RCKS Talk

12-Jul-2018

Red Pine Exploration Inc.

New Zone Discovered at Wawa Gold Project

Impact: Mildly Positive

Red Pine Exploration has announced results from 22 new holes drilled at its Wawa Gold Project as a part of its 30,000m 2017-2018 drill program and has discovered a new mineralized zone (Minto Lower Zone) parallel to the Minto Mine South Zone.
  • Highlights include: 4g/t Au over 2.2m (SD-18-213) and 76g/t Au over 1.6m (SD-18-212); another new gold zone was discovered in the footwall of the Surluga Deposit, including 2.54g/t Au over 5.4m (SD-17-153)
  • The new Minto Lower Zone extends for over 1.5km and 3D modeling suggests it may be associated with the historic Parkhill Mine, which had an average recovery grade of 8.57-10.28g/t Au
  • The Minto Lower Zone correlates with the company’s understanding of the mineralization of the project and reflects the exploration potential of the property
Red Pine currently trades at a discount to peers (C$26/oz vs. peers at C$49/oz), valuation does not reflect the exploration upside we believe the property has.

12-Jul-2018

Anaconda Mining Inc.

Q2 Production Beats Estimates; Withdraws Bid

Impact: Positive

Anaconda Mining Inc. (TSX:ANX) has announced Q2 2018 production results which were ahead of our expectations. In addition, Anaconda announced the withdrawal of its bid for Maritime Resources, which should remove the arbitration overhang.
  • Anaconda produced 4,632oz and sold 4,330oz in Q2, exceeding our estimate of 3,439oz of Au by 26% (Figure 1). The beat was as a result of better than expected grades, however this includes processing low-grade stockpiled ore from the Pine Cove pit and the company is expecting even higher grades in H2 2018 as ore feed becomes predominately sourced from Stog’er Tight
  • The Pine Cove Mill achieved record throughput of 121,299t (1,350tpd) exceeding our estimate of 1,300 tpd. The average head grade of 1.38g/t was ahead of our our estimate for 1.10g/t Au
  • With 8,856oz produced in H1 2018, the company is on track to beat 2018 guidance of 18,000oz Au, particular since we expect better grades in H2 2018 as the transition to Stog’er Tight is completed. We now model 20,230oz in 2018 (was 19,220oz)
  • As a result of this operational beat we now model revenue of C$33.5M (was C$31.5M), CFPS of C$0.013 (was C$0.0042) for Q2 2018 and a quarter end cash balance of C$9.4 M (was C$8.8M). Our estimate includes the recent ~C$4.5M equity financing, which is expected to fund an aggressive exploration program at Point Rouse and Goldboro
As a result of Anaconda withdrawing its bid for Maritime Resources and beating our Q2 production estimate, we have revised our NAVPS for Anaconda to C$1.00/sh (was C$1.11/sh). The exclusion of Maritime’s Green Bay property from our NAV was partially offset by stronger operating results from Point Rousse in Q2. The company remains attractively valued trading at 0.36x NAV (peers 0.70x).

11-Jul-2018

Bonterra Resources Inc.

Gladiator Continues to Grow

Impact: Mildly Positive

Bonterra Resources has released new infill and extension drilling results from the ongoing resource development program at the Gladiator Gold Deposit, including an intersection of 30.5 g/t Au over 2m, which expanded the high-grade area of the South Zone (Figure 1).

  • The North Zone was extended 150m east at ~500m depth, while the Footwall Zone was extended down plunge with an intersection of 10.3g/t Au over 2.1m and expanded eastward with 18.7g/t over 2.0m
  • The resource development program continues to demonstrate continuity down dip and along strike and supports our view that 2Moz could be delivered with the next resource update
  • Continuity of mineralization is now confirmed over a total drilled strike length of 1,200m, as well as to a drilled depth of over 1,000m; the resource development program continues in preparation for the updated mineral resource estimate in Q4 2018 
Given our expectation for meaningful resource growth at its flagship Gladiator deposit, assuming a 2M oz Au resource at Gladiator, Bonterra trades at a discount to peers (C$19/oz vs. peers at C$40/oz).

10-Jul-2018

Novo Resources Corp.

Heritage Agreement Paves the Way for Regional Exploration

Impact: Mildly Positive

Novo Resources has announced that the Ngarluma Aboriginal Corporation (NAC) has signed a heritage agreement including 37 exploration licenses covering 6,645sq km in the West Pilbara region (Figure 1), which represents over half of the company’s total land package in the Pilbara of Western Australia.
  • With the execution of the agreement, Novo’s exploration license applications should be granted without undue delay, which clears the way for exploration on the company’s wider land package in the Pilbara
  • A strengthening relationship with the NAC allows for a smooth transition to commence negotiations to enter into a Native Title agreement with respect to mining, which we highlight is essential in obtaining an exploitation license
  • Novo has previously highlighted that there are 24 samples (120-168 tonnes) at SGS waiting to be processed and additional samples at a secure yard in Karratha. The company expects to be able to process 50 tonnes per month now that the processing challenges have been ironed out. We expect the next set of results to be released within the next few weeks
Now that the company has overcome the processing challenges encountered for the first samples, we expect steady newsflow going forward (24 samples currently in the queue). We continue to believe that Novo is worth between C$4.70-17.90/sh, suggesting upside from the current share price.

10-Jul-2018

First Cobalt Corp.

Second Cobalt Trend Identified in Kerr Area of Cobalt Camp

Impact: Mildly Positive

First Cobalt has identified a second cobalt mineralized trend in the Kerr area at the Cobalt North project in the Canadian Cobalt Camp. The near surface cobalt mineralization extends over a 500m strike length and is parallel to the previously identified Kerr #2 Zone located 400m south, which has been traced over 350m to date.
  • Several closely spaced Co-Ag veins were intersected near the historic Drummond and Kerr Lake Mines, including: 6.5m grading 0.33% Co and 133 g/t Ag in addition to 10.7m grading 0.14% Co and 13.9 g/t Ag
  • Recent results support the company’s vision of large scale open pit mining in the Cobalt Camp, with new mineralization located just 400m north of Kerr #2 Zone; further testing is required to determine the continuity within the vein network system
  • First Cobalt is now reallocating a larger portion of this year’s exploration budget into the Kerr area despite having a multitude of other prospective targets across its land package; results from 9 holes are pending and additional drilling is planned
On an EV/hectare basis, First Cobalt is trading at a discount to other cobalt explorers in the Cobalt Camp of Ontario (C$0.011/ha vs peers at C$0.016/ha). We continue to believe the company’s unique attributes, including its land position, infrastructure and recent acquisition of US Cobalt are likely to close the gap to other cobalt exploration peers.

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