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CEO.CA members discuss high-risk penny stocks which can lose their entire value. Only risk what you can afford to lose.
@newstrackerHaywood Mining Team's Stefan Ioannou on Nevsun Resources Ltd. $NSU with a BUY rating and $6 target.
On Cukaru Peki
Nevsun has a debt free balance sheet that includes 218 million after the acquisition of Reservoir Minerals in June. The company added a 100% interest in the high-grade Cukaru Peki epithermal copper-gold deposit in Serbia, part of the Timok project, which is supported by a JV deal with Freeport. Nevsun plans to spend $35 to $40 million through 2017 to support pre feasibility studies due to be completed in september 2017. Haywood is of the opinion that the greater clarity Nevsun can provide on its development plans, will secure market recognition of the Cukaru Peki project as world class. Going forward, Nevsun will be underpinned by a negative free cash flow profile profile next year because of its serbian investment plan. Haywood recognizes that an investment thesis with a negative cash-flow profile requires patience, but they still feel that it is money well spent. In light of these expenses, the company plans to maintain its peer-lending dividend for foreseeable future. The Cukaru Peki PEA provides a base-case after tax NAV 8% of 1.55 billion USD (106%IRR) at $3.00 per pound copper and $1,200 gold. At near current metal pricing, Reservoir’s base case PEA
Metallurgical Issues at Bisha
One big concern is the fact that Nevsun has not been able to produce a commercially saleable copper concentrate owing to the metallurgical challenges associated with processing highly variable primary ore. The company has been able to sell its bulk concentrate to zinc focused customers However, Haywood suspects that they are taking a loss on this bulk rather than selling a conventional copper concentrate. Haywood expects the metallurgical issues to be solved in time and does not anticipate any significant capital expenditures to remedy copper metallurgical issues.
Bisha Zinc Plant Expansion: "Batting Three for Three"
Nevsun does not have an off-take agreement on its zinc and will be able to take advantage of an anticipated global supply deficit. Zinc circuit construction is complete on time and on budget. This continues the company's previous track record of construction with both its gold and copper operations build on time and under budget.
Contact your local Haywood representative for a full copy of the report on Nevsun Resources Ltd. #Research
@newstrackerAsanko Gold Inc. $AKG - #Haywood#Research,
Rating: Buy; Target: $6.50; Risk: High
Today's Event Q3/16 Financial Results.
Impact – Neutral: Q3/16 financial results were largely in-line with expectations as operating data had been released previously: near-term performance a key to gauge operational consistency leading into execution of Phase 2A expansion.
Contact your local Haywood Securities Representative for a full copy of the report.
@newstrackerTD Securities #Research: First Majestic Silver Corp. $FR C$10.84
Q3/16 Slight Beat on Lower Costs
This morning, First Majestic reported its Q3/16 financial results. Q3/16 adjusted EPS of $0.07 were slightly above our estimate and consensus of $0.06 due to lower costs.
Impact: SLIGHTLY POSITIVE
- Operating results were pre-released on October 13, with the company reporting Q3/16 silver production of 3.1 Moz (4.5 Moz AgEq). Total cash costs were not previously released and came in at $5.84/oz (AISC $10.52/oz), below our forecast of $6.55/oz due to lower costs at La Parrilla and Del Toro.
- Year-to-date, the company has produced 9.0 Moz Ag (14.3 Moz AgEq) at total cash costs of $5.73/oz (AISC $10.11/oz).
- 2016 guidance was unchanged at 10.7–11.9 Moz Ag (16.8–18.7 Moz AgEq) at total cash costs of $5.40–$6.00/oz (AISC of $11.50-$12.35/oz). As a reminder, guidance was revised lower with the company's Q2/16 results.
- At the end of the quarter, a total of 19 drill rigs were active at the company’s six operating mines. In Q3/16, the company drilled 36.3 km (19.3 km in Q2/16) and completed 12.8 km of underground development (11.8 km in Q2/16).
- According to the company, updated NI 43-101 Technical Reports for Del Toro, La Parrilla and San Martin are expected to be released in Q1/17.
- FCF (CFO pre-working-capital less total capex) in the quarter was $18mm after spending $15mm in capex.
- First Majestic ended the quarter with cash of $122mm ($108mm in Q2/16), against $57mm of total debt ($10mm of lease obligations and $47mm of debt).
@newstrackerMick Carew of #Haywood Securities visited $KNT. He notes: Since acquiring the project in 2015, K92 Mining’s primary focus has been on restarting mine operations at Irumafimpa (targeting Q1/17); the task includes refurbishment of the current processing facility (e.g., installation of a drum scrubber for processing wet ore) and rehabilitation of underground workings (e.g., rock bolts and meshing). The Company also recently began processing remnant ore (~60,000 tonnes) not processed when the Irumafimpa mine was put on care and maintenance in 2009. #Haywood#Research Contact your local Haywood representative for a full copy of the report.
