A look at some of the news releases that caught my eye on Monday morning and my comments.
Ivanhoe Mines – (IVN:TSX) – Ivanhoe shares are catching a bid this morning up 18% at press time. China-based Zijin Mining Group will be acquiring a 9.9% stake in Ivanhoe through a private placement at C$1.36 per share. Ivanhoe will issue 76,817,020 shares for proceeds of C$105 million.
It appears Zijin has a particular interest in the Kamoa copper discovery.
Robert Friedland, CEO of IVN commented: “In particular, Ivanhoe and Zijin are in detailed, friendly discussions about the strategic co-development of our Kamoa copper discovery in the Democratic Republic of Congo. Kamoa’s significance was further affirmed earlier this month when Ivanhoe’s Kamoa Discovery Team received the prestigious 2015 Thayer Lindsley Award from the Prospectors & Developers Association of Canada, recognizing Kamoa’s distinction as the year’s top global mineral discovery.”
Zijin is a mining power house who is one of China’s largest gold producers, the second largest primary copper producer, as well as a large producer of zinc. Zijin also has a portfolio of assets worldwide including a 9.9% stake in Pretium made in December. It appears Zijin is strategically acquiring 9.9% ownership in high quality (high grade) development assets.
CEO Live members have been talking about the IVN news this morning. Join us and let us know what you think.
Read: China-based Zijin Mining Group to acquire a 9.9% stake in Ivanhoe Mines; Zijin to invest approximately C$105 million to help advance Ivanhoe\’s three mine-development projects in southern Africa
Savary Gold -(SCA:TSXV) – Ross Beaty continues to add to his investments in junior mining stocks purchasing 28 million units at 5 cents of the $3 million dollar financing announced by Savary. Ross will now own 19.99% of the outstanding shares. Interesting to note Savary scaled back the private placement to $3 million when junior mining companies are having a tough time raising money at all. It makes me think management has high expectations for this project.
Don Dudek, president and chief executive officer of Savary Gold, commented: “I am pleased to welcome Ross Beaty as our newest strategic shareholder. His support, along with that of Altus Securities, allowed Savary to upsize the original financing amount by 50 per cent to $3-million. It has been gratifying that Savary was able to obtain such strong support for what I believe is a strong exploration story.” Mr Dudek continued: “Now that the financing has closed, Savary will be finalizing the details of a drill program on the Karankasso project in the Hounde belt, Burkina Faso, with our 35-per-cent JV partner Sarama Resources Ltd. The goal of the program will be to complete additional drill testing of six of the mineralized zones and to test nine exciting new targets. We hope to begin the program as early as next month.”
The Karankasso project is a 750 sq km gold exploration project in Burkina Faso that is a 65/35 JV with Savary as the operator. The properties are in the the Birimian age Houndé Greenstone Belt which host Semafo’s Mana Mine, Roxgold’s Yaramoko Project, and Endeavour Mining’s Houndé Project.
Grab samples released in December look very interesting and provide several exciting drill targets. I will be watching the upcoming drill program but waiting on assays for confirmation before I make an investment decision.
Sandstorm Gold (SSL:TSX) – A major royalty acquisition by Sandstorm this morning. A deal has been reached with Iamgold (IMG:TSX) to acquire a 1% royalty on the Diavik diamond mine for $52 million in cash and 3 million Sandstorm warrants. The warrants will have a 5 year term taking them out to 2020 and are exercisable at a strike price of $4.50 US per share.
“Adding a royalty from the world-class Diavik mine brings approximately $7-million (U.S.) to $8-million (U.S.) per annum in additional long-term, stable cash flows to Sandstorm’s portfolio,” said president and chief executive officer Nolan Watson. “With this transaction, over 50 per cent of Sandstorm’s free cash flow will come from mines operated by large, multiasset mining companies, including Glencore, Rio Tinto, Newmont, Primero, AngloGold Ashanti and Yamana. We are committed to growing our portfolio of streams and royalties and we will maintain our focus on gold. At present, over 95 per cent of the potential transactions in our deal pipeline are precious metals opportunities, and with approximately $140-million (U.S.) of cash and available credit facilities, we are well positioned to take advantage of this deal pipeline.”
