TSX : $0.83
A mining company named Sue!
Vote of confidence. Sulliden Gold announced that Agnico-Eagle Mines (AEM) has entered into a subscription agreement to
make a strategic investment of $24,000,000 into SUE through a non-brokered private placement of units. As a result of the
transaction, AEM will own 9.96% of SUE’s issued and outstanding shares on a non-diluted basis. Under the terms of the
subscription agreement, AEM will purchase a total of 26,966,292 units at a price of $0.89 per unit. Each unit comprises one
common share and 0.7 of a common share purchase warrant. Each whole share purchase warrant will entitle AEM to acquire
one common share of SUE at a price of $1.31 for a period of two years from the date of issuance.
Commenting on the deal, AEM’s President and CEO, Sean Boyd, stated, “Our investment highlights the quality and potential of SUE’s Shahuindo
Project. We also view this as an opportunity to gain exposure to another jurisdiction with a well-established mining culture. We look forward to participating in the advancement of Shahuindo towards production.”
SUE’s Shahuindo Project is located in a world-class gold producing belt in northern Peru. In September 2012, SUE completed a Feasibility Study highlighting a straightforward open pit mine with heap leach recovery, with capital requirement estimated at $131.8 million, supporting a
mining rate of 3.65 million tonnes per year and annual production of ~90,000 gold equivalent ounces at average cash operating costs of $552 per ounce.
- Hedge Funds Aren’t Crazy About Agnico-Eagle Mines Limited (USA) (NYSE:AEM) Anymore (insidermonkey.com)
TSX : $8.77
New Gold released a new resource estimate for its Blackwater gold project in central B.C.
The new resource estimate includes an additional 89 holes (22,220 m) when compared to the year-end 2012 resource estimate. The majority of the additional holes were infill in the southeast portion of the deposit, increasing confidence in the resource modeling and driving the increase in the Measured resource category.
Excluding stockpile material, Measured and Indicated gold resources now stand at 8.62 million ounces grading 0.88 g/t from 8.07 million ounces grading 0.85 g/t previously. Inferred gold resources grew slightly to 340,000 oz grading 0.76 g/t from 310,000 oz previously. The big increase was in the Measured category which jumped 46% to 3.9 million ounces at an average grade of 1.04 g/t, up from 2.67 million ounces grading 0.94 g/t.
The updated resource will be used for the company’s feasibility study, which is expected to be completed in late 2013.
- New Gold Increases Grades, Upgrades Resources at Blackwater (goldinvestingnews.com)
Led by former Minefinders executives, Esperanza Resources is a development stage gold company with a portfolio of projects in the Americas. Management is focused on advancing their 100% owned fully permitted and shovel ready La Bolsa heap leach project located in Sonora, Mexico (pending PAAS trans close, est. Q2/13) and their flagship Esperanza heap leach project located in Morelos, Mexico.
We are initiating coverage on Esperanza Resources Corp. (EPZ : TSX-V) with a SPECULATIVE BUY recommendation based on a 12-month risk-adjusted target of C$1.70, a ~70% premium to current price levels. The company trades at a P/NAV (US$1,600/5%) multiple of 0.45x (0.19-0.70x, average 0.48x). We estimate its EV/oz (Au only M&I resource, post transaction) at $30/oz versus an average of US$43/oz ($8-87/oz) for its peer group of developers. For more details, please see our full report, “Top of the Heap: Introducing a Trinity of Near-Term Open Pit/Heap Leach Gold Projects in the Americas.”
Pan American Silver Corp. transaction – The company entered into a transaction with Pan American Silver to create a gold project pipeline (2.8 Moz in M&I) with significant by-product silver credits (28 Moz in M&I) predominantly in Mexico. The transaction included a private placement at a premium that would bring its W/C position to $65-70 million (CG est.) leaving it fully funded to develop La Bolsa ($50 million, CG est.).
Post transaction, Pan American Silver would own ~48% of the company’s I/O shares and ~45% on a F/D basis. We note that Pan American Silver Corp. has stated that its long term goal is to vend its stake in Esperanza (~48%) once a reasonable valuation is achieved
Midway Gold Corp.’s is a development stage gold company with a pipeline of project in Nevada. The company offers exposure to a significant growth profile as production ramps up in 2015 to 2018 from their low to moderate technical and execution risk Pan and Gold Rock open pit/heap leach projects in central Nevada.
