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Wednesday, February 08, 2017 Derek Macpherson

EXN Materially Reduces TC/RCs

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Yesterday, Excellon Resources Inc. (TSX:EXN) announced it had entered into new off-take purchase agreements for 2017 lead-silver and zinc concentrate production, likely representing a ~60% reduction in treatment and refining charges (TC/RCs). We expect this to positively benefit Excellon’s profitability since TC/RCs for the first nine months of 2016 were US$2.7 million or ~17% of gross sales. If we were to apply this discount to the first nine months of 2016, revenue would have increased ~12%, adjusted net income would go from being a loss to slightly positive and operating cash flow would be about breakeven, versus a meaningful loss. Coupled with the completion of the company’s optimization program which is slated for Q1 2017, we expect cash flow and profitability to improve materially in H2 2017. Excellon currently trades at a premium to peers at 1.67x NAV and 14.0x 2017e EV/CF versus peers at 1.10x NAV and 9.2x 2017e EV/CF. We believe this premium partially reflects the increased production and lower costs expected once the optimization program is completed at La Platosa. read more


Wednesday, February 08, 2017 Derek Macpherson

Marlin Continues to Execute at La Trinidad

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Marlin Gold Mining Ltd. (TSXV:MLN) announced another strong month of operations from its wholly owned La Trinidad mine in Mexico, and provided an update on operations going forward. We view the results to date positively and continue to expect the company to generate between US$17-19 million per quarter from La Trinidad over the next two years. The company is planning to release a detailed operating plan with Q4 2016 financials, at which time we expect to refine our estimates. Additional catalysts include near-mine drilling at La Trinidad (Q1 2017), ongoing exploration results from Commonwealth and a permitting update from San Albino on which the company has a gold stream - all of which we expect to be positive for the share price. read more


Monday, February 06, 2017 Derek Macpherson

Austral Reports Strong Q4 Results

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Austral Gold Ltd. (TSXV:AGLD, ASX:AGD) reported strong Q4 and full-year 2016 production results that saw consolidated annual production increase 17% in 2016 over 2015, primarily driven by Casposo, which was recommissioned in Q3 2016. Production also improved on a quarterly basis, up 23% over Q3 2016, as the restart at Casposo progressed and grades improved at Guanaco (Figure 1). Higher grades at Guanaco also resulted in quarterly costs declining 22% from Q3. In addition, Austral released final drill results from the 13.3km 93 hole infill drill campaign at its Amancaya project, positioning the company to complete the planned pre-feasibility study by the end of March 2017 and likely start production around the same time. We expect that a resource update, pre-feasibility study (Q1 2017) and initial production from Amancaya, the ongoing ramp-up of the Casposo project and plans to increase its interest to 70% and the completion of the mill expansion at Guanaco are likely to be key catalysts in the near-term. read more


Sunday, February 05, 2017 Derek Macpherson

Red Pine Completes Merger with Augustine

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Red Pine Exploration Inc. (TSXV:RPX) announced that the acquisition of Augustine Ventures Inc. (CNX:WAW) has been completed. By way of the transaction, Augustine became a wholly-owned subsidiary of Red Pine, and Red Pine’s interest in the Wawa gold project increased from 30% to 60%. The project’s remaining 40% interest will continue to be held by Citabar LLP. Each common share of Augustine has been exchanged for 0.76 Red Pine shares and Red Pine issued 100,668,733 shares to former Augustine shareholders. In our view, the completion of this merger is an important catalyst for the company and should help close the valuation gap to peers. At C$45/oz Red Pine currently trades at a modest discount to peers that trade at C$53/oz. As well, we expect the ongoing exploration and resampling programs to benefit the share price. read more


Saturday, February 04, 2017 Derek Macpherson

Acacia Earns 50% of SWA's South Houndé

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Sarama Resources (TSXV:SWA) announced that its JV partner Acacia Mining (LSE:ACA) has fulfilled the minimum exploration spending requirement of US$7M over the first two years to obtain a 50% stake in the South Houndé gold project in Burkina Faso. Under the earn-in agreement, Acacia has the option to earn up to 75% in the project. By spending an additional US$7M over the next two years, Acacia can earn an additional 20% interest and the remaining 5% by establishing a mineral reserve of 1.6M oz Au. Acacia, has elected to become the project’s operator and has advised it plans on spending US$4M on exploration in 2017, including a 50km drill campaign, comprised of 12km of diamond core, 10km of reverse circulation and 28km of aircore drilling. Sarama currently trades at C$15/oz, a steep discount to peers at C$44/oz. We expect that the ongoing exploration at South Houndé (50% interest) and Karankasso (30.5% interest), along with likely work at Bondi (100% interest), may provide the necessary catalysts for the stock to begin closing the valuation gap to peers.  read more


Saturday, February 04, 2017 Derek Macpherson

MQR Releases More Results from Croinor & Gold Bug

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Monarques Gold Corporation (TSXV:MQR) announced the second last set of drill results from the 10km drill program completed in 2016 at its Croinor gold project in Quebec. Today’s results included assays from both Croinor and the Gold Bug target and were highlighted by hole CR-16-515 that returned 46.6 g/t Au over 0.6m within a wider interval of 2.8m that returned 11.91 g/t Au from Section 490W at Croinor. Results from Gold Bug continue to highlight this new discovery’s potential and while it is early days, this set of results was not as impressive as the previous hole. We continue to view exploration results from the Croinor deposit and Gold Bug target favourably, and believe resource growth is likely. The company plans to follow-up on its 2016 drill program with another 10km program in early 2017. Monarques continues to trade at a premium to peers, which reflects its resource growth potential, stage of development (pre-feasibility) and recently acquired mill.  read more


Thursday, February 02, 2017 Derek Macpherson

NEE´s Moss Mine Construction Remains On-Track

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Northern Vertex Mining Corp. (TSXV:NEE) provided a construction and permitting update on its wholly owned Moss gold-silver project in Arizona. The update suggests that the Phase II project remains on schedule for commercial production in Q4 2017 and on budget. As well, the company announced it initiated Phase III design work, which is key to incorporating the ~200k ounce of M&I resource currently excluded from the mine plan and extending the Moss mine beyond the current 5 year mine life. In addition, the company has completed 7 holes of the ongoing 3,000m drill program on the wider project area, assays are pending. We view the overall update positively, particularly since the mine remains on schedule and budget at this early stage. At C$76/oz, Northern Vertex currently trades at a premium to peers (C$52/oz). In our view, this premium valuation is warranted given the Moss mine is financed and under construction and does not appear to account for the potential for meaningful mine-life extension from the Phase III engineering work or the ongoing exploration program. However, we note that near-term share price performance is likely to be driven by ongoing construction updates. read more


Thursday, February 02, 2017 Derek Macpherson

EXN Discovers New Zones Above the Water Table

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Excellon Resources Inc. (TSX:EXN) announced additional results from its ongoing 25 km drill program at its La Platosa mine in Mexico. To date 35 holes totalling 5.4km have been completed and the program is focused on expanding and better defining the existing resource, along with testing new near-infrastructure areas above the water table. Today’s results were highlighted by the discovery of three new mineralized zones above the water table, which are likely to benefit operations in the near-term. As well, hole EX16LP1107 intersected 795 g/t Ag, 25.85% Zn and 9.25% Pb over 3.0m and appears to have expanded the Pierna Manto to the North and the Rodilla Manto to the South. Excellon currently trades at a premium to peers on a NAVPS and 2017e EV/CF basis which likely reflects the expected cost and production improvements from the ongoing optimization program. read more


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