Target Price Raised on ‘One of Our Favorite Small-Cap Montney Names’

Source: Streetwise Reports 06/16/2018

Analyst Garett Ursu with Cormark Securities compared the current numbers to past ones and explained why this energy company still has upside.

In a June 13 research note, Garett Ursu, an analyst with Cormark Securities, reported that Blackbird Energy Inc. (BBI:TSX.V) released the recent findings of an independent evaluation of some of its Montney resources in Alberta. Consequently, Cormark increased its per-share target price on the company to CA$1 from CA$0.90.

The report, prepared by McDaniel & Associates, indicated that Blackbird’s best estimate, or 2C, contingent resources increased 149% from the company’s 2017 resource evaluation. They now are 112.2 million barrels of oil equivalent (112.2 MMboe), having grown from 45 MMboe. Forty-three percent of the newly quantified resources are liquids.

The NPV-10 of these contingent resources of Blackbird is $587.3 million ($587.3M), or $0.78 per share, Ursu noted, when accounting for the commodity price and the 80% chance of development cited by McDaniel & Associates. This valuation is 35% higher than the one in the 2017 resource estimate, which was $436.5M. “This is net
of future development capital (FDC) of ~$1,833 MM (~$668 MM discounted at 10%),” the report stated.

Ursu highlighted that the 2C resources addressed in the current report are located on only two of Blackbird’s four prospective zones in the Montney Formation. This equates to 33.4 of its 113.5 net sections, or 29%, of its land there.

Blackbird previously, in 2017, reported Proven and Probable, or 2P, reserves with an NPV-10 of $395M, or $0.53 per share. Those were on 16.5 sections on land also in those same two zones as the 2C resources.

All told, of Blackbird’s total 113.5 sections of land, resources/reserves have been calculated on 49.9 of them, which equals about 44% of the entire package, wrote Ursu. Together, the 2P reserves and 2C resources have an NPV-10 of about $982M, or $1.31 per share.

Were the energy company to realize additional resources on the rest of its Montney land, “we estimate the potential value of Blackbird’s asset base to possibly reach ~$2.2 billion (~$2.98/share). . .representing significant upside currently unattributed to the stock,” Ursu purported.

Ursu reiterated Cormark’s Buy rating on Blackbird, whose stock is currently trading at around CA$0.38 per share. He added, “Blackbird remains one of our favorite small-cap Montney names, and we continue to encourage investors to accumulate the stock this summer.”

Read what other experts are saying about:

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Disclosure:
1) Doresa Banning compiled this article for Streetwise Reports LLC and provides services to Streetwise reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.
2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: Blackbird Energy. Click here for important disclosures about sponsor fees. As of the date of this article, an affiliate of Streetwise Reports has a consulting relationship with Blackbird Energy. Please click here for more information.
3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article, until one week after the publication of the interview or article. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Blackbird Energy, a company mentioned in this article.

Disclosures from Cormark Securities, Blackbird Energy, Morning Meeting Notes, June 13, 2018

Analyst Certification: We, Garett Ursu and Michael Mueller, hereby certify that the views expressed in this research report accurately reflect our personal views about the subject company(ies) and its (their) securities. We also certify that we have not been, and will not be receiving direct or indirect compensation in exchange for expressing the specific recommendation(s) in this report.

Disclosure Statements and Dissemination Policies: A full list of our disclosure statements as well as our research dissemination policies and procedures can be found on our website.

( Companies Mentioned: BBI:TSX.V,
)

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From:: The Energy Report

Coverage Initiated on Company That Defined ‘Gold Standard of Exploration Success’

Source: Streetwise Reports 06/16/2018

A BMO Capital Markets report laid out the investment thesis for this Nevada explorer.

In a June 8 research note, Andrew Mikitchook relayed that BMO Capital Markets initiated coverage on Gold Standard Ventures Corp. (GSV:TSX.V; GSV:NYSE) with an Outperform rating and a CA$3 per share price target “based on a conceptual-stage mine development plan and our expectation for exploration upside.” With the stock currently trading at around CA$1.61 per share, the target implies more than an 80% return.

Mikitchook outlined what’s attractive about Gold Standard Ventures from an investing perspective.

First, through exploration on its Railroad property situated on the Carlin Trend, the Nevada company has defined two gold discoveries, Dark Star and Pinion, which appear to be economic. North Dark Star, for example, shows “grades above peer heap-leach projects,” Mikitchook noted, and should be amenable to open-pit mining.

