RCKS Talk

Monday, March 05, 2018 Derek Macpherson

LPK PEA Confirms View; Provides Upside to Previous Estimates

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Lupaka Gold Corp (TSXV:LPK) released an updated resource estimate and PEA for its Invicta project in Peru, which was better than we expected after our recent site visit. As a result of higher than expected grades, higher than expected overall tonnes, our base case 350 tpd 10% NAVPS has increased to $0.55 (Figure 1 - was $0.34). While this is only a PEA, Lupaka is funded to production and is already building the mine, which suggests to us that this company is poised to quickly close the valuation gap to peers (0.44x base case NAV, peers 0.56x). We believe that first production, expected in H2 2018 is going to be the next key re-rating catalyst for Lupaka. read more


Sunday, March 04, 2018 Derek Macpherson

RPX Shifts to a Higher-Grade Underground Focus

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Red Pine Exploration Inc. (TSXV:RPX) is planning to start strategic optimization of the Wawa Gold Project, to focus on higher-grade zones following the discovery of the Minto Mine South Zone (MMSZ) and the re-evaluation of the Surluga deposit. We view this positively, as a higher grade underground scenario is likely to have lower upfront capital and the project can start smaller and grow organically. A similar approach was taken by Harte Gold (TSX:HRT); however, Red Pine is likely to start with a larger initial resource. Although preliminary, the company has estimated between 0.725M oz to 3M oz of contained ounces exists between three exploration targets (Figure 1); Surluga Exploration Target (3Mt to 5Mt @ 4.9 g/t to 6.5 g/t), Hangingwall-Footwall Exploration Target (0.5Mt to 3.5Mt @ 4 g/t to 9.5 g/t) and Minto-Darwin Exploration Target (1.5Mt to 3Mt at 4 g/t to 10 g/t). The Surluga Exploration Target is now also being considered for underground development as opposed to the prior open pit scenario. Plans exist to expand exploration in both the MMSZ and Surluga deposit areas to focus on under-explored targets to update property-wide mineral resource estimates. Red Pine currently trades at a discount to peers (C$23/oz vs. peers at C$49/oz). We believe that as Red Pine continues to demonstrate the potential of the Wawa Gold Project through its ongoing exploration program, it should close the valuation gap to peers, particularly when you take into account the significant growth potential of this deposit. read more


Sunday, March 04, 2018 Derek Macpherson

AbraPlata PEA Highlights Valuation & Opportunity

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AbraPlata Resource Corp. (TSXV:ABRA) announced the completion of an independent Preliminary Economic Assessment (PEA) for its 100%-owned Diablillos Ag-Au project in Argentina, which demonstrated economic potential and begins the process of de-risking this asset for shareholders. The project is planned to be mined by conventional open pit methods over a mine-life of 8 years with average annual production of 9.8 Moz AgEq (136,000 oz AuEq) at cash costs of US$7.52/oz Ag Eq (US$542/oz AuEq). In our view, the current discounted valuation that AbraPlata trades at (C$7/oz AuEq, peers C$35/oz AuEq) does not reflect the potential of the Diablillos project, or the solid economics of this PEA, which in our view presents an opportunity for investors. read more


Sunday, March 04, 2018 Derek Macpherson

NEE Files FQ2 Financials

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Northern Vertex Mining Corp. (TSXV:NEE) has announced that it has filed its unaudited interim consolidated financial results for FQ2 2018 ended December 31, 2017. The company ended 2017 with C$22.2M in cash, down from C$25M at June 30, 2017 as a result of cash outflows to the construction of the Moss Mine, which was partially offset by the cash inflows from various financings completed by the company. The company also stated that it has received the fourth and final tranche of $5M from Sprott Private Resource Lending, therefore the $20M Sprott facility is now fully drawn. Construction costs at the Moss Mine for the six months ending December 31, 2017 were $41.55M. The company has also drawn down the final US$3 million of its US$6 million working capital facility from its major shareholder, Greenstone Resources II L.P. While this, company is highly levered at this critical stage as it transitions from construction to production, there is some protection for equity investors as we would expect Greenstone (holds ~30% of the equity) to bridge a short-term financial gap to protect its investment if required. Northern Vertex trades at an EV/oz premium to peers (C$233/oz vs. peers at C$57/oz), which we view as warranted, considering it appears to be financed through to first cash flow, along with the potential for meaningful mine-life extension and improved economics from the ongoing optimization and exploration programs. read more


