AKG : TSX : C$2.50
AKG : NYSE MKT
The combination of AKG and PMI created a significant gold
development company with 2P reserves of 4.8 Moz with a
permitted, financed (US$231M in cash, Q2/14) mine plan on half
the reserve (Obotan project) with the permit in hand with a permit
pending on the other half (Esaase project). All the assets are
within the Ghana, one of the premier jurisdictions in the entire
All amounts in C$ unless otherwise noted.
Metals and Mining — Exploration and Development
GOLD ROYALTY ON PHASE 1 REDUCED FROM 7% TO 5% NSR
The company announced an agreement to buyback a 2% NSR reducing
the overall NSR from 7% to 5% for Phase 1 (Obotan) of the Asanko Gold
Mine in Ghana, West Africa. We view the acquisition of the NSR as a
strong positive and highly accretive given that the Phase 1 project is
breaking ground and close to production (H1/16E). We raised our target
(+C$0.10) accordingly to C$3.25, a 30% premium to current price levels,
and maintained our SPECULATIVE BUY recommendation. We anticipate
more construction updates leading to a resource update for Phase 1
followed by an updated mine plan (Q4/14E
Our revised target price is based on an increase in our NPV8% (+4%
to US$733 M) of the combined Obotan (Phase 1) and Esaase (Phase
2) gold projects, now known as the Asanko Gold Mine, related to the
reduction of the NSR at Phase 1 (Obotan) from 7% to 5%. On an
NPV8% basis, we valued the 2% NSR on Phase 1 at C$25-30 M (LT
US$1422) The drop in our NSR assumption from 7% to 5% for Phase 1 is
related to the recently announced purchase of the 2% Goknet
(privately held company) NSR for 1 M shares of AKG and cash (we
estimate US$1 M as the details were not disclosed). In addition, AKG
will transfer the rights to two exploration projects, Kubi and Diaso,
which the company deems as non-material.
In November 2012, Asante Gold Corp. (ASE : TSX-V
offered to purchase half (1%) of the 2% NSR on the Obotan project
from Goknet for C$22.5 M via shares (45 Msh, C$0.50), which
would now be worth about C$4 M (for 1% NSR). The sale was never
Posted by jackbassteam on September 1, 2014
DCK : TSX-V : C$2.18 SPECULATIVE BUY
Donnycreek is a junior pure play Montney exploration and
development company with assets in Alberta’s Deep
Basin. Donnycreek trades under the symbol “DCK” on the
TSX venture exchange.
All amounts in C$ unless otherwise noted.
Donnycreek released a brief operational update this morning on its
operations at Kakwa. The wells on the company’s three well Montney
pad (the company’s first 1.5 mile horizontals) have been successfully
completed and tested, however no test rates were provided with the
release. The company also announced a plant turn-around at Kakwa,
which will shut in production from the block for ~16 days in September,
and plans to expand the plant on the block from 15mmcf/d to 30
mmcf/d in the spring of 2015.
In our view, a fairly neutral release from the company; however, given
the delays in bringing on production at Kakwa, we have lowered our
production estimates for 2014 . Trading at just 3.1x 2015E
EV/DACF and 0.5x Base NAV (lowest NAV multiple in our coverage
universe), we continue to believe DCK is extremely undervalued relative
to its peers.
We continue to rate the stock a Speculative Buy, and look to November
for IP30 rates on the 3 recently completed 1.5 mile Hz’s (in addition to
the large production bump)as significant potential catalysts for the stock.
Highlights from the release
Kakwa 3 well pad. DCK announced that all three 50% working
interest wells from the company’s first three well pads have been
completed and flow tested . These wells were drilled with
horizontal lengths of 1,900m, which is longer than wells previously
drilled on this acreage. The wells are expected to come on
production in October.
Facility expansion. Donnycreek and its partners are currently
designing an expansion for its 16-7 facility to double the throughput
capacity to 30 mmcf/d of natural gas and associated liquids. DCK
and its partners plan to start-up the expansion by spring 2015.
