Corvus Gold Update

Corvus Gold ($KOR.TO | $CORVF) latest bought deal financing, while poorly timed on my part when I tweeted back in August (https://twitter.com/economicalpha/status/1164989458254614533?s=21), is turning out to be a blessing in disguise. The deal was below market at $2CAD (at the time announced it was $2.29) and that definitely stung a bunch of folks, including myself. The offering however did not include any warrants, which is vital as it eliminates any potential price overhang in the future and kept the capital structure pretty straight forward and tight for a company at this stage in the mining development lifecycle. Another element of the offering is that it was done solely by BMO, and with that, comes value added marketing and an opening to further institutional support. But the most important piece for me, is that the bigger picture just became a bit more crystalized, making the short term hit more palpable to absorb.


The $23M CAD raised should be enough of a runway to give Corvus plenty of time to execute on its strategic objectives. The latest financing included AngloGold and Tocqueville taking their respective pro-rata share, keeping them at 19.9% and 19.5% of ownership outstanding respectively. It also took in some new investors, including Franklin Templeton as well as some European institutions, just to name a few.

Anglo’s commitment to Corvus has been pretty consistent and notable. Not only has Anglo invested significant amount of capital but there is also a very high concentration of ex-Anglo personnel running the show at the company, including the CEO of Corvus as well as the Chairman.

The connections don’t stop short there. Anglo also owns, or has the option to earn in, 100% of the neighboring Silicon project. The CEO of Anglo has been very quiet about the prospects of Silicon publicly, including not providing much information about the current drilling program. However, he did provide some interesting tidbits during this Bloomberg video clip back during the BMO conference this year:

AngloGold Ashanti CEO Discusses M&A Possibilities (3 minute mark)
https://www.bloomberg.com/news/videos/2019-02-25/anglogold-ashanti-ceo-discusses-m-a-possibilities-video

The option to earn in 100% ownership in Silicon comes up in June of 2020, a very interesting time table (more on that below). Anglo would have to pay $2.4M of the remaining $3M to do so and they have every intention on moving forward in my opinion given what their actions have been. This article characterizes the option earn-in details as well as some specifics on drilling program done by Anglo:

http://www.rengold.com/s/NewsReleases.asp?ReportID=851364&_Type=News-Releases&_Title=Renaissance-Gold-receives-US300000-payment-from-AngloGold-Ashanti-to-mainta…

Just this past Friday, Renaissance Gold, reported an update on the progress of drilling, which included an update on Silicon. Details from the Press Release is as follows:

“The Silicon Project, Nye County Nevada is subject to an option to purchase agreement with AngloGold Ashanti (AngloGold). AngloGold conducted drilling through May, 2019 and to date have completed 28 reverse circulation holes totaling 11,156 meters (36,591 feet) and 19 core holes totaling 7,863 meters (25,791 feet). AngloGold has paid RenGold US$600,000 of the total purchase price of US$3,000,000, with the final payment of US$2,400,000 due in June, 2020. AngloGold is currently working to obtain a Plan of Operations permit to allow further drilling.”

http://www.rengold.com/s/NewsReleases.asp?ReportID=859720&_Type=News-Releases&_Title=Renaissance-Gold-Exploration-Update

AngloGold looks very motivated, and that makes sense given what they’ve done to date. The need to get a better understanding of what they may be sitting on between now and the end of the 3-year option earn-in agreement with Renaissance Gold in June of 2020 is all the more reason.

Meanwhile, as AngloGold moves full speed ahead drilling Silicon, Corvus, in its own right, is ramping up its drilling efforts at a much faster clip than would have been otherwise thanks largely in part to the recent financing. One of the newest drilling targets at Mother Lode is the deep core target, which is at depths of 500-600m in Paleozoic rocks. Early modeling is outlining a porphyry shaped body with a very conductive upper shell. Results from this drilling should come out sometime in early 2020. While I note that this is very speculative at this time, stay tuned on this front.

Corvus is being proactive, which is something you would expect, and they are moving things in motion not waiting for something to happen. An example of this is the recently announced multi-phase approach to develop their two assets, North Bullfrog and Mother Lode, as opposed to what was previously depicted in the combined PEA issued late last year.

This new optimization plan targets a lower capex/opex with near term production optionality by breaking down the assets into two staged phases, a Phase 1 and a Phase 2 development approach. The new strategy would allow for a quicker startup of operations as phase 1 capex at North Bullfrog is a more realistic $80M US, as opposed to the PEA capex number that was north of $400M running them combined.

