Eight Names with Interesting Technicals
In this edition of RCKS Charts, Keith has evaluated Lion One Metals (TSXV:LIO), Global UAV Technologies (CSE:UAV), Solgold Plc (TSX:SOLG), Moneta Porcupine Mines Inc. (TSX:ME), Detour Gold Corp. (TSX:DGC), Osisko Mining Inc. (TSX:OSK), Katanga Mining Ltd (TSX:KAT), and Nicola Mining Inc. (TSXV:NIM).
Monarques Gold Corp.
Commissioning Beacon Mill to Meet Strong Demand
Monarques has announced the planned commissioning of its Beacon mill in Val-d’Or by Q4 2018. The mill is located only 500m away from the railway line and
10km from the company’s Beaufor Mine.
- Monarques has allocated a C$1.5M budget to upgrading the facility to process 750tpd and is planning to submit an updated closure plan with the Ministry of Energy and Natural Resources before commissioning the mill
- Decision to operate its fully-permitted Beacon mill results from excess demand for custom milling services
- Custom milling at the 750tpd Beacon mill is expected to provide additional revenue to the company’s operating Camflo mill, which saw a 17% revenue increase in FQ3 2018
We view this as a positive development for the company as it is expected to bring the company’s operating mill capacity to 2,350tpd between the two mills.
Monarques currently trades at a discount to peers (C$14/oz vs. peers at C$34/oz) and we believe the upcoming resource expansion drilling and technical
studies including conceptual study should help close the valuation gap to peers.
Adventus Zinc Corp.
Initial Work Drives Further Land Acquisition in Ireland
Impact: Mildly Positive
Adventus has announced the results of its Phase I exploration activities at its Rathkeale and Lismore properties in Ireland, which includes seismic survey and detailed target generation initiative.
- Phase I exploration identified six drill-ready targets on the western extensions of structures relating to neighbouring Tobermalug deposit (44.2 Mt @ 7.2% Zn & 1.2% Pb)
- Exploration has led to the application to acquire two additional blocks of ground (21 licenses) covering 630km2 which would bring total exploration rights to 1,950km2 in Ireland
- We expect Adventus to monetize these earlier stage exploration assets, similar to what it has done with its Newfoundland projects
Adventus is currently trading in line with peers, however we believe a premium valuation is warranted given the exploration potential and quality of the company’s underlying assets. Upcoming catalysts includes results from regional exploration work along with the planned monetization of non-core exploration assets.
Maritime Resources Corp.
Maritime Adds Land; Doesn’t Alter Our View
Maritime Resources has announced the acquisition of 3,225 ha of claims surrounding its Hammerdown asset (Figure 1).
- Strategic land consolidation may provide incremental fundamental value; potential justifying a change to the current offer of 0.390 of a common share of Anaconda in exchange for each Maritime share
- Share component of the acquisition (500k on signing, plus an additional 1.5 million shares through the life of the deal) could be considered an additionally dilutive tactic, similar to the previous C$1M financing as a takeover defense tactic against Anaconda
While we expect Anaconda to be displeased with the expanding share count, it’s likely a transaction it would have eventually undertaken. Therefore, we
do not expect them to pull the offer and we continue to believe that the a hostile takeover
proposed by Anaconda in April still has an 60-70% chance of being completed.
Mawson Resources Ltd.
New Cobalt Mineralization at Rajapalot
Mawson has identified significant intervals of cobalt mineralization at its Rajapalot project in Finland, which is currently associated with gold mineralization over an area of 3km by 4km and open in all directions.
- Cobalt has potential to add by-product value to Rajapalot
- Attractive option for future ethically-sourced cobalt for Europe
- Over half the drill core remains to be re-assayed for cobalt content
We expect results from re-assaying and drilling to be upcoming catalysts for the company, as it looks to build a maiden resource.
Three Names with Positive Momentum
In this edition of RCKS Charts, Keith has evaluated Anaconda Mining Inc (TSX:ANX), Sierra Metals Inc. (TSX:SMT) and Ascot Resources Ltd (TSXV:AOT).
Catalysts are Key
In this edition of RCKS Charts, Keith has evaluated Toachi Mining Inc. (TSXV:TIM), Avidian Gold Corp. (TSXV:AVG), Aurania Resources Ltd. (TSXV:ARU), Novo Resources Corp. (TSXV:NVO), Golden Arrow Resources Corp. (TSXV:GRG) and NxGold Ltd. (TSXV:NXN).
Kirkland Lake Increases Investment in the Pilbara
Kirkland Lake Gold (TSX:KL) announces its third investment in Novo Resources Corp. (TSXV:NVO) by acquiring 4 million shares from Artemis Resources (ASX:
ARV) at C$5.00/sh to bring the company’s total investment to 29.83 million common shares of Novo at an average price of C$3.18/sh.
- Kirkland Lake announces third investment in Novo Resources
- Kirkland Lake continues to back a Pilbara discovery
- Novo Resources and De Grey Mining remain our preferred companies for making a Pilbara discovery
Kirkland’s continued investment in the Pilbara district indicates its ongoing confidence and commitment to a potential world-class discovery. We expect
the next catalyst for Novo in addition to other Pilbara players to be Novo’s large bulk sample results expected at the end of May.
Ascot Resources Ltd.
New Underground Resource First Step Towards Production
Impact: Mildly Positive
Ascot has shifted its focus to underground resource development at its Premier-Dilworth property with the announcement of a high-grade underground resource
in the southern area of the property.
- Ascot defines 601koz AuEq of high-grade underground resources at Premier/Northern Lights
- Underground focus puts the project on the path to production
- Drilling has revealed additional areas that may host high-grade resources
After incorporating Ascot’s resource update, the company trades at a discount (C$37/oz versus peers at C$65/oz). We expect the ongoing news from exploration
and infill drilling on higher-grade underground resources to close the gap to peers.
