This week was very slow (again) regarding company news flow, which isn't atypical in the weeks following the end of earnings season. It also didn't help that this was a holiday-shortened week. News-flow will likely remain slow as the summer is upon us and many take vacations, leading to lower volumes, which isn't ideal for companies releasing positive news flow. Gold failed to breakout much beyond $1,900/oz., getting sold off heavily on Thursday from $1,905 +/- down to $1,870/oz., only to regain some of those losses into the Friday close. This is yet another sign of the strength and resilience of gold. We could move lower from here, but we will likely consolidate for a while between $1,830-$1,900/oz. However, several potential upside catalysts include the May CPI numbers, the passing of another massive spending bill, which will likely be one of multiple to come before the mid-term elections.
$ABRA, $AXU, $GOLD, $ELE, $GCM, $GBR, $LAB, $NXS, $ODV, $SCZ, $SVM, $WM
AbraSilver Resource Corp: Reported multiple high-grade intercepts including:
- 8m @ 8.4 g/t Ag and 1.55 g/t Au
- 77m @ 149 g/t Ag and 0.71 g/t Au
- 65m @ 15.9 g/t Ag and 2.68 g/t Au
- 82m @ 103 g/t Ag and 2.70 g/t Au
Several potential stock price catalysts on the horizon include an updated MRE and updated PEA, both of which are expected in Q3.
Alexco Resource Corp: The company announced a C$25m bought deal financing, which we view as unnecessary given Alexco’s situation. At the end of Q1, the company had C$24m in cash and an undrawn US$10m credit facility. We believe Alexco, to prevent unnecessary dilution, should have increased its credit facility to $25m, and if necessary, supplement that with a smaller financing. Alexco has achieved production at Keno Hill, with the second mine, Flame and Moth coming online this quarter, followed by Bermingham in Q3. In other words, it will start generating cash flow and could easily service and pay off a $25m credit facility. We continue to believe Alexco is just getting started as it has defined a moderately sized resource, but there remains significant exploration upside. Once cash flowing, it can engage more aggressively in exploration to increase resources and increase mining rates to 700-800tpd or more. This would result in a production profile of approx. 5.5-7m oz. Ag p.a. The company has already announced a mill expansion beginning in year-3 from 400tpd to 550tpd, and in turn, average annual production has been increased to 4.4m oz. Ag.
Barrick Gold: The process of re-opening the Porgera gold mine under the terms of the binding framework agreement between the government and operator Barrick Niugini Limited took a significant step forward with a discussion between Barrick President and Chief Executive Mark Bristow, Prime Minister James Marape, and the various Porgera Landowners groups.
The framework agreement provides that Porgera will be owned by a new joint venture held 51% by Papua New Guinea (PNG) stakeholders and 49% by BNL, with BNL continuing as the operator. The framework agreement also calls on the Porgera Landowners and the Enga Province to have a dialogue to determine how the 10% ‘protected equity’ which forms part of PNG’s 51% interest will be allocated. The theft of majority ownership in Porgera greatly reduces Barrick's and Zijin's interest in the mine and, in turn, attributable production.
Elemental Royalties: Announced that the Karlawinda mine (on which Elemental holds a 2% NSR royalty) has been commissioned. Karlawinda is the company's largest royalty and will serve to roughly double Elemental's royalty revenue. This Australian asset is one of the company's cornerstone assets, with an initial mine life of 10yrs. Production will ramp up such that long-term production will average 110-125k oz. Au p.a. Although Elemental is a small royalty company, it will realize several quarters of sequential growth due to the ramp-up of Karlawinda and the Mercedes mine due to commence royalty payments in July 2022.
Gran Colombia: Announced today the completion of the acquisition of all of the issued and outstanding common shares of Gold X Mining Corp not already owned by Gran Colombia. The Arrangement became on June 4, 2021. As a result of the Arrangement, Gold X became a direct, wholly-owned subsidiary of Gran Colombia. Gran Colombia gained control of the Toroparu Gold Project located in Guyana, South America.
This acquisition will transform Gran Colombia from a junior producer into an emerging intermediate producer. Once Toroparu is in production, it will increase production by 75-80% and increase cash flow generation by 90-110% as Toroparu will have a lower cost structure. It also provides exposure to two South American countries which are mining-friendly but underexplored in Colombia and Guyana.
