ARLP is a diversified natural resource company that generates operating and royalty income from coal produced by its mining complexes and royalty income from mineral interests it owns in strategic oil & gas producing regions in the United States, primarily the Permian, Anadarko and Williston basins. ARLP currently produces coal from seven mining complexes its subsidiaries operate in Illinois, Indiana, Kentucky, Maryland and West Virginia. ARLP also operates a coal loading terminal on the Ohio River at Mount Vernon, Indiana. ARLP markets its coal production to major domestic and international utilities and industrial users and is currently the second largest coal producer in the eastern United States. In addition, ARLP is positioning itself as an energy provider for the future by leveraging its core technology and operating competencies to make strategic investments in the fast growing energy and infrastructure transition.
Mark Reichman, Senior Research Analyst, Natural Resources, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
Updating estimates. Coal prices continued to exhibit strength during the third quarter and we believe the outlook for oil and gas prices remains favorable. We have increased our 2022 adjusted EBITDA and adjusted EPU estimates to $951.9 million and $4.90 from $945.3 and $4.85, respectively. Our 2023 estimates remain unchanged. We have assumed the partnership declares third and fourth quarter per unit cash distributions of $0.45 and $0.50, respectively.
New Ventures team. Alliance recently announced the formation of a New Ventures team, led by Andrew Woodward and Matthew Lewis, to make strategic investments in energy and infrastructure that promote decarbonization. The team will identify, develop, and execute commercial opportunities outside of the company’s existing businesses to enhance growth and the company’s ability to serve the evolving energy needs of the market.
This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).
*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision.
TORONTO–(BUSINESS WIRE)– Sierra Metals Inc. (TSX: SMT) (NYSE American: SMTS) (BVL or Bolsa de Valores de Lima: SMT) (“Sierra Metals” or the “Company”) announced today that a special committee comprised of its independent directors (the “Special Committee”) has initiated a process to evaluate and consider the Company’s current financial and liquidity position, operational challenges and possible financing and restructuring alternatives that may be available to the Company.
Financial and Operational Matters
The Company faces liquidity challenges as a result of the recent previously announced suspension of operations at the Yauricocha Mine and operating losses and negative cash flows that have accumulated, primarily from the Bolivar and Cusi operations.
While mining operations have re-commenced at areas of the Yauricocha Mine, a majority of the operation remains suspended at this time. A precise timeline for achieving full plant throughput has not yet been established.
Absent additional support and increased funding, the Company’s ability to continue operations in the ordinary course may be impacted. The Company is monitoring and actively managing its capital to preserve liquidity to support operations and will continue to consult with its financial and other stakeholders.
The Company reiterates that the safety and wellbeing of its employees and contractors remains of utmost importance.
Special Committee
The Special Committee includes all non-management members of the board of directors of the Company. The mandate of the Special Committee includes exploring, reviewing and considering options to optimize the operations of the Company and financing, restructuring and strategic options in the best interests of the Company. The Special Committee has a particular focus on liquidity, near term financing and cash conservation options.
Financial and legal advisors with particular expertise in turnaround and restructuring matters have been engaged to advise on this process.
It is the Company’s current intention to not disclose developments with respect to the Special Committee process unless and until the board of directors of Sierra Metals has approved a specific transaction or material steps or otherwise determines that disclosure is necessary.
The Company cautions that there are no assurances or guarantees of the results of the Special Committee review process, management’s efforts to improve the current situation or the impact that the process and such efforts will have on the Company’s financial and liquidity position or its operations. The Company has not set a definitive schedule to complete the evaluation.
About Sierra Metals
Sierra Metals is a diversified Canadian mining company with Green Metal exposure including copper production and base metal production with precious metals byproduct credits, focused on the production and development of its Yauricocha Mine in Peru, and Bolivar and Cusi Mines in Mexico. The Company is focused on increasing production volume and growing mineral resources. The Company has large land packages at all three mines with several prospective regional targets providing longer- term exploration upside and mineral resource growth potential.
The Company’s common shares trade on the Bolsa de Valores de Lima and on the Toronto Stock Exchange under the symbol “SMT” and on the NYSE American Exchange under the symbol “SMTS”.
