RCKS Talk

Monday, January 30, 2017 Derek Macpherson

MLN Reports Good Drill Results from Commonwealth

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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

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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


Sunday, January 15, 2017 Derek Macpherson

RCKS Drilling Deeper Lunch Features Three Royalty Companies

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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 05, 2017 Derek Macpherson

MLN's Near-Term Cash Flow Should Fund the Future

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Following Marlin Gold Mining Ltd.’s (TSXV:MLN) conference call to discuss strong December operating results, we are maintaining our estimate for US$17-19 million per quarter of cash flow from La Trinidad. We highlight that this equates annually to US$68-76 million, or US$136-152 million over the next two years of La Trinidad’s mine-life. This cash flow is going to allow Marlin 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 (TSXV:GRR) San Albino project in Nicaragua. Our preliminary estimates suggest that Marlin is now trading at ~2.0x 2017E CF on a EV/CF basis versus peers at 4.6x. If you only account for La Trinidad and its short mine-life, this could be considered a fair valuation; however, it does not account for resource growth potential at La Trinidad, medium term production from Commonwealth or streaming cash flows from San Albino that the near-term cash flow from La Trinidad is expected to fund. This suggests that the stock has more room to run and in our view, further upside is likely to come from ongoing operating success, Q4 financial results demonstrating improved cash flow and exploration results from La Trinidad. read more


Wednesday, January 04, 2017 Derek Macpherson

Marlin Finishes Q4 with a Splash

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Marlin Gold Mining Ltd. (TSXV:MLN) announced another month of strong operations from its wholly owned La Trinidad mine in Mexico, reporting the third consecutive monthly record of recovered ounces. These robust operating results further support our view that Marlin is likely to deliver strong Q4 2016 and Q1 2017 financial results (see previous post), having reached a turning point in its operations at La Trinidad together with free cash flow (FCF) generation. We believe that the company is likely to use the FCF generated to fund its development projects, including the San Albino stream in Nicaragua and exploration/development work at its Commonwealth project in Arizona.  read more


Tuesday, December 06, 2016 Derek Macpherson

La Trinidad Likely to Deliver Meaningful Cash for MLN

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Following Marlin Gold Mining Ltd.’s (TSXV:MLN) conference call to discuss strong November operation results we have increased our go forward quarterly cash flow estimate for the company over the next two years. We now expect the company to generate US$17-19 million per quarter (was US$15-18 million), which equates annually to US$68-76 million, or US$136-152 million over the next two years of La Trinidad’s mine-life. Based on recent results and our preliminary go forward estimates, Q4 2016 and Q1 2017 are likely to be the best quarters. While a short mine-life at this point, this cash flow from La Trinidad should provide Marlin the ability to fund resource expansion efforts at La Trinidad (both brownfield and greenfield), ongoing exploration and development work at the company’s Commonwealth project in Arizona and the San Albino stream in Nicaragua. On a cash flow basis, the company’s current valuation is at a steep discount to peers. Based on our preliminary estimates, Marlin trades at ~1.0x 2017E cash flow versus peers at ~4.8x 2017E cash flow. While a discount is warranted, because of the short mine-life, the multiple should be closer to ~40% that of peers because La Trinidad’s cash flow allows them to fund future cash flow. In our view, ongoing production results and Q4 2016 financial results are likely to be the key catalysts for Marlin to re-rate.  read more


Monday, December 05, 2016 Derek Macpherson

MLN Delivers Another Excellent Month of Operations

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Marlin Gold Mining Ltd. (TSXV:MLN) announced a second month of strong operations from its wholly owned La Trinidad mine in Mexico. For November, the company reported monthly records stacked and recovered ounces. We believe that these positive operating results further support our view (see previous post) that Marlin has reached a turning point and is now generating free cash flow (FCF) at La Trinidad and is poised for a strong Q4. In our opinion, this transition is important as the company can use the FCF generated at La Trinidad to fund its development projects, including the San Albino stream in Nicaragua and exploration/development work at its Commonwealth project in Arizona.  read more


Thursday, November 03, 2016 Derek Macpherson

MLN’s La Trinidad Transitions to Positive FCF

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Marlin Gold Mining Ltd. (TSXV:MLN) provided an operational update from its wholly owned La Trinidad mine in Mexico. The company reported records for both ounces stacked on the leach pads and recovered in the month of October. As well, the company expects this level of production to persist for the remainder of the La Trinidad’s current 2+ year mine-life. In our view, these operating results indicate that the company has reached a turning point in its operations and has started generating free cash flow (FCF). This transition is key, as the company can use the FCF from La Trinidad to fund its development projects, including the San Albino stream and exploration/development work at the company’s Commonwealth project in Arizona.  read more


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