October 2019

Brixton Metals (TSXV: BBB) – Time to Drink Some Oban

Yesterday, Brixton released assays results from two of their thirteen-hole phase two exploration program (totaling 7,213m) at its wholly owned Thorn Project (Golden Triangle of B.C.). The program was following-up results from hole THN19-150, while also targeting other high potential areas at Thorn. We believe Brixton could be on the verge of a potential porphyry discovery that may cause the stock to react much like GT Gold did in 2017. We are encouraged by the presence of multiple mineralized sulphide-bearing zones, the overall size of the target and anxiously await results from TH19-163 which appears to hit the heart of the IP target.

Mako Mining Corp. (TSXV:MKO) – Big Fish with Bigger Margins

Mako Mining is in the process of building its 100% owned San Albino gold project in Nicaragua. The first gold pour is expected in mid-2020 from this small scale, high-margin open-pit mine. We model gold production initially ramping to 48koz/year in C2021 and then based on recent exploration success, doubling to 85koz/year in C2023. Despite relatively small-scale production we expect substantial FCF, and model C$53M in C2021E and C$78M in C2023E. Based on our expectations for substantial FCF, we believe Mako is undervalued relative to peers and expect the stock to re-rate towards our C$0.65/sh FV estimate (0.7x our base case NAVPS estimate of C$0.93) as it progresses towards first production and continues to demonstrate significant exploration upside.

Fiore Gold Ltd. (TSXV:F) – “Come on Baby Light My Fiore”

Fiore Gold is a gold producer that owns 100% of the producing Pan Gold Mine in Nevada, as well as the nearby Gold Rock development project. We continue to believe Fiore is well positioned to deliver +80koz/year by 2022 driven by steady production at Pan alongside organic growth from Gold Rock (PEA by year-end).

SolGold PLC (TSX: SOLG, LSE: SOLG) – Improved Recoveries Could be Game Changing

Yesterday, SolGold released results from metallurgical test work done at its Alpala project in northern Ecuador showing significantly improved recoveries for Cu, Au, Ag and an improved Cu concentrate grade. SolGold also stated that it plans to move forward with a pilot plant operation in 2020 to investigate a molybdenum-rhenium circuit for its copper concentrate as well as pyrite and magnetite recovery processes that will reduce tailings. We view the improved recovery results as a validation of the recoveries we used in our model (which were higher than the PEA) and believe that the additional recovery circuits could add significant value at Alpala should the metallurgy be proven feasible.

Uranium Update – Iranian Nuclear Sanctions Could be a Major Catalyst

Watershed event could be a major inflection in the uranium fuel space. The expiration of nuclear power waivers (October 29th) allowing foreign companies to continue engaging in Iran’s civil nuclear program has the potential to be a massive near-term catalyst for the uranium space, as it could impact as much as ~20% of U.S. nuclear fuel supply. The European, Chinese and Russian companies currently engaged in Iran’s nuclear program could be subject to sanctions if waivers are not extended, which could then jeopardize nuclear fuel imports to the United States. This is one of the potential catalysts we highlighted in our recent uranium update last month, that could spark the expected increase in uranium prices and contracting activity. With U.S. legislators threatening to force the issue (versus leaving it to the President), the odds of these sanctions occurring have increased slightly but it remains virtually impossible to call what will happen. Regardless of whether sanctions are implemented, we continue to have a bullish outlook on the uranium sector and are expecting the tightening long-term supply-demand fundamentals to result in a significant uranium price increase.

SolGold PLC (TSX: SOLG, LSE: SOLG) – Lucky 13; Celen Looks Sexy

Impact: Positive Yesterday, SolGold released a regional exploration update on its activities in Ecuador. The update focused solely on its 100% owned Cisne-Loja project located in southern Ecuador and specifically on its Celen prospect with soil and rock chip sampling and magnetic imaging. The Celen prospect is located only 5km south of the Cuenca Loma epithermal Au-Ag prospect (Figure 1). The last press release regarding this land package was published on May 9th. Since then, the Celen prospect area of Cu-Au-Ag mineralization has increased from 1.5km by 1.0km to 2.0km by 1.0km and 72 rock chip samples were collected and assayed. While it’s still early days at Celen, we expect it to add additional exploration sizzle to SolGold, especially when drilling begins.

Fiore Gold Ltd. (TSXV:F) – On the Cusp of Resource & NAV Expansion

Impact: Positive Fiore Gold Ltd. released drill results yesterday from its Gold Rock project in Nevada that identified thick intervals of oxide gold mineralization within and outside of the current resource pit shell. The company has been looking to expand its known resources at Gold Rock ahead of its expected PEA (Q4/19), and with positive results from 15 holes, we believe the share price should re-rate to better reflect the exploration upside at both its 100% owned Pan Mine and Gold Rock projects. We expect the stock to materially re-rate over the next 6-12 months, as the company continues to execute operationally, demonstrates organic growth to +80koz with Gold Rock and delivers on mine-life extension at Pan.

Atico Mining Corp. (TSXV:ATY) – El Roble Back at Full Pace; Positioned to Fund Growth

Impact: Positive Atico Mining Corp. announced positive Q3 production results from its El Roble mine in Colombia. The results are well ahead of Q2/19’s production, which was impacted by a labour dispute, and in line with Q4/18. We expect the Q3/19 operating results to translate positively into financials for the quarter. Following the recent acquisition of La Plata in Ecuador, Atico has added future growth to go with its steady cash flow and exploration upside at El Roble. We believe that a combination of operating execution, development progress at La Plata and exploration success should re-rate this stock.

Gran Colombia Gold (TSX:GCM) – High Grade Hits at Segovia Expand Resources; Potential to Boost NAVPS & CFPS

Impact: Mildly Positive Gran Colombia Gold released drill results from 25 infill and 15 step-out drill holes that appear to have expanded Chumeca, which is close to existing infrastructure and appears to have expanded resources at its existing mines (Sandra K, Providencia and El Silencio). Importantly, the results support the potential for a new high-grade zone at El Silencio, which if added to the mine-plan could materially improve our go forward estimates. Gran Colombia has significant leverage to the gold price but trades at a significant discount to peers. We believe that with ongoing exploration and operating success it should re-rate to our fair value estimate of C$10/sh.

Seabridge Gold Inc. (TSX:SEA) – Iskut Could be Another Significant Au-Cu Porphyry

Impact: Mildly Positive Results from Seabridge’s summer exploration program at its 100% owned Iskut project have defined another Au-Cu target. Results bode well for the project and we expect this work to be followed up by a significant drill program in 2020. While the expected JV for KSM is likely to be the next major catalyst, an aggressive exploration program at Iskut, along with ongoing work at Snowstorm should provide investors exploration upside in 2020.