A recent MoneyLetter survey of published securities analysts’ reports on junior mining stocks found three precious metals penny mining stocks with interesting gold and silver prospects.
SilverCrest Metals Inc. (TSXV—SIL) has discovered another high-grade vein at its Las Chispas silver and gold mining project in Mexico. Named Giovanni, this vein has defined dimensions of 400 to 500 meters along strike, 150 to 200 meters in height, and an average drilled true thickness of two meters. PI Financial precious metals analyst Philip Ker sees this new discovery as positive, potentially increasing tonnage and total mineralization. He maintains his ‘buy’ rating and 12-month target price of $3.25.
The announced assay results came from the drilling efforts in the Phase II exploration campaign. Additional results are yet to come in but the analyst is confident that high-grade results will continue.
SilverCrest continues to drill at Las Chispas with four drill rigs across key zones of mineralization.
With underground drill stations being set up from the main haulage level at Las Chispas, the company plans to complete tighter infill drilling for planning underground bulk sampling data and to support increased confidence in an upcoming resource estimate.
Gold mining stock also produces silver, copper and zinc
A relatively new Canadian explorer, Galway Metals Inc. (TSXV—GWM), has announced assay results from recent drilling at its Estrades property in Quebec. Beacon Securities analyst Michael Curran sees the potential to increase resources at Estrades. Both Estrades (copper, zinc, gold and silver mining) and the company’s Clarence Stream project (gold mining) in New Brunswick have existing resource bases, making Galway Metals a lower risk than other early-stage developers. Mr. Curran rates Galway Metals as a ‘speculative buy’ but provides no target price at this time.
Approximately 6,500 metres of drilling have been completed at Estrades as part of Phase 1. Drilling results from five of the holes show narrow, high-grade intervals, while results from 12 other holes are pending. This phase of the drilling is “targeting the extension of known mineralized zones along strike and at depth”.
In late March, Galway Metals also reported drilling assay results at its Clarence Stream project. Intercepts included 5.4 metres grading at nine grams of gold per tonne of ore from the South Zone and a high-grade 0.6 metres grading at 56.2 grams per tonne.
Goliath gold mine advancing toward production
In initiating coverage of Treasury Metals Inc. (TSX—TML), PI Financial precious metals analyst Philip Ker highlights the strong potential for the company’s wholly owned Goliath Gold Project near Dryden, Ontario.
The project, says the analyst, is on pace to become the Great White North’s next producing gold mine.
Mr. Ker, who starts things off with a ‘buy’ recommendation and a $1.20 per share 12-month target price, says that Treasury’s Goliath project has strong economics such as, among other things, an internal rate of return (IRR) of 25 per cent and manageable initial capital expenditures of $133 million.
“The recently updated PEA (preliminary economic assessment) for the Goliath gold project was a building block for Treasury moving forward,” says Mr. Ker. “The past economic study was dated 2012, lacked infill drilling and had a new resource update completed since the last evaluation.
“Due to extensive mergers and acquisitions across the sector, Canada currently has only four mines in construction, with a limited pool of attractive development projects in the pipeline. As Treasury continues to define and advance Goliath through its feasibility stage, we expect Treasury to emerge at the forefront of development companies in Canada—if not already.”
Late last year, the company brought Chris Stewart on board as its new president and chief executive officer. The analyst adds that Mr. Stewart has a strong background in operations. Previously the vice president of operations for Kirkland Lake, Mr. Stewart will play a leading role when it comes to contract talks, as Goliath gets closer to production stage.
“The updated PEA outlined in first quarter of 2017 demonstrated a 13-year mine life with average gold production of 87,850 ounces leading to more than 1.1 million ounces of recovered gold and a post-tax IRR of 25 per cent,” says Mr. Ker.
“The post-tax net present value of $306 million considerably offsets projected initial capital of $133 million and sets itself apart with lower quartile cash and all in sustaining costs of US$525 per ounce and US$611 per ounce, respectively compared to its peer group.”
Mr. Ker says that Goliath could go on to achieve a steady gold production profile of around 90,000 ounces annually. Commercial production is slated to start in 2021.
“With a current valuation gap compared to its peers along with the lack of attractive development projects in Canada presently, we expect Treasury to evolve into a leading junior development player within the sector as Goliath advances,” says Mr. Ker.
Treasury Metals is a gold exploration and development company that explores and evaluates mineral resources.
This is an edited version of an article that was originally published for subscribers in the June 2017/Second Report of The MoneyLetter. You can profit from the award-winning advice subscribers receive regularly in The MoneyLetter.
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