Wednesday 13th December 2017

Resource Clips


March, 2016

Stornoway Diamond increases Renard’s reserve, life and guidance; advances start date

March 31st, 2016

by Greg Klein | March 31, 2016

Not for the first time, Stornoway Diamond TSX:SWY has exceeded its own expectations for Quebec’s first diamond mine. Late March 30 the company announced increases to Renard’s reserve, lifespan and anticipated output, as well as an earlier start date for commercial production. The company now expects to start processing ore by the end of September, with commercial production (60% of nameplate capacity) beginning by year-end. That marks a five-month improvement over the previously announced start date.

Among other felicitous news, Stornoway announced a 25% increase in probable reserves, from 17.9 million to 22.3 million carats. Grade, however, fell from 75 to 67 carats per hundred tonnes. That “reflects the addition of new lower-grade material within the open pit and underground mining envelopes,” explained president/CEO Matt Manson.

Stornoway Diamond increases reserve, life and guidance; advances Renard start date

Renard’s earlier start date will put a second new
Canadian diamond mine into production this year.

Those 4.4 million extra carats extend Renard’s life expectancy from 11 to 14 years.

But average price estimates dropped to $155 per carat from $190 estimated in March 2014. The company noted a 19% decrease in world average rough prices during those two years. In early February, diamond analyst Paul Zimnisky forecast a 2016 global average of $92 per carat.

Renard’s annual production forecasts for the first decade now come to 1.8 million carats, compared to 1.6 million previously predicted. Beginning in 2018 Stornoway expects to process 2.5 million tonnes per year (7,000 tpd), boosting the earlier forecast of 2.2 million tonnes per year or 6,000 tpd.

An updated mine plan calls for a modified design for the Renard 2-Renard 3 open pit and a deepening of the Renard 2 underground mine.

Initial capex drops to $775 million, down from $811 million estimated in April 2014. The life-of-mine capex increases, however, from $1.013 billion to $1.045 billion.

A dramatic change puts the after-tax NPV at $974 million, previously $391 million, using a 7% discount rate.

The project now boasts “a cash operating margin of 59% after all taxes, royalties and the Renard diamond stream, despite the substantial recent reduction in rough diamond prices,” stated Manson. “We look forward to building on our track record to date of solid project execution as we bring Renard into production later this year.”

As for Canada’s other diamond mine-in-progress, Gahcho Kué reached 87% completion as of March 14 and remains on schedule for H2 production, Mountain Province Diamonds TSX:MPV reported. With a probable reserve totalling 55.5 million carats, it’s the “world’s largest new diamond mine and projected to be amongst the highest margin diamond mines due to the high grade and open-pit nature of the operation,” according to the company.

Mountain Province holds a 49% stake in the Northwest Territories JV with 51% owner De Beers.

See Chris Berry’s research report on long-term diamond demand.

Airships to the Arctic?

March 31st, 2016

A Lockheed Martin LOI launches high-flying hopes for northern transportation

by Greg Klein

Bush planes opened up much of Canada to mining, but now there’s talk of a different type of aircraft transforming the industry. On March 30 Lockheed Martin NYSE:LMT announced a letter of intent in which England-based Straightline Aviation would purchase up to 12 Hybrid Airships, a new contraption that evokes pre-Hindenburg efforts to defy gravity. Straightline would then contract its services to resource companies, among other clients.

Lockheed has yet to build the airships. No indication was given whether Straightline has, or can raise, the approximately US$480 million that the ships might cost.

Airship LOI re-launches high-flying hopes for northern transportation

A simulated image shows Lockheed Martin’s Hybrid Airship.

But Straightline COO Mark Dorey extols the potential benefits to Canada’s north. “We’re aware that part of the world is very sensitive from an environmental point of view,” Canadian Press quoted him. “You don’t have to build ice roads or bridges, or wait for the environmentalists to give you permission. You can simply land on the ice.”

Or on water or terrain, provided there’s a clearing nearly as big as a football field. The craft measures about 45 metres wide by 91 metres long and 24 metres tall.

Straightline “was co-founded by a team of highly experienced airship and aviation executives with the sole purpose of bringing Hybrids into operation,” according to Lockheed.

Yet as of press time Straightline’s website had little to say, except that the company “is the world’s first owner-operator of these new hybrid, hi-tech, heavy-lift aircraft, manufactured in the USA by Lockheed Martin and in the UK by Hybrid Air Vehicles, that are about to revolutionize worldwide air transportation.”

Hybrid Air Vehicles actually has an airship sitting in a hangar in England. Its Airlander 10 “can take off and land in a short distance from unprepared sites in desert, ice, water or open field environments,” the company states. “The Airlander 10 is designed to stay airborne for up to five days at a time to fulfil a wide range of communication and survey roles, as well as cargo-carrying and tourist passenger flights.”