We are initiating coverage on Midway Gold Corp. (MDW : TSX-V and MDW : NYSE) with a SPECULATIVE BUY recommendation based on a 12-month risk-adjusted target of C$1.65, a ~40% premium to current price levels. The company trades at a P/NAV (US$1,600/5%) multiple of 0.61x (0.19-0.70x, average 0.48x). We estimate its EV/oz (Au only M&I resource) at $30-35/oz versus an average of US$43/oz ($8-87/oz) for its peer group of developers. For more details, please see our full report, “Top of the heap: introducing a trinity of near-term open pit/heap leach gold projects in the Americas.”
Pan gold project – An open pit (1.8:1 SR), heap leach (15.4 kt/d, 74%) project in central Nevada that is currently in permitting stage where we estimate a record of decision by Q3/13 leading to production by 2015. We forecast an upfront capex of ~US$110 million to deliver an average production profile of 60-65 koz/y at cash cost, including royalties, of US$800-810/oz over a 10-year mine life. The Pan project has the potential to provide IRRs of 20-25% and paybacks of 3.0-3.5 years.
Gold Rock gold project – Another open pit (1.5:1 SR), heap leach (15.4 kt/d, 72%) project located only 8 km SE of the Pan project where the company is seeking to grow the resource base and deliver a scoping study (H2/13). We estimate that the project will require ~US$100 million to deliver an average annual production profile of 70 koz/y at a cash cost, including royalties of US$670-680 per ounce over a 9-year mine life beginning in 2017. The Gold Rock project has the potential to provide internal rates of returns of 30-35% and paybacks of 2.0-2.5 years. The company has begun (April 2) the EIS permitting process.
- MIDWAY GOLD CORP. Exploration Update (ampgoldportfolio.com)
TSX : $1.63)
. While many junior gold companies are struggling to survive and are desperately looking for capital, that is not the case for Pilot Gold. Thanks to the company’s success through the drill bit, experienced management team and prudent financing last year, Pilot has a strong balance sheet and on Tuesday announced its next phase of aggressive plans.
Management highlighted that the 2013 drilling campaign at the TV Tower property in northwestern Turkey commenced on March 23 with a total of 30,000 m of drilling planned property-wide, including 15,000 m on the KCD target and 7,500 m each on the Kayali and Columbaz targets. Currently, three diamond core drills are in operation, while one additional reverse circulation (RC) drill may be activated later in the season.
TV Tower drilling in 2012 and early 2013 focused entirely on testing the high-grade KCD target in the northeastern part of the property. Drilling confirmed the presence of a 250 by 400 m gold zone, which remains open down-dip to the north, and established the presence of a large, 400 by 600 m stratabound silver zone that overlies the gold zone and is open to the west and northwest. TV Tower is a JV between PLG and Teck Resources (TCK.B), with Pilot as project operator.
- Pilot Gold Reports Year-End Financial Results (sys-con.com)
- Pilot Gold Update : high-grades and aggressive plans. (ampgoldportfolio.com)
We maintain our SPECULATIVE BUY rating on Galane Gold. While Q4/12 was a very weak quarter, it was not entirely a surprise in light of expected lower milled grades pending completion of the Tholo pushback, as well as issues with the contractor that lowered contribution from Golden Eagle. As such, a larger than normal proportion of lower grade (and harder) stockpiled ore had to be processed, in turn lowering mill throughput, recoveries and production (while raising costs). The completion of the Tholo pushback (increasing the availability of higher grade material), as well as productivity improvements at Golden Eagle, both expected by Q2/13E, should substantially improve production levels, particularly in H2/13E.
In our view, Mupane was an under-capitalized, under-explored, and likely poorly managed operation for several years before the current management team assumed control in late 2011. In that regard, we view management’s efforts in 2012 (first full year of ownership) as commendable in light of several operational improvements and optimizations implemented while at the same time generating positive free cash flow from the asset.
Mupane is still in turnaround mode, and the stock remains very inexpensive trading at 1.0x P/CF 2014E (junior average at 6.0x). We continue to see substantial re-rating potential tied to an expected return of the mine to consistent profitability/positive cash flow, in addition to potential exploration success that could extend the current cash flow stream by several years beyond our currently modeled 4.5 year mine life.
There is more work to be done and we believe operational/exploration risks remain relatively high. We continue to see the potential for significant variability in quarterly results in the near-term. That said, management remains motivated, and in our view, on the right track to unlock value from Mupane.
Our 12 month target price remains unchanged at C$1.50 based on 0.8x our 5%/peak NAVPS estimate of US$1.99 (previously US$2.07) assuming US$/C$ parity.
