Extensive Analysis

One Of The Last Quality Gold Juniors To Come Out Of Bear Market Hibernation: Moneta Porcupine

Executive summary

  • Moneta Porcupine Mines is a gold developer, and owns the 100% owned 4.3Moz Au Golden Highway deposit in the mining friendly province of Ontario, Canada
  • The project has solid Dec 2012 PEA economics with an after tax NPV5 of $420M and IRR of 24.7% at a gold price of $1350/oz, and a market cap of just C$60.3M
  • Management likes to picture the company as an exploration play, looking for more high grade zones to improve economics
  • With already established, positive PEA economics it is also very much a development play in my view, probably of interest for mid tiers or majors looking for profitable, sizable assets in excellent jurisdictions
  • Moneta recently announced a long awaited C$7M private placement which is scheduled to close around September 7, 2016, which would finally enable them to advance Golden Highway after a long bear market

Terraco Gold: A New Royalty Player With An Excellent Cornerstone Asset And Substantial Growth Potential

  • Terraco Gold recently closed a $19M deal with Waterton, involving the Spring Valley royalties
  • As Waterton plans to advance the excellent Spring Valley project quickly and controls $2B in assets, Terraco can probably expect significant royalty payments in 3-4 years time
  • The company also aims at completing a PEA on the prospective Almaden/Nutmeg project in Q4 2016, which will be a big near term catalyst and significantly increase and indicate asset value
  • Terraco strives to become an established royalty player, and is looking to expand its portfolio rapidly

IDM Mining's Updated PEA Wasn't Exactly What I Hoped For, But Upcoming FS Could Be World Class

Executive summary

  • IDM Mining is developing Red Mountain, a small but high grade underground gold project in the Golden Triangle
  • The updated PEA was decent, but had relatively high capex and a short LOM, neutralizing the excellent after-tax IRR of 32.3% @$1250/oz
  • There are several realistic opportunities to improve LOM and economics considerably for the upcoming FS in Q1 2017
  • One of those being a likely significant increase in ounces, which will be defined by an updated resource estimate in November 2016
  • Recent sampling results on adjacent terrain, recently exposed through retreating glaciers, indicates excellent exploration potential

The Dalradian Resources FS Will Probably Define A Smaller But Still Excellent Project, The Impact Of Brexit Remains To Be Seen

Executive summary

  • Dalradian Resources has a high grade gold project in miningfriendly Northern Ireland, Europe, very high profile management/backers and no shortage of cash
  • Their Curraghinalt project is one of the highest grade and most economic gold projects worldwide
  • The Dalradian share price suffered lately because of negative market commentary on continuity of mineralization, mining dilution and politics
  • In my view the concerns on politics are legit right after the Brexit, but this hasn't cristallized yet, and continuity issues did cause the latest NI43-101 update to contain less Measured and Indicated resources than expected, but concerns on mining dilution are probably unfounded
  • The upcoming Feasibility Study will probably present a smaller project because of this, but still with excellent economics, still implying a real investment opportunity

Why Excelsior Mining's Perceived Permitting Risks Could Be Unwarranted

Executive summary

  • Excelsior Mining owns the unique Gunnison in situ recovery (ISR) copper project in Arizona, and has strong financial backers
  • The Gunnison project isn't just the only advanced standalone ISR copper project owned by a junior, but it also has the best economics of any undeveloped copper project worldwide
  • The recently updated PFS indicated excellent figures at just $2.00/lbs copper: an after-tax NPV7.5 of $563M and an after tax IRR of 26.2%
  • The company performed lots of testing to solidify those figures
  • Excelsior doesn't seem to risk the same local opposition regarding permitting issues as former nearby competitor Curis did on its Florence project, but it has suffered from longtime negative perceptions on its UIC/APP permitting procedures
  • I will discuss why these perceptions could be unwarranted.