For further information regarding Sierra Metals, please visit www.sierrametals.com.
This press release contains forward-looking information within the meaning of Canadian and United States securities legislation, including statements with respect to the ability of the Company to continue operations in the ordinary course. Forward-looking information relates to future events or the anticipated performance of Sierra Metals and reflect management’s expectations or beliefs regarding such future events and anticipated performance based on an assumed set of economic conditions and courses of action. In certain cases, statements that contain forward-looking information can be identified by the use of words such as “plans”, “expects”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates”, “believes” or variations of such words and phrases or statements that certain actions, events or results “may”, “could”, “would”, “might”, or “will be taken”, “occur” or “be achieved” or the negative of these words or comparable terminology. The Company has made certain assumptions regarding, among other things: the strategic alternatives that may be available to it. By its very nature forward-looking information involves known and unknown risks, uncertainties and other factors that may cause actual performance of Sierra Metals to be materially different from any anticipated performance expressed or implied by such forward-looking information. Forward-looking information is subject to a variety of risks and uncertainties, which could cause actual events or results to differ from those reflected in the forward-looking information, including, without limitation, the risks described under the heading “Risk Factors” in the Company’s annual information form dated March 16, 2022 for its fiscal year ended December 31, 2021 and other risks identified in the Company’s filings with Canadian securities regulators and the United States Securities and Exchange Commission, which filings are available at www.sedar.com and www.sec.gov, respectively. The risk factors referred to above are not an exhaustive list of the factors that may affect any of the Company’s forward-looking information. Forward-looking information includes statements about the future and is inherently uncertain, and the Company’s actual achievements or other future events or conditions may differ materially from those reflected in the forward-looking information due to a variety of risks, uncertainties and other factors. The Company’s statements containing forward-looking information are based on the beliefs, expectations, and opinions of management on the date the statements are made, and the Company does not assume any obligation to update such forward-looking information if circumstances or management’s beliefs, expectations or opinions should change, other than as required by applicable law. For the reasons set forth above, one should not place undue reliance on forward-looking information.
TULSA, Okla.–(BUSINESS WIRE)– Alliance Resource Partners, L.P. (NASDAQ: ARLP) will report its third quarter 2022 financial results before the market opens on Monday, October 31, 2022. Alliance management will discuss these results during a conference call beginning at 10:00 a.m. Eastern that same day.
To participate in the conference call, dial (877) 407-0784 and request to be connected to the Alliance Resource Partners, L.P. earnings conference call. International callers should dial (201) 689-8560 and request to be connected to the same call. Investors may also listen to the call via the “investor information” section of ARLP’s website at http://www.arlp.com.
An audio replay of the conference call will be available for approximately one week. To access the audio replay, dial U.S. Toll Free (844) 512-2921; International Toll (412) 317-6671 and request to be connected to replay using access code 13733069.
About Alliance Resource Partners, L.P.
ARLP is a diversified energy company that is currently the largest coal producer in the Eastern United States. ARLP also generates operating and royalty income from mineral interests it owns in strategic coal and oil & gas producing regions in the United States. In addition, ARLP is positioning itself as an energy provider for the future by leveraging its core technology and operating competencies to make strategic investments in the fast-growing energy and infrastructure transition.
News, unit prices and additional information about ARLP, including filings with the Securities and Exchange Commission (“SEC”), are available at http://www.arlp.com. For more information, contact the investor relations department of ARLP at (918) 295-7674 or via e-mail at investorrelations@arlp.com.
Brian L. Cantrell Alliance Resource Partners, L.P. (918) 295-7673
Shareholder Conference Call and Webcast will be held on Wednesday November 16th, 2022
TORONTO–(BUSINESS WIRE)– Sierra Metals Inc. (TSX: SMT) (NYSE American: SMTS) (BVL or Bolsa de Valores de Lima: SMT) (“Sierra Metals” or the “Company”) will release Q3-2022 consolidated financial results on Tuesday November 15th, 2022, after Market Close. Senior Management will also host a webcast and conference call on Wednesday November 16th, 2022, at 11:00 am EST. Details of the Conference Call and Webcast are as follows:
Via Webcast:
A live audio webcast of the meeting will be available on the Company’s website:
The webcast along with presentation slides will be archived for 180 days on www.sierrametals.com.
