RCKS Talk

25-Sep-2018

Monarques Gold Corp.

Monarques Highlights FS Changes That Should Improve Wasamac Economics

Impact: Mildly Positive

Monarques Gold has provided the initial parameters for the ongoing feasibility study (FS) on its Wasamac gold property in Quebec, which the company expects to complete by December 2018.

  • The company has indicated that it has taken a completely different approach to the assessment, design, engineering and costing for the mine in order to implement the latest technology and use a top-down rather than a bottom-up mining method
  • What we expect could be game changing for project economics is the use of twin ramps and a Rail-Veyor system underground to haul the mineralized material close to the railway, which will eliminate the significant CAPEX associated with building a shaft; the Rail-Veyor system is a new technology currently used at Agnico Eagle’s Goldex project in Val-d’Or
  • This news highlights the potential that this fresh approach could have on the economic viability of the Wasamac project, where the company currently has 2.6Moz in M&I resources grading 2.70g/t Au
Since acquiring the Wasamac project from Richmont Mines in 2017 the market has not ascribed any value to its potential economic value, which we expect may provide significant upside to the current share price upon release of the FS. Monarques continues to trade at a discount to peers (C$7/oz vs. peers at C$26/oz) and we believe the upcoming resource expansion drilling and technical studies including a conceptual study on Wasamac should help close the valuation gap to peers.

25-Sep-2018

Nicola Mining Inc.

Nicola Delivers Big Step-Out Hole, More to Come

Impact: Positive

Nicola Mining has announced the intersection of 73.6m grading 1.05% Cu, within a wider interval of 150m grading 0.54% Cu (CC-18-02) ~100m north of the historic Craigmont open pit, within the company’s active Mine Permit M-68.

  • Step-out hole CC-18-02 returned a wide zone of copper mineralization approximately 100m north of the historic Craigmont open pit, confirming the potential for a mineralized "halo" surrounding historic mining operations
  • Assays are pending for two more holes being drilled to the east and west of hole CC-18-02 with the aim of confirming the lateral continuity of the zone
  • Of note, a historic resource (pre NI 43-101) of 50Mt grading >0.4% Cu was defined within the "halo" to the west of the historic Craigmont Pit which when taken with today's drilling results appear to validate the company's strategy of defining a bulk mineable copper resource within the skarns surrounding historic mining operations
  • While this hole is significant for the expansion of Craigmont Central, we also note that two compelling porphyry targets remain to be tested on the property
We view this news as positive as it validates Nicola's thesis that due to higher cut-off grades applied by historic operators, significant potential remains for defining a potentially bulk mineable copper resources in the vicinity of historic mining operations at the Craigmont Project. We expect results from further exploration drilling at Craigmont West and Craigmont Central, in addition to the two porphyry targets, to be important catalyst for the stock.

24-Sep-2018

Precious Metals Commentary

Is it 2015 Again? Precious Metals Appear Poised for a Rally

This summer has not been pleasant for mining company share prices or for those of us that are invested in them. Falling commodity prices combined with excitement in other sectors has resulted in apathy towards mining companies in general. Recently, there has been a glimmer of hope with significant exploration results from GT Gold (TSXV:GTT) and RNC Minerals (TSX:RNX) that has driven each company’s share price significantly higher. One of the indicators that we follow, that we consider to be a reasonable indicator of bearish/bullish sentiment is the Gold/Silver Ratio, which is currently at a 2-year high.

  • Gold/Silver Ratio is at 83.6, levels not seen since early 2016, which was a precursor to a rally in precious metal prices and a significant rally for precious metals equities (Figure 1)
  • The last rally started in large cap names, but migrated quickly down cap, with the largest returns coming from the smallest names (Figure 2 & 3)
  • We think companies that have continued to deliver good results over the last few months without a corresponding rally in the share price are likely poised to outperform. Names that we think fit this profile:
    • Brixton Metals (TSXV:BBB)
    • NxGold (TSXV:NXN)
    • Red Pine Exploration (TSXV:RPX)
    • Amarillo Gold (TSXV:AGC)
    • Lupaka Gold (TSXV:LPK)
    • Orford Mining (TSXV:ORM)
    • Lion One Metals (TSXV:LIO, ASX:LLO)
It is always important to highlight, that while we believe a rally is likely coming, the timing of that rally is always uncertain. However, mining is a cyclical business and we believe we are very close to the bottom, suggesting now is a good time to get positioned for the pending rally.

18-Sep-2018

Lupaka Gold Corp.

Atenea Vein Extended with Better than Expected Grades

Impact: Positive

Lupaka Gold has announced assay results from the ongoing underground channel sampling program from the new development headings on the 3400 level and 3430 sublevel at the company’s Invicta Project in Peru.

  • The company has extended the Atenea Vein by 105m on the 3430 level, with channel samples returning 9.06 g/t AuEq, over a strike length of 235m over an average width 3.87m (Figure 1)
  • Similar results from the 3400 level have returned 9.04 g/t AuEq, over a strike length of 235m over an average width 4.88m, suggesting continuity (Figure 2)
  • Importantly, grades continue to reconcile positively to the mine plan defined in the PEA (8.58 g/t AuEq) and to the block model, suggest cash flows, particularly early in the mine life could be better than we current model (current estimate US$8.0M FCF in 2020) 
Based on the company’s recently released PEA, our valuation of Lupaka suggests a NAVPS10% of C$0.55 assuming a 350tpd operation. Based on our site visit and the company’s continued exploration success, we see potential for a larger 500tpd operation at Invicta. We believe that achieving first cash flow, expected in H2 2018, are going to be the next key re-rating catalysts for Lupaka.

 

17-Sep-2018

Brixton Metals Corp.

Brixton Hits One of the Best Holes of the Year in Cobalt

Impact: Positive

Brixton Metals announced additional drill results from its wholly owned Langis Mine Project located in the Cobalt Camp of Ontario.

  • The results were highlighted by one of the best drill holes released this year in the Cobalt camp. Hole LM-18-42 returned 6m grading 4719g/t Ag and 0.33% Co
  • This most recent round of results was highlighted by better than typical widths from the Cobalt camp, which is noted for its high-grade but narrow widths. In our view, these better than typical widths along with the expected high-grades set Brixton apart from its peers in the camp.
  • Continuing to intersect high-grade Ag-Co mineralization in areas that were not previously drilled reflects both the prospectivity of the company’s land package, its advanced state of data review relative to peers and the successful target generation by the exploration team 
Based on peers in the Cobalt Camp, we believe Brixton remains undervalued based on these assets alone. The company has demonstrated an ability to acquire prospective, undervalued assets and is working to surface value on all four its projects. In our view, continued exploration success in the Cobalt camp, along with planned work at the company’s other properties, should benefit shareholders through Brixton.

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