Alkane celebrates a gold anniversary and shares the wealth with a +258% return for investors

This year Alkane Resources Limited (ASX: ALK | OTCQX: ANLKY) celebrated 50 years of business. It’s appropriate that 50 years is celebrated as a ‘Golden Anniversary’ as the Company’s focus is gold production, exploration and partnerships. And what a golden year it has been with the stock price up 258% year to date, having risen from A$0.17 to A$0.61 so far in 2019. Alkane Resources shareholders are certainly celebrating 2019, thanks in part to record high Australian dollar gold prices (currently A$2,146/oz).

Alkane Resources’s other focus, rare earths, also had a good year, suggesting 2020 could also be a great year as the US takes a stronger interest in Australian rare earth projects.

Alkane Resources corporate history timeline

Alkane Resources gold operations at Tomingley, NSW, Australia

In 2019, the Tomingley Gold Mine operations have transitioned towards underground mining away from open pit mining with just under 3,000 mt of lateral development completed, which includes 1,000 mt on the decline. The underground development is progressing a little bit ahead of schedule and budget mainly because of a new underground development team performing exceptionally well.

Alkane Resources is searching for more nearby gold ounces to feed their Tomingley Mill

With a view to define additional ore resources for the Tomingley Mill, Alkane is also ramping up nearby regional gold activity. This year Alkane identified an exploration gold corridor between Tomingley and Peak Hill in New South Wales. The three prospects of San Antonio, Roswell and El Paso received encouraging results suggesting real potential for mine development in the area.

At Alkane Resources’ recent AGM, Chairman Ian Gandel stated: “We have centered our gold activities around one of Alkane’s key assets, the gold mine and processing facility at Tomingley. Many of our activities have centered around extending the production life of our gold mill.”

The San Antonio and Roswell prospects

A 60,000-metre resource definition drilling program on the San Antonio and Roswell prospects is in progress. Drilling is being undertaken to define an initial Inferred Resource at both prospects to a minimum 200 metre vertical depth. Phase one of Roswell drilling has been completed with samples now being prepared and assayed to form part of an initial resource that is expected to be released in early December. San Antonio drilling is continuing.

The Boda Project

Alkane is also continuing gold exploration more broadly at the Northern Molong Porphyry Prospect, 35 km east of Dubbo. Significant porphyry style gold-copper has been discovered at the Boda project. A single diamond drill hole was drilled to test the depth extent of gold mineralisation identified and returned a broad intercept of 502 m @ 0.48 g/t gold, 0.20% copper from 211 m. Alkane will now embark upon a drilling program of five diamond cores to test mineralization.

Alkane is also looking to enhance its gold strategy by investing in advanced junior gold mines with potential that Alkane can contribute additional capital, expertise and operational capability.

The Dubbo Project (rare earths)

Alkane has continued to develop its rare earths Dubbo Project in NSW, Australia. Key rare earths at the Project include zirconium, niobium, and hafnium. Estimated NPV is A$1,236 million over an initial 20 year mine life, with potential to expand to a 75+ year mine life. The Project is permitted and construction ready, pending finance.

Alkane Resources rare earths Dubbo Project revenue to be driven by zirconium, niobium, and hafnium

Investment in Zirconium Technology Corporation

In a notable development in the past year, Alkane made a significant investment in Zirconium Technology Corporation of South Korea. The Company will fund the final stages of research and feasibility of a new metallisation technology which is more environmentally sustainable and cost effective than conventional processes. This potentially represents the best process route for materials at the Dubbo Project into highly marketable high purity metals. Alkane is also looking at leveraging this technology with the Company’s own proprietary oxide separation technology for commercial scale.

It certainly has been a big year for gold, and also for Alkane Resources celebrating its 50th anniversary. With a 2019 YTD stock price return of 258% investors can feel very happy with the way things are going.

Looking towards 2020 strong interest and co-operation from the US towards Australian rare earth projects bodes well for Alkane Resources’ Dubbo Project achieving funding. With some gold exploration success, solid gold production, and if gold prices hold, 2020 should be another solid year for Alkane Resources.

Alkane Resources is based in Burswood Western Australia; and has a market cap of AU$ 308 million. Investors can read my January 2019 article discussing Alkane Resources on InvestorIntel here.