Via phone:
For those who prefer to listen by phone, dial-in instructions are below. To ensure your participation, please call approximately five minutes prior to the scheduled start time of the call.
Canada dial-in number (Toll Free): 1 833 950 0062 Canada dial-in number (Local): 1 226 828 7575 US dial-in number (Toll Free): 1 844 200 6205 US dial-in number (Local): 1 646 904 5544 All other locations: +1 929 526 1599
Access code: 991150
Press *1 to ask a question, *2 to withdraw your question, or *0 for operator assistance
About Sierra Metals
Sierra Metals Inc. is a diversified Canadian mining company with Green Metal exposure including copper production and base metal production with precious metals byproduct credits, focused on the production and development of its Yauricocha Mine in Peru, and Bolivar and Cusi Mines in Mexico. The Company is focused on increasing production volume and growing mineral resources. The Company has large land packages at all three mines with several prospective regional targets providing longer-term exploration upside and mineral resource growth potential.
The Company’s Common Shares trade on the Bolsa de Valores de Lima and on the Toronto Stock Exchange under the symbol “SMT” and on the NYSE American Exchange under the symbol “SMTS”.
For further information regarding Sierra Metals, please visit www.sierrametals.com or contact:
Endeavour Silver is a mid-tier precious metals mining company that operates two high-grade, underground, silver-gold mines in Mexico. Endeavour is currently advancing the Terronera mine project towards a development decision, pending financing and final permits and exploring its portfolio of exploration and development projects in Mexico, Chile and the United States to facilitate its goal to become a premier senior silver producer. Our philosophy of corporate social integrity creates value for all stakeholders.
Mark Reichman, Senior Research Analyst, Natural Resources, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
Third quarter production exceeded our estimates. On a silver equivalent basis, third quarter production exceeded our expectations due to higher silver grades at both mines. Compared to the second quarter of 2022, silver production increased 7.3% to 1,458,448 ounces, while gold production decreased 1.0% to 9,194 ounces. Third quarter silver and gold sales amounted to 1,327,325 ounces and 8,852 ounces, respectively. At quarter end, Endeavour held 1,527,548 ounces of silver and 3,210 ounces of gold in bullion inventory and 2,769 ounces of silver and 144 ounces of gold in concentrate inventory. Relative to the end of the second quarter, bullion inventory increased while concentrate inventory declined.
Updating estimates. While production was ahead of our estimates, we had assumed greater sales from inventory. Due to lower than expected sales in the third quarter, we have lowered our net income and earnings per share estimates to $2.0 million and $0.01, respectively, from $5.6 million and $0.03. We have lowered our full year EBITDA and EPS estimates to $42.9 million and $0.09, respectively, from $49.9 million and $0.11. Due to modestly lower 2023 silver and gold pricing assumptions, we have trimmed our 2023 EBITDA and EPS estimates to $53.3 million and $0.11, respectively, from $58.6 million and $0.13.
This Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).
*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision.
Mark Reichman, Senior Research Analyst, Natural Resources, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
2022 drilling program draws to a close. Eskay Mining has completed 29,500 meters of diamond drilling during its 2022 property-wide exploration and drilling program. During the past four months, drilling tested multiple volcanogenic massive sulfide (VMS) targets, including Jeff, Jeff North, Scarlet Ridge, Scarlet Valley, and Tarn Lake. Step-out drilling of the Upper Massive Sulfide Zone confirmed that semi-massive and massive sulfide mineralization overlays the entire stockwork zone at TV, expanding the along-strike and down-dip extent of mineralization.
Key take-aways. During the 2022 season, Eskay accomplished its primary objectives, including drill testing the full extent of the TV-Jeff trend, systematic mapping and extensive rock chip sampling of the Scarlet Ridge-Tarn Lake trend, and maiden exploratory drilling at Scarlet Ridge, Scarlet Valley, and Tarn Lake. We think the company is well on its way toward affirming that its unexploited land package surrounding the prolific past-producing Eskay Creek Mine may host multiple VMS deposits with significant high-grade gold and silver resource potential.
