RCKS Talk

13-May-2019

Mawson Resources Ltd

Mawson Drills New Gold Cobalt Target

Impact: Mildly Positive

Mawson has announced that it has successfully drilled a new zone, Rumajärvi, that is coincident with a boulder train and geophysical target. This new discovery is outside the current resource area. We are maintaining our fair value of C$0.79/sh (unchanged) however, today’s results could define upside beyond our current estimate that the existing resource is likely to double with 2019 drilling.
Highlights:

  • Drilling uncovers a new discovery (Figure 1 & 2). Banner intercepts from the Rumajärvi target returned 7.4m at 3.4 g/t Au and 597 g/t Co from 86.3 metres located 700m west of Raja and 1.1 km south of Palokas (current resource area). These results suggest there is room for resource growth beyond our current view. We believe the resources at Raja and Palokas have the potential to double with this year’s drill program, and that the geophysical targets in these areas suggest the resource could double again.
  • Results validate geophysical model. While still early days, Rumajärvi is located within large boulder field where highly anomalous grab samples have been collected (average 184 g/t Au). Additionally, this set of results offers promising evidence that geophysics are an effective method for target identification. This bodes well for near-resource drilling where the company is testing large conductive plates beneath existing resource shells. Assays are pending from three further holes at Rumajärvi.
  • Remaining drill holes expected to highlight growth potential. Mawson still has to report 23 drill holes from this winter’s program and we expect them to validate our thesis on resource growth. The company reports promising visual results from unreported intercepts drilled at Raja, Palokas and South Palokas. 
Valuation:
Ongoing drilling success should provide the near-term re-rating catalysts.
We are maintaining our fair value estimate of C$0.79/sh (unchanged), derived using our probability-based valuation methodology (Figure 3). Based solely on its maiden resource Mawson is trading at US$35/oz AuEq relative to peers at US$43/oz AuEq. We believe that ongoing drill results are likely to demonstrate the upside that we see and should re-rate the stock towards our estimated value. Upcoming catalysts include 1) Results from 23 holes from winter 2019 drill program and 2) Resource update (H2/19).

 

10-May-2019

SolGold Plc

Coangos Tallies Target #12

Impact: Mildly Positive

SolGold has released surface exploration results from its Coangos target which returned high copper grades in southern Ecuador and bring the company’s total priority-target count to 12 (up from 11). Exploration adds further optionality to SolGold’s assets in Ecuador and we expect the coming PEA at Alpala should demonstrate that the company is undervalued at current levels.

Highlights:
  • Target #12 shows promise. Rock chip samples collected at the Coangos Project have returned highly anomalous grades including 9.27% Cu, 91.5g/t Ag R02001026. Initial geochemical work outlined four potential targets throughout the property (Figure 2). Based on results to date SolGold now has a total inventory of 12 regional high priority targets warranting further exploration.
  • Located in the well-endowed Jurassic Belt. Located in southern Ecuador, the Coangos Project shares a regional setting with discoveries such as Fruta del Norte (9.89Moz Indicated, 2015). The Coangos Project property is also located to the East of SolGold’s El Cisne Project where the company very recently recovered highly prospective copper gold and silver rock chip samples. While still early days, these results further demonstrate the largely untested regional potential of southern Ecuador and continued exploration could push the value of the company’s southern Ecuadorian assets beyond our ascribed value of US$100M.
  • More news coming. We reiterate that we view the coming PEA at Alpala as an important update for the company in the near term. Additionally, with results we have seen so far, we expect that SolGold is well positioned to provide added value through exploration as it follows-up on its numerous regional targets.
 
Valuation:
Exploration updates continue to add positive momentum ahead of the pending Alpala PEA. We are maintaining our C$1.35 fair value estimate based on 0.90x our C$1.50 NAVPS8% estimate (unchanged). SolGold currently trades at a slight premium to peers (0.47x NAV, peers 0.43x). We expect the pending PEA should drive the stock higher. Upcoming catalysts: 1) Maiden PEA for Alpala (Q2/19) 2) Formal bid for Cornerstone and 3) Ongoing exploration results.

 

10-May-2019

SolGold Plc

Cisne Loja Project Shows Potential

Impact: Mildly Positive

Another exploration update from SolGold has added an additional regional target to the company’s exploration pipeline. Results from the Cisne Loja Project in southern Ecuador returned promising initial epithermal gold and copper-gold porphyry results. Exploration continues to demonstrate the potential of SolGold’s properties in Ecuador. In addition, the value proposition is further enhanced with the expanded exploration pipeline highlighted over the past three press releases.

 Highlights:
  • Celen prospect returns copper gold and silver. Rock chip samples collected at the Celen prospect returned highlights including 5.28% Cu, 0.66 g/t Au, 91.4 g/t Ag (R03001218). Samples were collected throughout three streams and outline a target area which spans 1.5km by 1km. The Celen prospect is located ~7km south of the Cuenca Loma prospect where previous rock chip samples returned additional high grades of 15.25 g/t Au, 23.6 g/t Ag. These results add to the company’s growing inventory of targets worthy of follow-up work.
  • Applying systematic exploration throughout Ecuador. Results to date suggest the company has an increased understanding of the regional geology in Ecuador and with an increased success-rate for producing targets, we continue to believe that the company could make a discovery beyond Alpala, which would only further enhance the company’s take-out-appeal.
  • Near-term catalysts should provide near-term momentum. The company remains active with its regional exploration program while simultaneously completing its maiden PEA at Alpala (Q2/19). Additionally, we are expecting a formal bid from SolGold to acquire Cornerstone Capital Resources (TSXV:CGP).

