RCKS Talk

22-Oct-2018

Brixton Metals Corp.

Big Grades from Hudson Bay

Impact: Positive

News from the 11 drill holes at Brixton’s Hudson Bay project comes as an exciting step forward, compounding on the ongoing exploration success at the nearby Langis mine. The Hudson Bay project is located in the Cobalt Camp, where ~500 Moz Ag and ~50 Mlb Co have historically been produced. Results support our thesis that Brixton remains an undervalued explorer with multiple prospective assets in North America.

 Highlights:
  • Impressive Ag-Co results. The company released 11 drill holes, highlighted by HB18-31, which intersected 1m grading 3,290 g/t Ag, 0.14% Co and 0.29% Ni (2.53% CoEq, equivalent to ~25% CuEq) and HB-18-34 which intersected 1.96% Co and 16.2 g/t Ag (1.97% CoEq, equivalent to ~19.7% CuEq). The results give the company additional leverage to cobalt and nickel, two battery metals with positive long-term supply and demand fundamentals.
  • Being a step ahead has Brixton delivering some of the best results in the Cobalt camp. The company started work in the Cobalt camp ~1 year ahead of the cobalt rush, putting it ahead of its peers in understanding, as evidenced by the company’s ongoing exploration success. However, these results have not translated into the share price, suggesting Brixton is significantly undervalued based on its Cobalt assets alone.
  • Other assets have high-potential but ascribed little value. The company has 3 other quality assets - Atlin, Thorn and Hog Heaven. In particular, we believe that Atlin has the potential to yield a high-grade gold discovery in the next 18 months. Historic results at Atlin include: 5.57m at 509.96 g/t Au and 6.00m at 21.07 g/t Au. We expect the company to ramp-up exploration at Atlin in 2019.
Valuation:
Undervalued based on Cobalt assets alone, investors getting Atlin and the other projects for free. Based on peers in the Cobalt Camp, we believe Brixton remains undervalued based on these assets alone. In our view, continued exploration success, including the ramp-up of exploration efforts at the company’s Atlin project in British Columbia, should benefit shareholders. Upcoming catalysts: 1) Additional drill results from the Cobalt camp, 2) Surface work results from Atlin and 3) Ramp-up of exploration efforts at Atlin.

22-Oct-2018

Pacton Gold Inc.

More Nuggets from the Egina

Impact: Mildly Positive

Pacton Gold continues to discover gold nuggets on its properties in the Egina region; specifically at the Golden Palms property (Figures 1 & 2). The news is another step in the right direction for the company as it ramps up its exploration efforts in Western Australia and transitions from land-acquirer to explorer. In our view, Pacton has multiple projects that could yield a significant conglomerate gold discovery, as demonstrated by its early stage success.

Highlights:
    • Nuggets from Golden Palms imply significant scale potential at the company’s Egina tenements. The discoveries were made within a 300m by 300m area located approximately 2.5km northwest of the company’s previously announced discovery of gold nuggets at Friendly Creek (Figure 1) and associated with the same 10km stretch of ultramafic and komatitic basalt rocks. While very early days, the scale potential is similar to that of Novo Resources (TSXV:NVO) Comet Well/Purdy’s Reward project.
    • Significant underexplored strike length. The Golden Palm, Friendly Creek and Hong Kong tenements are all located in South Egina, along a large underexplored 8km thick volcano-sedimentary system, which extends for ~10km along strike (Figure 1). The combined land package is adjacent to Novo’s recently acquired Egina tenements, which Novo highlighted as prospective.
    • More exploration catalysts expected shortly. The company has started to ramp up exploration, specifically at the Egina properties. We believe that exploration success from its own projects, along with positive news from Novo, should provide additional momentum for the share price.
Valuation:

Pacton is the third largest conglomerate landholder and its recent exploration success could be repeated at its other projects. With an excess of 2,500 km2 in the Pilbara and work underway on multiple projects, we believe that exploration success at one or more of its projects could drive Pacton’s share price higher. This should be particularly true if Novo’s bulk sample results provide some positive momentum for the space. Upcoming catalysts: 1) Initial exploration results from Arrow and 2) Novo bulk sample results (Oct).

19-Oct-2018

Nicola Mining Inc.

Custom Milling Kicks-Off

Impact: Positive

Nicola to recommence milling for Gavin Mines, positioning itself as the only permitted mill to process third party Au-Ag ore. The mine anticipates shipping up to 40ktpy (~11.2g/t Au & ~100.8g/t Ag) to the Merritt Mill, which only fills ~50% of the mill’s capacity, leaving the remaining capacity open to be fed by other mines. The announcement supports our thesis of custom milling being a sweetener to what we believe is a high-potential copper-focused exploration story.

