GCM announced Q1/22 production results from its 100%-owned, Segovia operations in Colombia, that were in line with our estimates. The company produced 49,951 oz Au compared to our estimate of 50,800 oz Au last quarter. In our view, GCM is off to a strong start in 2022 with production on track to meet 2022 guidance. We look forward to the company’s upcoming Q1/22 financial results next month. Following the earnings miss on sales timing in Q4/21, we believe GCM could make it up by selling more ounces than produced in Q1/22.
Altaley Mining provided an updated PFS for its 100%-owned Tahuehueto Au project located in Durango state, Mexico. The updated study is an improvement over the 2017 PFS and includes an updated reserve and resource estimate of 3.58Mt in 2P reserves and 7.18Mt in M&I+I resources. While we had already included many of the parameters outlined in this PFS in our model, resulting in no change to our target price, we view this update positively as we believe it is an important de-risking step for Altaley as it brings its 95%-complete Tahuehueto Au mine into production later this month. Once Tahuehueto comes online, we estimate Altaley would become a primary precious metals producer with ~51% of its revenue derived from Au and Ag by 2023E.
Last Friday, Red Cloud hosted the third and final day of its Very Pre-PDAC Mining Showcase, which featured 39 presenting companies including a keynote speech by Joe Mazumdar, Editor/Analyst and Publisher of Exploration Insights and had over 1,750 participants registered in advance of the event. With this note, we want to provide a quick recap of the highlights from the conference for those who were unable to attend the live event. Replays are available on the Red Cloud website.
EnviroGold Global (NVRO) executed a binding definitive agreement with Hellyer Gold Mines Pty Ltd. (HGM) to reprocessing existing tailings at the Hellyer Au operation in Tasmania, Australia. Like the MOU before it, the agreement contemplates a multi-stage tailings reprocessing project whereby NVRO would apply its proprietary mineral processing technology to extract remaining metals in the Hellyer tailings. We see the signing of a final agreement as a major de-risking milestone for EnviroGold, which has increased our confidence in the company’s ability to become a near-term producer.
We are initiating coverage on EnviroGold Global Ltd. (CSE:NVRO, OTCQB:RGOZF) with a BUY (S) rating and C$0.70 target price, representing 112% upside from the current share price. EnviroGold is looking to create value by reprocessing mine tailings. It plans to leverage its metallurgical expertise and deploy modular and scalable processing plants to several tailings sites throughout the globe to extract valuable metals left behind by prior operators. We believe there is strong potential for NVRO’s share price to materially re-rate over the coming year as it grows and de-risks its tailings portfolio and sets itself up for initial production.
We are initiating coverage on Altaley Mining Corp. with a BUY rating and a target price of C$1.00/sh, representing 208% upside from the current share price. Altaley Mining is a diversified, Mexico focused producer and developer. The company is currently producing Zn and Pb concentrates with Au, Ag and Cu as by-products at its Campo Morado mine in Guerrero, Mexico and is set to commence initial production at its Tahuehueto Au-polymetallic project in Durango, Mexico this quarter. Over the past two years, Altaley has steadily increased production and EBITDA QoQ while undergoing a transformation that included a revamped board and management team, financial restructuring, project optimizations and corporate rebranding – in addition to building Tahuehueto. Given that Altaley is poised to derive ~53% of its revenues from Au and Ag by 2023E, we believe its transition to being a primary precious metals producer could potentially drive a re-rating.
NorZinc announced that it has deferred the construction of the pioneer winter road at its 100%-owned Prairie Creek Zn-Pb-Ag project in the Northwestern Territories by up to one year due to longer than anticipated regulatory reviews. While this delays the development timeline for Prairie Creek, NorZinc is still well positioned in the longer term. The company has the major permits to build a road and mine, and it maintains positive relationships with stakeholders in the region. Meanwhile, the company plans to utilize this time to advance optimization work and to issue an updated Feasibility Study.
We recently visited Altaley Mining’s 100%-owned Campo Morado mine in Guerrero state, and its 100%-owned Tahuehueto project in Durango state, Mexico. We were impressed with the infrastructure and team in place at Campo Morado, which clearly benefitted from the big budget of its previous owner, Nyrstar. At Tahuehueto we would highlight to investors that construction work is well advanced and initial production remains on track for Q4/21-Q1/22. Although we have not yet valued Altaley, we believe that it has undergone a significant transformation over the past year and that processing optimizations at Campo Morado and initial production at Tahuehueto are key near-term catalysts that could potentially help re-rate the stock.
CMC Metals announced high-grade drilling results from the 19-hole (2,100m) drilling program completed at its flagship Silver Hart project in the Yukon. We view these results positively as they have returned multiple intersections of high-grade Ag-Pb-Zn and have extended the TM West vein structure at the Main zone by 360m. Although we have yet to see drill hole locations associated with these new assays, we would expect continued high-grade AgEq intercepts to translate positively into resource growth either through vein extensions or delineation of higher-grade zones. We believe ongoing positive drill results should continue to re-rate the stock, which closed +53% on the back of these results.