Second, “the Carlin’s rising star” has demonstrated “visibility on transitioning to development for over 100 thousand ounces per year of production,” the analyst wrote, with high grades from (North) Dark Star driving production initially. A preliminary economic assessment for Dark Star and Pinion is due out in the second half of 2018. The study could also incorporate Jasperoid Wash, depending on results from drilling currently taking place there.

Third, Gold Standard also boasts “significant exploration upside,” with its high probability of making additional discoveries, particularly since initial indications of such already exist. Additional discoveries could potentially be of “grade and/or scale similar to those driving significant gold production to the north for Barrick and Newmont,” said Mikitchook.

The company has ample room to explore on its 12-kilometer Railroad land package, the second largest in the mineralized Carlin Trend.

Additionally, the members of Gold Standard’s exploration team collectively have had great success specifically in the Carlin. Today, they’re concentrating on the Jasperoid Wash.

As for funding, the company has sufficient cash, CA$40 million, to cover its US$28.8 million 2018 exploration budget, Mikitchook reported.

Fourth, Gold Standard is an attractive takeover target based on its “exploration success combined with a proven technical exploration team in one of the top mining jurisdictions and in proximity to substantial Barrick and Newmont mines,” explained Mikitchook. In fact, two companies already have invested in the company, OceanaGold with a 15.5% interest and Goldcorp with a 9.9% stake.

The analyst opined that one of two events would likely catalyze a takeover. The first is the company making one or more additional high-grade or large-scale discoveries. The second is the company advancing the project toward a development decision by reaching permitting and engineering milestones.

In the interim, Gold Standard is expected to keep releasing drill results from Jasperoid Wash and Dixie along with infill/delineation drill results from Dark Star and Pinion.

Read what other experts are saying about:

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Disclosure:
1) Doresa Banning compiled this article for Streetwise Reports LLC and provides services to Streetwise reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.
2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: Gold Standard Ventures. Click here for important disclosures about sponsor fees.
3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article, until one week after the publication of the interview or article. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Wheaton Precious Metals, a company mentioned in this article.

Disclosures from BMO Capital Markets, Gold Standard Ventures, June 8, 2018

IMPORTANT DISCLOSURES

Analyst’s Certification
I, Andrew Mikitchook, hereby certify that the views expressed in this report accurately reflect my personal views about the subject securities or issuers. I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed in this report.

Analysts who prepared this report are compensated based upon (among other factors) the overall profitability of BMO Capital Markets and their affiliates, which includes the overall profitability of investment banking services. Compensation for research is based on effectiveness in generating …read more

From:: The Gold Report

Royalties Continue to Outperform Miners

Source: Adrian Day for Streetwise Reports 06/16/2018

Fund manager Adrian Day reviews several senior gold companies, including one he sees as a good buy at current prices.

Franco-Nevada Corp. (FNV:TSX; FNV:NYSE, US$70.43) revenue is up, driven largely by its oil & gas royalties, however. Looking ahead, Cobre Panama, Franco’s largest ever single investment, will see phased commissioning beginning later this year for first production in January. Cobre will drive the growth of 16% in gold-equivalent ounces by 2020. Under the unusual royalty, Franco will receive a fixed amount of gold and silver for each 1 million pounds of copper the mine produces, thus negating swings in the composition of the ore body. By 2020, this could be generating over $100 million a year for Franco.

After $523 million of investments in the first quarter, most of it at Cobre, Franco still has $1.2 billion of liquidity.

Franco is now the most widely held gold stock among generalist funds and institutions, other than gold ETFs, and this likely weighs on the stock in a period of general market volatility. However, at the current price—down from over $80 at the beginning of the year—Franco is a buy, particularly for those who do not own any.

Growth without a tax dispute

Royal Gold Inc. (RGLD:NASDAQ; RGL:TSX, US$91.71) saw revenue from another new mine, Rainy River, in the first quarter, and overall is expecting growth from last year to next of 19%, independent of the gold price. The previously announced suspension of milling at Mt. Milligan in January will affect the current quarter’s results (because of the timing of shipments), but this should not come as a surprise to the market.

Apart from the growth profile, the fact that Royal is a U.S. company and therefore unaffected by the Canadian tax authorities challenge to treatment of offshore royalties has helped the stock surge ahead, up from just over $80 at the beginning of March.

