RCKS Talk

16-Nov-2018

Red Pine Exploration Inc.

A Step in the Right Direction

Impact: Positive

Red Pine has announced a maiden resource estimate of 100Koz gold grading 6.8 g/t at their Minto South project. The size of the resource is modest, however, the likelihood of resource expansion with more drilling at Minto South is good given that it is open in all directions. Moreover, we believe that Red Pine’s efforts to better understand structural controls on mineralization within the Wawa Gold Corridor are beginning to pay dividends. As a result, we expect future drilling may more effectively target high grade shoots both at Minto South and Surluga. The results support our view that the Wawa corridor hosts a large gold system which may encompass multiple gold deposits.

Highlights:
  • Maiden high-grade resource at Minto South. The maiden resource includes 25Koz Au (105Kt grading 7.5 g/t) in the Indicated category and 75Koz Au (354Kt at 6.6 g/t) in Inferred (Figure 1). Mineralization at Minto South occurs within narrow, high-grade veins and shears which occur outside of the Surluga resource envelope.
  • Minto South resource just the beginning. Exploration to date suggests that mineralization remains open along strike and down plunge. In addition, additional mineralized zones, both within the Minto South shear and in parallel footwall structures to the west have been identified which require follow up drilling. Potential exists to expand resources five-fold at Minto South - the company is guiding to a conceptual resource target of 250-750koz Au (1.5-2.4Mt) grading 5-10g/t.
  • Minto South, starter kit for larger mine? Red Pine hints that it may evaluate a bulk sampling or small-scale mining scenario at Minto South. Presumably, cash flows generated by mining high grade zones within the Minto South deposit could potentially assist in funding a larger mining operation at Surluga. 
Valuation:
We continue to believe ongoing uncertainty regarding Red Pine’s ownership structure is causing the company to trade at a steep discount to peers (US$13/oz vs. peers at US
$33/oz). We also believe that the market fails to recognize the exploration upside demonstrated by drill results to date
Upcoming catalysts are expected to include, 1) Ongoing exploration results and 2) Updated Surluga Resource (H1/19)

 

30-Oct-2018

Red Pine Exploration Inc.

Impressive Results Validate Geological Model

Impact: Positive

We continue to believe that the market fails to appreciate the potential size, scope and strategic value of this land package. Red Pine Exploration announced the intersection of additional wide zones of high-grade gold at the Surluga deposit, which follows recent high-grade intercepts announced last week . These holes targeted the Jubilee Shear and intersected underground ore grade gold mineralization over significant widths, which continues to support our thesis that the Wawa corridor hosts a large gold system which may encompass multiple gold deposits.

Highlights:  

  • Fill the gaps. Red Pine drilled 5.13 g/t over 13.4m (true width), within a wider interval of 3.53g/t Au over 24.4m (SD-18-229). These results should have a positive impact on the upcoming resource estimate for Surluga as the company fills gaps in the existing resource. With a second rig currently being mobilized on the property, we can expect more results from the company as it drills untested portions of the existing resource model.
  • Drilling validates geological model at Surluga. These most recent results at Surluga validate Red Pine’s geological model, and demonstrate the company’s understanding of the controls on the mineralization. We believe potential exists (i) to convert waste to ore as additional gaps are drilled and (ii) to expand resources at Surluga as down-plunge extensions are drilled.
  • Wawa Corridor coming together. Consistent ore grade drill intercepts reported for Minto South and Surluga suggest the company is on track to deliver its maiden Minto Mine South Zone resource estimate in Q4/18 and updated Surluga Deposit resource estimate in H1/19. We note that a number of other zones and structures have been identified within the Wawa Corridor and that resources are likely to continue to grow.
Valuation:
Discounted valuation reflects ownership structure and not the significant exploration potential that we see.  Red Pine trades at a steep discount to peers (US$14/oz vs. peers at US$41/oz), due to uncertainty surrounding its ownership structure. It would appear that the market fails to recognize the exploration upside and we believe the pending resource updates could provide the company renewed momentum. Upcoming Catalysts include 1) Minto South maiden resource (Q4/18) and 2) Surluga resource update (H1/19).
24-Oct-2018

Red Pine Exploration Inc.

Wawa Wows with Grade and Thickness

Impact: Positive

Red Pine Exploration announced wide high-grade intercepts from the Surluga Deposit, which follows recent positive results from the nearby Minto South Zone . These results continue to support our thesis that the Wawa corridor (Figure 1) hosts a large gold system which may encompass multiple gold deposits. We continue to believe that the market fails to appreciate the potential size, scope and strategic value of this land package.

