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Friday, May 19, 2017 Derek Macpherson

AMI Signs IBA on Kemess

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AuRico Metals Inc. (TSX:AMI) has signed an Impact Benefits Agreement (IBA) with the Tse Keh Nay (TKN) First Nations, advancing the Kemess Underground project. Including the recently completed Environmental Assessment for the Kemess Underground project, we view these steps positively and should help unlock the project’s value. Using AuRico’s guidance the company trades at ~15.0-17.0x royalty EBITDA, versus peers at 16.9x (2017e EBITDA). This implies the market is ascribing Kemess negligible value, which in our view should be worth ~C$100-125 million as compared to stand alone development stage peers. read more


Tuesday, May 16, 2017 Derek Macpherson

NVO Plans for a Busy Year at Beatons Creek

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Novo Resources Corp. (TSXV:NVO) announced exploration and development plans to advance its Beatons Creek gold project in western Australia towards production. A pre-feasibility study is expected to be completed by Q4 2017, which will include the plans for a conventional gravity and carbon-in-leach (CIL) processing system. To expand and upgrade resources at Beatons Creek, ~10,000m of RC drilling and ~800m of trench sampling is underway and is expected to be completed by mid-June. With the addition of Chris Goti, who previously oversaw permitting activities at the nearby Millennium Minerals Ltd. (ASX:MOY), the company is focusing on production-related permitting. Considering the recently closed C$15 million private placement, the company is well positioned to undertake the planned exploration and development activities. We view this update positively as the company continues to both expand resources and advance the project towards production. Novo trades at C$111/oz a premium to peers (C$77/oz), which is justified both on the project's potential for significant resource growth and its likely low capital cost. read more


Tuesday, May 16, 2017 Derek Macpherson

SWA Adds More Land in Burkina Faso

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Sarama Resources (TSXV:SWA) announced it will acquire 100% of the Botoro exploration property in southwest Burkina Faso, increasing the size of its ThreeBee project to ~660km2. The ThreeBee project comprises of Sarama’s three wholly owned properties, Bamako, Djarkadougou and Bouni properties, of which the Djarkadougou hosts the Bondi deposit (Figure 1). We view the acquisition positively, as it adds to the company’s regional land package in South Houndé belt and solidifies Sarama’s position as being the key piece for a larger player to consolidate the region. Sarama currently trades at C$13/oz, a steep discount to peers at C$40/oz. We expect that the ongoing exploration at South Houndé (50% interest) and Karankasso (30.5% interest), along with likely work at its ThreeBee project (100% interest), may provide the necessary catalysts for the stock to close the valuation gap to peers. read more


Monday, May 15, 2017 Derek Macpherson

NEE Advances Infrastructure at Moss

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Northern Vertex Mining Corp (TSXV:NEE) provided an update on optimization activities from its Moss gold-silver project in Arizona. Permitting and design work is underway for the construction of a powerline which will replace diesel generators at the mine, a cleaner and more economic source of energy. In addition, the company signed a 5-year agreement with Tri-R Construction Inc. to sell waste rock aggregate, which also includes improving and maintaining roadways. The new advancements support the efforts to improve economics, as this permitted project moves towards production. Northern Vertex trades at C$101/oz a premium to peers (C$52/oz). We view the premium valuation as 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 and improved economics from the ongoing optimization and exploration programs. read more


Monday, May 15, 2017 Derek Macpherson

Eldorado Comes to Canada; To Acquire ICG

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Integra Gold Corp. (TSXV:ICG) and Eldorado Gold Corp. (TSX:ELD, NYSE:EGO) announced that they have entered into a definitive agreement for Eldorado to acquire Integra for ~C$1.21 per share in either Eldorado shares (0.24250 Eldorado shares), cash of C$1.21250 or cash and shares (0.18188 and C$0.30313). Compensation available to Integra shareholders is limited to C$129 million in cash (~25% of the transaction). The offer by Eldorado represents a 52% premium of the May 12, 2017 close, and a 46% premium based on the 20-day volume weighted average price (VWAP). This consideration represents, 1.0x NAV and US$122/oz, which is a premium to precedent transactions (0.7x NAV and US$41/oz). With this being a friendly transaction and taking into account the valuation, we believe there is a low probability (~10-15%) of a higher bid materializing from one of the larger players in the region or a new entrant. However, this should benefit smaller regional players like Radisson Mining Resources Inc. (TSXV:RDS), Monarques Gold Corp. (TSXV:MQR), Probe Metals Inc. (TSXV:PRB), QMX Gold Corp. (TSXV:QMX) and Alexandria Minerals Corp. (TSXV:AZX) and continues to highlight the scarcity of political stable development projects as we have previously highlightedread more


Monday, May 15, 2017 Derek Macpherson

Marlin Hits Best Hole to Date at Commonwealth

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Marlin Gold Mining Ltd. (TSXV:MLN) reported drill results from its Commonwealth project, intersecting 1.56 g/t AuEq (0.83 g/t Au and 116 g/t Ag) over 102.5 m from Hole 17CDDH26, the best hole drilled on the property from a grade x thickness perspective. The hole was designed as a twin to a previous reverse circulation hole, hole E-9. We believe these results should benefit the existing resource, as historic RC holes were used to calculate the current April 2014 resource estimate. More twin holes are being reviewed. In addition, the company intercepted 0.98 g/t AuEq over 11.4 m and 1.04 g/t AuEq over 16.5 m, in the down-dip extension of the Footwall zone (Figure 1). We expect continued exploration success from Commonwealth and La Trinidad, anticipated permitting news from its San Albino royalty and strong Q1 financial results (late May) to be positive catalysts for Marlin over the near-term.  read more


Friday, May 12, 2017 Derek Macpherson

Q1 Financials Reflective of SMT's Improvements

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Sierra Metals Inc. (TSX:SMT, BVL:SMT) reported strong Q1 2017 financial results, reflecting successful production improvements from its Yauricocha mine and favourable metal prices. Consequently, revenues increased by 130% YoY and 30% QoQ, while adjusted EBITDA increased 59% QoQ (480% YoY) to US$25.4 million. Despite a weak quarter at Cusi, company-wide CuEq production increased by 28% YoY and 23% QoQ. Cash costs decreased 17% QoQ (10% YoY) to US$0.96 lb CuEq and AISC decreased by 32% QoQ (21% YoY) to US$1.50 lb CuEq, highlighting continued success of the optimization program. The company remains focused on brownfield exploration at all operating mines, expecting to add more high-value tonnage in the future. 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


Friday, May 12, 2017 Derek Macpherson

MTO Reports Solid FQ3; Increases F2017 Guidance

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Metanor Resources Inc. (TSXV:MTO) reported solid FQ3 2017 (June 30th year-end) financial results, increasing guidance from 28k-33k oz to 33k-36k oz for the year. We view the results and guidance increase positively and with a strengthened balance sheet, the company is well positioned to extend the mine life of the Bachelor Mine and advance Barry towards production. From Bachelor, 9,442 oz of gold was produced in Q3 representing an increase in production by 3.6% YoY and a slight decrease of 3.3% QoQ. Cash costs decreased by 13.6% YoY, however, increased by 13.4% QoQ (Figure 1). With 27,605 oz produced so far, this year, the company appears to be well-positioned to meet or exceed its updated guidance with only one quarter remaining. We expect ongoing results and FQ4 production results to be important near-term catalysts for Metanor. read more


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