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Friday, April 21, 2017 Derek Macpherson

Sierra Q1 Results Show Continued Improvements

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Sierra Metals Inc. (TSX:SMT, BVL:SMT) reported Q1 2017 production results from its operating mines in Peru and Mexico. The company’s quarterly production showed continued incremental operational improvements at both Yauricocha and Bolivar, offsetting a weak quarter at Cusi (Figure 1). The company remains focused on improving operations and near-mine exploration, which should help it surface the value of these assets. In our view, continued exploration success along with ongoing operational improvements at Sierra’s operating mines are key to enhancing the company’s value and liquidity. read more


Thursday, April 20, 2017 Derek Macpherson

Ascendant Q1 Progress Report Encouraging

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Ascendant Resources Inc. (TSXV:ASND) announced Q1 operating results and 2017 guidance from its recently acquired El Mochito mine in Honduras both of which we view positively. For Q1, despite elevated costs and ongoing efforts to improve operations the company appears to be only modestly cash flow negative at the mine level. More importantly, the planned progressive improvements appear to be achievable and the exit run-rate suggests a much higher valuation may be warranted at the end of 2017. While there is risk associated with Ascendant executing these operational improvements, the company appears poised to deliver a progressive re-rating throughout 2017. As well, following the recent financing (C$20 million) the company should have the financial flexibility to execute on its plan, including what is planned to be a capital intensive Q2. We expect the pending financial and operating updates to be the key catalysts for the Ascendant share price over the next year. read more


Wednesday, April 19, 2017 Derek Macpherson

AMI Adds C$11.2M to Its Balance Sheet

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AuRico Metals Inc. (TSX:AMI) announced it has replaced the C$18.7 million restricted cash deposit used as security for reclamation and closure activities at the Kemess site, with a surety bond. The conversion released ~C$11.2 million in cash, as the company paid C$7.5 million in cash as collateral. In addition, the company appointed Sean Masse former Superintendent and Mine Manager at New Afton as Mining Project Manager and Mike Padula former Project Manager for Victoria Gold and Manager of Mining Wastes and Water for MMG Limited as Surface Construction Project Manager. The new additions to the AuRico team and stronger cash balance positions the company to continue to advance its Kemess Underground Project. read more


Tuesday, April 18, 2017 Derek Macpherson

GQC's Team Additions Support Romero Development

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GoldQuest Mining Corp. (TSXV:GQC) has appointed Georges Boissé former Canadian Ambassador to the Dominican Republic (2012) as Special Advisor to the company and Robert Crowley former US Agency for International Development/US Department of Agriculture liaison as Corporate and Social Responsibility (CSR) Manager. We view the new additions to the management team positively as it supports the development of Romero, as the company continues to advance the project and moves through the permitting process. GoldQuest currently trades at 0.44x NAV and $37/oz versus peers at 0.54x NAV and $35/oz. We continue to believe that the current valuation does not fully reflect the exploration potential of GoldQuest’s wider land package. We expect continued exploration drilling, along with follow-up drilling at Cachimbo are likely to be positive catalysts for the stock. read more


Tuesday, April 18, 2017 Derek Macpherson

NEE Identifies Sufficient Water for Operations

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Northern Vertex Mining Corp’s (TSXV:NEE) updated water report concludes that existing groundwater resources on the patented claims are sufficient to support expected mining operations at its Moss gold-silver mine in Arizona. The updated report estimates current groundwater resources to yield between 180 and 240 gpm, with an additional 120 to 160 gpm by way of pit dewatering from mining operations. Water demand at Moss will range between 170 gpm (winter) and 240 gpm (peak months, June and July), an average of 210 gpm, falling within the estimated capacity. Subsequently, a water distribution system is being designed to connect the groundwater wells. While identifying sufficient water for planned operations is critical; we believe this was already priced into the Northern Vertex’s share price. Northern Vertex trades at C$103/oz a premium to peers (C$55/oz). We view the premium valuation as reasonable given that the Moss mine is financed and under construction. In addition, the company’s valuation does not appear to account for the potential of meaningful mine-life extension and improved economics from the ongoing optimization and exploration programs. read more


Thursday, April 13, 2017 Derek Macpherson

SMT Updates Resource Estimate at Cusi

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Sierra Metals Inc. (TSX:SMT, BVL:SMT) provided an updated resource estimate comprised of drilling completed between January 2014 and January 2017 at its Cusi mine in Mexico (Figure 1). Due to the length of time since the previous resource update (2013) as well as differences in cut-off grades, recoveries, and average metal prices, we view the estimates as incomparable. The update does not include the 15,000m drill program which began in December 2016, targeting the Santa Rosa de Lima zone. The company is focused on converting resources into the measured and indicated categories, which will be incorporated in an updated resource expected in H2 2017. As mentioned in a post earlier this week, the company is in the process of obtaining a listing on the NYSE MKT, Cusi’s resource update will also aide in furthering that process. Sierra continues to achieve exploration success and deliver improvements at its operating mines, as this progress continues in addition to obtaining a US listing, we believe the progress should enhance the company’s value and improve the liquidity of the stock. read more


Thursday, April 13, 2017 Derek Macpherson

Otis' Exploration Activities Advance Kilgore

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Otis Gold Corp. (TSXV:OOO) provided an update on the exploration activities completed at the Kilgore Deposit and Gold Ridge exploration target at its Kilgore Gold Project in Idaho. The company completed magnetic and soil surveys at the Kilgore deposit and the surrounding areas, which revealed targets for future exploration. Otis is also in the process of planning a 2017 exploration program, which will consist of 8,000m of expansion drilling at Kilgore in late July, with permits expected later this quarter. At C$41/oz, Otis currently trades at a discount to peers (C$52/oz). We believe the market does not appear to fully account for the potential resource growth at Kilgore. We expect the upcoming drill program, pending resource update (Q2 2017) and PEA (Q3 2017) for Kilgore to be important catalysts for the company.  read more


Thursday, April 13, 2017 Derek Macpherson

IDM's Red Mountain FS on Track; Improves Recoveries

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IDM Mining Ltd. (TSXV:IDM) provided an update on the status of the Feasibility Study expected to be released in the next two months, for its Red Mountain project northeast of Stewart, BC. The FS is well underway to be completed on schedule, as the company finalizes designs and plans for the underground mine, tailings management facility and underground geotechnical and hydrogeology work. Thus far, metallurgical work has resulted in mildly improved recoveries on average of 89.4% and 86.1% Ag (previously 88.9% Au and 80.3% Ag), which should benefit project economics. IDM continues to trade at a discount to peers on a P/NAV basis (0.55x vs. peers at 0.63x) and on a per ounce basis (C$49/oz vs. peers at C$60/oz). We expect pending results from the 2017 drill program and the advancing feasibility study, coupled with the project’s ongoing de-risking (engineering and permitting), to help close the valuation gap to peers.  read more


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