Tuesday, November 07, 2017 Derek Macpherson

CG’s Bid Leaves Room for Another Bidder on AMI

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Centerra Gold (TSX:CG) has announced a friendly all-cash bid for AuRico Metals (TSX:AMI) at a price of C$1.80 per AMI share, which represents a premium of 38.5% to yesterday’s close for a total transaction value of C$310M. In our view this bid undervalues AuRico’s diverse assets (development assets and royalty portfolio) which leaves room for another bidder. We believe Aurico’s assets are worth more than $2/share (Figure 1); however, the diverse nature of them is likely to require a joint bid from a royalty and operating company. Consequently, we consider the odds of another bid to be ~30% (medium).  read more

Monday, October 23, 2017 Derek Macpherson


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In this edition of RCKS Charts, Keith has identified, four stocks with encouraging technicals to keep an eye on: AuRico Metals Inc. (TSX:AMI), Wesdome Gold Mines Ltd. (TSX:WDO), Bonterra Resources Inc. (TSXV:BTR) and Golden Reign Resources Ltd. (TSXV:GRR).  read more

Monday, October 23, 2017 Derek Macpherson

RCKS 5th Annual Fall Mining Showcase Presenter Preview

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On Thursday October 26, 2017, Red Cloud Klondike Strike Inc. will be hosting its 5th Annual Fall Mining Showcase. The event features presentations from 18 companies, including a themed breakfast and lunch presentation from industry leaders. For more details, please visit our event page. In this post, we provide a brief preview on the 18 presenting companies and 19 banner participants that will be in attendance.  read more

Thursday, September 14, 2017 Derek Macpherson

RCKS Charts: AMI

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In this edition of RCKS Charts, Keith has evaluated AuRico Metals Inc. (TSX:AMI). AMI has been in a positive long-term uptrend dating back to January 2016, as seen by its rising trendline and 200dma. The trendline has provided solid support on pullbacks along the way. Most recently AuRico, after rallying to a new all-time high at C$1.43, has begun to consolidate those gains. This is a normal development during an upleg and suggests more upside to follow. The rising weekly momentum provides additional support for higher objectives. The next upside target is the top of the trend channel at C$1.55-1.60. Additional higher targets are also possible. Support lies across C$1.32-1.33 then C$1.25. The consolidation provides opportunity to add or establish new positions. (Figure 1) read more

Tuesday, September 12, 2017 Derek Macpherson

Site Visit: AuRico Gearing Up to Initiate Construction

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Last week we visited AuRico Metals Inc.’s (TSX:AMI) Kemess Project in northern British Columbia. The existing infrastructure at Kemess was as impressive as it was a year ago when we last visited the site. Since that last visit the company has checked off major project milestones at Kemess including the receipt of an Environmental Assessment Certificate for Kemess Underground (“KUG”), a signed Impact Benefits Agreement with the Tse Keh Nay First Nations for KUG, a Preliminary Economic Assessment on neighbouring deposit Kemess East (“KE”), and the submittal of permit applications for KUG. The Company has also added key hires to their project management team over the past few months as, pending permits being received in Q2-2018, it will look to initiate construction at KUG by July 2018. As was the case a year ago, we continue to believe Kemess remains undervalued within AuRico. read more

Thursday, August 10, 2017 Derek Macpherson

AMI Ups 2017 Guidance for Second Time This Year

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AuRico Metals Inc. (TSX:AMI) reported Q2 2017 financial results and increased its annual royalty revenue to US$10.5-11.0 million from US$9.5-10.4 million. The increase in revenue guidance was due to an updated reserve estimate from Kirkland Lake Gold’s (TSX:KL) Fosterville Gold Mine by 110% to 1.03 million oz Au. In Q2, royalty revenues reached a record high of US$2.8 million, for a total of US$5 million (US$2.2 million in Q1 2017) year to date. The company remains focused on advancing Kemess East and Kemess Underground, planning a combined FS for mid-2018. Drill results for Kemess East are expected to be available in Q4 2017, with an updated resource estimate to follow in Q1 2018. As well, at Kemess Underground, permitting and engineering work are to be advanced for early construction in H1 2018. We believe the company is well positioned to unlock the value of Kemess. Using AuRico’s updated guidance the company trades at ~16.6-17.7x royalty EBITDA, versus peers at 16.4x (2017e EBITDA). This implies the market is ascribing Kemess negligible value, which in our view should be worth ~C$100-125 million as compared to stand alone development stage peers. read more

Sunday, July 30, 2017 Derek Macpherson

AMI’s Fosterville Royalty Continues to Add Value

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AuRico Metals Inc. (TSX:AMI) provided an update on its 2% NSR royalty on Kirkland Lake Gold’s (TSX:KL) Fosterville Gold Mine after the company announced mineral reserves increased by 110% to 1.03 million oz Au. Grades also significantly improved to 17.9 g/t Au from 9.8 g/t Au, an 83% increase. Q2 2017 production at Fosterville was 77,069 oz Au, a record for the company and we expect the successful quarter to be reflected in AuRico’s Q2 2017 financials, as well as aid in meeting AuRico’s revenue guidance of US$9.5-US$10.4 million for 2017. AuRico’s Fosterville royalty remains an important asset in the company’s royalty portfolio and Kirkland Lake’s exploration success continues to increase its value. read more

Monday, May 29, 2017 Derek Macpherson

Could AMI's Kemess have a +20-year Mine-Life or Produce >400k AuEq per Year?

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AuRico Metals Inc. (TSX:AMI) released promising results of a preliminary economic assessment (PEA) completed at its Kemess East project (KE), located ~1km east of its Kemess Underground project (KUG) in British Columbia. On a stand-alone basis, the KE PEA depicts an annual production averaging 222k oz AuEq/year, over a 12-year mine life with economics similar to the KUG project. Because the PEA is solely for KE, it does not account for what the combined project could be. In our view, the combined project is likely to have a greater than 20-year mine-life or a production profile in excess of 400k oz AuEq per year starting in year 3. While it is early days and many combinations are possible, we believe this PEA highlights the strategic and option value of Kemess. However, we also believe, the market continues to ascribe Kemess a negligible value providing investors an opportunity.  read more


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