The Hybrid Airship uses helium—non-flammable in nature—carrying about 10,000 pounds, whereas the Hindenburg carried seven million cubic feet of hydrogen gas.—Dana Carroll,
spokesperson for Lockheed Martin

Of course these somewhat zeppelin-like machines can bring to mind the 1937 Hindenburg disaster, etched into historical memory through dramatic photos and a live radio account. Lockheed’s Dana Carroll emphasizes “several standout differences” with her company’s design. “Most notably, the Hybrid Airship uses helium—non-flammable in nature—carrying about 10,000 pounds, whereas the Hindenburg carried seven million cubic feet of hydrogen gas,” she informs ResourceClips.com. “Also, the skin of the Hybrid Airship is made of non-flammable material, which further helps in safety.”

Her company has over 20 years’ experience designing, building and testing airships, she adds. “In fact, the Lockheed Martin Hybrid Airship (LMH-1) is the only cargo airship with an approved FAA Certification Plan.”

Lockheed has built and tested a half-scale prototype. That ship “has not flown since November 2006 because we completed the flight test program and met all the test objectives. The aircraft remains in the hangar as a static display model.”

As for the length of time the ship can remain aloft, it’s partly affected by speed. At a reduced rate “you could technically go around the world in 30 days” without landing, Carroll says.

Should all go well with the Straightline deal, the first airship could be flying by late 2018, she adds.

Related reading: What might airships do for Ontario’s Ring of Fire?

Watch a short promo video for Lockheed’s yet-to-be-built Hybrid Airship.

Airship LOI re-launches high-flying hopes for northern transportation

March 31st, 2016

This story has been moved here.

March 31st, 2016

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Gold stock rally’s market cap bias may surprise you SmallCapPower
Commodity veteran says you just can’t tell when markets will turn NAI 500
Electric car war sends lithium prices sky high Stockhouse

Cardiff Energy finishes acid treatment on Texas oil well

March 30th, 2016

by Greg Klein | March 30, 2016

Cardiff Energy finishes acid treatment on Texas oil well

Cardiff hopes Clayton #1H will transform the company
from a junior explorer to a junior producer.

Cardiff Energy TSXV:CRS moved closer to commercial oil production as the company reported completion of acid treatment on the Clayton #1H well in west-central Texas on March 30. Work began last month after the company secured a $250,000 line of credit. Some 19,000 gallons of acid were used in nine intervals to stimulate areas of the well bore that had the highest hydrocarbon shows during drilling, Cardiff reported. A pump is now being installed to remove the completion fluid before preparations begin for commercial production.

As the first horizontal well drilled into the Gardiner Lime formation, “all indications are that the Clayton #1H will be a strong production well,” the company stated. The flow rate will be reported once output stabilizes.

“We are looking forward to near-term cash flow and drilling of the next set of horizontal wells in the Runnels County area,” added president/CEO Jack Bal.

Cardiff holds a 70% working interest in Clayton #1H, a joint venture in which Equitorial Exploration TSXV:EXX may earn up to 30%. Cardiff also holds a 100% working interest in the adjacent Bearcat #4.

Belmont Resources to buy Nevada lithium prospect from Zimtu Capital

March 30th, 2016

by Greg Klein | March 30, 2016

A purchase agreement with Zimtu Capital TSXV:ZC will have Belmont Resources TSXV:BEA looking for lithium in Nevada. Belmont plans to acquire the Kibby Basin property and anticipates a program of mapping and surface sampling during the current exploration season, the companies announced March 30.

Belmont Resources to buy Nevada lithium prospect from Zimtu Capital

Regional geophysical anomalies in the Kibby Basin area compare to those of the lithium-rich Clayton Valley,
Belmont stated.

Totalling about 1,036 hectares, the claims sit 65 kilometres north of Clayton Valley, home to North America’s only lithium producer, Albemarle Corp’s NYSE:ALB Silver Peak mine, and a busy area play. Previous research of the Kibby Basin “has indicated that proximal rhyolitic flows and tuffs surrounding the Basin could be a potential source for the possibility of saturated lithium brine in the Kibby Basis Playa,” Belmont stated. “In addition to this, the Kibby Playa is located within a geothermal cluster, at a Basin low setting.” Regional geophysical signatures show anomalies comparable to those of the Clayton Valley, the company added.

Current and projected demand from lithium-ion batteries for consumer electronics, electric vehicles and energy storage present a bullish case for lithium. In February Benchmark Mineral Intelligence reported a 47% increase in this year’s lithium carbonate prices over the 2015 average.

The Kibby Basin deal has Belmont giving Zimtu $5,000 on signing, $20,000 and 500,000 shares on TSXV approval and another 500,000 shares six months later. Zimtu retains a 1.5% NSR, half of which Belmont may buy for $1 million.

Belmont also announced a private placement of up to $350,000 for the Kibby Basin project and general working capital.

As part of its business model, Zimtu acts as a project generator to provide other companies with properties and advisory services.

Read more about demand for lithium and other energy minerals.

Gorilla Lake gravity helps ALX Uranium define drill targets

March 30th, 2016

by Greg Klein | March 30, 2016

About 10 kilometres north of the Athabasca Basin’s former Cluff Lake mine complex, ALX Uranium TSXV:AL has wrapped up a round of geophysics over its Gorilla Lake project. While final interpretation continues, early analysis suggests gravity lows present “prime targets for drilling,” the company announced March 30.