Highlights:

  • Milling hub for nearby small-medium sized mines. The mill is both centrally located and is the only permitted Au-Ag processing facility for third party ore in the province. British Columbia has strict regulatory requirements tightened further since the Mount Polley disaster. In light of this and high CAPEX costs for mill construction, barriers to entry are high for the emergence of competing mills. Nicola's 200tpd mill and tailings storage facility, accessible by highway and connected to a power grid, are fully permitted and include grinding, crushing and flotation circuits.
  • Profit share agreements with four gold miners. As Gavin Mines will only fill 50% of the mill’s capacity, the mill could accept more feed from Gavin or other smaller neighbouring operations lacking a mill. In addition to Gavin Mines, the company currently has profit share agreements with AMA Gold Exploration Ltd., Huldra Silver Inc. and Clibetre Exploration Inc.
  • Merritt Mill: a sweetener to a good copper exploration story. While there are no synergies between Nicola's toll milling operation and its flagship New Craigmont copper project, currently being drilled for copper skarns and porphyries, potential cash flows from its milling operation will likely help fund exploration at New Craigmont and minimize shareholder dilution.
Valuation:
We continue to view Nicola as an undervalued copper explorer with highly prospective past producing assets in BC. Due to high cut-off grades applied by historic operators at New Craigmont, we see the potential for the company to define potentially bulk mineable copper resources that may have been previously overlooked. Upcoming Catalysts include: 1) Results from further exploration drilling at Craigmont West and Craigmont Central and 2) Drill results from porphyry targets. 

17-Oct-2018

Pacton Gold Inc.

Pacton Leapfrogs with Visibility to Processing

Impact: Mildly Positive

Access to processing facility accelerates Pacton's evolution.
Pacton announced a Memorandum of Understanding (MOU) with Artemis Resources (ASX:ARV) for a strategic processing alliance that should allow Pacton to process future bulk samples through Artemis’ Radio Hill plant. While Pacton is at an early stage of exploration, this MOU provides a clear path to the bulk sampling stage. This deal confirms our thesis that the company has continued to transition from land-acquirer to explorer.
Highlights: 

  • Alliance combined with multiple mining leases should fast-track bulk sampling. The Radio Hill mill is 30km from Karratha (Figure 1) and should allow the company to quickly move to bulk sampling at its projects with mining leases (Friendly Creek, Yandicoogina, Boodalyerrie) where initial results have been encouraging. We note that terms of the processing alliance are to be determined.
  • Radio Hill mill set-up for coarse gold. Artemis recently refurbished the 0.5 Mtpa Radio Hill, and set it up to process free gold, as it is not permitted for cyanide use (unlikely to be needed for conglomerate gold, where high gravity recoveries are expected). While permitted to operate, we note that the mill has yet to be commissioned and we expect Artemis to wait on tailings expansion permits before starting.
  • Bulk sampling plans should allow Pacton to quickly advance its projects. We view bulk sampling as the second stage of conglomerate exploration, with surface sampling, mapping, trenching and metal detecting being used to determine where to sample. While, the company’s projects are still at an early stage, having plans in place for bulk sampling should accelerate the exploration process.
Valuation: 
Pacton is the third largest conglomerate landholder in the Pilbara and should add to the market's excitement with upcoming sampling. With work underway on multiple projects, we believe that exploration success at one or more of its projects could drive the share price higher. This should be particularly true if Novo’s bulk sample results provide some positive momentum for the space. Upcoming catalysts: 1) Initial exploration results from Arrow, 2) Novo bulk sample results (Oct) and 3) Terms for processing at Radio Hill. 

 

17-Oct-2018

Orford Mining Corp.

Thick Au Intercepts Found; Follow Up Work Warranted

Impact: Mildly Positive

Thick gold intercepts warrant follow up work in Quebec; Carolina drilling also hit thick zones of low grade gold. The company announced results of the 2018 drilling and mapping program on its Qiqavik property in northern Quebec. Although very early days, the company is methodically progressing exploration at Qiqavik. In addition, they provided an update on the Jones Keystone and Landrum Faulkner drilling in the Carolina's. Qiqavik’s results continue to highlight this projects potential and with only ~16 weeks’ work completed to date, follow-up is needed.

Highlights:
  • Drilling and mapping efforts at Qiqavik progressing well but more work is needed. Initial visual results from the summer program uncovered a thick sequence of quartz veins in three drill holes (QK-18-002, -007 & -008), assay results include: 24.6m @ 0.48g/t Au (QK-18-008). While not ore grade intercepts, our view is that this target is starting to demonstrate potential and warrants follow-up work, particularly since the surface expression of the target has extended to 350m. As well, the company expanded the surface expression of the Focused Intrusive (to 800m) and Gerfaut South zones (to 850m).
  • Results suggest short transport distances for some discovery boulders, bodes well for others. Exploration at the Interlake area (Qiqavik) has led the company to a potential source of the high-grade boulders. The relatively short transport distance, bodes well for discovering the source of other high-grade boulders on the property.
  • Carolina drilling returns thick zones; data review underway. Drilling program at the Jones Keystone and Landrum Faulkner properties in North and South Carolina was completed in August. Highlighted by hole JK-18-054 which found 41.1 m @ 1.36g/t Au from 108.5m. Overall, the thick mineralization intersected did not deliver ore grades. The company is reviewing to determine the next steps for both projects.
Valuation:
We believe Orford’s current value does not properly reflect the potential of the Qiqavik. We believe the companies sub C$15M EV, does not reflect the regional scale of the Qiqavik project or its multiple district scale targets. Upcoming catalysts: 1) 2018 surface sample results and 2) 2019 exploration plans.

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