Results

Austral Gold Ltd. (TSXV:AGLD, ASX:AGD) reported initial trenching results from its Amancaya project in Chile. Results were highlighted 2.5m at 9.7 g/t Au and 6.9 g/t Ag at the newly discovered Nueva Vein and 2.3m at 8.1 g/t Au and 6.1 g/t Ag from the Nueva Sur Vein (Figure 1). The company believes that these newly discovered veins have the ability to yield a similar resource to the Central Vein which hosts 497k oz at 8.96 g/t AuEq (1.8 million tonnes). These new veins were discovered as part of the company’s regional trenching program on previously identified targets. The company plans to follow-up these results with a drill program, once the overall exploration program is complete. While these results highlight the longer-term potential of Amancaya, investors are likely to remain focused on the near-term as the company’s production profile is poised to increase with Amancaya ore starting to be processed. In our view, Austral is poised to re-rate towards similar scale peers, as it demonstrates its increased production potential.  read more


Monday, August 21, 2017 Derek Macpherson

VIT Breaks Ground at Eagle; Gets a Head Start on 2018

Victoria Gold Corp. (TSXV:VIT) has officially commenced construction at Eagle with its early start, C$40 million Phase 1 construction program. The primary focus of the program is to position the company for full construction in 2018 by upgrading existing roads, expanding the camp and completing detailed engineering. As well, critical path earthworks projects for the valley leach facility and crusher are being completed. We note that the company is starting construction without the full funding in-place; however, with a cash balance of C$63 million (at May 31, 2017) and a commitment letter in place for a US$220 million debt facility, we estimate the company only requires additional funding of ~C$70-90 million. We expect continued exploration success to be a positive catalyst for the stock and should help demonstrate the exploration upside that exists. Victoria currently trades at a discount on a per ounces basis, or C$32/oz versus peers at C$52/oz, which we believe does not take into account the exploration potential of the Dublin Gulch property or that the project has just transitioned from shovel ready to under-construction. read more


Friday, August 18, 2017 Derek Macpherson

SWA Grows South Houndé at Depth & Along Strike

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Sarama Resources (TSXV:SWA) reported final results for the H1 2017 drill program at South Houndé. The program was designed to test the depth and strike extensions of the high-grade shoots within the orebody to expand the existing open-pit resource and test the potential for underground mining. Deeper holes were highlighted by 10.4m at 3.96 g/t gold and 4.1m at 3.89 g/t gold and extended the MC and MM deposits to a depth of 500m and 550m respectively. This depth extension suggests an underground mining scenario could be possible. As well, some near surface air core drilling was completed in an effort to expand resources at surface, which was highlighted by 8m at 2.46 g/t gold. Sarama currently trades at C$12/oz, a steep discount to peers at C$49/oz. We expect that the ongoing exploration at South Houndé (50% interest) and Karankasso (30.5% interest), along with work at its ThreeBee project (100% interest), may provide the necessary catalysts for the stock to close the valuation gap to peers.  read more


Wednesday, August 16, 2017 Derek Macpherson

MQR Identifies Early Opportunity for Growth at Simkar

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Monarques Gold Corporation (TSXV:MQR) reported results from its 2,500m (4 holes) program on its Simkar Gold property east of Val-d’Or located near its Beacon mill (Figure 1). Drilling targeted the western extension of the “Diorite A” gold zone, returning good grades, as seen in hole SK-17-04 which included 15.85 g/t Au over 1.0m. The company plans to continue testing the area in the next phase of exploration, as it remains focused on increasing resources near its Beacon mill to optimize future production. At C$118/oz, Monarques currently trades at a premium to peers (C$60/oz). In our view, this valuation is supported by Croinor’s stage of development (pre-feasibility study), ongoing exploration success and the acquisition of the Beacon Mill. read more


Wednesday, August 16, 2017 Derek Macpherson

Sierra Maintains Positive Financials in Q2

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Sierra Metals Inc. (TSX:SMT, BVL:SMT) reported Q2 consolidated financials results, which have shown improvements YoY, however as compared to the previous quarter (Q1 2017) have been affected by reduced Q2 production. Revenue increased YoY by 30% however, due to weaker production results QoQ revenues decreased by 11%. In addition, costs increased; cash costs by 17% and AISC by 29% during the quarter as compared to Q1 2017; however, ongoing optimization should see these costs decrease as improvements are realized. Although decreased on a QoQ basis (31%), adjusted EBITDA remains positive for the quarter at US$17.6 million, especially compared to Q2 2016 of US$5.3 million. Importantly, exploration remains a priority for the company’s three operations which has the opportunity to add to the production profile in the near term, results are expected to be reflected in updated technical reports in Q4 2017. We anticipate a strong 2017 from Sierra as operations continue to improve and exploration advances, all of which should further enhance the company’s value. read more


Wednesday, August 16, 2017 Derek Macpherson

Site Visit: SGI is Systematically Building a Business

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Last week we visited the prolific Plutonic mine, which was recently acquired by Superior Gold Inc. (TSXV:SGI). While the asset itself impressed us, both from an operating and upside potential, we were most impressed by the company’s systematic approach to build a gold mining business. This has manifested itself by first converting Plutonic into a profitable mining operation (as evidenced by Q2 financial and operating results), then starting the process to add near mine resources and reserves (update expected in H1 2018) and now starting to look outside the existing operations then expanding. As well, we believe the addition of the Hermes project, is likely to have a positive impact on output, recoveries and consequently costs when it comes online later this year. Despite a short reserve life, we believe Superior Gold may be undervalued as it trades at 3.1x EV/CF and 4.2 EV/FCF (annualized Q2 results), versus peers that trade at 6.2x 2017 EV/CF.  read more


Tuesday, August 15, 2017 Derek Macpherson

Site Visit: RPX is Unlocking Surluga’s Secrets

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Last week we had the opportunity to visit Red Pine Exploration Inc.’s (TSXV:RPX) Wawa Gold Project. Red Pine is the operator with a 60% stake in the project, with the balance held privately by Citabar Limited Partnership (“Citabar”). The company has two rigs turning as part of its ongoing 20,000m drilling program, with one rig currently testing the Surluga North Zone and another at the Minto Mine South Zone. Results from the latter have been especially encouraging, as the company consistently continues to intersect gold mineralization in step-outs to the south-south-east.  read more


Tuesday, August 15, 2017 Derek Macpherson

NVO Completes JV with Artemis

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Novo Resources Corp. (TSXV:NVO) has signed a definitive agreement with Artemis Resources Ltd. (ASX:ARV), to form a 50:50 JV on 38 tenements/tenement applications which include Purdy’s Reward. Novo is required to spend AUD$2 million on exploration within two years, as well as issuing 4 million common shares to Artemis, once completed and approved, the companies will form a 50:50 JV managed as one by Karratha Gold. An additional 19 Artemis tenements/tenement applications are expected to be covered under another definitive agreement in the future. Together the companies are undertaking exploration work which includes systematic trench bulk sampling and large diameter RC drilling targeting Purdy’s Reward. Completing the JV is an important catalyst for the company, as it continues to consolidate land in Karratha. Based on our preliminary value for Beatons Creek (C$150-200 million) plus the C$400-560 million we would ascribe to Karratha based on our +10-million-ounce estimate at Comet Well, we believe modest upside remains to the current share price, which is likely to be realized as Novo demonstrates the potential of its Karratha project. read more


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