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Tuesday, March 14, 2017 Derek Macpherson

Ascot Starts Surface Drill Program

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Ascot Resources Ltd. (TSXV:AOT) announced it has commenced surface drilling as part of the 2017 exploration campaign planned at its Premier property in British Columbia. As we discussed in a previous post, the C$20 million program is expected to consist of both surface drilling and underground development. Initially, 120 km of surface drilling is targeted at establishing an initial high-grade resource of 2-3 million oz Au. Later this year, Ascot expects to drill an additional 20 km to explore grassroots targets at the north of the property, spending a total of C$13 million on surface drilling in 2017. At C$47/oz, Ascot currently trades at a discount to peers (C$58/oz). However, based on the high-grade resource goal and ignoring the existing low-grade resource, the company trades at between C$70-105/oz, a premium to peers. This valuation reflects the project’s likely high-grades, existing infrastructure and key shareholders. Based on Ascot’s cash position at the end of 2016 (C$29.1 million), the company appears to be well-financed for its planned exploration and remaining option payment of C$6.85 million (due June 2017). We believe Ascot is likely to continue the success demonstrated during the 2016 exploration program and that results from the 2017 drill program should support the company’s valuation. read more


Tuesday, March 07, 2017 Derek Macpherson

SMT Likely to Add High Value Tonnage at Bolivar

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Sierra Metals Inc. (TSX:SMT, BVL:SMT) announced initial drill results from the La Sidra and Bolivar West zones at its Bolivar mine in Mexico. In our view, the good results from the brownfield exploration program suggest the company is likely to deliver on its objective to add high value tonnes and extend mine life at Bolivar. Drilling continues to imply the existence of high grade Au-Ag mineralization at La Sidra. The zone currently extends over 500m along strike and to a depth of 300m while remaining open 2.5km NE-SW along strike and down dip. Results from Bolivar West similarly returned a weighted average grade above the resource grade. Sierra plans to follow-up on strong anomaly zones detected during a recent IP survey at Bolivar West and Bolivar Northwest. In our view, continued exploration success along with ongoing operational improvements at Sierra’s Yauricocha and Bolivar mines is key to enhancing the company’s value and positioning to bring about the necessary capital structure changes needed. read more


Tuesday, March 07, 2017 Derek Macpherson

Austral Increases Interest in Casposo to 70%

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Austral Gold Ltd. (TSXV:AGLD, ASX:AGD) announced it has acquired an additional 19% stake in the Casposo gold-silver mine in Argentina for US$1.0 million. By way of the transaction, the company has brought its total interest in the mine to 70%. Austral acquired a 51% interest in Casposo in 2016 and has options to acquire the outstanding 30% for US$7.0 million by 2020. Austral has commenced various operational improvement initiatives at the mine and spent US$5.8 million to date on development and re-commissioning. The mine was re-commissioned in Q3 2016 and Austral’s attributable share in Q4, the mine’s full operational quarter, amounted to ~5,500 oz AuEq. We view Austral’s ownership increase in Casposo positively. Based on Austral’s 2017 guidance of 50,000 oz AuEq, the company’s annualized attributable share would amount to ~35,000 oz AuEq. We expect that the ongoing ramp-up of the Casposo project, a resource update, pre-feasibility study (Q1 2017) and initial production from Amancaya, in addition to the completion of the mill expansion at Guanaco are likely to be key catalysts in the near-term. read more


Tuesday, March 07, 2017 Derek Macpherson

SCA Confirms Karankasso's Strike Potential

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Savary Gold Corp (TSXV:SCA) announced results from the first 24 holes from the ongoing 10km Phase 2 drill program at the Karankasso JV project (69.5% SCA/30.5% SWA) in Burkina Faso. Results identified new mineralized zones south of the existing resource. This first set of results returned a weighted average grade of 1.59 g/t Au, which is below the current resource grade, over a relatively narrow average width of 2.6m. The results were highlighted by 14.66 g/t Au over 6.0m (HE-RC-17-019) intersected in the southern part of the Serakoro 1 Main Area. In our view, these results confirm the strike potential at Karankasso and imply that the resource is likely to grow beyond the current 671k oz (9.2M tonnes at 2.28 g/t Au - inferred) with the pending update (H2 2017). Prior to that, further results from the ongoing 10km drill program is likely to benefit Savary’s share price, which at C$23/oz trades at a discount to peers (C$37/oz). read more


