Chris Berry, founder of commodity-focused House Mountain Partners, praised Terraco Gold (CVE:TEN) on Tuesday for "weathering the current poor market environment for juniors", after the Canadian junior closed its third royalty transaction on the Spring Valley project in Nevada, increasing Terraco's royalty exposure on the Barrick (TSE:ABX)-led joint venture property to up to three per cent.
Together with the company's first two net smelter returns (NSR) transactions on the project in 2011 and 2012, Terraco now has royalty coverage, either by direct ownership or option, of up to 3 per cent NSR on the developing project, which is expected to advance through scoping and into pre-feasibility status this year.
Berry makes the point that the company now has C$1.8 million in cash and marketable securities on its balance sheet, together with a low burn rate.
"It was encouraging to read TEN’s latest press release. CEO Todd Hilditch announced the closing of the third royalty transaction on the Barrick / Midway Gold Spring Valley gold deposit," Berry wrote in his morning notes on Tuesday.
Spring Valley is a joint venture between Midway Gold (TSE:MDW) and Barrick, where Barrick recently earned into a 60 per cent position by spending $30 million and has exercised an option to spend another $8 million to earn 70 per cent before the end of 2014. Recent statements from Midway indicate that this will occur well in advance of the end of next year.
"Essentially, as Spring Valley grows in size vis-à-vis resource, so too, does the value of the royalty from which TEN shareholders benefit. TEN now has CAD $1,800,000 in cash and marketable securities on its balance sheet and while the company did issue 800,000 shares to the royalty holder, we view this as a small price to pay to bring in $1,000,000 in cash and enhance the royalty agreement, particularly in this market environment," noted Berry.
He cites several factors that could be positive for Terraco, including the belief that Spring Valley will grow in size, that the deposit will eventually achieve commercial production and that the price of gold will be higher in the future than it is today.
"Nobody knows the answers to these questions with certainty, but in the case of TEN, management’s ability to arrange for largely non-dilutive financings in an environment hostile to junior financing leaves us with a sense of optimism for the future of the company," concluded Berry, who founded House Mountain Partners in 2010, which is focused on the commodity space and junior mining and resource stocks.
Spring Valley currently contains a NI 43-101 resource of 2.16 million ounces of gold in the Measured and Indicated categories and 1.97 million ounces of Inferred resource.
"This is a young and aggressive management team with very good sell-side institutional support. We are very large shareholders inTerraco Gold as we are in Pershing Gold a few miles down the trend.”
Shares in provider of auto-deploying satellite antenna systemsC-COM Satellite Systems Inc. (CVE:CMI) hit a new 52 week high Wednesday, adding up to 14 cents to their previous close to hit as high as $1.82 per share on the TSX Venture Exchange. The uptick is part of a longer-running trend for the stock that has seen its price almost triple since starting the year at 66 cents as word spreads of the technology that is the Ottawa-based company's stock in trade.
That technology– vehicle mounted, auto-deployed antennas for the delivery of 2-way high-speed, mobile internet services into vehicles or other transportable structures – is unique, in that it delivers high speed internet in locations where there might be no other means of gaining connectivity.
The most recent surge comes a week after the company announced a partnership with South Africa's largest independent telecommunications firm, Vox Telecom, which it was supplying with its iNetVu Mobile antennas.
The leading telecoms operator is to use the antennas, manufactured by C-COM, to provide voice and data services to the Southern African market.
"For the end user, it's literally a matter of pressing one button," said Jacques Visser, project Manager for Vox Telecom at the time of the announcement of the mobile antennas, which C-COM has designed to be fast, robust and easy to operate. "The antenna's software controller and robotic movement systems will automatically find the satellite signal and connect within less than five minutes. If there's no electricity, it can run off a car battery."
The almost tripling in share value in the year to date is consistent with the company's approach, which as president and CEO Leslie Klein points out, has “never gone back for additional funding,” since going public in 2000. The company reports $13 million in the bank, $3 million worth of inventory, no debt, and a record eight consecutive years of profit.
Canamex Resources Corp. (CVE:CSQ) (OTCQX:CNMXF) has appointed Dr. Dean McDonald, currently silver miner Hecla Mining's (NYSE:HL) senior vice president of exploration, to its board of directors.
"Dean is experienced in all aspects of mineral exploration, and is a welcome addition to the team as we continue to progress our Bruner Gold Project in Nye County, Nevada," said Canamex chairman and CEO Robert Kramer.
Late last year, the company announced a strategic investment from Hecla of $2.52 million, taking up 14 million shares for a 14.84 per cent stake in the junior explorer at closing.
For so long as Hecla holds more than 10 per cent of Canamex's outstanding shares, the company has the right to maintain its interest in Canamex and nominate one person to the board.