This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).
*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision.
The Fundamental Reasons the Strength in Precious Metals May Continue
What’s happening with precious metals? Silver has been outshining gold the past few days as the rally in both precious metals (PM) has grabbed the attention of investors and perhaps caught those that were short silver off guard. Why are the metals rising, can the strength last, and what is the longer-term outlook for PM?
Silver reached a six-week high in the first week of October, and gold is at its highest level in three weeks. As financial markets are becoming more uncertain, the two metals are showing they never really lost their safe-haven status. The concerns have just not been high enough for many to rotate out of the investments they were in. The move to what has always been viewed as the highest level of safe, gold and silver. This rotation follows months of movement to $ U.S. dollar-denominated securities. The heightened level of safety was inspired by the media being focused on a potential financial crisis in Europe and discussions of Russia unleashing a nuclear weapon in Putin’s attempt to annex Ukraine.
Silver, Gold and Copper performance since September 1. Source: Koyfin
As if the words “nuclear bomb” aren’t enough to send some investors taking a larger allocation in safe-haven assets, there are rumors circulating that the global investment bank Credit Suisse may be in serious financial trouble. For many market participants, the rumblings about an investment bank having problems are reminiscent of 2007, the rumors of Bear Stearns, and the market troubles that followed. Revisiting the activity of the precious metals market that followed in 2008, silver outperformed copper, which outperformed gold.
As silver and gold rise, many speculators that were comfortable with short positions are finding themselves forced with the decision to decide to purchase to close out their short positions. Active hedge funds and other money managers will often play precious metals against the U.S. dollar. With the dollar at a 20-year high, the sentiment around metals was negative. If this is the beginning of a longer rotation into PM, the rotation could build into a strong short squeeze. Short covering serves to strengthen prices.
Other Fundamentals
Prior to Monday’s 7% increase in the price of silver and the 3% increase in gold, both with strong follow-up on Tuesday, some analysts were becoming more positive on the metals and miners category. In his quarterly Metals & Mining Review and Outlook, released on Channelchek pre-market Monday, Mark Reichmann, Sr. Research Analyst, wrote, “While higher rates and a strong U.S. dollar pose significant headwinds for gold, an inflection point may be reached as investors seek to preserve value amid deteriorating economic conditions, increasing geopolitical uncertainty, and market volatility.”
Reichmann seems to be long-term positive on metals, thinking gold and silver may turn first; he wrote, “Precious metals prices may strengthen in advance of industrial metals. Therefore, investors may desire to lean into precious metals mining names to benefit from a positive shift in investor sentiment.” He continued, “While it may take longer for industrial metals to recover, an eventual return to economic growth could result in strong prices due to potential supply and demand imbalances.”
For a complete list and the most current research reports of producers of precious and industrial metals companies covered by Mark Reichmann, visit his analyst webpage here.
Take Away
The move earlier this year toward U.S. dollar denominated assets, to capture higher yields and low sovereign risk has been an ongoing investment trend since at least March. With the newly recognized potential of additional turmoil entering the market psyche, including Russia and whether they would use the bomb, and whether the recent about-face for England’s monetary policy indicates deep trouble beneath the financial world’s surface has created further allocations to precious metals.
The suddenness of the move may have caught some large investors who have been bearish on silver and gold to make unexpected decisions on short positions they had been carrying. This short-squeeze is likely contributing to the strength of both gold and silver as it plays out.
Mark Reichman, Senior Research Analyst, Natural Resources, Noble Capital Markets, Inc.
Refer to the bottom of the report for important disclosures
Mining companies outperform broader market. During the third quarter, mining companies (as measured by the XME) declined 2.1% compared to a loss of 5.3% for the S&P 500 index. The VanEck Vectors Gold Miners (GDX) and Junior Gold Miners (GDXJ) ETFs were down 11.9% and 7.9%, respectively. Gold, silver, copper, zinc, and lead futures prices fell 6.8%, 6.2%, 8.5%, 8.8%, and 0.4%, respectively. The commodity price declines reflect expected impacts of Federal Reserve monetary policy on interest rates, U.S. dollar strength, and the economic environment.