Sunday, March 04, 2018 Derek Macpherson

Mawson Results Encouraging; More to Come

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Mawson Resources Ltd. (TSX:MAW) reported initial results from its 2018 winter drill program at its Rajapalot Project in northern Finland, highlighted by 8.4 g/t Au over 31.7m including 21 g/t Au over 10.9m (PAL0093), the best hole drilled to date by grade X thickness. Four targets were the focus of drilling; Raja, Palokas, South Palokas and Terry’s Hammer, with intentions to expand known areas. The Raja prospect has been traced to 300m from surface which remains open laterally and down plunge. At South Palokas, drilling discovered for the first time, lower grade mineralization in the structural footwall however additional drilling is needed to better understand the extension of mineralization. In total, 4,896m of drilling (21 holes) have been completed, with results for the remaining 16 holes pending. There are currently 3 drills rigs in operation, with plans to add more over the following weeks. Results from ongoing drilling are expected to be an upcoming catalyst for the company, as it looks to build a maiden resource. read more


Thursday, March 01, 2018 Derek Macpherson

Anaconda Releases in Line Financials for Stub Year

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Anaconda Mining Inc. (TSX:ANX) reported encouraging financial results for its seven-month fiscal year ended December 31, 2017. For the stub year, the company reported cash costs, US$787/oz, which was ahead of our expectation for US$909/oz. This represents a significant improvement (vs. F2017) for the company and resulted in it achieving operating cash costs at the lower end of guidance for the stub year. As well, the company beat our expectations for end of year cash balance with C$4.0M compared to our previous estimate of C$3.6M. In addition to the company’s undrawn C$1M line of credit, we are forecasting an increase in gold production to 18,100 oz Au and a further reduction in all-in cash cost to $950/oz Au as the company transitions to the higher grade Stog’er Tight deposit in H2 2018. As the company’s fiscal year financial results have remained more or less in line with our expectations, our NAVPS estimate has only changed slightly to C$0.94/share (from C$0.95/share). Based on our current estimates, Anaconda still trades at discount to peers (0.46x NAV, peers 0.57x). In our view, upcoming catalysts include ongoing exploration at Goldboro and Argyle, improved cash flow in H2 2018 and ongoing development work at Goldboro which all should help close the valuation gap to peers. read more


Thursday, March 01, 2018 Derek Macpherson

Monarques Significantly Reduces Costs at Beaufor

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Monarques Gold Corp. (TSXV:MQR) has reported financial results for FQ2 2018 (quarter-end December 31st), following first production results since acquiring the Beaufor Mine in October 2017. The company reported revenue of C$10.3 million, producing and selling 5,444 oz Au and generating a positive EBITDA of $0.5 million and reducing costs by 31% to C$1,338/oz sold. We are impressed that the company was able to report a profitable quarter, after only owning to Beaufor mine and Camflo mill for a single quarter. Exploration remains an important focus for the company in 2018, with the goal to increase reserves and extend mine life at Beaufor as well as increasing resources at Croinor. At C$20/oz, Monarques currently trades at a significant discount to producing and development stage peers (C$40/oz). In our view, this valuation does not properly reflect the company’s recent acquisitions and we believe the upcoming resource expansion drilling and technical studies should help close the valuation gap to peers. The company is focused on growth in 2018, to improve financial performance and expand resources. We believe 2018 will be an important year for the company, and as these next steps are realized should help close the valuation gap to peers. read more


Thursday, March 01, 2018 Derek Macpherson

Metanor Drills the New High-Grade Bart Zone at Barry

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Metanor Resources Inc. (TSXV:MTO) reported results from the new Bart zone, 3.5km west of the Barry Project (Figure 1), highlighted by 18.9 g/t over 1.6m (BE0-17-80). Drilling at the Bart zone began last year to test historical gold grades, drilling a total of 2,985m (12 holes), which will continue into 2018. Results from the first 12 holes, are positive, providing more confidence a larger system exists. Metanor remains on track to increase the size of the Barry camp to better accommodate that a larger exploration program in Q1 2018, which is expected to include a 10,000 tonne bulk sample from a decline from the existing pit. We expect further results from the ongoing drill programs at both Barry and Bachelor to be important near-term catalysts for the company. read more


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