RCKS Talk

18-Sep-2018

Lupaka Gold Corp.

Atenea Vein Extended with Better than Expected Grades

Impact: Positive

Lupaka Gold has announced assay results from the ongoing underground channel sampling program from the new development headings on the 3400 level and 3430 sublevel at the company’s Invicta Project in Peru.

  • The company has extended the Atenea Vein by 105m on the 3430 level, with channel samples returning 9.06 g/t AuEq, over a strike length of 235m over an average width 3.87m (Figure 1)
  • Similar results from the 3400 level have returned 9.04 g/t AuEq, over a strike length of 235m over an average width 4.88m, suggesting continuity (Figure 2)
  • Importantly, grades continue to reconcile positively to the mine plan defined in the PEA (8.58 g/t AuEq) and to the block model, suggest cash flows, particularly early in the mine life could be better than we current model (current estimate US$8.0M FCF in 2020) 
Based on the company’s recently released PEA, our valuation of Lupaka suggests a NAVPS10% of C$0.55 assuming a 350tpd operation. Based on our site visit and the company’s continued exploration success, we see potential for a larger 500tpd operation at Invicta. We believe that achieving first cash flow, expected in H2 2018, are going to be the next key re-rating catalysts for Lupaka.

 

17-Sep-2018

Brixton Metals Corp.

Brixton Hits One of the Best Holes of the Year in Cobalt

Impact: Positive

Brixton Metals announced additional drill results from its wholly owned Langis Mine Project located in the Cobalt Camp of Ontario.

  • The results were highlighted by one of the best drill holes released this year in the Cobalt camp. Hole LM-18-42 returned 6m grading 4719g/t Ag and 0.33% Co
  • This most recent round of results was highlighted by better than typical widths from the Cobalt camp, which is noted for its high-grade but narrow widths. In our view, these better than typical widths along with the expected high-grades set Brixton apart from its peers in the camp.
  • Continuing to intersect high-grade Ag-Co mineralization in areas that were not previously drilled reflects both the prospectivity of the company’s land package, its advanced state of data review relative to peers and the successful target generation by the exploration team 
Based on peers in the Cobalt Camp, we believe Brixton remains undervalued based on these assets alone. The company has demonstrated an ability to acquire prospective, undervalued assets and is working to surface value on all four its projects. In our view, continued exploration success in the Cobalt camp, along with planned work at the company’s other properties, should benefit shareholders through Brixton.

17-Sep-2018

Novo Resources Corp.

Novo Eyes Egina Region for Conglomerate Gold

Impact: Mildly Positive

Novo Resources has announced that it has entered into two property transactions in the Egina region of Western Australia, expanding its dominant land position, and bringing a new conglomerate are within the Pilbara into focus.

  • Both land packages were acquired following in-depth research into the potential conglomerate gold-bearing nature of the Egina region, where gold nuggets have previously been discovered similar to those at Comet Well and Purdy’s Reward
  • For the 100% interest in the Farno-McMahon proprery, Novo plans to pay A$2.5M in cash and A$5.5M in shares (deemed price of C$4.107/sh)
  • For the ability to earn a 70% interest in Pioneer Resources (ASX:PIO) Kangan gold project, Novo plans to pay A$200,000 in cash and issue 100,000 shares to Pioneer, along with subscribing to a A$1M in Pioneer shares
  • We view these transactions favourably as, Novo is expanding its already dominant land position in the Pilbara; however, we believe the market is likely to remain focused on bulk sampling results from the Comet Well and Purdy’s Reward projects
Now that the company has overcome the processing challenges encountered for the first large tonnage bulk samples, we expect steady news flow from bulk sampling going forward (24 samples currently in the queue). We continue to believe that Novo is worth between C$4.70-17.90/sh, suggesting upside from the current share price.

 

13-Sep-2018

Brixton Metals Corp.

New Study Points to the Big Potential of Thorn

Impact: Positive

Brixton Metals announced that it has completed field work at its Thorn Au-Ag project in the northern tip of the Golden Triangle in British Columbia, located 200km NW from Imperial Metals Red Chris Mine.

  • The company is highlighting its collaboration with porphyry specialist, Brock Riedell, in conducting rock lithogeochemical analysis combined with short-wave infrared spectroscopy (SWIR) to generate Cu-Au porphyry targets on the property
  • Final results from the study are pending, but initial results have identified metal ratio patterns in soils and rocks that have been known to be consistent with gold-rich porphyry systems, where the company has compared to the Bingham Canyon porphyry in Utah
  • While it is certainly early days, given the size and intensity of the geochemical anomalies and location, we see the property as potentially prospective for a porphyry discovery and likely to be supported by final results from core re-logging, geological mapping and sample collection
Brixton has assembled four quality assets, and in our view each one could easily justify the company’s current market cap, without further exploration success. The company is actively advancing all four, with drill results pending from its Cobalt Camp assets.

13-Sep-2018

Red Pine Exploration Inc.

More High-Grades from Historic Assays

Impact: Mildly Positive

Red Pine Exploration announced additional results for historic holes sampled as part of its 2018 Historic Core Sampling Program at its Wawa Gold Project, located in Wawa, Ontario. The goal of the historic program is to convert gaps in the historic resource, where drilling exists but the core was not assayed.

  • This set of results were highlighted 22.8g/t Au over 1.74m (S287) in the Surluga Deposit, which continues to highlight the high-grade nature of the shear zones and aligns well with the company’s revised plan of operating a higher-grade underground mine. Figure 1 shows the holes released in this update and the grade x meter increase for the holes
  • Historic core sampling now totals 42,000m since December 2014 and continues to add gold to both the Jubilee Shear Zone and Surluga Deposit, which we expect is likely to have positive impacts to the projects resource base to be defined in the planned resource update for Surluga
  • We note that since April 2018, ~15.5M share purchase warrants have expired with only ~375k expiring in the money. We view this positively as it improves the company’s capital structure. We note that the next significant set of warrants expire in February 2019 with 9.25M at C$0.066 and 5.3M at C$0.132 and 3.4M at C$0.135
Red Pine currently trades at a steep discount to peers (C$19/oz vs. peers at C$49/oz), valuation does not reflect the exploration upside that continues to be demonstrated by ongoing drill results. While ongoing drilling is likely to be a positive for the stock, we view the pending resource update positively and is likely to provide investors clarity on the path forward.

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