Tuesday, August 08, 2017 Derek Macpherson

NVO Reports High Grade Bulk Sample Results from Karratha

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Novo Resources Corp. (TSXV:NVO) released initial bulk sample results from its Karratha Gold Project in Western Australia, providing a first look at the indication of high grade gold mineralization. Results of the sample taken from Purdy’s Reward (50% earn-in/JV) returned a weighted averaged of 67.08 g/t Au, which included 87.76 g/t Au (subsample #1) and 46.14 g/t Au (subsample #2). Importantly, in both subsamples a significant amount of gold was not contained in the coarser (nuggety) portion. In subsample #1 12.53% in the fine fraction and in subsample #2 15.63% was in the fine fraction, this suggests disseminated (or background) grades of ~11 g/t and 7 g/t, respectively. This is important as our +10 million ounce estimate is based on disseminated grades of 3 g/t (excludes nuggets). It remains early days and there is plenty of work required to definitely demonstrate continuity and grade but these initial results are encouraging. In the coming weeks, plans are still underway to complete full-scale, systematic trench bulk sampling and large diameter RC drilling which will include ~30 holes, 20-50m in depth, to follow recent results. To note, the agreement between Novo and Artemis Resources Ltd. (ASX:ARV) is expected to be executed by August 23rd 2017, which subsequently Novo will earn a 50% stake in Purdy’s Reward, adjacent to its recently acquired/consolidated Comet Well property. 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 some upside remains to the current share price, which is likely to be realized as Novo demonstrates the potential of its Karratha project. read more

Monday, August 07, 2017 Derek Macpherson

NVO Site Visit: Comet Well has +10M oz Potential; Plenty of Work Remains to Prove it

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We had the opportunity of visiting Novo Resources Corp. (TSXV:NVO) Karratha Project in Western Australia. The main goal of our visit was to determine if the recent significant increase in the share price (up 240% since July 10th) was warranted and in our opinion, it was. Based on our trip, the company’s recently acquired Comet Well property (80% owned), has the potential to host more than 10 million ounces of gold. We highlight that it is very early days, and the company has a significant amount of work to prove us correct. As well, the exceptionally nuggety nature of the deposit is going to provide challenges to determine a true resource grade and the potential exists that an initial NI 43-101 compliant resource could understate grade. We highlight that our view on the project’s potential has been adjusted for these factors and does not include the additional 2km of strike on the adjacent Purdy’s Reward (option to earn 50% from Artemis Resources Ltd. – ASX:ARV). We are comfortable with this opinion because of the pervasiveness of gold nugget discoveries across the trend. Important catalysts remain on the horizon for the company, including the initial bulk sample results from Purdy’s Reward, and the start of exploration at Comet Well. read more

Friday, August 04, 2017 Derek Macpherson

VIT Drills Underexplored Popeye Target

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Victoria Gold Corp. (TSXV:VIT) reported drill results from its Popeye Target, located ~1km west of the Olive-Shamrock deposit, near the Eagle Gold Mine. The target has been relatively unexplored, with only having four holes previously drilled. Results were highlighted by hole DG17-832C returning 46.63 g/t Au over 4.3m, including 131 g/t Au over 1.5m, in addition, 100m apart, results from the second hole returned lower grade material. Although early days, the positioning of the target, between two key areas on the Dublin Gulch property, make it a target of interest and acts as another example of the properties exploration upside. 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$59/oz, which we believe does not take into account the exploration potential of the Dublin Gulch property or that the project is “shovel-ready”. read more

Thursday, August 03, 2017 Derek Macpherson

GWM’s Exploration Success Continues at Estrades

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Galway Metals Inc. (TSXV:GWM) reported results from 13 holes and wedge off a hole completed at its Estrades property in western Quebec. Drilling intersected unusually high-grade zinc deep in hole GWM-17E-27 twice, returning 28.5% Zn, 2.2 g/t Au, 181.0 g/t Ag, 0.3% Cu and 0.9% Pb over 3.3m including 18.6% Zn, 0.3 g/t Au, 190.7 g/t Ag, 0.5% Cu and 0.5% Pb over 2.6m. In the same hole, drilling also intersected mineralization at shallow depths and revealed a new discovery midway as it crossed a fault. In addition, the company is targeting copper-rich source vents through an induced polarization (IP) program, results have shown “very strong chargeability” around hole GWM-17E-08, which intersected 17.7m of massive sulphides. Results continue to be positive, as the company fills in the gaps of the previous resources (Hole 19AW) and areas remain open. Upcoming drilling at Estrades will continue to be a combination of shallow and deep holes as the program focuses on expanding resources, as well, results from Clarence Stream are pending and the company is planning to receive the pit constrained and updated underground resource estimates by the end of September for the property. Continued exploration success is likely to be an important near-term catalyst for the company at both properties, and should help close the significant valuation gap between Galway (C$20/oz) and peers (C$36/oz). read more