Gorilla Lake gravity helps ALX Uranium define drill targets

Initial results from last February’s ground gravity work showed one gravity low that could be attributed to a topographical feature, another on the west side of Gorilla Lake and a third striking northeast-southwest that coincides exactly with a “magnetic button,” the company stated.

Further gravity work in March showed a large northeast-trending gravity low west of the lake. The company considers the anomalies west of the lake and over the magnetic button to be prime drill targets. Further ground electromagnetic surveys prior to drilling would better define the conductive trends in both areas.

ALX holds an 80% option on the 7,552-hectare project in a joint venture with Logan Resources TSXV:LGR. Gorilla Lake comprises one of three JVs in ALX’s Cluff Lake properties adjacent to the former Cluff Lake mine, which produced over 62 million pounds of U3O8 over 22 years. Historic drill results from Gorilla include 0.46% U3O8 over 1.5 metres and 0.17% over seven metres. Gorilla is one of five ALX projects in the Basin slated for winter/summer exploration.

In the southwestern Basin’s Patterson Lake South region, geophysical surveys over ALX’s Hook-Carter project verified multiple basement conductors, the company reported last week. The complexity of the conductors requires additional DC resistivity and gravity surveys prior to drilling.

In February Cameco Corp TSX:CCO signed an agreement to buy ALX claims peripheral to Hook-Carter.

Two weeks ago ALX closed a first tranche of $318,000, part of a strategic partnership in which Holystone Energy would buy 12.5 million shares for $750,000 and retain the right to maintain its ownership level for three years.

March 30th, 2016

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John Mauldin: Whatever happened to the invisible hand of capitalism? Equities.com
Commodity veteran says you just can’t tell when markets will turn NAI 500
PDAC 2016: Juniors try different business models to tempt investors Industrial Minerals
Electric car war sends lithium prices sky high Stockhouse

Gwen Preston: The brokerage list shrinks again

March 29th, 2016

by Gwen Preston | SmallCapPower.com | March 29, 2016

News a few days ago that PI Financial is acquiring Wolverton Securities and Global Securities—in other words, three of the few remaining independent Vancouver-based dealers are becoming one, shortening what in the last few years has become a short list of small, resource-focused brokerage shops.

Declining commodity prices did not only hurt miners and explorers: the small houses that advised their transactions, led their financings and told their stories also took a beating. Salman Partners wound itself up late last year. Dundee Securities left the retail brokerage business, selling its unit to Euro Pacific. Octagon Capital and Jacob Securities went bust amidst compliance violations. Byron Capital, EdgeCrest Capital and Fraser MacKenzie all went out of business.

Gwen Preston The brokerage list shrinks again

In fact, the Investment Industry Association of Canada says 50 small houses, representing a quarter of those in the business, have either folded or been acquired in the last three years.

The bigger boys haven’t fared much better. GMP Capital, one of Canada’s largest independent brokerages, announced a major restructuring in January, laying off a quarter of its workforce and erasing its dividend. Canaccord Genuity has also laid off staff while seeing its share price crater.

The commodity bear market is one major cause. Technological and regulatory changes are another.

Big banks pushing into the investment banking scene for small- and mid-cap companies made a bad situation worse for small houses, who could not tag cheap loans into a finance package the way a big bank can.

As a result, I would say there are now perhaps only eight brokerages left in the junior mining game: PI (with the absorbed Wolverton and Global), Haywood, Leede Jones Gable, Mackie (which already took over Jordan Capital), Sprott, Richardson GMP, Euro Pacific and Dundee Capital Markets. The bigger houses also play a role—Macquarie, Canaccord, Raymond James and the big banks—but for reasons ranging from regulatory compliance to risk adversity they are doing less and less on the junior end of the spectrum.

The change matters. For one, with fewer houses competing for business the term sheets offered companies looking for a financing lead will not be as good. Secondly, the advent of online trading has eroded the importance of the broker-client relationship, cutting off one key transmission route for stock tips and thus limiting the potential for strong share price moves.

Then there’s the simple fact that, without brokers talking up the deals they like, retail just doesn’t hear about mining stocks. Without retail our business cannot succeed, so we need to figure out an answer. Part of that answer is that full service brokers can be very valuable, providing their clients with access to quality deals, research and financings.

Instead of that, however, many investors are doing their own research and trading through online accounts. That works, but only to a point, for both investors and companies.

Continue reading this article on SmallCapPower.com.

March 29th, 2016

Lithium’s state of affairs Benchmark Mineral Intelligence
Two bulls and a bear talk gold Streetwise Reports
Germany wants half its gold reserves back by 2020 GoldSeek
Gold stock rally’s market cap bias may surprise you SmallCapPower
John Mauldin: Whatever happened to the invisible hand of capitalism? Equities.com
Commodity veteran says you just can’t tell when markets will turn NAI 500
PDAC 2016: Juniors try different business models to tempt investors Industrial Minerals
Electric car war sends lithium prices sky high Stockhouse