7 million gold ounces and 4 new gold-copper porphyry targets nearby sees huge upside potential

It is looking like the second largest undeveloped gold deposit in Europe may have a lot more gold and copper nearby. The Company behind the discovery states it has found four new gold-copper porphyry targets, with a cluster of three porphyry targets just 1.5 km apart from each other, 6 km east from their existing Colnic Au-Cu porphyry deposit on the Rovina Mining License.

The Company is Euro Sun Mining Inc. (TSX: ESM). Euro Sun Mining already has a M&I resource of 7.05 million gold ounces and 1.39 billion copper pounds at their Rovina Valley Project in Romania. According to the Company, their resource is the second largest undeveloped gold deposit in Europe and the 14th largest undeveloped gold deposit in the world.

The Rovina Valley Project location map in an emerging gold district in Romania

New porphyry discovery targets

Euro Sun’s new four gold-copper-molybdenum porphyry targets are located within the Stanija Prospecting Permit, which is 3 km east from Euro Sun’s Rovina Valley Gold Project. The permit area covers 42 square kilometers.

Reconnaissance rock chip sampling and grab sample assay results indicated the presence of porphyry-style gold-copper mineralization and gold epithermal vein-style mineralization. Results include samples with 1.39 g/t Au and 0.34% Cu porphyry style occurrence and a sample with 25.9 g/t Au and 0.005% Cu.

Scott Moore, Euro Sun’s CEO stated: “Our team has worked diligently over the past three years on the Stanija prospecting license to determine the discovery potential adjacent to our Rovina Valley Project. We look forward to the initiation process for the exclusive exploration license which is expected to occur in early 2020…..The granting of this prospecting permit by the Romanian Government clearly demonstrates that the country is supportive of new mining projects.”

The very promising Stanija Prospecting Permit is near to the Rovina Licence area

The Rovina Valley Project

Euro Sun Mining’s Rovina Valley Project covers 27.68 km² and is located in the historic mining district known as the Golden Quadrilateral. As one of the largest gold producing areas in Europe, it is estimated that more than 55 million ounces of gold has been produced since the Roman period. Rovina is the first-ever mining license issued to a non-state-owned mining company with a license to mine for 20 years, plus renewals. The Project is approved for large scale bulk mining at approximately 70,000 tpd without the use of cyanide and wet tailings.

The February 2019 PEA was based on just 29% of the Rovina Valley resource, and on 108,000 oz pa of gold production at an All-In Sustaining-Costs (AISC) estimate of US$752/oz, which is quite impressive. Despite lower grades, the scale of the project, open pit, and copper by-product credits leads to lower costs. The Pre-Tax NPV5% was $218.1 million, with an IRR of 15.4% at $1,325/oz gold and $3.10/lb copper, over a 12-year mine life. This should be substantially improved in the BFS in mid 2020 if the mine life can be significantly extended, and if gold prices stay strong.

Environmental Impact Assessment for Rovina to commence

Euro Sun has also announced they have recently appointed the Environmental Impact Assessment for the Rovina Valley Project to Bucharest based ERM Environmental Resources Management SRL.

Euro Sun Mining is definitely traveling under the radar right now. With 7.0 million ounces of gold, and 1.39 billion pounds of copper at Rovina Valley, and four very promising gold-copper porphyry targets just 3km East at Stanija exploration upside is enormous.

Euro Sun Mining is headquartered in Canada and is focused on generating value for its shareholders by advancing its 100%-owned Rovina Valley Project. The Company has a market cap of just C$ 26.2 million which looks to be highly attractive given the upside potential.

Are small cap stocks on the TSX-V set for a holiday rally?

Canadian small caps, represented by the TSX Venture (TSX-V) exchange, have had a very tough past two years and are way under-performing the Canadian large caps (TSX exchange). We ask the question why? And does this make Canadian small caps on the TSX-V a contrarian recovery play?

Comparing the two main Canadian indexes below we see the 5 year cumulative returns shown on the charts below. Clearly the TSX Composite Index (TSX large caps) has outperformed returning 15.11%. The TSX-Venture Composite Index (TSX-V small caps) has performed very poorly, especially since January 2018, returning a negative 28.94%. The chart below also shows last time the TSX-V fell heavily we saw a large recovery rally in 2016.

