Aurion reported results from its maiden seven-hole (1,537m) diamond drill program at the Christmas Deformation Zone (CDZ) on its 100%-owned Launi East property in Northern Finland. Following initial positive results from trenching and rock samples at the CDZ (read our comment here) the assays reported today returned low tenors of gold, though intercepts were made of structures thought to be associated with mineralization. Despite these initial results from Launi, we remain of the view that Aurion has the potential to discover multiple significant gold deposits on its large land package in Central Lapland Finland. In our view the 35% sell-off yesterday, has created an attractive entry point for investors.
Gran Colombia released 2020 production guidance for 232-257k oz (100% basis) which reflects the positive momentum from 2019. Guidance was effectively in line with our recently increased production estimates for 2020. As we expected, elevated grades are anticipated to continue at Segovia and operating improvements at Marmato should see production increase (Figure 1). We now model attributable production in 2020 of 242koz at US$693/oz total cash costs (was 237koz at TCC of US$695/oz), and 2020E EBITDA of US$170.8M (was US$167.3M) and FCF (CFO+CFI) of US$57.1M (was US$55.8M). We believe that as Gran Colombia demonstrates the high-grade, long-life potential of Segovia, its shares should materially re-rate.
Fission Uranium announced that it is on track to start the environmental assessment phase at its 100%-owned Patterson Lake South (PLS) project in Saskatchewan. Baseline environmental work at Fission has been ongoing since the discovery of the deposit and the majority is completed at present. We are maintaining a BUY rating and have adjusted our target to C$1.05/sh (was C$1.20) to account for the mildly longer timeline. We believe that as Fission advances its PLS project towards development the stock should materially re-rate towards our target.
Lion One announced results from a surface sampling campaign at its Navilawa exploration licence on its 100%-owned and fully permitted Tuvatu alkaline gold project in Fiji. The company conducted surface sampling to follow up on strong bulk leach extractable gold (BLEG) stream sediment samples collected in 2019. With ~600m of assays left from its second, deep drill hole and results from two additional holes still to come, we believe the company is well positioned to make a new discovery with its recent confirmatory geophysical work and surface sampling. We maintain our $1.70/sh target; however, we are adjusting our rating to HOLD (was BUY) based on share price appreciation.
Japan Gold released its Phase 1 drill results along with geophysical survey results and surface sample assays from its Kitano-o gold prospect at its Ikutahara project in Hokkaido, Japan (Figure 1). Taken together, the data has enabled the company to increase its geological understanding of Kitano-o and vector in towards potentially finding the source of historical mineralization at the Kitano Mine at depth in the eastern part of the prospect. Despite the lack of an early major success, we continue to believe that with 24 gold projects encompassed in a massive 127,894 ha portfolio that holds over 40 historic gold mines, Japan Gold has the potential to become the leading player in Japan.
SolGold released an exploration update from its Rio Amarillo project in Northern Ecuador that is 35km southeast of the company’s Alpala deposit (Figure 1). The company has discovered a cluster of new preserved porphyry lithocap zones and associated surface Cu-Au mineralization that could potentially indicate large porphyry related systems at depth. SolGold owns at least 12 other high-potential projects in Ecuador. The mood surrounding base metals stocks is currently in the doldrums, but now could be a great buying opportunity for SolGold shares as its stock price should recover in H2/20 amid improving sentiment post the global coronavirus scare and the near-guaranteed additional Chinese stimulus package to combat the as yet unquantifiable slowdown in GDP that the virus has already caused in country.
O3 Mining released positive results from its ongoing 50,000m drill program from its extensive land package (~61,000 ha) southeast of Val D’Or, Quebec. The company reported continuous and consistent drill intercepts from the Alpha property, where 25,000m of the 50,000m total drill program is underway. We note that the Alpha property comprises numerous historic and contiguous properties along the Central Cadillac break. This is the first time all the properties are held by a single company with funding to explore the entire land package. This provides the company with an opportunity to potentially make new discoveries in a top-tier mining jurisdiction that could substantially re-rate the stock.
SolGold released initial exploration results from its 100%-owned Timbara project in Southern Ecuador. The company has deployed field teams to assess 75 regional concessions across 14 provinces in the country. To-date, SolGold has identified 13 priority targets that could have excellent potential for discoveries. We note that the company’s flagship Alpala project is the only Cu-Au porphyry project in the hands of a “junior” with the scale to attract super majors such as BHP. SolGold owns 12 other high-potential projects in Ecuador. Given the dampened mood surrounding base metals stocks at present (see SNL Base Metals Index chart in sidebar), this could be an excellent buying opportunity that could see SolGold’s share price recover in H2/20 as sentiment is likely to rebound post the global coronavirus scare and the potential for a stimulus package.
Silver Viper Minerals released the second batch of drill results from its La Virginia project in Sonora State, Mexico. The results are part of the company’s ongoing 20-hole Phase II exploration program (~5km) which is designed to delineate an initial resource at it’s El Rubi target (the geology is similar to the Dolores mine containing 183 Moz AgEq). We expect the stock to re-rate towards our target of C$0.80/sh as Silver Viper continues to demonstrate the scale potential of its La Virginia project.
Domestic U.S. uranium producers could get a jumpstart following the release of the FY2021 Presidential Budget. On February 10th, President Trump released his FY2021 U.S. Government budget that allocated US$150M (to remain available until expended) to create a domestic uranium reserve. Following the Presidential Memorandum that was released on July 12, 2019, which stated that although the import of uranium did not constitute a national security threat, the fact that the domestic uranium industry faced significant challenges mining it was itself an issue of national security. Therefore, the FY2021 Presidential Budget contains a line item to establish a uranium reserve for the United States that is intended to provide assurances of the availability of uranium in the event of a market disruption and to support strategic U.S. fuel cycle capabilities. While we expect this announcement of a US$150M investment could create a U.S. domestic uranium price (while funding remains) and push domestic producers stocks higher, we continue to be bullish on the uranium sector and are anticipating the tightening long-term supply-demand fundamentals to result in a significant price increase.