Friday, March 31, 2017 Derek Macpherson

GQC’s Regional Exploration Reveals Two New Zones

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GoldQuest Mining Corp. (TSXV:GQC) released results from eight additional holes drilled as part of the ongoing minimum 10km regional program at the company’s wholly owned Tireo property in the Dominican Republic. These results were highlighted by the discovery of two new gold zones Mineros Ridge and Vaca Valley zones. Results from both zones, appear to be similar to the lower grade halo surrounding the 2.5M oz AuEq (23Mt at 3.35 g/t AuEq) Romero deposit. Although follow-up drilling is required to determine these new discoveries value, we view the results positively as it continues to highlight GoldQuest’s regional exploration potential. Recent exploration success, along with the strategic investment by Agnico Eagle (TSX:AEM) have helped close the valuation gap to peers. However, we continue to believe that the current valuation does not fully reflect GoldQuest’s exploration upside. read more

Thursday, March 30, 2017 Derek Macpherson

AMI Royalty Update Highlights Portfolio Value

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AuRico Metals Inc. (TSX:AMI) provided an updated on its cash flowing royalties, the creation of a new royalty project acquired in the acquisition of Kiska and the addition of two additional non-producing royalties. We view the update positively, as it not only highlights the value of the company’s existing portfolio but reminds us of its ongoing focus to continue expanding its royalty portfolio. Three of the company’s existing royalties, Fosterville (2% NSR), Eagle River (0.5% NSR) and Hemlo (0.25% NSR on Williams Mine and 1.5% NSR on David Bell Property) all saw material reserve increases, 66%, 15% and 73% , respectively. As well, the company has optioned the Kliyul property, acquired via the acquisition of Kiska, and created 0.5% NSR on it through the option agreement with First Quantum (TSX:FM). Finally, the company acquired 1% NSR on exploration properties close to Goldcorp’s (TSX:G) Red Lake mine and a 0.75% NSR on exploration properties in the Rainy River district. read more

Sunday, March 26, 2017 Derek Macpherson

Following C$11.5 Financing MTO Upgrades Its Board

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On Friday, Metanor Resources Inc. (TSXV:MTO) announced the appointment of Greg Gibson and Akiba Leisman to its Board of Directors. The change adds experience to the team, as the company looks to grow production at its Bachelor gold mine and advance its exploration properties, specifically developing its Barry project in Quebec. Greg Gibson is currently the President and CEO of Sprott Mining and Jerritt Canyon Gold LLC. Akiba Leisman is a consultant to Wexford Capital LP where he oversees the precious metal public and private equity portfolios and is currently the Executive Chairman of the Board and Interim Chief Executive Officer of Marlin Gold Mining Ltd (TSXV:MLN). As a result of the recently completed C$11.5 million financing on March 21, 2017, Eric Sprott now owns 12.9% of the outstanding shares of Metanor or 19.5% on a partially diluted basis (assuming the exercise of all warrants) and Wexford Capital LP now owns 14.1% of the outstanding shares of Metanor or 19.7% on a partially diluted basis. We expect the board change, strong shareholders and the recent financing to be positive catalysts for the stock and may be the initial driver for a re-rating relative to peers.  read more

Friday, March 24, 2017 Derek Macpherson

NEE Adds C$5M from Warrant Incentive Program

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Northern Vertex Mining Corp. (TSXV:NEE) announced it has completed the warrant exercise incentive program announced on February 17, 2017. The purpose of the program was to provide funding for the ongoing development plans and construction of the Moss gold-silver mine in Arizona. Gross proceeds of C$5,000,054 were raised through the exercise of 10,713,608 outstanding unlisted warrants. For holders who exercised their warrants under the program, the company issued 5,356,804 common share purchase warrants, whereby each incentive warrant entitles the holder to purchase an additional common share of the company at a price of C$1.00 per common share until March 24, 2021. At C$103/oz, Northern Vertex currently trades at a premium to peers (C$55/oz). In our view, this premium valuation is reasonable given that the Moss mine is financed and under construction. In addition, the company’s valuation does not appear to account for the potential of meaningful mine-life extension from the Phase III engineering work or the ongoing exploration program. read more