Highlights:
  • Mind the gaps. Red Pine drilled 3.5 g/t over 32.8m (true width), including 4.99 g/t over 17.6m (SD-18-228) and 27.3m (true width) over 1.0 g/t (SD-18-230). These holes targeted gaps within the existing resource model that were previously untested and assigned zero grade. These results should have a material positive impact on the upcoming resource estimate for Surluga, as waste blocks are converted to ore. 
  • Drilling validates Red Pine’s structural model at Surluga. While previous operators were focused on down-dip extensions of stacked shear zones at Surluga, Red Pine has shifted focus to high grade shoots plunging to the southeast within the shears. These most recent results at Surluga validate Red Pine’s structural model and demonstrate potential (i) to convert waste to ore as additional gaps are drilled and (ii) to expand resources at Surluga as down-plunge extensions are drilled.
  • Wawa Corridor slowly coming together. Consistent ore grade drill intercepts reported for Minto South and Surluga suggest the company is on track to deliver its maiden Minto Mine South Zone resource estimate in Q4/18 and updated Surluga Deposit resource estimate in H1/19. We note that a number of other zones and structures have been identified within the Wawa Corridor and that resources are likely to continue to grow.
Valuation:
Discounted valuation reflects ownership structure and not the significant exploration potential that we see.  Red Pine trades at a steep discount to peers (US$14/oz vs. peers at US$41/oz), due to uncertainty surrounding its ownership structure. It would appear that the market fails to recognize the exploration upside demonstrated by ongoing drill results. We believe that the pending resource updates could provide the company renewed momentum. Upcoming Catalysts include 1) Minto South maiden resource (Q4/18) and 2) Surluga resource update (H1/19). 

10-Oct-2018

Red Pine Exploration Inc.

Minto South Resource Incoming

Impact: Mildly Positive

Red Pine Exploration announced results from 19 holes at its Wawa Gold Project, 2 km west of Wawa, Ontario. Drilling continues to test the southern extension of the Minto Mine South Zone ahead of the resource update for the zone, which is expected Q4 2018. The high-grade drill results continue to support our thesis that the Wawa corridor hosts a large gold system where we see the company building a high-grade underground resource.

Highlights:
  • Results validate structural interpretation. The company highlighted 3.3g/t Au over 15m including 9.93g/t Au over 2.9m (SD-18-223), testing extensions of Minto South. Continued drilling success at Minto Mine South Zone continues to validate Red Pine’s structural interpretation of this zone. We note that the Minto Mine Shear Zone remains open down plunge to the south and has potential to host a second shoot up-dip of the existing mineralized zone. 
  • The pieces are coming together. Results continue to reflect our view that the multiple mineralized zones at Wawa are part of a larger gold system, where the company is slowly building a high-grade resource within the prospective Wawa Gold Corridor. 
  • Maiden resource expected shortly. The company is continuing its 30,000m drilling campaign leading up to its Q4/18 maiden NI 43-101 resource on the Minto Mine South Zone.We expect a PEA and revised NI 43-101 resource on the Surluga Deposit in H1/19. 
Valuation:
We continue to believe that the current uncertainty regarding Red Pine’s ownership structure is causing the company to trade at a steep discount to its peers (US$15/oz vs. peers at US$39/oz). We also believe that the market fails to recognize the exploration upside demonstrated by ongoing drill results. While ongoing drilling is likely to be a positive for the stock, we view the pending resource update as a catalyst that could provide the stock renewed momentum.Upcoming catalysts are expected to include, 1) Minto Mine South Zone Maiden Resource (Q4/18), 2) Updated Surluga Resource (H1/19) and 3) Ongoing Exploration results.  

24-Sep-2018

Precious Metals Commentary

Is it 2015 Again? Precious Metals Appear Poised for a Rally

This summer has not been pleasant for mining company share prices or for those of us that are invested in them. Falling commodity prices combined with excitement in other sectors has resulted in apathy towards mining companies in general. Recently, there has been a glimmer of hope with significant exploration results from GT Gold (TSXV:GTT) and RNC Minerals (TSX:RNX) that has driven each company’s share price significantly higher. One of the indicators that we follow, that we consider to be a reasonable indicator of bearish/bullish sentiment is the Gold/Silver Ratio, which is currently at a 2-year high.

  • Gold/Silver Ratio is at 83.6, levels not seen since early 2016, which was a precursor to a rally in precious metal prices and a significant rally for precious metals equities (Figure 1)
  • The last rally started in large cap names, but migrated quickly down cap, with the largest returns coming from the smallest names (Figure 2 & 3)
  • We think companies that have continued to deliver good results over the last few months without a corresponding rally in the share price are likely poised to outperform. Names that we think fit this profile:
    • Brixton Metals (TSXV:BBB)
    • NxGold (TSXV:NXN)
    • Red Pine Exploration (TSXV:RPX)
    • Amarillo Gold (TSXV:AGC)
    • Lupaka Gold (TSXV:LPK)
    • Orford Mining (TSXV:ORM)
    • Lion One Metals (TSXV:LIO, ASX:LLO)
It is always important to highlight, that while we believe a rally is likely coming, the timing of that rally is always uncertain. However, mining is a cyclical business and we believe we are very close to the bottom, suggesting now is a good time to get positioned for the pending rally.

13-Sep-2018

Red Pine Exploration Inc.