Earlier this month, Canamex reported a new high grade gold intercept at its Penelas East discovery area found on its Bruner gold project in Nevada. A new drill pad in the region was constructed in June, located 90 metres north of the initial discovery hole found last summer, and 140 metres north of the high grade gold intercept announced in April.
The new hole, B-1316, cut 1.5 metres grading 37.9 grams per tonne (g/t) gold, from between 340 to 345 feet, within a wider zone averaging 4.27 g/t gold over 21.3 metres.
Two more holes near the area have already been drilled, with results pending, while another hole is also being drilled to intersect the high grade structure 100 feet above the intercept in the latest hole completed.
The Canadian listed junior has the right to earn a 70 percent interest in the Bruner project by spending $6 million on it before May 2017, and can boost its stake by a further 5 percent by finishing a bankable feasibility study.
Canadian mining junior Donner Metals (CVE:DON) has extended the sulphide mineralisation at the McLeod Deep zone of the Bracemac-McLeod zinc-copper mine in Quebec.
Two drill holes revealed the extension, intersecting “well-developed pipe alteration below the sulphide mineralization suggesting the hydrothermal system is robust in the area”, the company said in a statement.
Drilling at McLeod Deep continues with four drills, it added.
Exploration drilling is also in progress between the Bracemac and McLeod zones, with six widely-spaced holes completed to date targeting the Key Tuffite horizon.
Donner said it found anomalous base metal values to the east of the Bracemac-KT zone.
Drilling 7 kilometres north-west of the Matagami mill meanwhile returned the first discovery of semi-massive copper-rich sulphides within a 1.2 kilometre-wide zone of chlorite-silica-pyrite alteration.
Glencore Xstrata operates the mine and owns 65%, while Donner has the remaining 35%.
The deposit contains proven and probable mineral reserves of 3.7mln tonnes grading 9.6% zinc, 1.26% copper, 28.25 grams per tonne silver and 0.43 grams per tonne gold.
Avrupa Minerals (CVE:AVU) says it has acquired a new license in the northern Pyrite Belt of Portugal, which is located just 40 kilometres north of its Alvalade joint venture project with Antofagasta Minerals.
The new Marateca 742 square km license was issued by the Mining Bureau of Portugal. Avrupa said it previously held an exploration license, also called Marateca, covering some of the same area as the new license.
The latest document covers a portion of the Pyrite Belt that is under-explored, according to the company's statement, with targets being potential copper and zinc-bearing massive sulfide deposits, hosted in a similar setting to that of the Alvalade project.
Prior work in the area by Avrupa includes core drilling at three different targets, said the junior explorer, with two holes at the Serrinha target intercepting "anomalous base metal values and silver".
The company said it is "highly optimistic" about further drilling in all three target zones. Further geological mapping and prospecting done last year also identified five areas in the new license with exposed rock units that Avrupa says typically host massive sulfide deposits in the Pyrite Belt.
The Marateca license lies next to the company's Alvito license, with Avrupa hoping to joint venture both these assets, either separately or together. Potential partners have already begun to review the targets on both licenses, which together cover some 1,730 square kilometres - land that has targets which can be brought to drilling stage with just a small amount of surface exploration work, Avrupa reiterated.
Avrupa is in the process of upgrading precious and base metal targets to joint-venture ready status in a number of districts in Europe, with the aim of attracting potential partners.
The company, which has properties in Portugal, Kosovo and Germany, holds a total of 16 exploration licenses in these European countries, including 10 in Portugal. It operates three joint ventures in Portugal, including the Covas partnership with Blackheath Resources (CVE:BHR), and the Alvalade joint venture with Antofagasta Minerals in the southern part of the country.
Last month, it signed a third deal to option out its Arga tungsten-gold project to tungsten explorer Blackheath, giving Blackheath the option to acquire up to an 85 per cent interest in the property over several years.
Earlier this month, Avrupa said core drilling has resumed at the Monte de Bela Vista target on its Alvalade joint venture. This will be the fourth hole drilled at the target, the companies said, which is located less than 2km north of the old Lousal mine on the Neves Corvo mineral trend.
RESAAS Services (CNSX:RSS) has added yet another real estate agency to its ever-growing social networking platform designed for real estate professionals. This time, the company has signed on California-based brokerage Excellence Real Estate.
The Covina, California-based full service agency serves southern California and beyond, and provides information for residential, commercial, investment, foreclosed and short sale properties.
"I am always trying to find a way for my agents to be more social and RESAAS is going to give this to my agents, resulting in a fantastic opportunity for the entire team," said broker and owner of the agency, Fernando Galaz.
