RCKS talk

Wednesday, March 15, 2017 Derek Macpherson

Otis Consolidates Ownership of the Oakley Project

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Otis Gold Corp. (TSXV:OOO) announced it has reached an agreement to bring its interest in the Oakley gold project in Idaho to 100%. Otis expects to acquire the remaining 20% stake in the Blue Hill Creek and Matrix Creek properties, which together with the Cold Creek property, comprise the Oakley project. In addition, the agreement entails a reduction of a NSR royalty on Blue Hill Creek and Matrix Creek from 2.5% to 2.0%. The total consideration of the transaction consists of 380k Otis shares, implying a total value of C$112.1k based on Otis’ close price on March 14, 2017 (C$0.295/sh). Blue Hill Creek has a 163k oz Au (11Mt at 0.51 g/t Au) inferred resource that is hosted in a shallow epithermal system which remains open in several directions. Previous drill results have intersected gold mineralization over +100m wide intervals. Limited exploration has taken place on the adjacent Matrix Creek property which hosts a mineralization distinctive from that of Blue Hill Creek. In our view, the consolidation of Oakley, a secondary project, is mildly positive and may help accelerate exploration on this project. At C$37/oz, Otis currently trades at a discount to peers (C$50/oz). We believe the market does not appear to fully account for the potential resource growth at the company’s flagship Kilgore project which is located in Idaho, a stable jurisdiction, and in the vicinity of infrastructure. Coupled with the recent strategic ~C$5.05 million investment by Agnico Eagle Mines Ltd (TSX:AEM, NYSE:AEM), we expect the pending resource update (Q2 2017) and PEA (Q3 2017) for Kilgore to be important catalysts for the company, allowing it to close the valuation gap to peers. read more

Sunday, February 26, 2017 Derek Macpherson

RCKS Pre-PDAC Mining Showcase Presenter Preview

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On Friday March 3th, 2017, Red Cloud Klondike Strike Inc. will be hosting its 5th Annual Pre-PDAC Mining Showcase. The event features presentations from 21 companies, including a themed lunch presentation by leading corporations in the gold mining sector. Visit the event page for more details on the day’s schedule. In this post, we provide a brief preview on the 21 presenting companies and 13 banner sponsors that will also be in attendance.  read more

Friday, February 24, 2017 Derek Macpherson

AEM Invests in Otis; Affirms Potential of Kilgore

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Otis Gold Corp. (TSXV:OOO) announced a private placement with Agnico Eagle Mines Ltd. (TSX:AEM, NYSE:AEM) for C$5.047 million to fund working capital and exploration at Otis’ Kilgore gold project in Idaho. The financing consists of 14.42 million common shares priced at a C$0.35/sh which represents a 12.9% premium to the prior day’s close. As a result of the transaction, Agnico Eagle would own ~9.95% of Otis on a non-diluted basis. In conjunction with the financing, Agnico Eagle and Otis are to enter into an investor rights agreement where Agnico Eagle has the right to participate in subsequent financings to maintain its 9.95% interest in Otis. The transaction is expected to close on February 28. In our view, this strategic investment by Agnico Eagle provides confidence for investors and supports our view on the Kilgore project’s technical merits and upside potential. We believe the market does not appear to fully account for Kilgore’s likely resource growth over the current 820k oz Au (47.5M tonnes @ 0.53 g/t Au) resource (indicated + inferred) as indicated by recent drill results and we discussed in a previous post. Coupled with the project being located in a stable jurisdiction in the vicinity of infrastructure, we expect the pending resource update (Q2 2017) and PEA (Q3 2017) to be important catalysts for the company, allowing Otis, which currently trades at C$38/oz, to close the valuation gap to peers (C$47/oz). read more

Saturday, January 21, 2017 Derek Macpherson

Otis' Drill Results Highlight Likely Resource Growth

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Otis Gold Corp (TSXV:OOO) announced results from the 12 final drill holes from its 2016, ~10km (40 holes) drill program the company completed at its wholly owned Kilgore gold project in Idaho. These results returned a weighted average grade of 1.16 g/t Au over 29.2m and were highlighted by 1.79 g/t Au over 128.0m, including 11.96 g/t Au over 7.6m (16 OKC-353). The width and grade of these results, along with the balance of the 2016 program suggests to us that the current 820k oz Au (47.5M tonnes @ 0.53 g/t Au) resource (indicated + inferred) is poised to grow with the planned H1 2017 update. This likely resource growth does not appear to be priced into Otis’ current valuation as it trades at C$33/oz versus peers at C$40/oz. In our opinion, the Kilgore project’s likely resource growth along with the project’s location (stable jurisdiction, proximity of infrastructure) should allow Otis to close the valuation gap to peers.  read more


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