@newstrackerColin Healey, MBA, of Haywood Securities commented on Kootenay's $KTN results today from 11 drill holes at the ‘Ram’ target, located on its 100%-owned La Cigarra project near Parral City, Chihuahua, Mexico. Within today’s results there are some very promising higher-grade intersections among the mineralized intervals that suggest the potential for the Ram target to host a material silver resource proximal to the La Cigarra deposit, which is promising and could be complimentary. Intersecting some degree of silver mineralization in 9 of 11 holes is a good hit rate (82%) for a first pass drill program of fairly wide spaced (often) pairs of holes. As shown in Exhibit 1, the two holes that did not intersect mineralization are both collared approximately 100-150 metres to the west of the balance of the holes. #Haywood#Research
Contact your local Haywood Representative for a full copy of the report.
@newstracker#Haywood#Research: Ikkuma Resources Corp. $IKM- In Line Q3; Cardium Light Oil Discovery Holds Encouraging Potential. Rating: Buy; Target: $1.25 (from $1.10); Risk: Very High. Event: Ikkuma (IKM) released its Q3/16 results and an ops update before market highlighted by a New Cardium light oil pool discovery.
Impact – Neutral Short-Term; Directionally Positive Mid-Term:
- Production of 5,866 boe/d (98% natural gas) was below Haywood's estimate and consensus of 6,300 boe/d due to ~1,000 boe/d of shut-in gas production due to economics and 3rd party curtailments. Cash flow of $2.6 MM ($0.03/sh) was in line with its estimate and consensus of $2.5 MM ($0.03/sh) supported predominantly by a hedging gain of $1.8 MM in Q3.
- While the headline rate is not strong, the New Cardium light oil pool discovery well is encouraging. IKM announced a new light oil discovery post completion of a short leg Hz (670m) Cardium oil well drilled in the Q1/16. In Oct, the well was completed with a 16 stage slick-water frac and during 28 days of production flow back witnessed daily fluid rates of 158-334 bbl/d. The proportion of frac water has decreased steadily and is currently ~40% of the total pumped fluid. Post load fluid clean up, mgmt. expects the well will pump at about 150 - 250 boe/d (~80% light oil). Speaking with mgmt. the well cost was ~$4 MM.
@newstrackerHudbay Minerals Inc. $HBM, HBM-N, $9.24
Rating: Buy; Target: $10.00 (from $8.25); Risk: Very High
Stefan Ioannou, PhD,
Sooner Than Expected Higher Grade Satellite Pampacancha Ore Feed at Constancia
Valuation: Haywood's valuation is based on a 6.0x multiple to 2017E cash flow per share (CFPS) of US$1.30 at US$2.25/lb of copper and US$1.00/lb respectively (vs peers at +6x CFPS). Our target also equates to a 9.4x enterprise value (EV)/2017E CFPS multiple (vs peers at ~10x).
Event: Hudbay recently tabled an updated National Instrument 43-101 compliant technical report for the Company’s 100% owned flagship Constancia mine in Peru.
Impact – Mixed (base metal sentiment prompts target increase):
- Constancia’s updated mine plan detailing open-pit production through 2035 includes ore feed from the higher grade Pampacancha deposit, which is now expected to be in production by mid-2018 (through early 2022), versus our previously modelled mine plan that had incremental higher grade production from the satellite deposit beginning in early 2019.
- Pampacancha's 43 Mt reserve grades 0.49% copper and 0.28 g/t gold, versus Constancia's 552 Mt reserve, which grades 0.29% copper and 0.04 g/t gold (as of June 30, 2016). Hence, the satellite deposit, located within ~5 km of the Constancia mill, stands to significantly augment the mine's medium-term head-grade profile.
Please contact your local Haywood representative for a full copy of the report.
