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Thursday, July 20, 2017 Derek Macpherson

EXN's Q2 2017 Production Improves Post Optimization

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Excellon Resources Inc. (TSX:EXN) reported positive Q2 2017 production results, subsequent to the completion of its optimization plan at its Platosa Mine in Durango, Mexico (Figure 1). In mid-June, the company achieved dry mining conditions the initial benefits of which were scene in Q2 results. In Q2 production increased in all metals, silver (~49%), lead (~39%) and zinc (~28%) as compared to Q1 2017. We expect the remainder of the year to be strong, as the company should be able to ramp up production. read more


Tuesday, July 18, 2017 Derek Macpherson

AGLD Consolidates Land Position Around Amancaya

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Austral Gold Ltd. (TSXV:AGLD, ASX:AGD) announced it will acquire 100% interest in the San Guillermo and Reprado projects from Revelo Resources Corp. (TSXV:RVL), for 10 million shares of Austral (C$1.5 million) as well as NSRs on future production at both projects (1% NSR Reprado, 0.5% NSR San Guillermo). In February 2016, Austral signed an Option and Sale Agreement on San Guillermo with Revelo, which has now been cancelled. The transaction is beneficial to Austral adding near mine exploration potential from both projects which are located adjacent to Amancaya. We continue to expect improved performance from the company over the course of the year, as the new agitation leach plant comes online and higher-grade stockpiled ore at Amancaya begins being processed. In our view, Austral is poised to re-rate towards similar scale peers. read more


Tuesday, July 18, 2017 Derek Macpherson

GWM Results Point to Future Areas of Potential Growth

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Galway Metals Inc. (TSXV:GWM) reported results from 31 holes completed at its Clarence Stream gold property in New Brunswick. Drilling focused on expanding resources and further defining the areas surrounding historic drilling in the North Zone which hosts an indicated and inferred resource of ~93k oz Au (421kt @ 6.9 g/t Au - cut). Results were highlighted by step-out holes grading 14.6 g/t Au over 10.2m (AD17-127) and 7.3 g/t Au over 4.6m (AD17-119), located between the North Zone resource and a smaller zone to the southeast. The drill is being relocated to the South Zone which appears to have similar mineralogy as the North Zone but separated by a fault. The company plans to pursue exploration in the area, as well as test other priority targets which include to the northeast of holes AD17-127 and AD17-119. We believe results highlight the project’s potential for significant resource growth, as already results have appeared to extend the North Zone 1,250m southeast and then east. We expect the maiden pit constrained resource and updated underground resource estimates (September 2017), to be important near-term catalysts for the company, as they continue to drill and define the project’s resource. This update is likely to be important to help close the significant valuation gap between Galway (C$15/oz) and peers (C$36/oz). read more


Tuesday, July 18, 2017 Derek Macpherson

NEE Advances Construction at Moss

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Northern Vertex Mining Corp (TSXV:NEE) provided an update regarding construction activities underway at its Moss Mine in Arizona. Most notably, the delivery of the crushing plant is ahead of schedule, with final delivery expected at the end of August. The company has also received the majority of permits needed to build and operate a power supply line to the Moss Mine, which will remove the need for diesel generators. Other activities include concrete work and liner installation as well as the decommissioning of the pilot plant heap and ponds, which will be replaced. Based on the advances made to date, the company remains on schedule for production in Q4 2017. Northern Vertex trades at C$138/oz a premium to peers (C$58/oz). We view the premium valuation as reasonable given that the Moss mine is financed, permitted 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


Tuesday, July 18, 2017 Derek Macpherson

Sierra Reports Weaker Q2 2017 Results

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After consecutive record quarters, Sierra Metals Inc. (TSX:SMT, BVL:SMT) reported weaker production results for Q2 2017; however, the company’s flagship Yauricocha mine continues to perform well (Figure 1). The main reasons for the weaker QoQ performance, were poor equipment availability, lack of water (dry summer) and lower grades. In our view, upside exists as ongoing exploration and operational improvements at Sierra’s operating mines are key to enhancing the company’s value and liquidity. We highlight that company recently received a U.S. listing (NYSEMKT:SMTS) which has the potential to help with liquidity. read more


Tuesday, July 18, 2017 Derek Macpherson

ASND Shows Improved Operations in June & Q2

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Ascendant Resources Inc. (TSXV:ASND) provided a production update for June and Q2 from its El Mochito mine. Operations improved month-over-month but throughput fell slightly short (~7%) of Q2 guidance. However, better than expected grades resulted in the company exceeding zinc equivalent production guidance by ~4% for the quarter. We view the progress the company is making positively, particularly since equipment availability is expected to improve in Q3 and the company reaffirmed its full-year guidance. Consequently, we expect operational improvements to continue. We believe a progressive re-rating is likely over the year as the company executes on its ongoing optimization program and reports exploration results from the recently initiated program. read more


Tuesday, July 18, 2017 Derek Macpherson

Tinka Extends South Ayawilca; Drilling Continues

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Tinka Resources Ltd (TSXV:TK) reported results from five step-out drill holes targeting South Ayawilca, West Ayawilca and Zone 3 at its Ayawilca zinc project in central Peru (Figure 1). Results continue to demonstrate the exploration upside at this project having extended South Ayawilca by 200m southeast with hole A17-071 which returned 8.4% Zn, 0.8% Pb and 35 g/t Ag over 22.8m. Interestingly, hole A17-072 returned 11.5m of 2.9% Zn, 2.3% Pb and 781 g/t Ag from a different style of mineralization (sulphides as cavity fillings in recrystallized limestone versus massive sulphides) than seen elsewhere on the property. More drilling is needed to determine the potential impact of this different mineralization. As well, drilling at West Ayawilca intersected high-grade zinc of 31.0% Zn over 2.2m. Hole A17-081 will follow-up on initial results from Zone 3, as drilling continues at all targets, including step-out holes in South Ayawilca and West Ayawilca. We believe as Tinka continues to demonstrate exploration upside at Ayawilca it should support and may expand the current premium it trades at relative to peers (C$0.04/lbs vs. C$0.01/lbs ZnEq). read more


Thursday, July 13, 2017 Derek Macpherson

EXN Ramps Up Under Dry Mining Conditions

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Excellon Resources Inc. (TSX:EXN) has successfully completed its optimization plan for its Platosa Mine in Durango, Mexico. Drier mining conditions allow the company to ramp up production rates and access the higher grades in the Rodilla and Guadalupe South Mantos. We expect to see a stronger H2 2017 as cash flow and profitability should improve materially. The company is planning to produce from six faces (Q3), and access the 623 Manto in the near term, more details are pending. Excellon currently trades at a premium to peers at 8.2x 2017e EV/CF versus peers at 6.6x 2017e EV/CF. We believe this premium only partially reflects the increased production and lower costs expected now that the optimization program is completed at Platosa. read more


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