Outlook for precious metals. The U.S. Dollar Index rose 7.1% during the third quarter, while the yield on a 10-year treasury note increased from 3.0% to 3.8% as of September 30. While higher rates and a strong U.S. dollar pose significant headwinds for gold, an inflection point may be reached as investors seek to preserve value amid deteriorating economic conditions, increasing geopolitical uncertainty, and market volatility. While down 7.9% year-to-date through September 30, the price of gold has remained relatively resilient this year despite challenging headwinds. Not being able to benefit from strengthening gold prices, investors have focused more on silver’s industrial applications which make it more sensitive to economic expectations.
Industrial metals demand expected to remain challenged. The decline in industrial metals prices reflect concerns about economic growth in the U.S. and abroad. While the long-term investment case for owning industrial metals mining companies remains favorable, industrial metals prices may remain challenged into 2023.
Putting it all together. Precious metals prices may strengthen in advance of industrial metals. Therefore, investors may desire to lean into precious metals mining names to benefit from a positive shift in investor sentiment. While it may take longer for industrial metals to recover, an eventual return to economic growth could result in strong prices due to potential supply and demand imbalances.
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IMPORTANT DISCLOSURES
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Company Specific Disclosures
The following disclosures relate to relationships between Noble and the company (the “Company”) covered by the Noble Research Division and referred to in this research report. Noble is not a market maker in any of the companies mentioned in this report. Noble intends to seek compensation for investment banking services and non-investment banking services (securities and non-securities related) with any or all of the companies mentioned in this report within the next 3 months
ANALYST CREDENTIALS, PROFESSIONAL DESIGNATIONS, AND EXPERIENCE
Senior Equity Analyst focusing on Basic Materials & Mining. 20 years of experience in equity research. BA in Business Administration from Westminster College. MBA with a Finance concentration from the University of Missouri. MA in International Affairs from Washington University in St. Louis. Named WSJ ‘Best on the Street’ Analyst and Forbes/StarMine’s “Best Brokerage Analyst.” FINRA licenses 7, 24, 63, 87
WARNING
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RESEARCH ANALYST CERTIFICATION
Independence Of View All views expressed in this report accurately reflect my personal views about the subject securities or issuers.
Receipt of Compensation No part of my compensation was, is, or will be directly or indirectly related to any specific recommendations or views expressed in the public appearance and/or research report.
Ownership and Material Conflicts of Interest Neither I nor anybody in my household has a financial interest in the securities of the subject company or any other company mentioned in this report.
TORONTO–(BUSINESS WIRE)– Sierra Metals Inc. (TSX: SMT) (BVL or Bolsa de Valores de Lima: SMT) (NYSE AMERICAN: SMTS) (“Sierra Metals” or “the Company”) reports that an agreement has been reached with residents from the town of Alis following the blockade of the main access road to the Yauricocha Mine, operated by the Company’s subsidiary, Sociedad Minera Corona.
Efforts to ensure critical safety and maintenance have been ongoing at the mine throughout the blockade. The safety and well-being of its employees and contractors remains of utmost importance to the Company. Accordingly, safety inspections and reviews are underway to support a safe and progressive restart to the operations at Yauricocha Mine.
Sierra Metals will continue to collaborate with the host communities in its area of influence, in order to promote their development, while supporting long-term, stable operations at the Yauricocha Mine.
At this time, it is not clear when the mine will reach its pre-suspension production levels and as such, production and financial guidance will remain suspended.
About Sierra Metals
Sierra Metals Inc. is a diversified Canadian mining company with Green Metal exposure including increasing copper production and base metal production with precious metals byproduct credits, focused on the production and development of its Yauricocha Mine in Peru, and Bolivar and Cusi Mines in Mexico. The Company is focused on increasing production volume and growing mineral resources. Sierra Metals has recently had several new key discoveries and still has many more exciting brownfield exploration opportunities at all three Mines in Peru and Mexico that are within close proximity to the existing mines. Additionally, the Company also has large land packages at all three mines with several prospective regional targets providing longer-term exploration upside and mineral resource growth potential.
