newsFeb25

A red morning across the board so far in the markets as the TSX is down (-111.8 ) and the TSX V is down (-4.69). Commodities in red include gold,silver,platinum, and oil (as of press time). Oil is down ~1.5% after a large build in inventory of 10 million barrels according to the EIA.

Just a couple news releases caught my eye this morning.

Roxgold - (ROG:TSXV) -  Roxgold continues to make steps to move the Yaramoko project towards the start of construction. This morning the DRA/Group Five joint venture group has been announced as the construction contractor. The fixed price for the contract will be $34.9 million. DRA and Group Five have had recent success building mines in Africa including the Perkoa zinc project in Burkina Faso. Roxgold has signed a letter of commitment on a $75 million dollar debt financing to build the mine but is still waiting for the transaction to close.

The Yaramoko project is one of the worlds largest high grade undeveloped gold projects (15 g/t). At $1100 gold the project will generate an after tax IRR of 35.2% and a payback period of  2.4 years. Investors need to factor in the political risk of Burkina Faso and that elections are scheduled for October.

Related:  What to expect from Roxgold in 2015: CEO John Dorward or Roxgold set to make over US$ 70 million next year

Sprott Resource Corp - (SCP:TSX) - Sprott released year end financial results for 2014.  A tough year for Sprott posting a net loss of $137.9 million ($1.41 per share). The majority of the loss can be attributed to energy related investments (Long Run Exploration).  Sprott as of Dec 31st held 11.9% of Long Run Shares which are now worth ~$24.2 million compared to the book value of $34.5 million when reported.

Steve Yuzpe, president and chief executive officer of Sprott Resource commented "However, like many investors in the energy sector, we believe the sell-off has been overdone. Over time, supply-and-demand fundamentals will drive a recovery in oil prices and a corresponding increase in the value of our energy holdings. However, we realize that any recovery will be gradual. As such, our current focus is on conserving our capital and helping our portfolio companies position themselves to emerge from this downturn in the best position to capitalize on the next upswing in the commodities cycle.

Sprott stock is now trading all the way back close to the low's seen in 2006. All is not lost thought as the net asset value as of Dec 31,2014 was $2.33 per share.  The balance sheet does not look that great with only $1.7 million in cash and $10 million in debt. If the space recovers quickly  SCP will be a name to watch but investors should take a close look at each individual asset held to determine full worth of SCP shares.

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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.