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Monday, April 03, 2017 Derek Macpherson

Marlin Continues to Deliver at La Trinidad

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Marlin Gold Mining Ltd. (TSXV:MLN) announced strong Q1 2017 production results, near-mine exploration success at La Trinidad and a further debt repayment, all of which we view positively. The company shipped, 18,875 ounces of gold, primarily as a result of the high-grades stacked in Q4 2016. We expect Q2 2017 gold shipments to also benefit from Q4 2016. The company continues to have exploration success near the existing pit, and with continued success may be able to extend the current ~2 year mine-life of La Trinidad. Finally, continued operating success, has provided the company the ability (C$6.7 in cash and refined gold) to repay another US$2 million on its unsecured credit facility, reducing the outstanding principal to US$30 million. 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 in April, at which time we expect to refine our estimates. Additional catalysts include continued near-mine drilling at La Trinidad, 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


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

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


Tuesday, March 07, 2017 Derek Macpherson

Kiska Shareholders Approve AuRico Acquisition

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Last week, Kiska Metals Corp. (TSXV:KSK) announced its shareholders approved the planned acquisition by AuRico Metals Inc. (TSX:AMI) and that it has received the final court order approving the plan of arrangement. The transaction is expected to close on March 8, 2017. We continue to view this tuck-in transaction positively as it highlight’s AuRico’s focus on building out its royalty portfolio. Looking ahead, we believe the completion of the Environmental Assessment (expected in Q1 2017) is likely to be a key catalyst for AuRico to unlock the value of Kemess which appears to be undervalued by the market. read more


Thursday, March 02, 2017 Derek Macpherson

MMX's Guidance Suggests Strong Cash Flow in 2017

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Maverix Metals Inc. (TSXV:MMX) provided guidance for its attributable gold production in 2017, the company’s first full year of operations. The company is guiding for net royalty revenues of C$17.5-20.0 million, based on a US$1,225/oz Au price and annual production of 13.4-15.0k oz AuEq. The majority of the revenue, or 93%, is driven by gold sales with the balance coming from silver (5%) and nickel (2%) sales. Based on general and administrative expenses expected to amount to 13-14% of net revenues and the company’s current cash position, we believe the company is able to acquire additional small to medium sized streams and royalties. Although Maverix has growth potential in our view, we note that Maverix currently trades at a discount to peers on a P/NAV and 2017e EV/EBITDA basis. read more


Wednesday, March 01, 2017 Derek Macpherson

Initial Drilling from MLN's La Trinidad May Extend Life

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Marlin Gold Mining Ltd. (TSXV:MLN) announced the first set of results from the ongoing drill program at its La Trinidad gold mine in Mexico. This is one of the value creating initiatives undertaken by Marlin now that La Trinidad is generating significant free cash flow. With three holes returning grades significantly higher than the resource grade over good intervals suggests that Marlin may have extended the mine-life beyond La Trinidad’s current mine-life, but it is early days. Today, Marlin also announced a new Normal Course Issuer Bid (NCIB) program under which the company intends to purchase ~2.5 million shares, which represents ~1.44% of the company’s current issued and outstanding common shares, over the next 12 months. Besides ongoing near-mine drilling at La Trinidad, the company has a number of upcoming catalysts including greenfield exploration at La Trinidad, exploration at its Commonwealth property and a detailed operating plan update for La Trinidad with Q4 financial results. We expect these catalysts along with ongoing operating updates to be positive catalysts for the stock. read more


Wednesday, February 15, 2017 Derek Macpherson

AMI's 2017 Guidance Highlights Royalty Value

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Yesterday, AuRico Metals Inc. (TSX:AMI) released its Q4 and 2016 financial results and provided guidance for 2017. The company has guided for royalty revenues of US$8.0-8.4 million in 2017, a slight increase over 2016. The company recognized 2016 royalty revenues of US$8.1 million, reaching the top end of 2016 guidance (US$7.7-$8.1 million). At US$2.2 million, Q4 2016 revenues increased by 47% over Q4 2015, primarily driven by a production increase at Fosterville and a higher gold price. AuRico also reaffirmed that it expects the Environmental Assessment for Kemess to be completed by the end of Q1 2017, which we believe to be the key catalyst for unlocking the project’s value. This should allow AuRico to decouple its royalty and development assets and enable the company to unlock value for shareholders. 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


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