RCKS Talk

Monday, December 18, 2017 Derek Macpherson

OM to Acquire Pine Point; Highlights Zinc Asset Scarcity

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Osisko Metals Inc. (TSXV:OM) has entered into a friendly arrangement to acquire Pine Point Mining Ltd. (TSXV:ZINC), for an implied value C$0.21 per Pine Point share (or ~C$31.9 million), a ~23.5% premium to Friday’s close. This equates to $0.013/lb ZnEq based on the current resource, $0.0038/lb ZnEq based on the historic resource. Peers are trading at $0.174/lb ZnEq. We view the acquisition positively for both Osisko Metals and Pine Point shareholders. For Osisko shareholders, Osisko does not appear to have overpaid for the asset, while at the same time can use it's considerable technical and financial strength to quickly advance the Pine Point project towards production. For Pine Point shareholders, while the premium is modest, they get overall exposure to a well-financially backed and technically strong pro forma company, while maintaining exposure to the Pine Point project. This acquisition stands out to us because it highlights the scarcity of transactable development stage zinc assets, and believe this could be part of a greater consolidation trend in the zinc space.  read more


Monday, December 18, 2017 Derek Macpherson

eCobalt Reports Good Results from 2nd Infill Hole at ICP

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eCobalt Solutions (TSX:ECS) reported results from the second completed resource definition drill hole at its Idaho Cobalt Project (ICP), as a part of upgrading a portion of inferred resources to indicated resources for an updated feasibility study. Results returned, 0.26% Co, 2.1% Cu over 6ft (~1.83m), 0.37% Co, 0.4% Cu over 6ft (~1.83m), 0.38% Co, 0.8% Cu over 7.6ft (~2.34m) and 0.56% Co, 1.6% Cu over 23.4ft (~7.13m), which, along with the other two holes (1 remaining), the company believes should positively impact project economics. We view eCobalt as one of the few companies positioned to meet the near-term increase in cobalt demand, taking advantage of the current upswing in metal prices. The project’s location in the U.S., places it in a mining friendly jurisdiction with low political risks versus other Cobalt developers. read more


Monday, December 18, 2017 Derek Macpherson

New “Partner” Not the Validation the Headlines Suggest

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Northern Dynasty Minerals Ltd. (TSX:NDM) has found a new “partner” for its massive but controversial Pebble project in Alaska, in First Quantum Minerals Ltd. (TSX:FM). We see this transaction positively for First Quantum and negatively for Northern Dynasty. At the surface the announced framework appears positive, US$150 million over 4 years followed by a US$1.35 billion investment to acquire 50% of the project, and could be considered third-party validation for the Pebble project. However, in our view, First Quantum is acquiring a cheap option on a world-class resource (10.9 billion tonnes @ 0.67% CuEq) in an improved permitting environment currently in the United States. If the project turns out to be permittable, First Quantum has a cheap option to get significant exposure to a world-class asset. If the permitting environment reverts to what it has been previously, First Quantum has spent a relatively small sum of money and can walk away without further liabilities. In our view, we do not consider this a true third-party validation and but merely, First Quantum buying a relatively low-risk, high potential return option. For Northern Dynasty shareholders, we view this negatively because, while the company is now funded for the lengthy permitting process (should First Quantum continue with the option), they continue to bear the essentially 100% of the permitting risk, and are still on the hook for the majority of their share of the construction capital to build the mine should it get permitted.  read more


Monday, December 18, 2017 Derek Macpherson

GWM Makes New Discovery at Clarence Stream

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Galway Metals Inc. (TSXV:GWM) has made a new discovery located north of the Sawyer Brook Fault, 2km east of the Jubilee Zone and 4km west of the Clarence Stream South Zone (Figure 1), which returned 2.2 g/t Au over 11.85m (GWM17BL-04). The new zone was discovered by drilling in the area of a 700m soil anomaly, where boulders were found to contain 16.5 g/t Au, 11.5 g/t Au, and 7.9 g/t Au. The company is planning to immediately follow-up on these results, particularly filling in a 300m gap and determining continuity to surface. These results continue to demonstrate the exploration upside that exists. Notably, all soil anomalies tested to date have resulted in mineralization which provides more incentive for the company to continue to test other soil anomalies. Galway currently trades at a discount to peers, or C$19/oz versus peers at C$38/oz. Continued exploration success will likely be an important catalyst for the company and should help close the valuation gap to peers. read more


