Rye Patch Gold Corp. (RPM:TSX.V; RPMGF:OTCQX) announced the sale of its "3.4% net smelter return royalty for total consideration of US$5,000,000 in cash" on June 1, and on June 6 announced a bought deal offering in Canada "for aggregate gross proceeds of $10,002,200. . .to be used for continued expansion of the Florida Canyon, working capital and general corporate purposes."
In a June 2 announcement, Rye Patch outlined the production statistics for its Florida Canyon mine:
- Mining of 1.174 million tons (1.07 million tonnes) of material including 551,359 tons (501,235 tonnes) of ore delivered to the crusher;
- Stacking of 582,161 tons (529,237 tonnes) of ore on the new South Heap Leach pad;
- Pouring of 5,566 troy ounces of dore containing 3,094 ounces of gold and 2,381 ounces of silver; and
- Progressing toward commercial production in Q3.
William C. Howald, president and CEO of the Company, stated, "In less than one year, the Company has made the transformation from a Nevada explorer to Nevada's newest gold producer. The acquisition of the Florida Canyon mine was a transformational transaction that Rye Patch was uniquely positioned to pursue and re-start the mine to create shareholder value."
Analysts are looking at Rye Patch in a positive light as well. In an iA Securities June 2 research report, analyst George Topping noted that the proceeds from the sale of the smelter royalty to Coer Mining "will supplement the cash flow from the Florida Canyon mine to be used towards drilling near mill material, infill drilling, and expanding the known resource."
Topping went on to recognize the May production statistics for Florida Canyon, reporting that "at 3,094oz/month, the mine is producing 103oz/day, which is well on its way to achieving operating financial breakeven." Topper maintained a Buy rating and $0.75 target price.
Michael Gray, analyst for Macquarie Research, also stated in a June 2 report that Rye Patch "produced 100oz/day Au (3094ozAu in May), which is in line with our expectations from the May 16 site visit. We estimate production of 130oz/day for FCF breakeven pre-delivering into the hedge facility at $1276/ozAu. We expect gold production to continue to ramp up over the coming months, driven by pregnant gold solution concentrations increasing and two pad construction milestones."
Reiterating an Outperform recommendation and $0.65 target price, Gray concluded that Rye Patch "is a top pick amongst our developer coverage for its significant re-rating potential (0.35x NAV vs junior producer peers averaging at 0.6x – Macquarie price deck) and emerging Nevada production on an underexplored trend, making it also an attractive target."
Rye Patch's shares are currently trading at around $0.26.
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1) Melissa Farley compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee. She owns, or members of her immediate household or family own, shares of the following companies mentioned in this article: None. She is, or members of her immediate household or family are, paid by the following companies mentioned in this article: None.
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Disclosures from iA Securities, Rye Patch Gold Corp., Research Update, June 2, 2017
Conflicts of Interest: The research analyst and or associates who prepared this report are compensated based upon (among other factors) the overall profitability of iA Securities, which may include the profitability of investment banking and related services. In the normal course of its business, iA Securities may provide financial advisory services for the issuers mentioned in this report. iA Securities may buy from or sell to customers the securities of issuers mentioned in this report on a principal basis.
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Macquarie Research, Rye Patch Gold Corp., June 2, 2017
SLW CN: MACQUARIE CAPITAL MARKETS CANADA LTD./MARCHÉS FINANCIERS MACQUARIE CANADA LTÉE. or one of its affiliates managed or co-managed a public offering of securities of Rye Patch Gold Corp in the past 12 months, for which it received compensation.
Macquarie Group Limited together with its affiliates beneficially owns 1% or more of the equity securities of Rye Patch Gold Corp.
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Analyst certification: We hereby certify that all of the views expressed in this report accurately reflect our personal views about the subject company or companies and its or their securities. We also certify that no part of our compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in this report. The Analysts responsible for preparing this report receive compensation from Macquarie that is based upon various factors including Macquarie Group Ltd total revenues, a portion of which are generated by Macquarie Group’s Investment Banking activities.