Thursday, March 23, 2017 Derek Macpherson

Ascendant Continues Optimization at El Mochito

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Ascendant Resources Inc. (TSXV:ASND) provided an update on its ongoing optimization program at its El Mochito Mine in Honduras. Throughout the majority of March, the company mined and milled on average 1,745 tpd (vs. 1,600 tpd in January), noting a sustainable processing capacity target of 2,200 tpd. The company expects that ongoing productivity improvements should steadily ramp-up throughput, achieving planned throughput by year end. In addition, the company is implementing a maintenance program to improve equipment availability and support higher production rates. On March 9th, the company completed its first lead concentrate shipment from El Mochito, selling ~1,500 tonnes. Negotiations are underway to complete a new Collective Bargaining Agreement, we expect further results from the agreement coupled with the ongoing optimization program to result in an operational turnaround, positioning Ascendant to benefit from the improving zinc price environment. read more

Thursday, March 23, 2017 Derek Macpherson

EXN's Optimization Program Nearing Completion

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Excellon Resources Inc. (TSX:EXN) reported financial results for Q4 2016 and 12-months ended 2016 including an update on its ongoing optimization program at its Platosa Mine in Durango, Mexico. Costs for Q4 were much higher than the expected run-rate; however, this incorporates costs of the ongoing optimization program. The company anticipates operations to achieve higher rates of production and lower costs during H2 2017, when the optimization program is complete. While Excellon currently trades at a premium to peers; we believe this reflects the market's anticipation for improved production and costs later this year.  read more

Wednesday, March 15, 2017 Derek Macpherson

Otis Consolidates Ownership of the Oakley Project

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Otis Gold Corp. (TSXV:OOO) announced it has reached an agreement to bring its interest in the Oakley gold project in Idaho to 100%. Otis expects to acquire the remaining 20% stake in the Blue Hill Creek and Matrix Creek properties, which together with the Cold Creek property, comprise the Oakley project. In addition, the agreement entails a reduction of a NSR royalty on Blue Hill Creek and Matrix Creek from 2.5% to 2.0%. The total consideration of the transaction consists of 380k Otis shares, implying a total value of C$112.1k based on Otis’ close price on March 14, 2017 (C$0.295/sh). Blue Hill Creek has a 163k oz Au (11Mt at 0.51 g/t Au) inferred resource that is hosted in a shallow epithermal system which remains open in several directions. Previous drill results have intersected gold mineralization over +100m wide intervals. Limited exploration has taken place on the adjacent Matrix Creek property which hosts a mineralization distinctive from that of Blue Hill Creek. In our view, the consolidation of Oakley, a secondary project, is mildly positive and may help accelerate exploration on this project. At C$37/oz, Otis currently trades at a discount to peers (C$50/oz). We believe the market does not appear to fully account for the potential resource growth at the company’s flagship Kilgore project which is located in Idaho, a stable jurisdiction, and in the vicinity of infrastructure. Coupled with the recent strategic ~C$5.05 million investment by Agnico Eagle Mines Ltd (TSX:AEM, NYSE:AEM), we expect the pending resource update (Q2 2017) and PEA (Q3 2017) for Kilgore to be important catalysts for the company, allowing it to close the valuation gap to peers. read more

Wednesday, March 15, 2017 Derek Macpherson

AuRico Receives Positive EA Decision for Kemess

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AuRico Metals Inc. (TSX:AMI) announced today it has obtained a positive environmental assessment (EA) decision for its Kemess Underground project in British Columbia. We view this very positively as we believe it is an important catalyst for AuRico to unlock Kemess’ value. AuRico’s current EV of ~C$157.8 million implies an EV/EBITDA for royalties only (based on 2017 guidance) of ~22.0-23.7x, which is slightly higher than royalty peers that trade at 19.2x (2017e EV/EBITDA). This suggests the market currently allocates a value of ~C$20-30 million to Kemess. However, similar development stage peers trade at 0.56x NAV or C$48/oz, which suggests that Kemess on its own could be ascribed a value of ~C$115 million. In our view, with the completion of the Environmental Assessment, AuRico should now be positioned to unlock this value, providing investors the potential for meaningful near-term upside as the market prices in the viability of Kemess. read more


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