RESAAS, whose social network is designed to allow real-time updating of property listings as well as the ability to sync with social media sites such as Facebook (NASDAQ:FB) and Twitter, is growing steadfast in its popularity, continually adding broker after broker to its platform across the U.S. and Canada, and digitally powering real estate events nationwide.
Known as real estate broadcasts, RESAAS' reblasts engine automatically generates all of an agency's real estate workflow into social content that is instantly pushed out to the RESAASplatform and other social networks. Last month, the company said it planned to raise $2 million to meet with demand and expand its platform into Europe.
When using RESAAS, each Excellence Real Estate agent will receive his or her own corporate branded agent page, and the firm will have its own page as well in order to broadcast information and keep in contact with its members.
Earlier this week, the red hot social network for real estate professionals said it will be promoting and digitally powering the Asian Real Estate Association of America's (AREAA) upcoming national convention in Los Angeles this September, coming hot on the heels of RESAAS powering the same association's Canadian summit in Vancouver earlier this month.
Northern Vertex Mining Corp. (CVE:NEE)(OTCQX:NHVCF) has filed amended third quarter interim financial statements to reflect a reversal of US$2.9 million in deferred cash payments tied to the sale of its majority stake in the Lemhi property earlier this year, citing industry-wide reductions in property expenditures.
The company has filed amended statements for the three and nine month period ending March 31. In February of this year, Northern Vertex closed the sale of its 51 per cent interest in the Lemhi gold joint venture to Idaho State Gold company for US$7.65 million, allowing it to focus exclusively on its Moss gold-silver mine in Arizona.
"Given the current market environment of industry-wide reductions in property expenditures and that future spending decisions by Idaho State Gold Company, are not under the company's control, the probability and timing of receiving the US$2.9 million (based on 3% of future property expenditures made by ISGC) is too uncertain for the amount to be accounted for as a receivable at this time under International Financial Reporting Standards (IFRS)," said Northern Vertex in a statement released late Tuesday.
As a result, the company is amending and refiling financials to reflect the reversal of the US$2.9 million as a long-term receivable, and will instead disclose its entitlement to the contingent consideration in the notes. The statements will now show a reduction in total assets by this amount, the company said, and an increase in the deficit for the period of US$2.9 million.
Any cash received in future in respect of the deferred consideration arrangement will now be treated as income in the period in which it is received.
Northern Vertex's loss per share has increased by $0.056 to $0.079 per share for the three months that ended March 31, and increased $0.062 to $0.137 per share for the nine month period ending on the same date.
Earlier this month, the company filed a preliminary short form prospectus with provincial regulatory authorities in Canada relating to its equity offering to raise proceeds of up to $10 million. The new funds will be used to advance the exploration and development of its Moss gold-silver project, including the pilot plant operations, which is designed to confirm test mining, heap leach processing and gold and silver recoveries. In conjunction with the equity offering, the junior explorer also plans to complete a private placement financing of up to $5 million.
Northern Vertex recently provided an update on its construction plans for its Moss gold-silver mine project, saying the first phase of the three-stage development process is progressing on time and on budget.
Phase II of the project is estimated to show an IRR of almost 118 per cent pre-tax and before royalties, and a net present value of US$110 million, at a 5 per cent discount rate. The phase II, or full operation, economics were calculated using gold prices of US$1,500 an ounce and $30 per ounce of silver. The payback period was seen at 15 months, with capex costs estimated at US$26.6 million. Cash costs were projected at just US$490 an ounce.
Kootenay Silver (CVE:KTN) reported Tuesday that hydrologic work and environmental baseline studies have been ongoing to advance its Promontorio project in Mexico, updating investors on the company's progress.
It said in a statement Tuesday that three monitoring wells have been installed along the main corridor of mineralization stretching from the Northeast zone through the pit on to the Southwest zone, in an effort to characterize the ground water levels to be used to develop a hydrogeological model.
According to the release, the company has so far gathered information on the property including an understanding of initial pit dewatering requirements, the initial evaluation of the potential for groundwater to supply a source of water to the project, and a collection of baseline groundwater data. The work is in preparation for evaluating groundwater conditions at the project, including potential water sources that may be required to sustain potential open pit or underground mining operations.
Alongside this work, environmental baseline work is now complete, and included surveying and data collection of surrounding flora and fauna, sampling of soil, water and sediments, and other socio-economic data. Meanwhile, geotechnical work completed so far includes the collection of extensive rock quality data, Kootenay said.
Last month, shares of the silver exploration and development company rose after it released drill results from Promontorio, saying it found a high grade silver zone between the pit and the northeast zones. The news came not even a month after the company released an updated resource at the Promontorio project that approached the 100 million ounce mark on the back of new metallurgical data that supported the recovery and inclusion of gold. Despite the new gold content, the latest resource did not include any drilling completed since the previous resource report was announced in August last year.