TSX large caps (blue) versus TSX-V small caps (red) – 5 year price chart


What are the main differences between the TSX and the TSX-V?

The most obvious is size, with the TSX stocks having a bigger market capitalization. The next key difference is the TSX is heavily weighted to financials and energy, whereas the TSX-V is heavily weighted to the materials (mining) sector (29.15%).

TSX-V sector weightings and Top 10 holdings

Why are the TSX-V (small caps) under-performing, especially in the past 2 years?

There are a number of reasons for the under-performance. First and foremost is the under-performance of the materials (mining) sector. Incidentally, the trade war started about 2 years ago, and the electric vehicle (EV) metals boom peaked ~2 years ago (January 2018). We have also seen a slowdown in global growth in 2019, which is a negative for much of the mining sector. Gold is the exception, and palladium has been another exception due to tougher emission standards arriving in 2020.

This means we have seen the TSX-V taken down by a large downturn in the mining stocks, especially those related to the trade war and China, such as the base metals and EV metal miners. We also saw a considerable pullback in the cannabis stocks the past year after their previous boom.

Does this make Canadian small caps on the TSX-V a contrarian recovery play?

The answer is mostly yes, if you believe we will soon see a trade war recovery and a strong China. China consumes almost half the world’s metals, so a stronger China is good for Canadian metal miners.

Investorintel asked Mario Drolet (President of MI3 Financial Communication and 25 year trading veteran) to share his thoughts, and this is what he said:

‘’Despite the fact that the big market is continuing to make new record highs.….Dow at 28,000.….The small-cap stock index and many sectors has been anemic..…but remember the junior market is a catch up market.….and I am expecting a Christmas rally.….(mid-November to December) and we should start seeing some inflows of money soon into the market..…We are all seeing the TSX-V and CSE Index near their all time lows..…the cannabis and blockchain sectors pullback have accentuated the downward movement and have not helped the cause.…Lookout for a rebound on precious (gold) and base metals (copper, nickel) and strategic metals like rare earths.‘’

I would agree with Mario’s conclusions. If we get a trade war deal and global growth starts to pick up again (including China EV sales), then we should see better sentiment to small caps (especially the EV and base metal miners), and the TSX-V could be set for a brilliant Christmas rally.

Harte Gold – Where to from here?

It has been a tough start up year of production for Harte Gold Corp. (TSX: HRT) and investors were naturally disappointed with their recent 2019 Financial Year (FY) guidance, sending the stock price ~50% lower. Announced on November 1, guidance for 2019 was : “Quarterly results when compared to the Feasibility Study were below target. Based on results to-date, full year 2019 guidance has been adjusted to 24,000 – 26,000 ounces at an AISC of US$2,000 to US$2,200 per ounce. Previous guidance was 39,200 ounces at an AISC of US$1,300 to US$1,350 per ounce.”

Harte Gold Chairman Stephen Roman stated to InvestorIntel “Our ramp up issues at the Sugar Zone Mine will be resolved. We are working on the 2020 and Life of Mine Plan as well as management additions. More news to follow. Our biggest issues during 2019 have been lack of labour and insufficient underground development due to lack of labour as well as getting through surface low grade prior to getting into our forecasted mine grades.”

Harte Gold makes swift management changes

Clearly changes were needed at Harte Gold to fix the 2019 production results. Just three days after the 2019 guidance Harte Gold announced two new key management appointments – Sam Coetzer as President, Chief Executive Officer and Director, and Martin Raffield as Executive Vice President and Chief Operating Officer.

Sam Coetzer (President, Chief Executive Officer)

Sam has over 30 years of international mining experience and provides Harte Gold with strong leadership skills and an extensive knowledge of underground mining operations. Most recently, Sam was President and Chief Executive Officer of Golden Star Resources Ltd. During Mr. Coetzer’s tenure as CEO, he successfully:

• Transitioned the company from open pit operations to an underground-only producer.
• Attracted institutional capital including a large strategic investment.
• Grew the capital markets profile and increased overall share trading volume.

