RCKS talk

Thursday, February 02, 2017 Derek Macpherson

MLN Reports Best Interval to Date at Commonwealth

Download Report  

Marlin Gold Mining Ltd. (TSXV:MLN) announced results from the tenth hole of the ongoing infill and step-out drill program at its wholly owned Commonwealth gold and silver project in Arizona. Hole 17CDDH10 returned the highest metal factor (grade x width) intercept reported on the property since 1972, intersecting 2.12 g/t over 55m, including 26.7m that returned 3.75 g/t AuEq. The hole intersected oxide mineralization only, hitting the Main Vein at a depth of 60m and continuing below the main structure to hit a secondary mineralized structure (Figure 1). The company plans to follow-up on today’s results during the ongoing drill campaign. In our view, today’s results further demonstrate the expansion potential of Commonwealth’s existing 1.2M oz AuEq (44Mt at 0.84 g/t AuEq) resource and we expect pending results to provide positive momentum for the stock. The company’s strong cash flow generation from La Trinidad, which we estimate to be US$17-19 million on average on a quarterly basis going forward, is funding the drill program at Commonwealth in addition to exploration efforts at La Trinidad (near-mine and greenfield) and the company’s financial commitment for the San Albino stream. read more


Thursday, February 02, 2017 Derek Macpherson

MMX adds Cash-Flow Generating Royalties

Download Report  

Yesterday, Maverix Metals Inc. (TSXV:MMX) announced it has entered into an agreement to acquire a 3.25% NSR on Rye Patch Gold Corp’s (TSXV:RPM) Florida Canyon gold mine and an additional 1.5% gold NSR and 0.5% nickel NSR on RNC Mineral’s (TSXV:RNX) Beta Hunt mine, increasing its portfolio to 27 streams and royalties. We expect the transaction to add ~20-25% to Maverix’s current attributable production profile of 12k AuEq oz per year. Consideration for the proposed transaction is US$5.0 million cash and ~8.5 million Maverix shares, implying a total value of C$19.6 million based on Maverix’ close price on January 31, 2017 of C$1.54/sh. We view the transaction positively, as it should meaningfully add to Maverix’s near-term cash flow. We note that Maverix trades at a slight premium to peers on a NAVPS basis and significant premium on 2017e EV/CF; we believe this to be reflective of this new entrant’s growth potential both from its development stage royalties and ability to do accretive acquisitions like the one announced yesterday. read more


Monday, January 30, 2017 Derek Macpherson

MLN Reports Good Drill Results from Commonwealth

Download Report  

Marlin Gold Mining Ltd. (TSXV:MLN) announced results from the first nine holes of the ongoing infill and step-out drill program at its wholly owned Commonwealth gold and silver project in Arizona. The first part of the drill program was focused on modest step-out from the existing resource and acquiring metallurgical samples for flow sheet optimization. Today’s results were highlighted by hole 16CDDH06 which extended mineralization by 100m along strike and returned 2.91 g/t AuEq over 25.8m, and infill hole 16CDDH09 which returned 2.27 g/t AuEq over 18.0m. The company plans on following-up on today’s results during the ongoing drill campaign as well as commencing a geochemistry and geophysics program to develop additional targets. The company’s strong cash flow generation from La Trinidad is funding this program along with exploration efforts at La Trinidad (near-mine and greenfield) and the company’s financial commitment for the San Albino stream. These results highlight the importance of that cash flow. read more


Wednesday, January 25, 2017 Derek Macpherson

MLN Reduces Debt with La Trinidad's Cash Flow

Download Report  

Marlin Gold Mining Ltd. (TSXV:MLN) announced it has made an US$5.5 million dollar repayment, reducing the unsecured credit facility with its majority shareholder, Wexford Capital, to US$32.0 million (due January 2018). Following the payment and further investment in Golden Reign Resources (TSXV:GRR) to maintain its interest (18.94%), Marlin’s cash and refined gold totaled ~C$8.5 million. With January’s production and costs expected to be similar to December’s (9,924 ounces sold at cash costs below US$250/oz), the company is well positioned to fund near-mine and step-out exploration at La Trinidad, additional exploration and development activities at Commonwealth and fund the remaining commitments for its stream on Golden Reign’s San Albino project in Nicaragua. We highlight that although grades are expected to decline for the balance of 2017, we estimate that the going forward quarterly cash flow would on average be US$17-19 million for the remaining ~2 years of La Trinidad’s current mine life.  read more