Posted by Jack A. Bass on August 26, 2014
||P/E Ratio (TTM)
||3.18 / 96
||3.20 / 150
|52 Week High
||# of Floating Shares
|52 Week Low
||Short Interest as % of Float
Posted by Jack A. Bass on May 27, 2014
Questerre Energy Corporation (Photo credit: Wikipedia)
TSX : $0.88
Great potential – but they used to say the same thing about me.
Shares of Questerre jumped after the company announced the results of the resource assessment of its Montney acreage in the Kakwa-Resthaven area.
The best estimate by the company’s independent reserve engineers of Prospective Resources (PR) is 100 million barrels of oil equivalent and of Economic Contingent Resources (ECR) is 32 million barrels of oil equivalent.
Commenting on the results, QEC’s President and CEO, Michael Binnion, stated, “We are very pleased that the report puts a significant value on the dense resource we have captured in the Kakwa-Resthaven area over the last year. ECR were assigned to just over 15% of our total acreage based on proximity to tested or producing Montney wells.”
He added, “We expect that as additional wells are drilled and tested on and adjacent to our lands, the majority of the prospective
resources will be reclassified as economically contingent resources and ultimately reserves.”
Posted by Jack A. Bass on July 8, 2013
Black Pearl (Photo credit: Wikipedia)
PXX : TSX : C$2.07
BlackPearl (PXX : TSX) is a mid capitalization exploration and production company focused on large scale resource plays: primarily conventional and thermal heavy oil and bitumen opportunities in Canada.
BlackPearl announced its long awaited roadmap for growth that includes advancing its 12,000 bbl/d thermal development project at Onion Lake concurrent with its plans to issue US$350 million in senior second lien secured notes. The announcement from our perspective was positive as it clearly addressed its near term development plans and proposed method of financing, which was in line with our previously published view.
Valuation remains extremely attractive in our view, with currently no value in the stock for Blackrod. We reiterate our BUY recommendation and C$4.00 target price based on an unchanged 0.9x multiple to NAV.
Proposed US$350 million note facility fully funds capital cost at Onion.
With an anticipated capital cost of $300 to $350 million ($25,000 to $29,000/boepd) at Onion, the proposed financing would fully fund
construction of the project through 2014. Additionally, indications from its existing lenders would provide an unchanged $115 million revolving
facility (only $12 million drawn at Q1/13), providing additional financial flexibility. A successfully completed note issuance will remove near term
financing concerns, in our opinion the least dilutive path to growth and retaining optionality at Blackrod. The decision to advance Onion Lake thermal is in line with our prior view; it provides cost and size advantages relative to Blackrod, thus limiting dilution, and additionally preserves option value at Blackrod for a potential joint venture, sale, or future development.
BlackPearl trades at 0.5x CNAV, 12.4x EV/DACF, and $77,400/BOEPD on our 2013 estimates
Posted by Jack A. Bass on June 5, 2013
Hong Kong Confidential (Photo credit: Wikipedia)
AYA : TSX-V : C$5.32
Amaya Gaming Group Inc. designs, develops and distributes a host of technology-based solutions targeted at the regulated gaming industry. Amaya’s solutions cater to a wide range of industry participants, including land based and online casino operators, hotel and hospitality operators and government regulators.
We are initiating coverage of Amaya Gaming with a SPECULATIVE BUY rating and a C$8.50 target price. We believe that Amaya is well positioned to benefit from strength in the gaming technology market and more specifically, the physical/online convergence. Attitudes towards gambling are liberalizing as debt-laden governments are looking for new sources of tax revenue. With the US becoming more open to regulated online gambling, a large new market may open. While this is an attractive source of upside, we believe that Amaya is on the cusp of a transformation after a flurry of acquisitions supporting strong growth in 2013 and 2014 whether the US opens or not.
Amaya Gaming is a developer of innovative technology and content for the regulated online, interactive and land-based gaming industry.