Highlights of the most recent drilling included 301 grams per tonne (g/t) silver equivalent over 31.7 metres, including 1,046 g/t silver equivalent over 5 metres in hole 186.
Kootenay, which earlier this year put to bed a $4.75 million investment from Agnico-Eagle Mines (NYSE:AEM), has 92 million contained silver equivalent ounces in the measured and indicated category for its Promontorio project resource, with another 24.3 million ounces in the inferred resource category. A further resource update is expected once the company's current 30,000 metre drilling campaign is finished, sometime in the third quarter of this year.
Gold Resource Corp (NYSE MKT:GORO) declared its monthly dividend of 3 cents per common share for July on Tuesday, payable on August 23 to shareholders of record as of August 12.
The company, which declared its first monthly dividend three years ago in July 2010, has now returned more than $86 million, or $1.64 per share to its shareholders in the form of 36 straight monthly dividends. The gold producer's shares went public in 2006 for $1.00 apiece.
“This company was created to pay a meaningful dividend," said president Jason Reid. “We are proud to have paid consecutive monthly dividends these past three years and look forward to continuing our shareholder focused approach.”
Last week, Gold Resource Corp reported that an employee was fatally injured in a rock fall accident at its La Arista underground mine in Mexico, with operations temporarily suspended as an investigation is still underway.
Earlier this month, the company reported its preliminary production results for the second quarter, maintaining its full year outlook. The U.S.-based gold producer with operations in Oaxaca, Mexico, reported production of about 20,500 ounces of precious metal gold equivalent for the three months to June 30. This compares with 14,488 ounces of gold equivalent in the same period last year. It stood by its outlook for the full year, for output of between 80,000 to 100,000 ounces of gold equivalent.
The planned expansion of the Aguila mill to a nominal 1,500 tonnes per day progressed well during the quarter, according to the company's statement, with the target to complete the project by year-end.
Madalena Ventures (CVE:MVN) is moving forward with its plan to unlock unconventional oil and gas resources within the prolific Nequen basin in Argentina, saying it has started a multi-well drilling program at its Coiron Amargo block while it also continues to make progress at its other two blocks in the region, where recent changes have created a more investment-friendly climate.
The upstream oil and gas company, which also has existing production in Canada, holds three blocks in the Nequen basin in Argentina, focused on delineating resources in the Vaca Muerta and Lower Agrio shales, alongside tight sand plays and conventional zones of interest. Its properties span 135,000 net acres across the Coiron Amargo, Cortadera and Curamhuele blocks, the latter of which the company is looking to joint venture.
In an operations update Tuesday, the company said that in the southern portion of the Coiron Amargo block, in which it has a 35 per cent working interest, it has started the first well of a multi-well program, with the primary target being the Vaca Muerta shale. Drilling is expected to last up to four weeks, with completion operations to follow.
At Cortadera, where Madalena holds a 40 per cent working interest, the company has agreed with its partner Apache to progress the block and re-enter the deep test originally drilled as a Vaca Muerta shale gas discovery in early 2012, in the fourth quarter. The company said the CorS.X-1 location was cased to a depth of 4,500 metres, with four zones of interest identified through log interpretation and analysis.
Meanwhile, at Curamhuele, Madalena is moving forward with RBC Capital Markets as its financial advisor to help find a potential joint venture partner to develop the asset, in which it holds a 90 per cent working interest. Of note, Chevron, Total, Exxon and Apache hold blocks that are adjacent to the Curamhuele block.
Mackie Research analyst Bill Newman reiterated his buy rating and $2.05 price target on the company on the back of the update today, saying the Canadian junior continues to make progress on all three of its blocks located in Argentina.
"A high volume test from the CorS.X-1 well on the Cortadera block or securing a partner for the Curamhuele block should be a major catalyst for the stock," he said.
Indeed, the company has received much attention from the analyst recently, in light of recent developments in Argentina, including a decree earlier this month that provides for new incentives for large investments into the oil and gas sector, with companies that invest over US$1 billion over a five year period to be allowed to sell 20 per cent of their production at world prices, without paying export taxes. This was followed by Chevron and YPF completing a US$1.24 billion joint venture deal that should see 100 wells drilled over the next 18 months targeting the Vaca Muerta shale.
Earlier this week, Mackie's Newman wrote in a report that these events make emerging companies operating in the region with prime acreage positions in the shales, including Madalena and Americas Petrogas (CVE:BOE), well positioned to benefit "from the start of a more investment-friendly environment in Argentina".