- Galane Gold Ltd. Releases Drilling Results From the Jim’s Luck Prospect That Show Significant Gold Mineralisation from Surface Open at Depth and Along Strike (sys-con.com)
PLG : TSX : $1.82
The results released Tuesday were from the 15 remaining diamond core holes from the Phase 1 drilling program. Management noted that the holes are wide-spread across the property and targeted KCD”s gold and silver zones. Infill drilling highlights included: i) 25.7 g/t Au, 47.2 g/t Ag and 2.12% Cu over 16.5 m in hole KCD-102, including 142 g/t Au, 141 g/t Ag and 3.39% Cu over 2.0 m; and, ii) 13.9 g/t Au over 6.3 m in hole KCD-99. While highlights from Exploration drilling included 4.71 g/t Au and 71.7 g/t Ag over 8.5 m and 2.93 g/t Au over 8.0 m in hole KCD-95.
Commenting on the results, PLG’s President and CEO, Matt Lennox-King, stated, “Our first program as operator has confirmed a large, central gold zone overlain by a robust silver blanket. Both remain open in multiple directions and will be aggressively followed-up in our upcoming drill program.” Going forward, the company plans an additional 25,000- 30,000 m of drilling at TV Tower with a focus on KCD, Kayali and Columbaz targets in 2013. TV Tower is a JV between PLG and Teck Resources (TCK.B), with PLG as project operator.
ATAC Resources*(ATC : TSX-V : $1.36),
Agnico-Eagle Mines* (AEM : TSX : $41.37)
Agnico-Eagle Mines* (AEM : NYSE : US$40.25)
Shares of ATAC Resources were in the green after the Yukon-focused gold explorer announced that Agnico-Eagle Mines has entered into a Subscription Agreement with ATC to make an investment of ~$13 million in the company by way of a non-brokered private placement, including 9,600,000 units at a price of $1.35 per unit.
Each unit will consist of one common share and one-half of one share purchase warrant, entitling AEM to purchase one additional common
share of ATC at a price of $2.10 for a period of 18 months from closing. As a result of the transaction, AEM will own 8.48% of ATC’s outstanding shares on an undiluted basis (12.21% on a partially diluted basis if all warrants are exercised).
Both Boards of Directors have approved the transaction. Upon completion, ATC’s cash position will be ~$27 million. Commenting on the deal, AEM’s President and CEO, Sean Boyd, stated, “We have been actively following ATAC’s progress at the Rackla Gold Project for the past three years and recognize their teams’ unique skill set and excellent results. Through its investment in ATAC, Agnico-Eagle is pleased to be involved in a project with significant exploration potential in an emerging gold district.”
ATC’s Rackla Gold Project is divided into two distinct trends: the 50 km long Nadaleen Trend which hosts Carlin-type mineralization at the Conrad, Osiris, Isis East, Sunrise and Anubis zones and the Rau Trend which hosts the Tiger Gold Deposit, Ocelot silver-lead-zinc-tin target and the new Bengal gold showing. Management highlights that property-wide regional exploration has outlined ten Tier 1 Carlin-type anomalies within the Nadaleen Trend as well as multiple anomalous targets
within the Rau Trend
Colossus Minerals is a junior exploration and development company with a focus on gold in Brazil. Colossus is under the stewardship of Claudio Mancuso, CEO and David Anthony, President and COO . The company’s primary asset is the Serra Pelada project, an extremely high grade gold-platinum-palladium project in Northern Brazil. Colossus has a 75% ownership interest in the project.
We maintain our SPECULATIVE BUY recommendation with a target price of C$7.75, down from C$9.00 previously.
Shares of Colossus Minerals bounced up 20.7% on March 12, 2013 on an upward movement in the price of gold and a release by Arias
Resource Capital Fund II L.P. that the fund had acquired 10.2% of the outstanding shares of CSI.
The shares of CSI have been under significant pressure recently, dropping 50% from January 10, 2013 to March 8, 2013. The shares of CSI were particularly impacted by selling pressure related to its deletion from the S&P/TSX Global Gold Index. Over the past eight trading sessions, 11.4 million shares of CSI have traded, representing an average daily volume roughly 160% higher than the 200-day average volume. We believe that most of the index rebalancing related selling pressure is behind CSI.
CSI is working to de-risk the Serra Pelada project with the potential for a significant revaluation as a junior producer. Over the next 3-12
months, we are expecting to see an initial one-year reserve estimate for Serra Pelada (Q2/13), the results from the bulk sample (Q2/13),
commissioning of the mine and plant (Q3/13) and initial production (Q4/13).
We have adjusted our operating cost assumptions for the Serra Pelada project upwards by 18%. After adjusting our model, our estimate of peak gold price NAVPS (10%, US$1,850/oz Au) has dropped to C$10.26, down from C$11.95 previously. We continue to value the shares of CSI based on a 0.75x multiple to our peak gold price estimate of NAVPS (10%, US$1850/oz Au).