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Tuesday, January 24, 2017 Derek Macpherson

RPX's Drill Results Point to Resource Expansion


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Red Pine Exploration Inc. (TSXV:RPX) released results from SD-16-40, the first hole of its 6km drill program that is currently underway at the Wawa gold project in Ontario. The hole intersected six separate gold shear zones, including a newly discovered zone, an extension of the Hornblende Shear Zone and the William Gold Zone. In our view, these results support Wawa’s resource growth potential while it appears that the likely resource growth from the ongoing drill and resampling programs are not fully incorporated into Red Pine’s share price. This likely growth, along with the planned ownership consolidation of the Wawa gold project, should allow Red Pine to close the valuation gap to peers. Red Pine currently trades at C$42/oz vs. peers at C$53/oz.


First drill results support resource growth potential. Hole SD-16-40 was drilled through the Wawa Gold Corridor from the Jubilee Shear Zone hanging wall to the Hornblende Shear Zone (Figure 1). The hole intersected six separate gold shear zones within 300m of the current resource boundaries. Results were highlighted by a 7.3m interval that returned 2.09 g/t Au in the Jubilee Shear Zone and a 1.92m interval that returned 16.82 g/t Au in the Surluga Road Shear Zone. Both intervals were intersected within a wider interval of 90.8m. A 11m interval that returned 0.92 g/t Au, including 1.53 g/t Au over 4.5m, identified a new gold zone in-between the William Gold Zone, which was extended to a depth of 150m, and the Hornblende Shear Zone, which was extended to a depth of 300m. In our view, these results along with recent exploration success continue to suggest that the current resource is likely to grow.


Resource growth potential not fully factored into valuation. At $42/oz Au, Red Pine continues to trade at a discount to peers ($53/oz). In our view, the market does not appear to fully account for the project’s likely resource growth as indicated by recent results. We expect further results from the ongoing drill and resampling programs, coupled with the planned consolidation of the Wawa Gold project’s ownership structure, to be important catalysts for the company.


Derek Macpherson | VP Mining Analysis
Sunneva Bernhardsdottir | Associate, Mining Analysis
Victoria Ellis Hayes | Associate
 
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Company Specific Disclosure Details
Red Pine Exploration Inc. - (TSXV:RPX) - 2,3,4
Augustine Ventures Inc. - (CNX:WAW) - 2,3,4

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