Martin Raffield (Executive Vice President and Chief Operating Officer)

Martin has over 25 years of experience managing underground mining operations across Canada and Africa. Most recently, Martin was appointed Executive Vice President and Chief Technical Officer of Golden Star, after joining Golden Star as Senior Vice President, Project Development and Technical Services. From June 2007 to 2011, Martin served as Principal Consultant and Practice Leader, SRK Consulting (US). Prior to SRK, he was Chief Engineer and Mine Superintendent at the Campbell Mine for Placer Dome Inc. Martin holds a Ph.D. in geotechnical engineering from the University of Wales and is a Professional Engineer registered in Ontario.

Harte Gold’s Sugar Zone Mine in White River Ontario, Canada

Harte Gold has a massive 79,335 hectares at their Sugar Zone property, with plenty of exploration upside. The current Resource estimate is 1,108,000 contained gold ounces @8.12g/t Indicated and 558,00 contained gold ounces @5.88g/t Inferred. Production is forecast to ramp up to 61,000 Au ounces pa over a 14 year mine life. With further exploration success the mine life could be extended or production volumes increased, or both.

Will new management be able to turn things around?

There is quite a long history of new production start ups having a rough first year before going on to be very successful. Most recently RNC Minerals production turned around to be on target for ~100,000 ounces per annum at an AISC of US$ 1,175 and falling, from a mine that was about to be sold 2 years ago due to not being profitable. In this case gold grades are only 2-4g/tonne, with some occasional bonus very high grade coarse gold finds.

In the case of Harte Gold they have grades in the range of 6-8g/tonne, so really there should be absolutely no reason why this mine cannot be very profitable going forward, assuming the gold price remains strong. The start up year has been a struggle, and AISC right now mean they are running at a loss. But looking ahead as they apply a more disciplined management approach and reach the high grade gold, Harte Gold should become a very profitable mine with AISC falling towards the previously forecast AISC of US$845 in the April 2019 Feasibility Study. Harte Gold is currently working on the 2020 and life of mine plan, so we will need to wait to see what comes from that.

Harte Gold – April 2019 Feasibility Study summary points

Given the current gold price is hovering just above US$1, 450, if Harte Gold can get their AISC down in 2020 to below this level, and then close to the US$845/oz as per the 2019 Feasibility Study (FS), then the outlook will brighten considerable in 2020 and 2021.

It is not unusual for underground mines to have a tough first year as they try to expand production. Harte Gold is working their way deeper to reach the higher grade gold. Also head office and other expenses (interest expense etc) are a relatively larger portion of costs until a mine can scale up production to higher volumes. My view is that a combination of new management, better ore grades, and economies of scale as production volumes increase, will see a significant improvement in the AISC in 2020 and beyond.

The gold is there in good grades, it just takes time to reach economies of scale. With two new key management appointments (CEO & COO) who have over 55 years of combined mining experience (especially underground), it looks highly likely that the problems of 2019 will soon be turned around in 2020.

Harte Gold Corp. is headquartered in Toronto, Ontario, Canada; and has a market cap of C$ 91 million. Analyst’s consensus is a buy with a price target of C$ 0.40, representing an upside of ~185%.

New AI methods attract capital to mining sector

Here is an unavoidable truth. Resource extraction is hard physical work. Even in today’s tech-happy world, there’s no app for that. And perhaps this is the very reason modern investors have wandered away from mining—whether or not it’s to their benefit. New AI methods may change that.

Just like society, many investors today are overlooking the connection between the products we use and the source of the materials to make them. And yet it’s still true that “if you cannot grow it, you have to mine it.” Comically, we see generous valuations for end products but outright hostility toward the companies providing the basic materials to create the products. New flashy sectors like digital currencies, online commerce and cannabis are grabbing the spotlight while the basic source of materials for many everyday needs falls into the shadows.

Yes, some of this shunning may be deserved. The mining industry for the most part is still trying to use a classical economics appeal to attract investors. They trot out supply and demand fundamentals, and costs of production, hoping the market will make rational investment choices based on the facts. But as much as investors claim to be rational, there is a significant chunk of sentiment associated with attracting capital to any sector.

It will take more than just facts to win back investors. Some may hold a negative impression or position on the sector, one that has been reinforced with poor performance in recent years. And so funding for mining exploration is declining and, not surprisingly, so are discoveries.