Wednesday, January 18, 2017 Derek Macpherson

AMI's Royalties Perform Well in 2016

Download Report  

AuRico Metals Inc. (TSX:AMI) provided an update on its royalty portfolio and continues to expect royalty revenues for 2016 to be at the higher end of the US$7.7 - US$8.1 million guided range as result of recently released production results. The majority of royalty revenue is expected to come from Young-Davidson (US$3.3M – US$3.4M) and Fosterville (US$3.4M-US$3.5M), with the remainder from Hemlo and Eagle River. In 2016, production at Young-Davidson was 170,000 oz Au, and is forecasted to increase by 6% in 2017. Fosterville produced record annual gold results of 151,755 oz in 2016 and is expected to produce 140–145k oz Au in 2017. In addition, AuRico announced it expects to close the Kiska Metals transaction later in Q1, growing its royalty portfolio. AuRico’s current Enterprise Value (EV) is sitting at ~C$154 million, which implies an EV/EBITDA for royalties only (excluding Kemess costs, annualizing Q3 results) of ~23.6x. This is higher than the EV of royalty peers at 18.7x, which implies that the market currently allocates a value of ~C$32.0 million to Kemess. Similar stage development peers trade at 0.54x NAV or C$50/oz which suggests Kemess could easily be ascribed a value around C$115-120 million. This suggests to us that as permitting advances for Kemess Underground and AuRico continues to grow its royalty portfolio, it should enhance value for shareholders. read more


Sunday, January 15, 2017 Derek Macpherson

AMI Grows Kemess East; Adds Long-term Value

Download Report

AuRico Metals Inc. (TSX:AMI) released an updated resource estimate for Kemess East and has grown the overall resource and the high-grade core of the deposit. The overall tonnage increased by 19% and with grades seeing a very minor decrease, metal content has increased a similar amount (Figure 1). We view this as mildly positive since it enhances the long-term value of the Kemess project. The Kemess Underground project currently has a 12 year mine-life based on current reserves. This update, in-particular the high-grade core at Kemess East, along with the resources excluded from reserves at Kemess Underground, suggests this could be an exceptionally long-life mine, which would be attractive to larger mining companies. While this update adds long-term value to Kemess, in our view the key catalyst for unlocking this project’s value is the completion of Kemess’ Environmental Assessment expected in Q1 2017 and mine permit expected in H2 2017. These catalysts should allow AuRico to decouple its royalty and development assets and enable the company to unlock value for shareholders. read more


Sunday, January 15, 2017 Derek Macpherson

RCKS Drilling Deeper Lunch Features Three Royalty Companies

Download Report

Last week, Red Cloud Klondike Strike Inc. (RCKS) hosted another installment as part of our Drilling Deeper lunch series, this time featuring three companies that own and are unlocking royalty value in unique ways. The presenting companies were AuRico Metals Inc (TSX:AMI), Marlin Gold Mining Ltd (TSXV:MLN) and Maverix Metals Inc (TSXV:MMX). We believe all three presenters have the potential to unlock value for investors through each company’s royalty and streaming assets. read more


Thursday, January 12, 2017 Derek Macpherson

Permitting Catalysts on the Horizon for AuRico

Download Report

AuRico Metals Inc. (TSX:AMI) provided a permitting update for the Kemess Underground project which continues to suggest the Environmental Assessment decision will be made shortly. The process has now entered the final stages with the Assessment Report and conditions being made available to the public for a month long public comment period. The company expects a final ministerial decision regarding the EA certificate by the end of Q1. We view this positively as in our opinion the receipt of environmental assessment is a key catalyst to unlock the value Kemess and its royalty assets. Based AuRico’s current EV of ~C$149 million implies an EV/EBITDA for royalties only (excluding Kemess costs, annualizing Q3 results) of ~23.1x. This is higher than the EV/EBITDA of royalty peers at 18.7x, which suggests the market currently allocates a value of ~C$28.4 million to Kemess. Similar stage development peers trade at C$49/oz and 0.53x NAV which implies Kemess could easily be ascribed a value between C$115-120 million. This suggests to us that with the completion of the Environmental Assessment (Q1 2017), followed by the mine permit (H2 2017), AuRico should be positioned to decouple its royalty and development assets in 2017, allowing it to unlock significant value for shareholders.  read more


SUBSCRIBE TO HEAR FROM US

Gain access to exclusive mining industry research reports as well as additional mining industry information, promotional materials, press releases and news.

RCKS Talk Daily Analysis
RCKS News
LATEST POST
CATEGORIES
RELATED TAGS
ARCHIVES

 

RISK WARNING:

Red Cloud Klondike Strike Inc. is registered as an Exempt Market Dealer (EMD) in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec, New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland & Labrador, and Yukon.

 

By accessing this website you agree to be bound by our Terms of Use and Privacy Policy.

 

Red Cloud Klondike Strike Inc. connects mining companies with suitable investors that qualify under available regulatory exemptions. For example, in Canada, according to National Instrument 45-106, Prospectus and Registration Exemptions. Similar laws and regulations apply in other jurisdictions. Companies presented on this website are considered to be highly speculative and, as such, are suitable only for purchasers who can tolerate the highest level of risk including the loss of their entire investment.

© Copyright 2017 Red Cloud Klondike Strike Inc. All rights reserved.