The Company’s Common Shares trade on the Bolsa de Valores de Lima and on the Toronto Stock Exchange under the symbol “SMT” and on the NYSE American Exchange under the symbol “SMTS”.
For further information regarding Sierra Metals, please visit www.sierrametals.com
This press release contains forward-looking information within the meaning of Canadian and United States securities legislation. Forward-looking information relates to future events or the anticipated performance of Sierra and reflect management’s expectations or beliefs regarding such future events and anticipated performance based on an assumed set of economic conditions and courses of action. In certain cases, statements that contain forward-looking information can be identified by the use of words such as “plans”, “expects”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates”, “believes” or variations of such words and phrases or statements that certain actions, events or results “may”, “could”, “would”, “might”, or “will be taken”, “occur” or “be achieved” or the negative of these words or comparable terminology. By its very nature forward-looking information involves known and unknown risks, uncertainties and other factors that may cause actual performance of Sierra to be materially different from any anticipated performance expressed or implied by such forward-looking information.
Forward-looking information is subject to a variety of risks and uncertainties, which could cause actual events or results to differ from those reflected in the forward-looking information, including, without limitation, the risks described under the heading “Risk Factors” in the Company’s annual information form dated March 16, 2022 for its fiscal year ended December 31, 2021 and other risks identified in the Company’s filings with Canadian securities regulators and the United States Securities and Exchange Commission, which filings are available at www.sedar.com and www.sec.gov, respectively.
The risk factors referred to above are not an exhaustive list of the factors that may affect any of the Company’s forward-looking information. Forward-looking information includes statements about the future and is inherently uncertain, and the Company’s actual achievements or other future events or conditions may differ materially from those reflected in the forward-looking information due to a variety of risks, uncertainties and other factors. The Company’s statements containing forward-looking information are based on the beliefs, expectations, and opinions of management on the date the statements are made, and the Company does not assume any obligation to update such forward-looking information if circumstances or management’s beliefs, expectations or opinions should change, other than as required by applicable law. For the reasons set forth above, one should not place undue reliance on forward-looking information.
Sierra Metals Inc. is a diversified Canadian mining company with Green Metal exposure including increasing copper production and base metal production with precious metals byproduct credits, focused on the production and development of its Yauricocha Mine in Peru, and Bolivar and Cusi Mines in Mexico. The Company is focused on increasing production volume and growing mineral resources. Sierra Metals has recently had several new key discoveries and still has many more exciting brownfield exploration opportunities at all three Mines in Peru and Mexico that are within close proximity to the existing mines. Additionally, the Company also has large land packages at all three mines with several prospective regional targets providing longer-term exploration upside and mineral resource growth potential.
Mark Reichman, Senior Research Analyst, Natural Resources, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
Activities at Yauricocha mine suspended. Following a mudslide at its underground Yauricocha mine, activities remain suspended and will resume once conditions are deemed safe and appropriate. Following the mudslide incident, a group of residents illegally blocked the main access road and the company, along with local authorities, continue to seek a resolution.
Company financial guidance suspended. Due to the timing uncertainty associated with resolving the road blockage and the restart of production at the mine, Sierra Metals suspended 2022 production and financial guidance.
This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).
*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision.
Mark Reichman, Senior Research Analyst, Natural Resources, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
Mapping program sets up for a productive drilling program. The “Anaconda method” mapping program at the company’s Tatasham and Awacha porphyry copper targets has revealed indications of porphyry-style mineralization at both locations. Highly prospective porphyritic felsic intrusive rock was discovered at Tatasham, while mapping confirmed diorite and other intrusive rock with local hydrothermal breccias in the Awacha target area.
Drilling to commence soon. While the mapping program at Awacha continues, it has been completed at Tatasham. Drilling at Tatasham is expected to begin in the fourth quarter of 2022 followed by Awacha.
This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).
*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision.
Investors have many options to gain exposure to gold. They may purchase gold bullion, gold coins, gold exchange-traded funds (ETF) and mutual funds, gold mining companies, or gold futures and options. Publicly traded equities of gold producers and royalty companies may offer an attractive way to invest given the disproportionate percentage impact higher commodity prices may have on a company’s bottom line and valuation for a given percentage increase in the commodity itself. While most investors are likely familiar with mining companies and how they operate, royalty companies may be less familiar.
