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Tuesday, October 17, 2017 Derek Macpherson

As Anticipated Excellon Reports Improved Q3 Results

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Excellon Resources Inc. (TSX:EXN) has reported a significant increase in grades and tonnage at its Platosa mine in Mexico. By mining the high-grade 623 manto and ramping up production from 125 tpd in Q2 2017 to 200 tpd, the company was able to increase metal AgEq production by 96% compared to Q3 2016. The company also completed the first stage of a new tailings management facility at their milling facility in Miguel Auza, Zacatecas, which, once in commission, will allow for a 300 tpd production rate in five stages for approximately 19 years. The commissioning of this facility is in line with the company’s plan to continue expanding their resource base and the mine’s production rate. Management also pointed out that their AISC decreased during this past quarter to approximately $11-$13 per payable silver ounce. As previously suggested, the production and cost improvements are a direct result of the company’s recently completed mine optimization plan which has resulted in dry mining conditions in higher grade areas. In our view, these operational improvements are key to enhancing the company’s value and liquidity in the years to come. Excellon currently trades similarly to peers at 5.9x 2017e EV/CF versus peers at 5.8x 2017e EV/CF. Ongoing exploration should be an important catalyst for the company, as they highlight the potential to expand and grow operations in the near-term.  read more


Tuesday, October 17, 2017 Derek Macpherson

NEE Plans for Exploration with Strengthened Team

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Northern Vertex Mining Corp (TSXV:NEE) announced it has an agreement with La Cuesta International Inc. to design a ~$10 million exploration program. Founders, Frank (Bud) Hillemeyer and Perry Dunning have been appointed as Exploration Advisors for the Oatman District, further strengthening the company’s team. The agreement provides the company access to the La Cuesta Proprietary Resource Data Bank of the Oatman District which hosts data going back to the 1970’s. Northern Vertex trades at C$138/oz a premium to peers (C$48/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 fully account for the potential of meaningful mine-life extension and improved economics from the ongoing optimization and exploration programs. read more


Tuesday, October 17, 2017 Derek Macpherson

ASND Sees Slight Impact from Delays; Ramp-Up Continues

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Ascendant Resources Inc. (TSX:ASND) reported September and Q3 2017 production results, achieving milled production of 2,055 tpd (8% increase from August) and 1,934 tpd (17% increase over Q2 2017), respectively. September results were hindered by delayed equipment deliveries, which have now arrived. Although being slightly under Q3 guidance of 2,000 tpd, with the addition of new equipment and continued progress, the company is expecting to meet its Q4 2017 guidance of 2,200 tpd. As well, ore grades are expected to improve as new higher-grade zones become accessible. All of which should be reflected by improved production over the remainder of the year. We believe a progressive re-rating is likely over the year as the company executes on its ongoing optimization program and reports results from ongoing exploration. read more


Tuesday, October 17, 2017 Derek Macpherson

MTO Extends Shear Zones at Barry; Drilling Continues

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Metanor Resources Inc. (TSXV:MTO) reported results from ongoing surface drilling at its Barry project in Quebec. Since the last results, 24 holes have been drilled over 11,163m which have extended an existing shear zone 400m east. These results were highlighted by 4.0m at 8.4 g/t Au (MB-17-102) and 3.0m at 27.8 g/t Au (MB-17-111). The company notes it has differentiated many gold bearing shear zones east of the pits by reducing the spacing between drill holes. The continued confirmation of and identification of new shear zones supports our and the company’s view that a high-grade underground mining scenario is more likely than the open-pit only scenario outlined in the 2016 PEA. Exploration continues in the west with two drills, as well, a third drill is operating ~1km north-east of the mining leases following up on results from the 2017 geophysical aerial survey. We expect further results from the ongoing drill programs at both Barry and Bachelor to be important near-term catalysts for the company along with FQ4 production and financial results. read more


Tuesday, October 17, 2017 Derek Macpherson

Sierra Reports Higher Q3 2017 Results

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Sierra Metals Inc. (TSX:SMT, BVL:SMT, NYSE:SMTS) reported modestly improved production results for Q3 2017 with an increase in CuEq production of 2% versus Q2 2017. However, metal production remains weaker than Q3 2016 due to lower production from its projects in Mexico. The QoQ decrease in metal production at Cusi is a result of shifting resources to develop recently discovered higher grade zones. An operational improvement program, which has already been successful at Yauricocha, is currently underway at Bolivar and Cusi and is expected to improve production, modernize operations and lower costs by early 2018. We note the company is likely to need a strong Q4, to achieve 2017 production guidance. In our view, the ongoing operational improvements in addition to ongoing exploration are key to enhancing the company’s value and liquidity. read more


Wednesday, October 11, 2017 Derek Macpherson

VIT Hits Gold Below the Eagle Pit

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Victoria Gold Corp. (TSXV:VIT) reported results from the first drill hole from the Eagle Deep target, adjacent and below the 2016 Eagle Gold Mine Updated FS pit boundary. Results returned 0.59 g/t Au over 423m including 0.91 g/t over 161.4m (hole DG17-910C). The company noted visible gold was encountered in core logging at 577m, 608m and 614m. An additional 3 holes were drilled with results pending. Results were successful in highlighting the growth potential in and around the Eagle Gold mine. Exploration at Dublin Gulch continues to successfully highlight the properties exploration upside. Victoria currently trades at a discount on a per ounce basis, or C$32/oz versus peers at C$57/oz, which we believe does not take into account the exploration potential of the Dublin Gulch property or that the project has just transitioned from shovel ready to under-construction.  read more


Wednesday, October 11, 2017 Derek Macpherson

NEE PEA Expands Moss Mine; Improves Project Economics

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Northern Vertex Mining Corp. (TSXV:NEE) reported results from a PEA completed for its Moss mine outlining an alternative mine plan which includes existing resources currently excluded from the mine plan. The previous feasibility study (FS) completed in 2015 is based on a mine plan constrained by the company’s patented claims, not by resources, whereas the PEA removes this restriction, materially improving project economics. The key step for the company to realize this value is acquiring permits for the surrounding land, a process which is likely to start once the powerline and road upgrade permitting process is complete. While this upside potential is important, we believe that ongoing construction updates and first production are likely to be the key near-term catalysts for the stock.  read more


Friday, October 06, 2017 Derek Macpherson

Site Visit: NEE Progressing Towards First Gold Pour

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Recently we had the opportunity to visit Northern Vertex Mining Corp.’s (TSXV:NEE) Moss mine which is progressing towards its first gold pour. The construction period can be a challenging time for any company and a risky period for investors, as the company works to take the major de-risking step of transitioning from a developer to a producer. Our site visit highlights that Northern Vertex is well down the path to production, with all major components showing meaningful progress. Based on what we saw on-site, we expect Northern Vertex to pour gold before year-end. We highlight that Northern Vertex is very well funded with both debt (Sprott loan, CAT finance facility) and recent equity investments resulting in low completion risk (i.e. running out of capital before construction). Northern Vertex’s current valuation does not appear to reflect likely reserve growth, currently excluded from the mine plan. We expect ongoing construction updates and first production to be key catalyst for the stock. read more


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