Tuesday, March 07, 2017 Derek Macpherson

Kiska Shareholders Approve AuRico Acquisition

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Last week, Kiska Metals Corp. (TSXV:KSK) announced its shareholders approved the planned acquisition by AuRico Metals Inc. (TSX:AMI) and that it has received the final court order approving the plan of arrangement. The transaction is expected to close on March 8, 2017. We continue to view this tuck-in transaction positively as it highlight’s AuRico’s focus on building out its royalty portfolio. Looking ahead, we believe the completion of the Environmental Assessment (expected in Q1 2017) is likely to be a key catalyst for AuRico to unlock the value of Kemess which appears to be undervalued by the market. read more


Monday, March 06, 2017 Derek Macpherson

eCobalt Advances ICP as Cobalt Prices Increase

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eCobalt Solutions’ (TSX:ECS) provided a corporate and operations update on its Idaho Cobalt Project (ICP) near Salmon, Idaho. The update suggests progress has been made in advancing the project and that the feasibility study is on track to be completed in Q2. A third-party market study established that cobalt sulfate samples produced from ICP meets the standards for the most recent NMC and NCA battery technologies. We view this positively as it should allow the company to complete an off-take agreement. In addition, the company announced it has completed the ~800m metallurgical drill program which commenced in Q3 2016. Cobalt sulfate crystal samples produced from the drill core are expected to be made available to potential off-take clients for due diligence purposes. Earlier in Q1, eCobalt closed a C$17.25 million financing to fund the project to a construction decision. With the project progressing, we believe eCobalt is likely in a good position to take advantage of the increasing cobalt prices. Cobalt prices have increased by ~55% since the beginning of 2017. read more


Monday, March 06, 2017 Derek Macpherson

AEM Buys 15% of GQC at a Premium

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GoldQuest Mining Corp. (TSXV:GQC) announced a private placement with Agnico Eagle Mines Ltd. (TSX:AEM, NYSE:AEM) for C$22.86 million to fund working capital and the exploration and development of its properties in the Dominican Republic. In our view this investment by Agnico provides technical validation for the Romero project, and highlights the exploration potential of its district scale land package. The financing consists of 38.1 million common shares priced at C$0.60/sh which represents a 27.7% premium to the prior day’s close. As a result of the transaction, Agnico would own ~15% of GoldQuest on a non-diluted basis. In conjunction with the financing, Agnico has been granted the right to nominate one director and maintain its interest in future financings. GoldQuest currently trades at 0.54x NAV and $42/oz versus peers at 0.51x NAV and $35/oz. We believe that a further premium may be warranted because of Romero’s stage of development and the exploration potential of the company’s district scale land package. We expect the combination of the ongoing de-risking at Romero (feasibility study in early 2017 & operating permits in late 2017) along with ongoing regional exploration are likely to provide positive momentum for the share price. read more


Sunday, March 05, 2017 Derek Macpherson

RPX Extends Strike Length to ~5 km

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Red Pine Exploration Inc. (TSXV:RPX) released partial results from three holes drilled ~3 km South of the Surluga deposit during the ongoing 6 km campaign at the Wawa gold project (60% interest) in Ontario. Hole DG-17-56 returned 57.31 g/t Au over 3.14m. This hole, together with DG-17-55 that returned 42.22 g/t Au over 2.44m, was drilled to test the near-surface extension of the northernmost high-grade zone at Darwin-Grace. This zone is largely underexplored and while early days, these initial results suggest the potential for a new deposit at Darwin-Grace. As well, these results suggest that the Wawa Gold project now has strike length of ~5km. Considering that the current 1.1 million oz Au resources covers a ~1.5km strike length, we believe substantial resource growth is possible. Red Pine currently trades at C$40/oz a discount to peers (C$55/oz). We believe that as Red Pine continues to demonstrate the potential of the Wawa gold project through its ongoing exploration program, it should help close the valuation gap to peers.  read more


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