Thursday, August 03, 2017 Derek Macpherson

NVO Makes Progress in Western Australia; Site Visit Coming

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On July 31st, 2017, Novo Resources Corp. (TSXV:NVO) provided an update on ongoing activities at its Karratha, Beatons Creek and Marble Bar projects (Figure 1). Announced in May, through a JV with Artemis, Novo is earning into a 50% interest at Purdy’s Reward in Karratha. Bulk samples were recently collected from Purdy’s Reward and results are expected shortly which should provide clarity on grade. To the southwest, at Beatons Creek, the company recently partnered with Sumitomo to advance the project, results are pending from RC drilling and bulk sampling, and a detailed overview of recent work will be available at the end of August. At Marble Bar, west of Beatons Creek, results are pending from 24 RC drill holes (13 at Virgin Creek, 11 at Contact Creek), which are expected to be released at the end of August. Novo trades at a significant C$604/oz premium to peers (C$145/oz), which is justified because of the projects significant exploration upside both at Beatons Creek and in Karratha, along with Beatons Creek’s potential for low operating and capital costs. Our VP Mining Analysis, Derek Macpherson will be attending a site visit and providing additional commentary in the week ahead. read more

Tuesday, August 01, 2017 Derek Macpherson

Sierra Reports Strong Back to Back Quarters from Yauricocha

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Sierra Metals Inc. (TSX:SMT, BVL:SMT) reported Q2 2017 financial results from its Yauricocha mine in Peru (Sociedad Minera Corona S.A. - 81.8% owned subsidiary). Unadjusted for ownership interest, revenue for the quarter was US$38.5 million and although a slight decrease QoQ (1.7%), a 62% increase YoY. Q2 marks the second highest quarter of production in Yauricocha’s history, the first being Q1 2017. YoY cash cost per AgEq oz payable decreased by 12%, while AISC per AgEq payable oz decreased by 9%, however compared to Q1 2017 costs increased; cash cost per AgEq oz payable by 15% and AISC per AgEq payable oz by 27%. The increase in costs was a result of increased Capex as well as exploration expenses and the cost of infrastructure improvements, all of which should have longer term value. The company is expecting to complete updated technical report in Q4 2017. Yauricocha remains a key aspect of the company’s operations, ongoing exploration success is important to enhancing the company’s value. read more

Tuesday, August 01, 2017 Derek Macpherson

EXN Q2 Financials Begin to Reflect Optimization Work

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Excellon Resources Inc. (TSX:EXN) reported improved Q2 2017 financial results, as the company began to experience the benefits of completing the optimization plan at Platosa. Although YoY costs are still higher and revenue is lower, on a quarterly basis the company’s financials have improved. QoQ revenue increased by 4.6% to ~US$3.6 million, while costs decreased; production costs per tonne by 14.5%, cash costs per payable Ag oz by 19.3% and AISC per Ag oz payable by 38.9%. In Q3 2017, the company noted it will produce from the Rodilla Manto, increase production from the Guadalupe South Manto and begin producing from the 623 Manto. For the remainder of 2017, the focus remains on ramping up production to 300 tpd, and to continue on the path to double production and cut costs in half. We view the results positively and believe the following quarters are likely to show incremental gains as the effects of dry mining conditions and overall improvements are realized. Excellon currently trades at a premium to peers at 8.7x 2017e EV/CF versus peers at 6.7x 2017e EV/CF. Ongoing exploration should be an important catalyst for the company, as they highlight the potential to expand and grow operations in the near-term. read more

Tuesday, August 01, 2017 Derek Macpherson

New Plant Delays Impact ALGD’s Q2; Ops Expected to Improve in Q3

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Austral Gold Ltd. (TSXV:AGLD, ASX:AGD) reported Q2 2017 production and financial results from its operations in Chile and Argentina. Total production for the quarter was 11,764 Au oz and 390,234 Ag oz (16,898 AuEq), the decrease in overall production QoQ was due to delays in the commissioning of the new agitation leach plant (Figure 1). The plant is expected to come online next quarter, which should result in higher production for the remainder of the year. Overall, it appears the company has the potential to meet its guidance of 115k AuEq oz for CY2017; however, the processing of higher grade ore from Amancaya is key. In our view, Austral is poised to re-rate towards similar scale peers, as it demonstrates its increased production potential. read more


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