Recent acquisitions transform Amaya into a global player with a platform to offer content across multiple gaming mediums including land-based, online and mobile. Amaya’s position in the market is protected from new entrants by onerous government regulation.
The market for gaming services is very large with gaming gross yield expected to grow to over $400 billion in 2013 with online growing to over $37 billion. We believe that the gaming vendor space is over $27 billion with annual growth closer to 5%. For a firm the size of Amaya, we believe there is ample room for growth. In 2014, after the model has stabilized, we expect 25% revenue growth and 43% EBITDA growth.
Amaya’s technology products attract a share of gambling revenue which is scalable, high margin and recurring in nature. We believe that
EBITDA margins of ~35% are within reach as the model matures.
Given strong product positioning with an end-to-end product suite more common to companies much larger than Amaya and our strong growth
expectations, we believe Amaya shares warrant a premium valuation. At current levels, Amaya trades at 6.6x EV/C2014E EBITDA versus gaming
technology vendors at 8.4x (range is 6.0x to12.3x). Our C$8.50 share price is based upon 10x C2014E EV/EBITDA and 18x C2014E cash adjusted P/E supported by comparables, recent transaction pricing and our DCF analysis.
Posted by Jack A. Bass on April 9, 2013
NZ Red Admiral Butterfly in Wellington, New Zealand Māori: Kahukura (Photo credit: Wikipedia)
New Zealand was the greatest AMP miss in 2012 . Here is the latest chapter of that mistake:
New Zealand Energy
NZ : TSX-V : $0.39
, Net Change: -0.25, % Change: -39.06%, Volume: 2,213,150
New Zealand Energy tumbled after announcing it does not expect to achieve its 3,000 boe/d target by
the end of Q1/13.
Given its current production rate of 335 bbls/d and limited funds, the company has decided not to pursue higher-risk, higher-reward opportunities, opting instead to focus on its pending Origin asset blocks. While the Origin assets have numerous uphole completion opportunities, which will cost significantly less than regular exploration locations, Canaccord Oil & Gas Analyst Christopher Brown has concerns surrounding the company’s ability to fund the Origin acquisition, which is now projected to close in Q2/13.
The company’s working capital position, including a $5 million deposit relating to the transaction, is currently only $16.8 million. The Origin transaction will cost an additional $37 million and the company has stated it will seek alternatives for financing in 2013. On its pending Origin (TAWN) assets, the company has six wells it can move onto in Q2/Q3 which have recompletion opportunities in the upper sections of the wells. Brown estimates that recompletions would cost roughly $500,000-600,000/well, for a total capital cost of $3.0-3.6 million. Brown notes these
recompletions could potentially impact production immediately as there is infrastructure in place.
Next catalysts: i) Arakamu – NZ perforated and flow tested two zones in the Arakamu-1A well in the Moki formation, but was unable to demonstrate
recoverable hydrocarbons and has suspended the well, and ii) Wairere – NZ has cased the Wairere-1A well and will complete the well once completion activities are finished at the Arakamu-2 well.
Posted by Jack A. Bass on February 27, 2013
(GUY : TSX : $4.13)
Shares of Guyana Goldfields jumped after the company announced a revised feasibility study on its 100%-owned
Aurora Gold project.
The estimated initial capital required to achieve commercial production is $205 million and reflects numerous positive changes, in particular, the phased mining and milling approach, reduced footprint of the mine site and facilities, and utilization of an optimized mobile equipment fleet. Based on the key findings of the study, the company will continue to move forward with mine construction and development of the project.
The improved mine plan will produce 3.29 million ounces of gold over an initial 17 year mine life at an operating cash cost of US$527 per ounce (including royalty). Average annual gold production over the life of mine is 194,000 ounces, and averages 231,000 ounces per year over the first ten years. Gold production peaks in 2020 at 349,000 ounces.
