PI Financial recently noted that the firm believes that the explorer market is "primed for a reawakening, supported by buoyant metal prices and a splattering of financings." It stated that senior and intermediate miners are funding juniors "in order to advance technically sound projects that offer real discovery potential." It also stated that "$350 mln was invested in junior exploration companies through strategic investments or joint ventures in 2017."
Six of the explorers that it featured are on the firm's explorer coverage list:
Auryn Resources Inc. (AUG:TSX; AUG:NYSE): Analyst Phil Ker noted that the company's management team "has a track-record of success and has a business strategy of acquiring and developing district-scale land positions within favorable mining jurisdictions." Auryn holds seven projects, including in Nunavut in Canada and Huilacollo in Peru.
"With initial results on the horizon [at Huilacollo], Auryn is positioned to have a steady stream of exploration based news flow and with any significant results achieved at Huilacollo, Auryn would have 3 significant projects to advance with others waiting in its pipeline," Ker concluded.
Balmoral Resources Ltd. (BAR:TSX; BALMF:OTCQX): Analyst Phil Ker noted that Balmoral's Martiniere project is an "extensive mineralised system spanning 3.5km along strike with mineralization intercepted across more than 700m of vertical extent. Four high-grade deposits remain open to depth." The explorer's Grasset nickel sulphide deposit "hosts an attractive high grade core offering grades in excess of 10% Ni."
"We believe Balmoral has an attractive pipeline of projects that could evolve into prime acquisition targets."
"Considering the lack of development multi-million ounce gold projects located in Canada and nickel deposits globally, we believe Balmoral has an attractive pipeline of projects that could evolve into prime acquisition targets," Ker stated.
The third company is Nighthawk Gold Corp. (NHK:TSX.V), which, according to Ker, is "one of the few Canadian junior gold developers that stands behind a multi-million ounce resource (2.1 mln oz grading 1.64 g/t Au)," at Colomac in the Northwest Territories. Metallurgical test work has shown gold recoveries of up to 98%.
Ker stated, "Further work is being completed and if successful, we see Colomac becoming a much larger project than currently envisioned. Considering the M&A appetite for attractive Canadian based gold project’s, we see Colomac as a potential takeout candidate."
Another company on PI's list is Otis Gold Corp. (OOO:TSX; OGLDF:OTCBB); Agnico Eagle has a 9.9% strategic investment in the company. Analyst Gary Sidhu noted that the explorer is advancing its Kilgore and Oakley projects, both in Idaho. Kilgore has a global resource estimate from 2012 of Indicated and Inferred of 820 Koz at 0.54 g/t gold, and these numbers don't include more recent drilling. Sidhu expects a resource update for Kilgore in Q2/18.
For Oakley, Sidhu noted, "we see last year's regional geophysics/soils exploration work laying the ground work for drill program at Oakley (anticipated in Q218)."
Another explorer is Revival Gold Inc. (RVG:TSX.V), whose Beartrack project produced gold from 1995 until 2002, but was put on care and maintenance because of the low price of gold, $350/oz at the time, noted analyst Brian Szeto. "We highlight Beartrack's LOM cash cost of $200-$250/oz when in operation and ~$140/oz achieved towards the end of the mine's life (when the operation was fully optimized)," the analyst stated.
"We see support infrastructure at [Revival's] site contributing to a lower initial capex than when the mine was built."
Revival will target a 1 Moz oxide resource from Beartrack and Arnett Creek, according to Szeto, who wrote, "we see this as a sufficiently sized initial resource to support a restart" at Beartrack. "We see support infrastructure at site (including the ADR plant, core shack, power substation, and access roads) all of which is in good shape, contributing to a lower initial capex than when the mine was built ($72 mln) should a decision be made to restart the mine," Szeto concluded.
The final explorer on its coverage list that PI Financial highlighted is SilverCrest Metals Inc. (SIL:TSX.V). Analyst Phil Ker noted that the company's management "discovered, built, operated and sold the Santa Elena mine to
First Majestic Silver for $140 mln." The company is now advancing the Las Chispas project in Sonora, Mexico, where it recently announced the discovery of "up to 19 high-grade veins (5 of which form part of a recently released maiden resource estimate)."
"Given SilverCrest's experience in Sonora and their initiative to "do-it-again," we anticipate a swift de-risk of all the boxes required to advance Las Chispas towards production potentially as soon as 2020," Ker concluded.
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Disclosure:
1) Patrice Fusillo compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.
2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: Balmoral Gold and Revival Gold. Click here for important disclosures about sponsor fees.
3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
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Disclosures from PI Financial, 2018 Junior Exploration Report, March 2, 2018
Analyst Certification: I, Chris Thompson, Phil Ker, Brian Szeto, and Gary Sidhu hereby certify that all of the views expressed in this report accurately reflect my personalviews about the subject securities or issuers. I also certify that no part of my compensation was, is, or will be, directly or indirectly related to thespecific recommendations or views expressed in this report. I am the research analyst primarily responsible for preparing this report.
Research Disclosures:
Auryn Resources, Balmoral Resources, Revival Gold and SilverCrest Metals:
PI Financial Corp. and/or its affiliates have received compensation for investment banking services for the subject company over the preceding 12-month period.
PI Financial Corp. and/or its affiliates expect to receive or intend to seek compensation for investment banking services from the subject company.
Nighthawk Gold:
PI Financial Corp. and/or its affiliates have received compensation for investment banking services for the subject company over the preceding 12-month period.
PI Financial Corp. and/or its affiliates expect to receive or intend to seek compensation for investment banking services from the subject company.
PI Financial Corp. and/or its affiliates have managed or co-managed a public offering of securities for the subject company in the past 12 months.
Otis Gold:
PI Financial Corp. and/or its affiliates expect to receive or intend to seek compensation for investment banking services from the subject company.
Company has partially funded previous analyst visits to its projects.