According to a Ryder Scott resource assessment from earlier this year, there are a total of 2.86 billion barrels of oil equivalent of recoverable resources (net to Madalena) across its three blocks within the Neuquen basin, of which approximately 2.0 billion boe net hails from the Vaca Muerta shale alone. The estimate also showed there are 1.3 billion barrels of oil equivalent gross prospective resources of Vaca Muerta shale potential on Madalena's Curamhuele block.
With the strengthening commodity prices, and improving investment climate, Newman wrote in his report that he believes there is a higher probability that a farm-out deal will be completed in 2013.
RESAAS Services (CNSX:RSS) has announced that its red hot social network for real estate professionals will be promoting and digitally powering the Asian Real Estate Association of America's (AREAA) upcoming national convention in Los Angeles this September.
The news comes hot on the heels of RESAAS powering the same association's Canadian summit, held in Vancouver earlier this month, which RESAAS said was deemed a "roaring success" by attendees.
"The theme of this year's National Convention is The Future is Now," said convention co-chair, Peter Park. "We are focused on equipping attendees with the latest tools, marketing and business strategies, so providing everyone access to RESAASmakes complete sense."
AREAA has 30 chapters across North America, made up of over 13,000 real estate professionals. All members will be invited to join AREAA's group on RESAAS before, during and after the National Convention.
RESAAS, whose social network is designed to allow real-time updating of property listings as well as the ability to sync with social media sites such as Facebook (NASDAQ:FB) and Twitter, is growing steadfast in its popularity, continually adding broker after broker to its platform across the U.S. and Canada, and digitally powering real estate events nationwide.
Known as real estate broadcasts, RESAAS' reblasts engine automatically generates all of an agency's real estate workflow into social content that is instantly pushed out to the RESAAS platform and other social networks. Last month, the company said it planned to raise $2 million to meet with demand and expand its platform into Europe.
"I met the RESAAS team for the first time at our Vancouver Summit earlier in July, so I am pleased to enhance our relationship by bringing them into the National fold. RESAAS provides incredible value to REALTORS, so I'm very happy to empower our members and attendees with this technology," said president of AREAA, Jim Park.
Just a few weeks ago, RESAAS signed a deal to power a slate of upcoming conferences, partnering with Xplode Conference to power events to be held this year in Boca Raton, Beverly Hills, Dallas, Jacksonville and Atlanta. It was also recently picked to power Inman News' upcoming Real Estate Connect conference in San Francisco this month, showcasing the company's increasing popularity in the industry.
"The AREAA National Convention promises to be a tremendous assembly of passionate agents," said CMO of RESAAS, Michael St. Hilaire. "We are very excited to provide a social experience for the conference attendees."
AREAA's National Convention will run September 19 to 21 in Los Angeles, California (http://www.areaa.org/).
New Zealand Energy Corp. (CVE:NZ)(OTCQX:NZERF) is entering a 50/50 split joint venture agreement with L&M Energy Limited to explore, develop and operate the assets it is about to acquire from Origin Energy -- the Tariki, Waihapa and Ngaere (TWN) petroleum mining licenses, as well as the Waihapa production station and associated infrastructure.
Shares of New Zealand Energy picked up more than 3 per cent in early deals Tuesday after the news was announced, which will see L&M invest $18.25 million, to be put toward the acquisition of the assets from Origin.
The parties said they intend to finalize definitive agreements shortly, with the aim of closing the deal at the same time as New Zealand Energy wraps up the $33.5 million acquisition of these assets from Origin Energy Resources, which has been underway since last year.
New Zealand Energy will become the operator of the licenses and the Waihapa station once the deal with Origin is closed, while decisions related to exploration, development and operations of the Waihapa assets will be made by management committees with equal representation from both New Zealand Energy and L&M Energy, the parties said in the release.
"L&M Energy's $18.25 million investment is a significant show of confidence in NZEC's exploration and development plans for the TWN Licenses and Waihapa Production Station," said CEO John Proust.
"With the $18.25 million purchase commitment from L&M Energy, NZEC is continuing to pursue a number of strategic options to fund the remaining $12 million required to close the acquisition of assets from Origin and add to existing working capital."
New Zealand Energy says the joint venture and acquisition, which will add to its existing production portfolio in the Taranaki Basin, will provide "significant benefit" to its shareholders, giving it the cash flow, infrastructure and inventory to support long-term growth.
Indeed, it will immeditately increase the company's reserves by 150 per cent, with the addition of 1.07 million barrels of oil equivalent of proven plus probable reserves, with a net present value of $31.4 million before tax.
The company is also banking on immediate production and cash flow with the reactivation of six existing Tikorangi wells using the gas lift system already in place, with output increases projected thereafter from the installation of the high volume lift.