More High-Grades from Historic Assays

Impact: Mildly Positive

Red Pine Exploration announced additional results for historic holes sampled as part of its 2018 Historic Core Sampling Program at its Wawa Gold Project, located in Wawa, Ontario. The goal of the historic program is to convert gaps in the historic resource, where drilling exists but the core was not assayed.

  • This set of results were highlighted 22.8g/t Au over 1.74m (S287) in the Surluga Deposit, which continues to highlight the high-grade nature of the shear zones and aligns well with the company’s revised plan of operating a higher-grade underground mine. Figure 1 shows the holes released in this update and the grade x meter increase for the holes
  • Historic core sampling now totals 42,000m since December 2014 and continues to add gold to both the Jubilee Shear Zone and Surluga Deposit, which we expect is likely to have positive impacts to the projects resource base to be defined in the planned resource update for Surluga
  • We note that since April 2018, ~15.5M share purchase warrants have expired with only ~375k expiring in the money. We view this positively as it improves the company’s capital structure. We note that the next significant set of warrants expire in February 2019 with 9.25M at C$0.066 and 5.3M at C$0.132 and 3.4M at C$0.135
Red Pine currently trades at a steep discount to peers (C$19/oz vs. peers at C$49/oz), valuation does not reflect the exploration upside that continues to be demonstrated by ongoing drill results. While ongoing drilling is likely to be a positive for the stock, we view the pending resource update positively and is likely to provide investors clarity on the path forward.

14-Aug-2018

Red Pine Exploration Inc.

Surluga Drilling Intersects 27.9m of 3.13g/t Gold

Impact: Positive

Red Pine Exploration has announced the results of sixteen additional holes at its Wawa Gold Project as a part of its drill program designed to in fill gaps in the Surluga and Minto Mine South Zone.
  • Drilling in the near-surface extension of the historic Jubilee Mine at the Surluga Deposit returned results of: 3.13g/t Au over 27.9m, including 37.3g/t over 1.1m (SD-17-172), 1.77g/t Au over 32.6m (SD-17-170) and 2.12g/t over 14.1m (SD-18-176)
  • A new gold zone was discovered in the footwall of the Surluga Deposit with hole SD-17-172 returning 7.74g/t Au over 2.9m, which is a positive development for the company as high-grade gold mineralization has been primarily intersected in the hanging wall and shear zone
  • Drilling continues to fill gaps in the Surluga Deposit with high-grade mineralization and the company is working to target strategic gaps in the existing database in order to maximize the impact of the program on the upcoming resource
Red Pine currently trades at a discount to peers (C$27/oz vs. peers at C$51/oz), valuation does not reflect the exploration upside we believe the property has, or the likely re-rating should the current project ownership structure be cleaned up.

08-Aug-2018

Red Pine Exploration Inc.

Resampling Results Suggest Current Resource May Be Understated

Impact: Mildly Positive

 

Red Pine Exploration has received partial assay results for 135 holes from historic drill core from the Wawa Gold Project, which the company is sampling as a part of its 2018 sampling program.
  • Red Pine has received assays for 7,600 of the 11,000m of core logged this year, where 51% of sampled holes returned grades greater than 0.1g/t Au
  • Sampling highlights include: 8.78g/t Au over 2.28m at the Surluga Deposit (U0728L5) 9.36g/t gold over 0.7m (S174W), 2.31g/t gold over 4.88m (U0645L5), 1.55g/t gold over 3.8m (U0683L5)
  • Previously, all unsampled cores were assigned a gold value of zero, removing any ability for extrapolation in those areas of the deposit; subsequently, the results of this sampling are likely to have a positive impact on any future resource model as 51% of holes in these unsampled areas have returned non-zero gold values
Red Pine currently trades at a discount to peers (C$27/oz vs. peers at C$50/oz), valuation does not reflect the exploration upside we believe the property has, or the likely re-rating should the current project ownership structure be cleaned up.

 

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.

24-May-2018

Red Pine Exploration Inc.

Minto Mine South Zone Continues to Expand

Impact: Positive

Additional drill results highlight the exploration potential of the Wawa Gold Project, supported by further expansion of the Minto Mine South Zone.

  • Minto Mine South Zone continues to expand along strike and down-dip
  • Possible new high-grade zone intersected in Minto Mine South.
  • 30,000m drill program underway, working towards updating resources at Wawa
Red Pine currently trades at a discount to peers (C$27/oz vs. peers at C$51/oz), valuation does not reflect the potential for exploration upside.

12-Apr-2018

Red Pine Exploration Inc.

New Discovery Expands Wawa Gold Project

Impact: Positive

With the discovery of a new zone outside current resources, drilling continues to support our view that resource expansion is likely.

  • New shear zone discovered 950m north of resource at Wawa
  • New zone demonstrates 5km strike of Wawa Corridor
  • Exploration continues to follow-up on results, to support expected resource expansion
Red Pine currently trades at a discount to peers (C$27/oz vs. peers at C$49/oz), valuation does not reflect the potential for exploration upside.

01-Jan-2018

Red Pine Exploration Inc. (TSXV:RPX)

RCKS Talk Blog Archive

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