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Friday, May 12, 2017 Derek Macpherson

MTO Reports Solid FQ3; Increases F2017 Guidance

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Metanor Resources Inc. (TSXV:MTO) reported solid FQ3 2017 (June 30th year-end) financial results, increasing guidance from 28k-33k oz to 33k-36k oz for the year. We view the results and guidance increase positively and with a strengthened balance sheet, the company is well positioned to extend the mine life of the Bachelor Mine and advance Barry towards production. From Bachelor, 9,442 oz of gold was produced in Q3 representing an increase in production by 3.6% YoY and a slight decrease of 3.3% QoQ. Cash costs decreased by 13.6% YoY, however, increased by 13.4% QoQ (Figure 1). With 27,605 oz produced so far, this year, the company appears to be well-positioned to meet or exceed its updated guidance with only one quarter remaining. We expect ongoing results and FQ4 production results to be important near-term catalysts for Metanor. read more


Thursday, May 11, 2017 Derek Macpherson

RCKS Drilling Deeper Lunch; Focus on Zinc

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Yesterday, Red Cloud Klondike Strike Inc. (RCKS) hosted another installment of our Drilling Deeper Lunch series, this time featuring three zinc companies, a producer, a developer, and an explorer. The presenting companies were Tinka Resources Ltd. (TSXV:TK), Ascendant Resources Inc. (TSXV:ASND) and Aquila Resources Inc. (TSX:AQA). We believe all three presenters are well positioned to take advantage of the strong fundamentals we see for zinc.  read more


Thursday, May 11, 2017 Derek Macpherson

EXN's Costs Increase as Optimization Nears Completion

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Excellon Resources Inc. (TSX:EXN) reported weak Q1 2017 financials, as the company entered a period of increased spending supporting the ongoing optimization at its Platosa mine in Durango, Mexico. Due to challenging mining conditions and focus on optimization, production costs increased significantly QoQ by 11.19% (23.13% YoY). The optimization plan is 90% completed and water levels are lowering at a faster rate than initially forecasted. We expect to see a stronger H2 2017 as cash flow and profitability should improve materially. Excellon currently trades at a premium to peers at 1.22x NAV and 6.3x 2017e EV/CF versus peers at 0.87x NAV and 6.0x 2017e EV/CF. We believe this premium only partially reflects the increased production and lower costs expected once the optimization program is completed at Platosa.  read more


Tuesday, May 09, 2017 Derek Macpherson

Radisson Continues to Grow Resources at O'Brien

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Radisson Mining Resources (TSXV:RDS) announced drill results from two additional holes completed in 2017 both of which we expect to be added to the current resource at its O’Brien gold project in Quebec. Results continue to highlight the project’s potential for resource growth, as both holes intersected significant mineralization outside the current resource. As well, hole OB-17-25 intersected 1 g/t Au over 93m, which is a much wider interval than we have typically seen from O’Brien (Figure 1). Assays are still pending for 8 holes covering 3,500m. Currently, two drill rigs are operating at the project, one at the 36E and Kewagama areas targeting resource expansion and the second following up on exploration targets. Radisson currently trades at a discount to peers, C$50/oz vs. peers at C$58/oz, which we believe fails to reflect the exploration potential of O’Brien. read more


Monday, May 08, 2017 Derek Macpherson

CSL Intersects High Grades at Preview SW

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Comstock Metals Ltd. (TSXV:CSL) reported initial high-grade results from 3 of 8 drill holes completed during the winter program at its Preview SW gold project near La Ronge, Saskatchewan (Figure 1). Holes PR17-164 to PR17-166 completed at the Preview North zone were drilled to follow-up on intercepts from Hole PR13-163 (April 2013), which intersected high-grades over good widths. Today’s results were highlighted by Hole PR17-166 which included 10.33 g/t Au over 5m. Results from an additional 5 holes are still pending, and the company plans to develop a summer program depending on the remaining results. At C$12/oz, Comstock currently trades at a steep discount to peers (C$53/oz). In our view, the market does not account for the exploration upside at either the company’s QV Property or Preview SW gold project. We believe that the pending results from the winter exploration program from Preview may begin to close the valuation gap to peers.  read more


Monday, May 08, 2017 Derek Macpherson

Ascendant Sees Improvements Early in Q2

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Ascendant Resources Inc. (TSXV:ASND) announced average daily throughput had improved to 1,960 tpd from its El Mochito mine in April (up from 1,619 tpd in Q1), providing an early indication that the company is on-track with its turnaround. For Q2, the company has guided for 1,850 tpd and expects to exit 2017 at 2,200 tpd. To achieve these goals, we expect the company is likely to deliver steady improvements over the course of the year, as it enters its most capital intensive quarter. The recent financing (C$20 million), should provide the financial support necessary to fund its operational turnaround. In addition, the company announced that its new three-year collective bargaining agreement has been agreed upon with union leadership and ratified by the Minister of Labour of Honduras, which should provide the company medium term labour stability. We believe a progressive re-rating is likely over the year as the company executes on its ongoing optimization program; we expect Q2 operating results (expected in early July) are inclined to be the next catalysts for the company. read more


Sunday, May 07, 2017 Derek Macpherson

Marlin Identifies New Zone at Commonwealth

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Marlin Gold Mining Ltd. (TSXV:MLN) released drill results from its Commonwealth project that have defined the new “Footwall Zone” at the Arizona project which could likely grow the resource and lower costs. Following up on hole 16CDDH06 (2.91 g/t AuEq over 25.8m), Marlin drilled an additional 12 core holes and results were highlighted by hole 17CDDH24 which returned 2.20 g/t AuEq over 25.7 m (Figure 1). Besides adding ounces, this new zone appears to be significantly higher grade than the current resource. In our view, this zone has the potential to meaningfully improve project economics. Besides continued drill results from the Footwall Zone, we expect strong Q1 financial results (late May), along with ongoing exploration results from La Trinidad and anticipated permitting news from its San Albino royalty to be positive catalysts for Marlin in the near-term. read more


Sunday, May 07, 2017 Derek Macpherson

AMI Ups 2017 Guidance; Kemess Remains Undervalued

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AuRico Metals Inc. (TSX:AMI) reported Q1 2017 financial results and increased its royalty revenue guidance for 2017 from US$8.0-US$8.4 million to US$9.5-US$10.4 million. The increase in guidance was driven by Kirkland Lake Gold Ltd. (TSX:KL) increasing its production guidance at Fosterville (was 140-145k oz Au, now 200-225k oz Au). AuRico is continuing to advance Kemess with ongoing permitting, a planned 12km drill program at Kemess East and Offset zones as well as a planned PEA to demonstrate the economic potential of Kemess East. We believe the company is well positioned to unlock the value of Kemess. Using AuRico’s updated guidance the company trades at ~14.3-16.2x royalty EBITDA, versus peers at 16.2x (2017e EBITDA). This implies the market is ascribing Kemess negligible value, which in our view should be worth ~C$100-125 million as compared to stand alone development stage peers. read more


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