New Zealand Energy also highlighted the growth potential of the deal, with the new Tikorangi wells and uphole Mt. Messenger completions in existing wells. The acquisition gives the company a large inventory of development opportunities, it said, with access to exploration targets in deeper prospects.
"LME has been exploring and operating in New Zealand since 1969 and brings financial strength combined with business and technical expertise to the joint venture," added Proust.
According to the terms of the joint venture with L&M, New Zealand Energy will get $18.25 million, made up of half of the purchase price for the Waihapa assets, plus half of the company's costs incurred to date.
The Canadian junior oil and gas play already controls 2.2 million acres of exploration permits on New Zealand’s North island (including one permit pending), where it is producing oil from four wells. The company has also completed a natural gas pipeline from its Copper Moki well site to the soon-to-be-acquired Waihapa production station, and is considering options to tie-in Waitapu-2 to the station. The oil producer is not yet generating cash flow from its natural gas production, with the Origin deal set to make this goal a near-term reality.
Earlier this year, the junior oil and gas company announced the decision to delay further drilling to focus on the completion of the acquisition of assets from Origin Energy, while also undertaking a number of reservoir and production tests in recent months with the aim of optimizing output and recovery from its existing wells.
The joint venture agreement announced today is still subject to government and regulatory approvals, as well as the remaining funds required to close the Origin deal. Once both transactions are closed, both New Zealand Energy and L&M will each own 50 per cent of the licenses that stretch across 23,4049 acres in the Taranaki Basin of New Zealand's North Island, as well as 50 per cent of the station and related oil and gas gather pipelines.
Mackie Research analyst Bill Newman issued an update onMadalena Ventures (CVE:MVN) stock Monday, in an industry report on Argentina's oil and gas sector, with the research based on a conference call with with Daniel Gerold, from G&G Energy Consultants in Argentina.
The call was prompted by recent developments in the country, including a decree earlier this month that provides for new incentives for large investments into the oil and gas sector, with companies that invest over US$1 billion over a five year period to be allowed to sell 20 per cent of their production at world prices, without paying export taxes. This was followed by Chevron and YPF completing a US$1.24 billion joint venture deal that should see 100 wells drilled over the next 18 months targeting the Vaca Muerta shale.
This makes emerging companies operating in the region with prime acreage positions in the shales, including Madalena andAmericas Petrogas (CVE:BOE), well positioned to benefit "from the start of a more investment-friendly environment in Argentina", concluded the Mackie analyst.
"We asked Daniel to provide an overview of the current political and economic situation in Argentina, and to offer some insight into the short and long term implications of the recent government incentives regarding oil and gas companies operating in Argentina," wrote Newman in his report.
The analyst's key takeaways from the call were the beliefs that Argentina is even more reliant on expensive imports, as reserves and production of both oil and natural gas continue to decline, and that the country is at the bottom of a new energy crisis cycle.
"Argentina has a history of introducing incentive programs in order to increase domestic oil and gas production whenever it is forced to start importing energy. The energy imbalance today is large relative to previous crises, this has begun to prompt modifications in current oil and gas incentives programs in order to boost domestic il and gas production. The government is aware of the potential impact of the current energy imbalance and in 2013, started to move slowly in a positive direction to promote investment," Newman took note. Indeed, Argentina’s energy deficit is expected to reach a record US$13 billion in 2013.
Newman also cited Argentina's recent decision to increase oil and gas prices, and the "probable scenario for soft improvement, with the country's government recognizing that some of the decisions made in 2012 were negative for the Latin American region's investment climate. "The more likely scenario is a continued improvement of the conditions in the energy sector with more incentives similar to decree 929 which should results in more investment from the major and super major oil and gas companies," Newman wrote.
The analyst believes that Madalena is well positioned to capitalize on the unconventional shale plays in the Neuquén Basin in Argentina, where the company holds three key blocks.
An independent resource estimate, done by Ryder Scott, earlier this year showed 1.3 billion barrels of oil equivalent gross prospective resources of Vaca Muerta shale potential on Madalena's Curamhuele block - for which it is gearing up to start a joint venture process - and 414 million barrels of oil equivalent of Lower Agrio shale potential. According to the Ryder Scott resource assessment, there are a total of 2.86 billion barrels of oil equivalent of recoverable resources (net to Madalena) across its three blocks within the Neuquen basin, of which approximately 2.0 billion boe net hails from the Vaca Muerta shale alone.
"Both companies [Madalena and Americas Petrogas] are in early stage discussions to farm-out an interest in high working interest blocks in return for a significant carried work program," Newman noted. "We believe that the successful completion of a farm-out will be a significant catalyst to the stock price."