Nemaska Lithium On Its Way To Become A Lithium Powerhouse

Executive summary

  • Nemaska Lithium has one of the best hard rock lithium deposit worldwide
  • The Whabouchi project, located in mining friendly Quebec, is fully permitted, and has the second highest grade of lithium oxide and second largest hard rock reserves globally behind the Greenbushes deposit in Australia
  • An updated Feasibility Study has been completed this year, generating solid results with an after tax NPV8 of US$928M (C$1.2B) and IRR of 30.3% based on a $439M capex and conservative $9500/t lithium hydroxide price, making it the most advanced lithium project around, and indicating lots of upside left after the recent run up
  • Nemaska just finalized the $12M Johnson Matthey Battery Materials off take agreement which was the last building block needed to complete the $38M funding needed for the important Phase 1 plant, and expects to start production from the Phase 1 Plant in Q1 2017
  • Through a series of catalysts, commercial production of the Whabouchi Mine and commercial Hydromet plant is planned to commence in H2 2018, which makes it the first new lithium producer in the Americas after Orocobre, and is in time to profit from the rapidly developing global EV/energy storage/fossil free trend

Wealth Minerals: Negotiating Its Way Into The World Class Maricunga Lithium Brine Project

Executive summary

  • Wealth Minerals is in the process of acquiring a part of Salar de Maricunga in Chile, a brine lithium project, by taking over Li3 Energy
  • The Maricunga project has been ranked as the 4th best brine project in the world
  • The local situation is complex, but CEO Henk van Alphen, COO Xiaohuan Tang and newly appointed executive director Marcelo Awad are respected, experienced and successful businessmen in China, Latin America and especially Chile, and are working out a possibly very interesting solution
  • With current developments in electric vehicles and energy storage fueling lithium prices to unprecedented levels, problematic or even absent production expansions, the lithium carbonate supply/demand situation seems constrained for many years to come, creating healthy market fundamentals for Wealth Minerals

Mandalay Resources: A Class Act With A Valuation Issue

Executive summary

  • Mandalay Resources is primarily a gold producer, with 3 mines spread all over the world
  • The company buys underperforming assets in good jurisdictions, and turns them around through excellent management and engineering
  • After a sustained period of organic growth and converting resources into reserves, Mandalay Resources is strongly lagging behind peers based on valuation metrics
  • There is a distinct factor causing this disadvantage, and it is part of a deliberate strategy chosen by management
  • I will try to show why I have a different view on increasing shareholder value

Reservoir Minerals: How Big Can Timok Get?

Executive summary

  • Reservoir Minerals is exploring numerous prospects in South-east Europe for base/precious metals, next to a few early-stage gold prospects in Africa.
  • Its flagship project is called Timok, located in Serbia. A small part of it sports an already impressive resource of 3.7B lb copper @2.6% Cu, and 3.16M oz gold @1.5g/t.
  • Existing drill results indicate a much bigger, deep porphyry deposit around the existing mineralized zone.
  • Both Reservoir Minerals and giant copper producer Freeport-McMoran recently concluded the JV in order to take the project to scoping study level (PEA).
  • The investment community has been waiting for a Freeport buyout since the maiden resource estimate in Jan 2014, my guess is Freeport needs more confirmation.

Continental Gold: Its Upcoming PEA Could Be Impressive But Permitting Will Be The Real Catalyst

Executive summary

  • Continental Gold has one of the largest and highest grade gold projects in Latin America, with 7.4M oz gold equivalent @ 9 g/t gold equivalent.
  • A Preliminary Economic Assessment (PEA) of its Colombian flagship project Buritica is about to be released soon, estimated PEA economics look impressive.
  • Notable risks are a lack of follow up studies like a PFS and FS before production, and permitting.
  • I don't expect the PEA to be a big catalyst, compared to the possible granting of an environmental permit in H2 2015.
  • A sum of parts valuation generates an estimated target range of $3.92-4.83 per share, for a profit of 74-115% when the permit would be granted.


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