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).


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.


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.


Monarques Gold Corp.

Mineralization Expanded at Croinor

Impact: Mildly Positive

Monarques Gold has released new assays from its ongoing drill program at its Croinor Gold project, located near Val-d’Or in Quebec. Results demonstrated an extension of mineralization both along strike and at depth.
  • Highlights include: 9.4m of 3.08g/t Au intersected at 560m depth including 3.1m of 6.61g/t and 16.05g/t over 3.1m
  • Drilling has extended the deposit 180m horizontally to the northwest and 256m below the current resource envelop to 560m of depth
  • These Phase 1 results are from 16 drill holes reaching 4,584m of the total 20,000m 2018 program that began in March
Monarques continues to trade at a discount to peers (C$14/oz vs. peers at C$35/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.


Anaconda Mining Inc.

Anaconda Rescinds Increased Offer; Original Offer Still Valid

Impact: Negative

Anaconda Mining has announced that it has rescinded its proposal to increase, by ~28%, the take-over bid for Maritime Resources Corp. (TSXV:MAE). The announcement follows the closing of Maritime’s private placement of C$1.4M, which results in dilution to current Maritime shareholders by over 23%.
  • Anaconda will proceed with its initial take-over bid of 0.39 Anaconda shares per Maritime share, a 28% premium to Maritime’s previous close of C$0.11/share, which has been approved by Anaconda shareholders
  • Anaconda has entered into Lock-Up Agreements with Maritime shareholders holding ~10.6% of the issued and outstanding Maritime Shares, pursuant to which such Maritime Shareholders have agreed to tender their Maritime Shares in support of the Offer
  • We expect that investors in the C$1.4M private placement at C0.10/share are likely to tender their shares in order to capture the value gap between the offering price and Anaconda’s original bid
We view these new developments as negative for Anaconda and have revised our estimate of the probability of the deal being completed to 50-60% (was 60-70%). By factoring in the closed private placement into our estimates, we have decreased our NAVPS estimate to C$1.01/sh. (was C$1.11/sh.) Regardless of the completion of the takeover, the company remains attractively valued. Assuming the transaction is completed, Anaconda is trading at 0.36x NAV or if it is not completed Anaconda is trading at 0.37x NAV (peers 0.72x). We believe that a resolution of the hostile bid (either positively or negatively) is likely to lift current overhang on the share price.

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