From a quick glance this looks like a good deal by Sandstorm in my opinion. It is nice for investors to see a royalty that is already in production and will generate immediate cash flow. I did notice however that the current Diavik mine plan is expected to run till at least 2023. Assuming $8 million US per year and no additional mine life Sandstorm is basically paying $52 million right now for $64 million over the next 8 years.
Sandstorm does have $140 million available to them to make additional deals and I would expect the team to be busy this year. 2015 production is now expected at between 40,000 and 50,000 gold-equivalent ounces up from 36,000 to 44,000 gold equivalent ounces.
NexGen Energy – (NXE:TSXV) – NexGen is out with more high grade uranium results this morning from the 100% percent owned Rook 1 project in Saskatchewan. Drilling continues to intersect off scale radioactivity within the A2 and A3 shear zone. The early stage deposit continues to grow in size and hit impressive intercepts.
Garrett Ainsworth, NexGen’s vice-president, exploration and development, commented: “The high-grade sections of the A2 and A3 shears are taking shape beautifully into what is heading toward a world-class uranium asset in the southwest Athabasca basin. Initial testing of the A3 shear with drill holes AR-15-39, -39w1, and -41 shows A3 is significantly larger in size than A2 and just as mineralized. This coupled with the successful strike of off-scale radioactivity with AR-15-40b at the current northeast edge of Arrow, strongly suggests that Arrow will continue to grow to the northeast.”
Investors will be waiting for assay results of the off scale radioactivity holes. A high CPS reading is usually a very good indicator of how the assays will come back.
NexGen is one of the leading Uranium exploration companies in the world. On the valuation side NXE still trades at close to 1/6th (75M vs. 450M) of the market cap of Fission. Fission is much more advanced with a 43-101 already but it shows the potential upside NXE still has.
Drilling continues with 4 drill rigs with 8,206.9 m of the winter program now been reported on. Investors can continue to expect steady news flow from NexGen.
Fission Uranium (FCU:TSX) – Fission just like NexGen continues to intercept high grade mineralization. 19 holes were released from the Triple R deposit this morning with 17 being mineralized. Highlighted by drill hole PLS15-368 (line 480E), which intercepted 8.98 metres total composite greater than 10,000 counts per second radioactivity with peaks up to 65,500 counts per second in a 57.0-metre zone of mineralization. Step out drilling has also expanded the R780E zone.
Ross McElroy, president, chief operating officer and chief geologist for Fission, commented: “This latest round of drill results, which includes a large number of step-out holes, represents a big step forward in the continued growth of the Triple R’s R780E zone. In addition to expanding the overall footprint of the zone, we have successfully targeted the on-strike extension of the high-grade domain west of line 495E. As shown by the model used for the Triple R resource estimate we released in January, 2015, each high-grade hole makes a significant impact on the size of the deposit, so continued extension of this high-grade core is a top priority.”
Fission has decided to expand the winter drill program due to positive drill results and favourable winter conditions. An additional $3 million of drilling is planned for 28 holes.
Today’s news was significant as the R780E zone expansion is the largest zone that is included in the Triple R deposit. A PEA is expected to be released this summer witch will be a major catalyst for the stock. I personally believe Fission is the next uranium company to be taken over and it is just a matter of time before it happens.
Barkerville Gold – (BGM:TSXV) – A short press release from Barkerville Gold this morning that Eric Sprott will be converting his $3.85 million debt into shares at 27 cents per share. Personally I am not sure what to think of Barkerville Gold and do not follow the stock closely. I thought the exaggerations of an extremely large gold resource were outrageous a couple years back. I do know the Barkerville area has several placer operations and the source of that gold has yet to be found. I checked the website for an update and the latest corporate presentation is 5 months old which is not good enough for me. New management has been appointed recently and we will see what they can do. I checked SEDAR to get a look at the financial position of the company and it does not look pretty as of November 30th,2014 current assets were $4,055,627 with current liabilities of $28,425,344.
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This is not investment advice.All facts are to be checked and verified by reader. As always please do your own due diligence.