What is a Gold Royalty?
A gold royalty is a contract that gives the owner the right to a percentage of gold production or revenue. Since royalties typically cover the life of a mine, gold royalty companies benefit from the exploration upside that may extend the life of a mine and thus increase the amount of gold or revenue they receive from the mining company at no additional cost.
There are several ways to generate royalties. First, royalty businesses may help finance a development project in exchange for a royalty. Second, a royalty business may purchase existing royalties from third parties, and 3) a royalty company may take a property that they already own, sell it to a mining company, and retain a royalty on the property.
There are several types of royalties. The two most common are NSR and NPI royalties. A net smelter returns (NSR) royalty is an agreement where the mining company agrees to pay the royalty owner a percentage of the revenue, less refining and smelting costs. A net profit interest (NPI) royalty entitles the royalty owner to a percentage of the profit from a mine.
A stream is a purchase agreement that provides the owner of the stream, in exchange for an upfront payment, the right to purchase all or a portion of one or more metals produced from a mine at a negotiated price for the life of the agreement. The negotiated price is generally at a significant discount to the spot price.
Advantages of Owning Equity Shares of a Gold Royalty Company
Compared with investing in gold production companies, royalty businesses generally benefit from low overhead costs, geographically diversified asset portfolios, and exposure to multiple operators. Additionally, they avoid costly exploration expense which is borne by operators while sharing the benefit and upside of exploration investment in properties where they retain a royalty interest. Like mining companies, royalty businesses offer greater leverage to changes in gold prices than investing in bullion. Lastly, royalty businesses generally seek to build portfolios of producing royalties that support dividend payments to shareholders. It is important to keep in mind that revenues increase with rising gold prices, increasing production on its royalty properties, and a growing royalty portfolio, while costs remain relatively fixed and stable. This scenario positions royalty companies to thrive in good markets and weather more challenging sets of circumstances.
As a royalty company grows, it offers the potential for multiple expansion, dividend payments, and the ability to execute larger transactions which could accelerate its growth. Junior royalty companies generally perform well in their early years since they can grow rapidly based on an increasing capacity to transact larger deals. Additionally, junior royalty companies may become attractive acquisition candidates for a larger royalty company seeking to enlarge its royalty portfolio.
Investor Considerations:
It is important for investors to keep several factors in mind when conducting due diligence on prospective royalty company investments. These include: 1) management, 2) asset portfolio, 3) asset quality, 4) jurisdiction, and 5) valuation.
Management
Should you bet on the horse or the jockey? It is important to evaluate management’s history and track record of creating value for shareholders. Does the management team reflect a balance of technical, financial, legal, and capital markets expertise? Is the board of directors comprised mostly of independent directors who provide a diversity of relevant experience and perspectives? Do they articulate clear objectives, and is their business model sound? Most importantly, do they focus on areas they know and employ a disciplined growth strategy, or are they seeking growth at any price?
Asset Portfolio
How is the company’s asset portfolio balanced between royalties that are producing cash flow streams versus royalties that are expected to produce cash flow within five years and/or longer?
Asset Quality
Because royalty companies have little control over the decisions of the mining companies that control the properties on which the royalty interest is held, it is important for investors to evaluate the operators associated with the properties in the royalty portfolio. Are they well-capitalized major mining companies or small start-ups? Additionally, it is helpful to evaluate mineral resource estimates associated with properties in the portfolio and the operators’ plans for development.
Jurisdiction
While geographic diversity is a selling point for most royalty companies, it is often helpful to consult the Fraser Institute’s Annual Survey of Mining Companies to check if royalty interests are in favorable mining jurisdictions versus high-risk areas.