@newstrackerDundee Capital Markets with its top pick Lundin Mining Corp. $LUN, has its investment thesis strengthened on $LUN 's maiden 12-cent dividend and updated operating outlook. The first quarterly dividend of 3 cents per share will start in March. The company has an excellent balance sheet with $845M with $350M in undrawn revolving credit. Furthermore, production guidance at Candelaria 2017 increased 20% vs. previous guidance. #Zinc production increased 5% vs previous guidanance. The construction of its tailings dam at Los Diques has its capex cost reduced by $25M. In Dundee's opinion, "$LUN 's metamorphosis to the go-to large cap base metals name is now complete." Dundee has a price target of $10.50. #research
@newstrackerDundee Capital Markets has a price target of $2.30 up from $2.25 on Nemaska Lithium $NMX. It is their top lithium pick, The increase in the target is because of the company's resource expansion and a slight life of mine extension, which is not that significant in light of the 26-year life of mine. Resources grew 26%, 322,000 t LCE to 1.58 MM t LCE. The cut-off grades were lowered from 0.43% to 0.3% due to an increase in lithium prices. Nemaska's feasibility study is pending. #Research#Lithium
@newstrackerDaniel Earle of TD Securities is slightly positive on today's drilling results from NewCastle Gold $NCA. TD rates the company with a speculative risk rating and a recommendation as Spec Buy and has a 12-month price target of $2.00. #research
@newstrackerHaywood is positive on today's drilling results from Osisko $OSK. Haywood rates the company's risk very high and a recommendation as a Buy and has a price target of $4.00. #research#Haywood
@racker#Haywood#Research: Lundin Gold Inc. $LUG - Still Running on Schedule and Ticking the Boxes...Lundin Gold Signs Exploitation Agreement for Fruta Del Norte" That's Kerry Smith, MBA with a BUY, High Risk Rating and $8.75 target price on the Ecuadorian gold developer. Contact your Haywood rep for a copy of the $LUG report.
@newstrackerDarrell Bishop, PEng, MBA of Haywood Securities in a recent email to clients assessed the impact of $BBI Blackbird Energy's fiscal Q1 2017 results, released on friday, as neutral. As of Monday close, the stock closed at 59 cents, up one cent on the day. He issued a buy rating with a price target of 90 cents but with a very high risk rating. It is one of Haywood's top nat gas picks. #Haywood#Research
@newstrackerYesterday, $SMF received its Natougou mining permit on schedule. Kerry Smith, MBA, PEng, of Haywood has a price target on SEMAFO $SMF of $7.50, currently trading at $3.81. He has a buy recommendation with a medium to high risk rating. #research
@nlepanHaywood Securities in a note to clients today, commented on $OSK Osisko's high grade results from its Windfall property. Mick Carew of Haywood has a price target of $4 with a buy recommendation but with a very high risk rating. #research#haywood
@nlepanIn a note to clients today, Haywood analyst Kerry Smith has a buy recommendation for Alamos Gold on news that the company has received forestry permits for its Kirazli project in Turkey. Haywood has price target of $13 with a medium to high risk rating. This permit allows the company to move forward with development at Kirazli but the company still has to submit permits for its Agi Dagi project. $AGI#Haywood#Research
@nlepanIn a note to clients today, Darrell Bishop of Haywood Securities maintains its buy rating on Whitecap Resources $WCP and assesses today's news of the closing of $200 million in secured notes and operation updates as positive. Haywood has a target of $14 with a medium to high risk rating. $WCP is currently trading at $12.30. #Haywood#Research
@nlepanIn a note to clients today, Kerry Smith of Haywood Securities comments on $ELD Eldorado Gold's news today. Haywood maintains a buy rating with a price target of $8.75 and medium to high risk rating. The stock is currently trading at $4.77. The news today was the company missed its 2016 guidance by 9006 ounces (guidance was 495,000 ounces, actual production 485,994) due to slower than expected leach rates. The company's guidance for 2017 is 365,000 to 400,000 ounces of gold. Expansion at its Kisladag mine has been indefinitely deferred. However, the company is flush with cash as its balance sits at US$880 million due to the sale of its chinese assets. #haywood#gold#research
@nlepanLee Groat, a mineralogist and professor from the University of British Columbia, may have just cracked one of mining’s biggest environmental problems — acid rock drainage — thanks to initial research funding from Yukon-explorer Strategic Metals $SMD. Groat and his students have found a way to combine acidic water generated from mine tailings with carbon-dioxide from gas emissions to make siderite, a stable iron-carbonate mineral that won’t hurt the environment. http://www.northernminer.com/news/ubc-terra-co2-team-us7-5m-tailings-research-prize/1003782248/#research
@nlepanIn a note to clients today, Haywood analyst Kerry Smith comments on Osisko's sale of shares in Labrador Iron Ore Royalty Corp. for proceeds of $113.4 million. This sale increases Osisko's cash balance to over $500 million. Haywood believes that Osisko's valuation could benefit from an acquisition, however the royalty business requires discipline and Osisko has demonstrated it being selective in its deals. Haywood has a buy rating with a $19 price target with a high risk rating. $OSK#mining#Haywood#research