Commercial production is expected to commence in Q1 2015. Gold production will be staged, with initial open pit production of 5,000 tonnes per day from the Rory’s Knoll deposit and expanding to 10,000 tonnes per day in early 2018 when underground mining commences. A Bay Street analyst was positive on the study and noted that he believes this is the report that will convince investors that Aurora, re-optimized and re-designed, presents an attractive project with robust economics.
Posted by Jack A. Bass on January 15, 2013
Hornos Pacific en Almadén (Photo credit: Pichardino)
ALMADEN MINERALS LTD.
(AMM : TSX : C$2.78
Almaden Minerals is an exploration company specializing in the generation of new mineral prospects in the western half of North America and eastern Mexico.
Almaden’s Founder and Chairman, Duane Poliquin, is linked to numerous discoveries, including the Santa Fe gold deposit in Nevada, the Apex germanium-gallium deposit in Utah, the Nevada Scheelite Extension, and the Trinidad gold mine in Mexico. Morgan Poliquin, President and CEO, is a PhD geologist with a special interest in epithermal gold.
Last week, Almaden reported drill results from the Tuligtic project in Puebla State, Mexico.
Almaden reported four drill holes from the 100%-owned Tuligtic project (Figure 7), where three company-owned drill rigs are currently turning. All of the holes were collared on the same pad, located along the Main Ixtaca Zone trend on section 11+000E (Figure 8). This section is pproximately 50 metres northeast of the closest holes that will be used in forming the maiden resource estimate. Headline Hole TU-12-224 intercepted visible gold, returning 134 metres grading 3.76 g/t gold and 18.1 g/t silver (or 4.1 g/t AuEq), including 10 metres grading 26.75 g/t gold and 50.4 g/t silver.
Additionally, Hole TU-12-222 intercepted 117 metres grading 3.1 g/t gold and 30.7 g/t silver. These results indicate the potential to grow the current resource area, which is currently open in all directions.
Almaden has interests in 40, 100%-owned projects, including the flagship Tuligtic project. The 14,000 hectare Tuligtic property is located 150 kilometres east of Mexico City. The project is host to porphyry and epithermal gold and silver targets. Almaden made the first blind discovery in 2010 with Hole TU-10-01 that intercepted 300 metres grading 1 g/t gold and 48 g/t silver, including 4 metres grading 26 g/t gold and 936 g/t silver.
With US$19 million in cash, US$2.8 million in gold (1,597 ounces) and US$10 million in equity investments, Almaden appears well financed to advance the flagship Tuligtic project. Almaden is planning to release the maiden resource this quarter, which will include the Main Ixtaca Zone, Ixtaca North, and the Northeast Extension.
Posted by Jack A. Bass on December 12, 2012
(CNE : TSX : $0.33)
An awful chart may get better as a result of Canacol’s news that its Agueda 1ST light oil discovery tested 1,837/1,470 b/d (gross/net) on LLA23 block (80% working interest).
The discovery is on the same fault as the original Rancho Hermoso discovery. The company has far better contract terms on LLA23 and has identified 5 additional leads/prospects. The company has assessed LLA23 resources of 11 million barrels (management estimate over the total 6 leads/prospects) and estimates the pre-tax value of $242 million (at 10% discount rate).
Charle Gamba, President and CEO of Canacol, commented “We are pleased by these positive results, which set up the potential to access meaningful near term light oil production and cash flow from the LLA23 contract. The Labrador discovery is one of 6 prospects that we have identified on the LLA23 block on the basis of recently acquired 3D seismic, and we are very satisfied that the first one we drilled encountered a significant light oil
accumulation. Once we have the proper drilling permits in hand, we plan to aggressively drill this block to grow our production base in Colombia during 2013.”
Looking ahead, production testing of the Lower Gacheta will continue in the short term, with produced oil being transported to the nearest point of sale. Upon completion of the production test of the Lower Gacheta, the deeper Ubaque reservoir will be production tested, and the well placed on permanent production from either zone.
Posted by Jack A. Bass on December 6, 2012