With the strengthening commodity prices, and improving investment climate, Newman wrote in his report that he believes there is a higher probability that a farm-out deal will be completed in 2013, reiterating his buy rating on Madalena and $2.05 target price. Shares of Madalena are currently trading at 33.5 cents on the TSX Venture Exchange.
Sacre-Coeur Minerals (CVE:SCM) is in a position many average Canadian mining juniors can't even dream of, according to research released Monday by Prime Equity Research, which has assigned a speculative buy rating in a report initiating coverage on the Vancouver-based company.
In fact, the analyst, Vitalie Eremia, wrote in the note that the term "junior" to describe Sacre-Coeur is a bit of a misnomer, in the fact that the company is already producing "some low-cost gold" from an alluvial operation in Guyana, with annual proceeds in the millions of dollars.
Eremia noted that the miner, is, however, quite good at hiding this, booking the proceeds as offsets to exploration costs, as at the same time, Sacre Coeur is developing its Million Mountain Zone 1 resource body in Guyana. "Perhaps this is one reason why it appears underappreciated by the market – it’s not obvious that the company has cash inflows and appears to be an average junior," the analyst took note.
As recently as last month, the gold exploration and development company reported metallurgical test hole results from Million Mountain, saying the results were encouraging in terms of grades. The holes, which yielded in particular 42.8 metres grading 10.56 g/t gold, were drilled to collect samples as part of the feasibility study that is currently underway for the project.
Owing to the positive results of Sacre Coeur's own internal analysis, the company decided last year to move directly to a formal feasibility study, now being done by Tetra Tech, and expected in the third quarter. The report will be followed immediately by a final development decision, as well as by the completion of development financing and the start of construction - should the study lead to a positive result. Commissioning of the mine and plant for production is targeted for the third quarter of next year.
Though the company is already in production in Guyana, boasting all-in cash production costs of less than $500 an ounce at its alluvial/elluvial operations. In a recent interview with Proactiveinvestors, president and CEO Gregory Sparks attributed the reason behind the company's low-cost success mainly to the planned retrofitting of its first production unit, and the addition of a second unit, equipped with a fine gold recovery circuit. The net effect from these changes led the miner to boost its production forecast for the year, to between 6,000 to 8,000 ounces of gold, up from its prior estimate in the range of 5,000 to 7,000 ounces.
"The fact that the company is already producing has huge implications: it allowed SCM to secure gold-backed debt financing several months ago and the company plans to raise additional debt to fund the capital expenditures for its flagship half-a-million ounce project, for which it has commenced (in a fast-track fashion) a feasibility study, expected to be completed by autumn," wrote Eremia.
"Reliance on debt financing has allowed management to publicly commit to limiting shareholder dilution – something an average junior can’t even dream of. If the feasibility study comes back positive (management seems to have little doubt about that), SCM plans to commence a low cost mining operation in the second half of 2014, with a potential of expanding it further, subject to an additional feasibility study."
The Million Mountain Zone 1 deposit hosts roughly 500,000 troy ounces of gold as currently tested, including NI 43-101 compliant measured resources of 12.12 million tonnes grading 1.0 g/t gold, and indicated resources of 2.18 million tonnes grading 0.9 g/t gold. Since this report, the company has drilled an additional 40 holes on the outside of the resource body, with the estimate to be updated as part of the feasibility study in process.
The operation is also expected to be low cost, as the mining plan for the deposit is to be completed in two phases, with the first phase to be limited to the portion that is saprolitized, or the resource from chemically weathered rock. Drilling and blasting is not required to excavate saprolite, and therefore crushing and grinding requirements are less intensive than hard rock. Because of this, Sacre Coeur is focusing on initially exploiting only the upper saprolite layer for 5-7 years, with a separate feasibility study to be commissioned for mining the underlying bedrock after the mining of saprolite has advanced. The company is also working to lower the volume of the down-line processing stream for the property, reducing the size and capital and operating cost for the actual gold recovery system.
It currently envisages producing on average 37.7K ounces per year from the upper saprolite layer at an average cash operating cost of US$386/ounce. Prime Equity is modeling a more conservative cash operating cost of $500 an ounce, plus initial capex of $30 million, versus management’s estimate of $25 million.
The Prime Equity Research report says that though Sacre Coeur is not really a junior, it is not yet a full producer either, and lies somewhere in between, despite being perceived by the market as a junior. The analyst notes nevertheless that Sacre Coeur has smaller risks than other juniors, but cautions that the firm's valuation is speculative at this stage and dependent on the results of the upcoming feasibility study, which "will be the main catalyst for pushing the price up".
“Interestingly, Sacre-Coeur Minerals plans to begin paying out excess cash flows as dividends already in 2015, which is also unusual for junior companies. In a recent presentation, the company stated that around 30% of excess cash flows is planned to be paid out in cash or gold ETF units,” noted Prime Equity’s Eremia, adding that the company has also committed itself to minimizing shareholder dilution.