Valuation:
With results coming in from many of SolGold’s prospects across northern and southern Ecuador, we view the recent exploration updates as positive build-up ahead of the pending Alpala PEA.
We are maintaining our C$1.35 fair value estimate based on 0.90x our C$1.50 NAVPS8% estimate (unchanged). SolGold currently trades closely in line with peers (0.43x NAV, peers 0.42x). We expect the pending PEA should drive the stock higher. Upcoming catalysts: 1) Maiden PEA for Alpala (Q2/19) 2) Formal bid for Cornerstone and 3)
Ongoing exploration results.
 
 
10-May-2019

Orford Mining Corp

Orford Gains Strategic Support

Impact: Positive

Orford has secured a C$2.3M strategic investment from Alamos Gold Inc. (TSX:AGI) in exchange for a 19.3% equity stake in Orford – the funds are expected to be used to kick-start Orford’s 2019 exploration program at the Qiqavik Project in the Cape Smith belt of northern Quebec. We view Orford as an inexpensive call option on a highly prospective district scale exploration play and believe the company could re-rate on the first hint of drilling success.


Highlights:
  • Alamos Gold strategic equity investment. Orford announced an important strategic investment from Alamos Gold, a gold producer with mining operations in Ontario, Canada and Mexico. Alamos Gold is investing C$2.3M, comprising C$2M in flow-through funds (11.7M flow-through shares at C$0.17/share) and C$300,000 in hard dollars (3M shares at C$0.10/share). It is anticipated that Alamos Gold will own a 19.3% equity stake in Orford upon close and can contribute two nominees to a technical committee to help guide Orford’s exploration work at Qiqavik.
  • Investment validates the potential that we see in Qiqavik. The deal provides a much needed cash injection which should allow Orford to systematically test its most prospective targets across its 70,000ha Qiqavik property. In addition, the investment provides strong third-party validation of the exploration potential that we see in the Qiqavik project and increases the potential for a discovery.
  • Orford now has funds to commence 2019 exploration. We expect this investment should help kick-start Orford’s 2019 exploration program. Various activities could be initiated ahead of drilling, including prospecting/mapping and ground geophysics. Previous work by Orford along the ~45km Qiqavik Break Shear Zone has identified multiple targets returning high gold and copper grades in grab samples and drilling (Figure 1).
Valuation:  

Orford’s current valuation does not properly reflect the district scale potential of the Qiqavik Project. With an enterprise value of C$5.8M we view Orford as an inexpensive option on drilling success. The strategic placement from Alamos Gold validates our thesis and provides the funds necessary for Orford to surface value at Qiqavik. Upcoming catalysts: 1) 2019 exploration plans for Qiqavik (Q2/19).

 

09-May-2019

GT Gold Corp

Newmont Goldcorp Validates Saddle North

Impact: Positive

GT Gold has announced a strategic investment by Newmont Goldcorp which endorses our positive view of the Saddle North project. With funding now in-place, GT Gold should be able to aggressively explore Saddle North in 2019. Consequently, the market will again focus on the exploration potential and should result in sector leading share price performance.
Highlights:
Highlights:
  • Newmont becomes a strategic investor, buying 9.9% of GT Gold. The strategic investment should bring in C$17.6M when it closes later this month. The deal was priced at C$1.53 per flowthrough share. As part of the investment, Newmont Goldcorp will be able to designate one nominee for election to the board, appoint half of the newly formed joint technical committee, and have a right of first offer (ROFO), should GT Gold seek to divest all or part of Saddle North.
  • Investment validates Saddle North’s potential. Despite only 11 drill holes being completed at Saddle North, we believe GT Gold has made a major Copper-Gold porphyry discovery and this investment by Newmont Goldcorp supports this potential. We are also encouraged that Newmont Goldcorp, is going to lend its technical expertise to the project, which we think should help move this project from discovery to resource in an expeditious manner.
  • Focus returns to exploration. While the company was positioned to fund a small exploration program this season previously, this investment should allow it to properly explore this major discovery in 2019. We expect drilling to start later this quarter, with first results likely this summer. We expect continued success, should drive the share price higher.
Valuation:
Strategic investment should help generate momentum ahead of this summer’s exploration program. Our rough numbers point to a high-grade resource of 6.153B lbs of CuEq or (14.2M oz AuEq – Figure 1) project NPV at over C$2B (Figure 3). Even with conservative estimates for further dilution and time to construction, GT Gold appears to be undervalued at a market capitalization of just C$96.7M. Upcoming catalysts include 1) 2019 Exploration plans (Q2/19), 2) Restart of Exploration (Q2/19) and 3) Initial 2019 exploration results (Q3/19).

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