Great Bear Resources: Reported results from its ongoing fully funded $45 million 2021 exploration program at its 100% owned flagship Dixie Project in the Red Lake. This release includes two new detailed high-grade domain long sections adjacent to the north of previously released domain BR7, plus drill results from 18 new LP Fault drill holes mainly targeting the peripheral bulk-tonnage domains. 318 drill holes have now been reported from the LP Fault since its discovery two years ago. Ongoing drill results continue to intersect high-grade and bulk tonnage style mineralization at the LP Fault. New results include:
- 2.30m @ 50.05 g/t Au
- 2.50m @ 29.52 g/t Au
- 32.35m @ 3.85 g/t Au
- 49.25m @ 2.10 g/t Au
- 14.80m @ 4.19 g/t Au
- 18m @ 6.63 g/t Au
The next potential stock price catalysts include additional drill results, the maiden resource estimate, and whether the LP Fault is similar to Barrick's historic, world-class, high-grade Hemlo mine. There are similarities to Hemlo and other tier-I deposits in Canada, but if there is significant mineralization below 500m depth, it could make this project immensely more valuable. Hemlo’s total resource (mined and remaining mineralization) totals more than 22m oz. Au (@ 8 g/t), the majority of which were found below 500m.
Labrador Gold: Announced the first intercepts of near-surface high-grade gold mineralization from its Kingsway project near Gander, Newfoundland. Highlights from four drill holes include: 2.4m @ 10.48 g/t Au 3.6m @ 20.60 g/t Au, and 1.0m @ 5.04 g/t Au.
The Big Vein target has been traced over 400 meters at surface along the Appleton Fault Zone. It lies within a larger northeast-southwest trending "quartz vein corridor" that stretches over 7.5 kilometers as currently outlined, with potential expansion in both directions. Gold mineralization observed at Big Vein includes six occurrences of visible gold, assays of samples ranging from 1.87g/t to 1,065g/t gold.
A 20,000m drill program currently in progress has only tested Big Vein over an 80-meter strike length of the 400m surface exposure and only to vertical depths of 50 meters. However, drilling has already produced visible gold in four drill holes and wide areas of gold mineralization.
Nexus Gold: Reported assay results from its recently completed diamond drill program at its McKenzie Gold Project, located in Red Lake. The drilling completed in April was a follow-up program designed to test and expand on the gold results obtained in the company's summer 2020 drill program in the St. Paul's Bay area of the property. Drill highlights include:
- 24.7m @ 4.05 g/t Au
- 37.6m @ 2.78 g/t Au
- 4.45m @ 2.35 g/t Au
- 56m @ 1.01 g/t Au
Osisko Development: Announced drilling results from the 200,000, 2021 exploration and category conversion drill program campaign at its Cariboo Gold Project. Recent drill highlights include:
- 2.70m @ 21.94 g/t Au
- 2.30m @ 23.48 g/t Au
- 10.85m @ 5.24 g/t Au
- 4.10 @ 13.39 g/t Au
- 15m @ 23.32 g/t Au
- 4.40m @ 16.83 g/t Au
Santacruz Silver: Reported Q1 2021 financial results. Santacruz produced 606k payable silver equivalent ounces. This is a distorted way to view it as the company produces little silver (approx. 30-36% of total revenue is derived from silver, with the rest coming from lead and zinc). Regardless, the company has turned its operations around relative to a few years ago, augmented by considerably higher silver prices. Revenue increased 43% to $11.1m, and gross profit increased $4m to $2.2m. Cash and marketable securities stood at $6.8m at the end of March, and the company subsequently closed a private placement totaling C$14m.
Silvercorp: Announced drill results at the TLP mine in the Ying Mining District. Highlights include:
- 1.74m @ 3,911 g/t Ag, 6.22% Pb, 2.11% Zn, 0.08 g/t Au, and 0.55% Cu
- 1.11m @ 1,556 g/t Ag, 15.27% Pb, 0.24% Zn, 0.10 g/t Au, and 0.23% Cu
- 2.56m @ 771 g/t Ag, 11.68% Pb, 0.23% Zn, 0.08 g/t Au, and 0.11% Cu
- 5.04m @ 523 g/t Ag, 5.10% Pb, 0.36% Zn, 0.11 g/t Au, and 0.13% Cu
- 2.03m @ 1,115 g/t Ag, 1.20% Pb, 0.09% Zn, 4.22 g/t Au, and 1.30% Cu
- 3.62m @ 1.086 g/t Ag, 0.93% Pb, 0.19% Zn, 0.19 g/t Au, and 0.15% Cu
Wallbridge Mining: Announced assay results from its current drilling program on the Fenelon Gold Property, expanding high-grade mineralization as measured by grade x thickness. Drilling is currently focusing on multiple areas within the approximately 1.0 km by 1.2 km central portion of the Fenelon Gold System to expand and better define the mineralization in support of the maiden mineral resource estimate expected to be released before September 30, 2021. In total, over 200,000 meters of drilling for incorporation into the MMRE has been completed to date. Drill highlights include:
- 38.10m @ 4.99 g/t Au
- 10.80m @ 15.57 g/t Au
- 26m @ 6.28 g/t Au
- 37.85m @ 3.10 g/t Au
- 19.80m @ 3.11 g/t Au
- 23.95m @ 2.65 g/t Au