“This is yet another differentiator from the rest of junior miners, whose only source of financing is typically issuing new shares. Moreover, management has demonstrated its ability to follow through with this plan, issuing gold bonds in January 2013.”
The Canadian junior company, which has stated that capex to put its Million Mountain Zone 1 project into production will be funded by a gold-denominated bond and/or gold streaming or royalty sale, owns about 860 square kilometres of both producing and development-stage properties in Guyana, including another eight targets at Million Mountain, where scout drilling at Zone 9 intersected 0.55 meters of 84.26 grams gold.
Based on its internal analysis at Million Mountain Zone 1, using a base case gold price of $1,500 an ounce, Sacre-Coeur is projecting a net present value of $145.5 million from the project at a discount rate of 5 per cent, and an IRR of 123 per cent. "The economics are quite robust all the way down to $1,000 an ounce of gold," said Sparks.
The equity research firm concludes that the company's shares should be valued at 64 cents, based on its analysis, calling the numbers at hand pretty much "self-explanatory". "Only a very low gold recovery rate or a drop in the price of gold below $1,000/ounce would reduce the target valuation close to the current price level," the analyst wrote.
Montero Mining and Exploration (CVE:MON) provided Monday an update on test work from material at the company's Wigu Hill rare earth project in Tanzania, taking a significant step forward in improving the economic flowsheet for the asset.
The metallurgical study, done by SGS Lakefield, examined flotation processes to upgrade rare earth element (REE) minerals from Wigu Hill bastnaesite-rich carbonatite material. The main aim of the study was to identify a processing route that could recover the rare earth-bearing minerals while rejecting major "gangue" minerals that include quartz and barite.
The best results from rougher stage tests were achieved from a head grade of 6.42% Ce2O3, the company said Monday, using a hydroxamate-type collector. Here, the cumulative rougher concentrate graded 12.8% Ce2O3, with 79.1% recovery and 48.1% mass pull, which represents x2 upgrade.
"The results achieved in the scoping study demonstrate the potential to recover REE minerals into a pre-concentrate and reject the major gangue minerals, which are acid consumers for the downstream hydrometallurgical process," Montero revealed in its statement.
The rare earths explorer is coming off fresh from the receipt of its EIA certificate - part of the requirement for a mining license application. The EIA certificate from the Tanzanian government was received in late June, to fulfil section 92(1) of the Environmental Management Act in the country. The company is planning to submit a mining license application within the quarter, with expectations that it will receive the permit sometime in the first half of next year.
Montero's main Wigu Hill rare earth element (REE) deposit in Tanzania, which is 81 per cent owned by the company, is a steep hill that is 250 metres above sea level, 550 metres above the surrounding coastal plain, with the highest peak at 796 metres above sea level.
The junior explorer's plan is to fast track a portion of the large, 142 square kilometre deposit to the mining and production stage, but with a more comprehensive drilling program, Montero is convinced it can expand mineral resources from the current 3.3 million tonnes to well above 40 million tonnes.
"Advancing the mineral processing flowsheet with the flotation testwork completed by SGS-Lakefield, keeps us on a production focused target for our flagship Wigu Hill project," said president and CEO Dr. Tony Harwood in the release.
"These positive results represent a significant step in advancing the beneficiation process and improving Montero's economic flowsheet for the extraction of REEs from the bastnaesite-rich carbonatite mineralization. By reducing downstream reagent consumption costs we are on track to becoming a low cost producer of Rare Earths."
"The mineralization currently has grades that average between 3% to 5% TREO [total rare earth oxides], and this could potentially be upgraded to up to 50% TREO in a rare earth mineral concentrate," Harwood explained in a recent interview with Proactive Investors, through methods including gravity separation and x-ray sorting. "If we can do that, we can target reducing one of our biggest costs in the rare earth extraction process using acid consumption in the leaching plant."
The company's fast track strategy and decision not to focus only on expanding resources has allowed the company to become one of the first juniors to produce samples of individual and mixed oxides for marketing purposes, making it attractive to potential funding partners and positioning it ahead of the pack.
The SGS metallurgical study announced Monday will form the basis for further lab and pilot scale test work, in which flotation, as a mineral processing option, will be further explored and optimized, Montero said.
The Wigu Hill rare earth asset is considered a "look-a-like" to Molycorp's (NYSE:MCP) Mountain Pass project in the U.S. as the rare earth elements are hosted in the mineral bastnaesite, found in carbonatite dikes at Wigu Hill. This carries high grades of neodymium, praseodymium, lanthanum, and cerium with a small amount of heavy rare earths in the deposit.