The company took an impairment on its investment in Barrick’s large but troubled Pascua-Lama project, where work was recently suspended. However, now Royal, with a 5.45% gold royalty and 1% copper royalty on this large deposit, essentially has a low-cost option.

Given the sharp rise in the stock price and high valuation—with a price-to-book higher now even than Franco’s—we are standing aside for now.

Turning the corner…again?

Yamana Gold Inc. (YRI:TSX; AUY:NYSE; YAU:LSE, US$2.99) reiterated its annual guidance for 900,000 ounces of gold, excluding assets for sale and the Brazilian assets in Brio, which has been acquired by Leagold Mining Corp. (LMC:TSX.V; LMCNF:OTCQX). Yamana now owns 21% of Leagold. This sale is a positive for Yamana, since Leagold will likely put the energy and focus into the assets that were non-core for Yamana. It also reduces the average cash cost for Yamana’s mines since the Brio mines had a cash cost about 25% higher than the rest of the mines.

Separately, the first gold pour has taken place at its next major mine, Cerro Moro, in Argentina. The ramp up of this mine will largely drive a 17% increase in production by 2020. Some sales of minor assets have helped improve the balance sheet, with net debt now $1.55 billion, down from over $1.7 billion at year-end. Assuming the ramp up goes up, cash flow from Cerro Moro should help cut debt further in coming years.

Certainly, there are signs of improvement at Yamana and the valuation is competitive, particularly the price to book value at just 0.7x relative to 1.26 x for the XAU index. However, we have been burned before, so, particularly given the move from $2.60 in the last three months, we are holding.

Slow progress towards its lofty goals

Goldcorp Inc. (G:TSX; GG:NYSE, US$14.21) had a slow start to the year. Despite somewhat improved production, driven by Peñasquito, operating costs also rose. Two new mines still in ramp up, Cerro Negro and Éléonore, actually saw lower production. Ramp up is taking longer than expected, though these long-life mines should generate strong revenue for the company once fully operational. We are holding but not buying at the current price.

Adrian Day, London-born and a graduate of the London School of Economics, heads the money management firm Adrian Day Asset Management, where he manages discretionary accounts in both global and resource areas. Day is also sub-adviser to the EuroPacific Gold Fund (EPGFX). His latest book is “Investing in Resources: How to Profit from the Outsized Potential and Avoid the Risks.”

Want to read more Gold Report articles like this? Sign up for our free e-newsletter, and you’ll learn when new articles have been published. To see a list of recent articles and interviews with industry analysts and commentators, visit our Streetwise Interviews page.

Disclosure:
1) Adrian Day: I, or members of my immediate household or family, own shares of the following companies mentioned in this article: Franco-Nevada, Royal Gold. I personally am, or members of my immediate household or family are, paid by the following companies mentioned in this article: None. My company has a financial relationship with the following companies mentioned in this article: None. Funds controlled by Adrian Day Asset Management hold shares of the following companies mentioned in this article: Franco-Nevada, Royal Gold, Yamana Gold and Goldcorp. I determined which companies would be included in this article based on my research and understanding of the sector.
2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: Leagold Mining. Click here for important disclosures about sponsor fees. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
3) Statements and opinions expressed are the opinions of the author and not of Streetwise Reports or its officers. The author is wholly responsible for the validity of the statements. The …read more

From:: The Gold Report

Dollar higher after Fed hike and dovish ECB

The U.S. dollar gained against all major pairs this week. A hawkish Fed and a dovish European Central Bank (ECB) gave the edge to the American currency. U.S. President Donald Trump scored diplomacy points in Singapore by meeting with North Korean leader Kim. Trade war fears were once again at the forefront as the Trump administration announced new tariffs on Chinese goods on Friday. Crude oil prices plunged as supply might be on the rise with heavy anticipation on the Organization of the Petroleum Exporting Countries meeting on Friday.

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From:: Resource Investor

Major market ranges & directions for the week of June 18

The coming week (June 18-22) should continue the trend of trending symbols. The only potential exceptions are gold and soybeans whose weekly pivots are sideways for reversal scalpers and who already made a wide-range move likely to consolidate sideways. However, both gold and beans have trending monthly pivots–a wild card working against my Iron Condor favorite trade.

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From:: Resource Investor