This is important as it not only gives Corvus the optionality to either build and operate on their own but it also makes Corvus more appealing and valuable to others that may not have otherwise been able to move forward with those initial capex constraints. The culmination of this is that it largely de-risks the investment proposition as the high capex hurdle is softened and the potential for Corvus to build is now included in the equation. http://www.corvusgold.com/news/releases/index.php?content_id=322

Adding this all up, including the key Anglo angle, the optionality of a much more favorable development approach, a fully funded treasury, a rising Gold price environment, a tightly held corporate structures, as well as the not too often spoken about strategic water rights, and we have ourselves a very interesting proposition heading into 2020.

Update 12/1/2019: Adding site visit photos and notes.

Corvus Gold Site Tour Photo Thread
September 23, 2019. https://twitter.com/economicalpha/status/1177969613889507328?s=21

On our way to the site tour, we made a quick pit stop here at the Area 51 Alien Center.

Here’s a photo of the old Secret Pass Pit owned by Coeur. You can see the pit failure there in the middle.

Here’s a photo of the other side of the Secret Pass Pit. You can see Bullfrog on the far end.

This photo is from the old historic Mother Lode pit. A few more angles coming.

Another photo of the old Mother Lode pit.

Here’s another photo of old Mother Lode with a stationed track mounted RC Rig.

Old Mother Lode there in the middle right. This is the view of the extensions of that deposit.

View of Anglogold’s Silicon Project from the old Mother Lode.

Approaching the old Mother Lode Pit.

Amazing shot of the old Mother Lode Pit. You can see the sulphide.

Closer look at Angolgold Silicon project.

Here’s a shot of North Bull Frog. If you look closely, you can see the town of Beatty, NV.

North Bull Frog.

Area of drill results released by Corvus on September 23. http://www.corvusgold.com/news/releases/index.php?content_id=323

Ongoing exploration work.

The crew including Corvus exploration manager, Mark Reischman third from right and from @soarfinancial Kai, second from left. I was on the far right. This picture doesn’t do me any justice. I am not that short. We are standing in front of the old Mother Lode Pit.

Update 12/14/2019: Corvus Gold interview of Jeff Pontius, CEO, conducted by Trevor Hall from Mining Stock Daily. https://www.podbean.com/media/player/w8dwu-76c3ed2-dir?vjs=1

Disclaimer and Disclosures:

I own the stock. Therefore, I have an inherent bias.

I am not a certified investment professional. Assume everything I say herein is wrong. In fact, I am wrong more often than right. Do your own due diligence and consult with your own investment advisor. Do not buy or sell on anything contained herein.

I did not receive any compensation for this blog post. I did not receive any compensation from the company mentioned. I did do a site visit as part of my due diligence.

The content contained herein is strictly my opinion only. I do not warrant to the accuracy of the content or whether this is a suitable investment and disclaim any responsibility.

11 thoughts on “Corvus Gold Update

    1. It’s been a acting very poorly especially since my writeup. I’m not too sure why. They are at an interesting turning point cash flow wise and earnings are coming up in a few weeks. See how that goes.

      Like

  1. Luis, I added 2500sh on Friday to initial 2000. Your above update is well articulated and easy to understand, that and their Phase 4 drilling assays, released and market appreciated on Thursday, prompted me to add to Corvus and several others on Friday.

    I know you’ve got a lot of other plates spinning, family, day job and Metro-North at a minimum…please know your efforts are not taken for granted.

    Have a wonderful Holiday Season.

    Liked by 1 person

    1. Thank you. Yes the Phase 4 results released on Thursday were great. We should see continuous results through May. The culmination of these results plus the Phase 3 results will be incorporated into an updated resource. Meanwhile, Anglo will be stepping up on their drilling up through the June 2020 100% earn in. At the same time all of this is going on, Corvus will be positioning North Bull Frog a step further with a PFS. All of these efforts will be value creating on their own. And if they hit on deep Mother Lode that will be a game changer.

      Like

      1. Thank you for the follow-up.
        Osisko Mining and KL/Wallbridge had useful news this morning.
        I subscribed to MSAnalysis over the weekend, a worthwhile service for any trading and entry points for all PM’s
        It is an exciting time! Have a fine week.

        Like

Leave a Reply to EconomicAlpha Cancel reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.