But here is another unavoidable truth. Demand for resource materials increases alongside the development of society.

The next generation of ideas

The industry needs to attract capital with new ideas to streamline the process of value creation. To illustrate, let’s look at GoldSpot Discoveries Corp. (TSXV: SPOT). GoldSpot is a technology company striving to be a disruptor in the industry of mining exploration and investment. Its proprietary technology uses AI and machine learning to interpret underused data and to spot sites with the potential to host a mineral deposit.

Mining a mountain of data

The simple idea behind the big-data idea is to exploit the abundance of data collected in the world’s mining camps. In the past, there was not enough time, talent and skill to evaluate it all, even as still more data was being created. GoldSpot uses AI and machine learning and other tools to organize and analyze the data. The geologist spends less time collecting the data and more time interpreting the results—potentially making new discoveries.

GoldSpot is confident in its abilities to use machine learning to identify good exploration projects and the company wants to participate in their development and success through investments, royalties and consulting work. Their list of clients already includes significant names from the industry: Hochschild Mining, McEwen Mining, Sprott Mining and Yamana Gold.

Recently GoldSpot announced that Gran Colombia Gold Corp. used their methods at their Segovia project. The preliminary targets were confirmed through drill results at near mine and regional targets. This truly is a new idea: a client company that gives confirmation and relates success to the service provider. In the mining sector, new technology often faces challenges in development, promotion and acceptance. The sector does not change its methods quickly.

Fast on the heels of this success came the announcement of a $15 million strategic investment by Eric Sprott and plans for a 70,000 m drilling program on the Segovia project to further test these targets. This too validates GoldSpot’s AI and machine learning methods for doing exploration differently.

Now GoldSpot is working on another significant opportunity to showcase their method and further develop their tools. Through a deal with Metal Earth project and Laurentian University, GoldSpot will sort through this significant and large dataset to identify the characteristics of metal endowment in Canada’s mining camps.

The AI effect on the market

Impressively, quantitative analysis of the markets is driving up to 65% of returns during the past 20 years. And more investment funds are using this method for stock selection. On the other hand, these methods are also partially responsible for the drop in investment in the mining sector, particularly in exploration. And yet GoldSpot is using these same methods to analyze exploration results and market data to identify the best targets for investing in this opportunity gap.

For the tech-minded investor or mining company, AI and machine learning methods are revealing opportunities that can change minds and grow investments for exploration.

MI3 Market Alert: Top Gold Explorer in Nevada

Mario Drolet President of MI3 Communications Financières Inc. (MI3) released a technical note at market open today on Corvus Gold Inc. (TSX: KOR | OTCQX: CORVF) for exclusive distribution on InvestorIntel. In this note, MI3 highlighted the following points on Corvus Gold Inc.

  • Corvus Gold Inc. is a North American gold exploration and development company, focused on its near-term gold-silver mining project at the North Bullfrog and Mother Lode Districts in Nevada.
  • Near-term potential for mining complex to produce 2.6Mozs over 9 yrs with ~350Koz/yr for the first 4 years.
  • On October 10th Corvus closes C$23Million bought deal financing.
  • KOR traded over 9.0 Million shares between $1.90 & $2.69
  • Support: S2; $ 1.72   S1; $1.85   Resistance:   R1; $1.95     R2; $2.05

About Corvus Gold Inc.

Corvus Gold Inc. is a North American gold exploration and development company, focused on its near-term gold-silver mining project at the North Bullfrog and Mother Lode Districts in Nevada. Corvus is committed to building shareholder value through new discoveries and the expansion of its projects to maximize share price leverage in an advancing gold and silver market.


Disclaimer: This MI3 Technical Note produced by MI³ Communications Financières is neither an offer to sell, nor the solicitation of an offer to buy any of the securities discussed therein. The information contained is prepared by MI3, emanating from sources deemed to be reliable. MI3 Communications Financières makes no representations or warranties with respect to the accuracy, correctness or completeness of such information. MI³ Communications Financières accepts no liability whatsoever for any loss arising from the use of the information contained therein. Please take note that for compliance purposes, all directors, consultants or employees of MI3 Communications Financières are prohibited from trading the securities of the company and MI3 Communications Financières is a shareholder and do not intend to sell any shares during the distribution of this note.