@nlepanIn a note to client's today, Haywood analyst Mick Carew noted that Cordoba Mineral's $CDB initial resource estimate (released last friday) for Alacran as a good start. Haywood notes that the initial resource is pit constrained in the inferred category and that copper-gold mineralization has been intercepted below the conceptual pit shell however insufficient drilling has been completed to include these zones in the current resource estimate. Haywood has not rated $CDB. #research#Haywood
@nlepanIn a note to clients, TD Securities analyst Daniel Earle rates today's news of Endeavour Silver's Q4/16 production results as slightly negative. Production of 1.1 Moz Ag and 11.4 koz Au was below our forecast of 1.3 Moz Ag and 11.9 koz Au as production from El Cubo, Bolanitos and Guanacevi were all slightly below expectations. TD Securities has a hold recommendation with 12-month price target of $5 and a high risk rating. $EDR#research
@nlepanIn a note to clients today, Haywoood Analyst Darrell Bishop, PEng, MBA, is encouraged by early results from Parex Resources' $PXT Aguas Blancas gas project in the Llanos Basin in #Colombia and states that Haywood would be buyers on any potential weakness. Haywood has a buy rating with a price target of $24 with a medium to high risk rating. Parex is currently trading at $16.17 down 68 cents on ~500,000 shares, at time of writing. #Research#Haywood
@nlepanIn a note to clients today, TD Securities analyst Daniel Earle announced that he will be resuming coverage of Rubicon Minerals $RMX after the company has completed a restructuring transaction. TD Securities concludes Rubicon is in possession of an underground gold mine, mill and associated infrastructure in a premier mining jurisdiction. With a competent management team and financing for its immediate plans in place, the stock could re-rate as the company rebuilds confidence and moves the project forward. TD is upgrading its recommendation to SPECULATIVE BUY (from Hold) and increasing its target price to $4.00 (from $0.35). $RMX is currently trading at $1.88 before market open. #Research
@nlepanIn a note to clients today, TD securities analyst Daniel Earle rates Sandstorm's $SSL news of 2016 sales at higher end of guidance, as slightly positive. TD securities has a buy rating with a high risk rating and a 12-month target price of $7.50. Sandstorm last traded at $5.71 at the close of markets on Jan. 10, 2016. #Research
@nlepanIn a note to clients today, Mick Carew of Haywood Securities rates Pilot Gold's $PLG news of more gold intersected at Goldstrike as positive. Haywood has a buy rating with a $1 price target with a very high risk rating. Haywood notes that these results support their observations from a recent site visit. $PLG is currently trading down 1 cent today to 50 cents on 35,000 shares. #Haywood#Research
@nlepanIn a note to clients today, Geordie Mark of Haywood Securities rated Asanko Gold's $AKG 4th quarter production results as positive. Asanko reported gold production of 57,178 oz and sales of 58,483 oz gold for revenues of US$70.1 million at an average gold price of US$1,199 per ounce. Haywood has a buy rating with a high risk rating and a price target of $6.50. Currently, Asanko is trading at $4.81 up 3 cents on 409,000 shares. #Haywood#Research#gold
@nlepanIn a note to client's today, Daniel Earle of TD securities rates Premier Gold's $PG Q4/2016 production results as slightly positive. 2016 production of 112 koz was above TD's estimate of 103 koz and 2016 guidance of 100-110 koz due to greater production from South Arturo. In addition, TD is neutral on the company's Hasaga project's maiden resource. TD Securities has a hold recommendation, with a high risk rating and a 12 month price target of $2.75. $PG is currently trading at $2.95. #Research
@nlepanIn a note to clients today, Mick Carew of Haywood Securities rates NewCastle Gold $NCA as a buy with a $1.60 price target but with a high risk rating. NewCastle today published drill results from the company's project in California. $NCA is currently trading at 76 cents up 3 cents on 529,000 shares. #Haywood#Research
@nlepanYesterday evening, Pan American Silver $PAA reported its Q4/16 operating results and three-year production, operating cost, and capital spending guidance. In a note to clients, TD Securities analyst Daniel Earle rated the news as positive. 2016 silver production of 25.4 Moz was in line with the upwardly revised guidance of 25.0–25.7 Moz. 2016 net cash costs of $6.29/oz were at the lower end of the company’s revised guidance range of $6.25–$7.00/oz. TD Securities has a hold recommendation with a 12-month price target of $18 USD with a high risk rating. #research
@nicholaslepanYesterday morning, Guyana $GUY released an updated Feasibility Study for its Aurora Gold Mine in Guyana. The study includes an updated Reserve estimate using $1,200/oz gold ($1,000/oz previously) and assumes underground production in 2024. In a note to clients today, Daniel Earle of TD Securities assessed this news to have a positive impact. Reserves (net of depletion) increased 15% to 3.5 Moz at 2.99 g/t from 3.0 Moz at 2.94 g/t. TD has a buy recommendation with a 12-month price target of $8 and high risk rating. $GUY is up 36 cents to $7.10 on 1.7 million shares for the day. #research