Going 'All-In': Silver and Gold Project Expanding in Nevada
Shaking off delays in April, this mining and development company has money to expand, and analysts are talking about the Nevada project's May production results.
Rye Patch Gold Corp. (RPM:TSX.V; RPMGF:OTCQX) announced the sale of its "3.4% net smelter return royalty for total consideration of US$5,000,000 in cash" on June 1, and on June 6 announced a bought deal offering in Canada "for aggregate gross proceeds of $10,002,200. . .to be "used for continued expansion of the Florida Canyon, working capital and general corporate purposes."
In a June 2 announcement, Rye Patch outlined the production statistics for its Florida Canyon mine:
Mining of 1.174 million tons (1.07 million tonnes) of material including 551,359 tons (501,235 tonnes) of ore delivered to the crusher; Stacking of 582,161 tons (529,237 tonnes) of ore on the new South Heap Leach pad; Pouring of 5,566 troy ounces of dore containing 3,094 ounces of gold and 2,381 ounces of silver; and Progressing toward commercial production in Q3.William C. Howald, president and CEO of the Company, stated, "In less than one year, the Company has made the transformation from a Nevada explorer to Nevada's newest gold producer. The acquisition of the Florida Canyon mine was a transformational transaction that Rye Patch was uniquely positioned to pursue and re-start the mine to create shareholder value."
Analysts are looking at Rye Patch in a positive light as well. In an iA Securities June 2 research report, analyst George Topping noted that the proceeds from the sale of the smelter royalty to Coer Mining "will supplement the cash flow from the Florida Canyon mine to be used towards drilling near mill material, infill drilling, and expanding the known resource."
Topping went on to recognize the May production statistics for Florida Canyon, reporting that "at 3,094oz/month, the mine is producing 103oz/day, which is well on its way to achieving operating financial breakeven." Topper maintained a Buy rating and $0.75 target price.
Michael Gray, analyst for Macquarie Research, also stated in a June 2 report that Rye Patch "produced 100oz/day Au (3094ozAu in May), which is in line with our expectations from the May 16 site visit. We estimate production of 130oz/day for FCF breakeven pre-delivering into the hedge facility at $1276/ozAu. We expect gold production to continue to ramp up over the coming months, driven by pregnant gold solution concentrations increasing and two pad construction milestones."
Reiterating an Outperform recommendation and $0.65 target price, Gray concluded that Rye Patch "is a top pick amongst our developer coverage for its significant re-rating potential (0.35x NAV vs junior producer peers averaging at 0.6x - Macquarie price deck) and emerging Nevada production on an underexplored trend, making it also an attractive target."
Rye Patch's shares are currently trading at around $0.26.
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Additional disclosures
Disclosures from iA Securities, Rye Patch Gold Corp., Research Update, June 2, 2017
Conflicts of Interest: The research analyst and or associates who prepared this report are compensated based upon (among other factors) the overall profitability of iA Securities, which may include the profitability of investment banking and related services. In the normal course of its business, iA Securities may provide financial advisory services for the issuers mentioned in this report. iA Securities may buy from or sell to customers the securities of issuers mentioned in this report on a principal basis.
Analyst's Certification: Each iA Securities research analyst whose name appears on the front page of this research report hereby certifies that (i) the recommendations and opinions expressed in the research report accurately reflect the research analyst's personal views about the issuer and securities that are the subject of this report and all other companies and securities mentioned in this report that are covered by such research analyst and (ii) no part of the research analyst's compensation was, is, or will be directly or indirectly, related to the specific recommendations or views expressed by such research analyst in this report.
Analyst Trading: iA Securities permits analysts to own and trade in the securities and or the derivatives of the issuer under their research coverage, subject to the following restrictions. No trades can be executed in anticipation of coverage for a period of 30 days prior to the issuance of the report and 5 days after the dissemination of the report to our clients. For a change in recommendation, no trading is allowed for a period of 24 hours after the dissemination of such information to our clients. A transaction against an analyst's recommendation can only be executed for a reason unrelated to the outlook of the stock for the issuer and with the prior approval of the Director of Research and the Chief Compliance Officer.
The analyst has visited the issuer's operations in Lovelock, Nevada, US. No payment or reimbursement was received from the issuer for the associated travel costs.
In the past 12 months, neither iA Securities, its officers or directors, nor any analyst involved in the preparation of this report have provided services to the issuer for remuneration other than normal course investment advisory or trade execution services.
Macquarie Research, Rye Patch Gold Corp., June 2, 2017
SLW CN: MACQUARIE CAPITAL MARKETS CANADA LTD./MARCH??S FINANCIERS MACQUARIE CANADA LT??E. or one of its affiliates managed or co-managed a public offering of securities of Rye Patch Gold Corp in the past 12 months, for which it received compensation.
Macquarie Group Limited together with its affiliates beneficially owns 1% or more of the equity securities of Rye Patch Gold Corp.
Important company disclosures are available here.
Analyst certification: We hereby certify that all of the views expressed in this report accurately reflect our personal views about the subject company or companies and its or their securities. We also certify that no part of our compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in this report. The Analysts responsible for preparing this report receive compensation from Macquarie that is based upon various factors including Macquarie Group Ltd total revenues, a portion of which are generated by Macquarie Group's Investment Banking activities.