Friday, December 15, 2017 Derek Macpherson

ANX Reports Solid Q2 F2018

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Anaconda Mining Inc. (TSX:ANX) reported Q2 F2018 production and partial financial results, producing 4,170 oz Au, selling 3,560 oz Au and generating revenues of C$5.8 million at a price of C$1,621/oz Au during the quarter. Year-to-date gold production has increased by 20% compared to F2017 and the company is well-positioned to meet F2018 guidance of 15,500 oz Au.  read more


Thursday, December 14, 2017 Derek Macpherson

eCobalt Reports Drill Results From ICP; More Pending

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eCobalt Solutions (TSX:ECS) reported results from one of three completed resource definition diamond drill holes at its Idaho Cobalt Project (ICP), returning 0.40% Co, 0.3% Cu over 6ft (~1.83m), 0.44% Co, 1.6% Cu over 6ft (~1.83m) and 0.51% Co, 1.8% Cu over 16ft (~4.88m). Results are pending for the two remaining holes. Drilling was intended to upgrade a portion of inferred resources to indicated resource for an updated feasibility study. The updated resource is expected in Q1 2018, which the company believes should have a positive impact on project economics. We view eCobalt as one of the few companies positioned to meet the near-term increase in cobalt demand, taking advantage of the current upswing in metal prices. The project’s location in the U.S., places it in a mining friendly jurisdiction with low political risks versus other Cobalt developers.  read more


Thursday, December 14, 2017 Derek Macpherson

Monarques Releases Final Croinor Drill Results

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Monarques Gold Corp. (TSXV:MQR) reported final results from the 2017 drill program at its Croinor Gold deposit and Gold Bug sector. The drilling program included 26 holes totalling 9,388m of drilling on the Croinor Gold deposit and 26 holes totalling 5,457 metres in the Gold Bug sector. The company highlighted recent drill results of 13.1 g/t Au over 4m at a vertical depth of 58m, 7.84 g/t Au over 9m at a vertical depth of 197m and 7.76 g/t Au over 5.7 metres at a vertical depth of 203m. The drilling program was largely successful for the company as it was able to increase the size of the Croinor deposit, the mineralization remains open along strike and at depth. The company is planning to continue testing extensions of the mineralization at depth and to the east and west, in addition to conducting infill drilling in order to increase the indicated resource. At C$14/oz, Monarques currently trades at a significant discount to peers (C$34/oz). In our view, this valuation does not properly reflect the company’s recent acquisition of the operating Beaufor mine and Camflo mill, along with the Wasamac project. read more


Thursday, December 14, 2017 Derek Macpherson

EXN Begins 2018 Exploration at Platosa

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Excellon Resources Inc. (TSX:EXN) has started an extensive surface exploration program at Platosa, comprised of 30,000m of drilling as well as soil geochemistry and induced polarization surveys. Drilling will follow up on results from 2017 to define mineralization near existing infrastructure from underground drill platforms and to test, new manto mineralization along the Platosa Corridor (5km strike) and skarn targets. Drilling has been ongoing, having drilled 6,600m from surface (24 holes) and 6,000m from existing underground infrastructure since Q3 2016, the program will be completed in Q1 2018, with results to follow. The geophysical campaigns in Q1 2018, will follow up on previous soil geochemistry work which began in Q4 2017. Excellon currently trades at a discount to peers at 4.5x 2017e EV/CF versus peers at 5.4x 2017e EV/CF. Ongoing and upcoming exploration should be an important catalyst for the company, as they highlight the potential to improve and grow operations in the near-term. read more


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