Anaconda Mining Inc.
Expands Mineralization & Extends Drill Program
Anaconda has expanded multiple mineralized zones at Goldboro through exploration drilling and has initiated an additional 2000m of drilling to test the
high-grade zone around the previously identified fault system
- High-grade drill results expand deposit in multiple directions
- 2,000m added to program to test fault zone
- Results point to resource growth – 10% increase in both grade and tonnes at Goldboro increases our NAVPS estimate by 9%
After recently incorporating Anaconda’s potential acquisition of Maritime Resources (TSXV: MAE), our NAVPS estimate increased to C$1.12/sh results in Anaconda
trading at a steep discount to peers (0.33x NAV, peers 0.65x).
Brixton Metals Corp.
Brixton Hits Cobalt Mineralization in Basement Rock
Brixton has identified a new broad Ni-Co-Ag mineralized zone in the Archean basement rocks at its Langis Project in addition to intersecting high-grade
Co-Ag in the conglomerate sequence.
- Experience working in the Cobalt Camp continues to pay off
- Broad mineralized zone discovered in Archean basement rock
- Brixton remains undervalued compared to Cobalt Camp peers
Based on peers in the Cobalt Camp, we believe Brixton remains undervalued, for example First Cobalt (TSXV:FCC) trades at C$0.014 EV/ha, while Brixton trades at C$0.004 EV/ha.
Anaconda Mining Inc.
Anaconda’s Response As Expected
Anaconda has responded to statements made by Maritime in response to Anaconda’s hostile offer to acquire all the outstanding common shares of Maritime.
- Response is as expected and normal course, as a result this does not change our view with respect to the likelihood of the acquisition being completed (60-70%)
- We continue to believe the current offer for 0.39 an Anaconda share for each Maritime share which represents an 26% premium based on today's (implied value C$0.14 per Maritime share) is accretive for both companies’ shareholders
- We expect Maritime shareholders are likely to eventually support the acquisition for the significant purchase price premium and to avoid Maritime’s share price retreating to pre-offer levels
Assuming the transaction is completed, Anaconda continues to trade at discount to peers (0.32x NAV, peers 0.64x); ongoing exploration success and the completion
of the Maritime acquisition should close the gap to peers.
Anaconda Mining Inc
Anaconda Releases Q1 2018 Financials
Anaconda releases financial results for Q1 2018 with higher than expected revenue and lower operating cash costs.
- Better grades, lead to higher production and lower than expected cash costs at Point Rousse
- Development spending at Goldboro and Point Rousse, higher than expected
- Anaconda continues to trade at a discount to peers
Anaconda continues to trade at discount to peers (0.30x NAV, peers 0.64x); ongoing exploration success and the completion of the Maritime acquisition should
close the gap to peers.
Stay Tuned as Market Transition Unfolds
In this edition of RCKS Charts, Keith has evaluated Altius Minerals Corp. (TSX:ALS), InZinc Mining Ltd. (TSXV:IZN) and Otis Gold Corp. (TSXV:OOO).
First Cobalt Corp.
High Priority Kerr Area Extends over 200m; Remains Open
Impact: Mildly Positive
Encouraging recent drilling in the Kerr area provides momentum for First Cobalt in advancing exploration efforts across its large land package in the Cobalt
- Kerr area mineralized zone expands to 200m, remains open
- Drilling complements disseminated mineralization thesis
- Follow-up planned for the high priority Kerr area
We continue to believe the company’s unique attributes, including its land position and infrastructure are likely to see First Cobalt trade at a premium to other cobalt exploration peers. Next key catalyst for the company is the completion of the US Cobalt acquisition, expected on or around May 28, 2018.
Northern Empire Resources Corp.
Crown Gets Bigger; Outlines Expansion Potential
Exploration activities on the Sterling project continue to enhance the prospectivity of the Crown Block of deposits through step-out drilling at the Daisy and Secret Pass deposits, which adds value to the company’s already permitted Sterling mine.
- Daisy grows in many directions
- Potential near-surface oxide mineralization to the west of Secret Pass deposit
- Market does not appear to fully reflect the likely resource growth delivered by recent drilling
Considering Northern Empire’s ongoing exploration success, we expect upcoming drill results to close the discount to peers.
Austral Gold Ltd.
Q1 2018 Production Hindered by Unexpected Issues
Impact: Mildly Negative
Austral reported disappointing Q1 2018 production results, reducing total mine production (Guanaco, Amancaya and Casposo) by ~17% from Q4 2017 to 20,367 oz AuEq, following unexpected issues.
- Total production fails to meet expectations, company focused on improvements to meet 2018 guidance of 92,000 oz Au (net to Austral)
- Better grade control systems have been implemented at Guanaco and production issues at Amancaya have been fixed to support a stronger Q2 2018 production
- QoQ production at Casposo reduced by lower head grades, more equipment to be added for next quarter to recover
We expect stronger quarters from Austral as the company and works towards meeting its 2018 production guidance. In our view, Austral is poised to re-rate towards similar scale peers, as it improves operations.
Lion One Metals Ltd.
Site Visit: Small Project with Big Potential
Recently, we visited Lion One’s Tuvatu Gold Project in Fiji and were generally impressed with this permitted high-grade project.
- On the path to production with permits in-hand
- Start small approach, makes this a financeable & buildable project
- Current resource does not reflect the significant exploration upside
Lion One currently trades at C$62/oz, a modest premium to peers (C$49/oz), however, in our view this premium does not properly account for this project’s permitted nature or the significant exploration upside that we see.