Valuation
Royalty companies are often valued based on price to net asset value. Net asset value is the net present value (NPV) or discounted cash flow (DCF) of all future cash flow of a mining asset, less any debt plus cash. Price to net asset value is the company’s market capitalization divided by the net present value of all mining assets minus net debt. For those that pay a dividend, investors may also compare dividend growth rates and yield. Larger companies generally trade at higher valuation multiples which generally increase with scale due to lower perceived risk due to greater asset diversification and a proven track record of growth. As royalty companies grow, they may be able to establish and grow dividends to shareholders, offer greater liquidity due to listings on major exchanges, and benefit from broader research. Some may also benefit from their inclusion in stock indices. For those that pay a dividend, it is important to know whether the dividend is paid from operating cash flow or whether the company is borrowing to pay the dividend.
Take Away
Investors have many options to gain exposure to gold. Royalty companies may be worth considering as a vehicle for exposure to gold. However, it is important for investors to understand their risk tolerance and return objective. The universe of royalty and streaming companies represents a broad range of market capitalizations, and many differences exist among their asset portfolios. Channelchek offers a starting point for investors to conduct due diligence and dig deeper.
VANCOUVER, British Columbia, Sept. 26, 2022 (GLOBE NEWSWIRE) — Endeavour Silver Corp. (TSX: EDR, NYSE: EXK) (“Endeavour” or the “Company”) is pleased to report positive drill results from its ongoing drill program at the Guanacevi Mine in Durango state, Mexico. Drilling continues along the prolific Santa Cruz vein in two areas (view Santa Cruz Vein longitudinal section), with the objective to convert, expand, and discover new resources.
The 2022 drill program has continued to focus on the El Curso property, establishing lateral and vertical extents of the mineralized zone between the Porvenir Cuatro and Milache mines. The exploration and exploitation rights to the El Curso property were obtained in 2019 from Ocampo Mining S.A. de CV., and have become an integral contributor to the operation. Recently, under the same agreement terms, the Company has tested the northwest extension of the Porvenir Dos orebody with encouraging results from initial drilling.
Highlights from Recent El Curso Drill Results
3.50 gpt Au and 1,150 gpt Ag for 1,430 gpt AgEq over a 1.16 m ETW, including 12.80 gpt Au and 4,240 gpt Ag for 5,264 gpt AgEq over 0.24 m (UCM-102)
3.54 gpt Au and 1,129 gpt Ag for 1,412 gpt AgEq over a 7.28 m ETW, including 25.40 gpt Au and 7,080 gpt Ag for 9,112 gpt AgEq over 0.43 m (UCM-106)
Highlights from Recent Porvenir Dos Drill Results
1.43 gpt Au and 967 gpt Ag for 1,081 gpt AgEq over a 2.43 m ETW, including 3.64 gpt Au and 5,120 gpt Ag for 5,411 gpt AgEq over 0.23 m (APD-03)
1.60 gpt Au and 1,460 gpt Ag for 1,589 gpt AgEq over a 1.17 m ETW, including 2.91 gpt Au and 3,340 gpt Ag for 3,573 gpt AgEq over 0.25 m (APD-04)
Abbreviations include: gpt: grams per tonne; Au: gold; Ag: silver; ETW: estimated true width; m: metre; HW: hanging wall. Silver equivalents are calculated at a ratio of 80:1 silver:gold.
“We are encouraged by the drill results at Guanacevi, as we continue to delineate high grades in areas which are proximal to the mill and historic working areas. The results announced today demonstrate both growth and steady improvement of the deposit and mine plan,” stated Dan Dickson, Chief Executive Officer. “Our focus remains on delineating mineralized extensions to mining horizons and resource growth.”
Latest Drill Results
The Guanacevi drill results are summarized in the following tables:
Guanacevi – Santa Cruz Vein – El Curso
Hole
Structure
From
To
True Width
Au
Ag
AgEq
(m)
(m)
(m)
(gpt)
(gpt)
(gpt)
UCM-101
Santa Cruz
219.90
221.90
1.10
0.36
101
130
Including
220.55
221.15
0.33
0.29
137
160
UCM-102
Santa Cruz
202.80
205.45
1.16
3.50
1,150
1,430
Including
203.55
204.10
0.24
12.80
4,240
5,264
UCM-103
Santa Cruz
195.00
210.25
6.08
0.97
234
311
Including
208.90
209.35
0.18
5.77
699
1,161
UCM-104
HW Santa Cruz
217.85
221.35
1.25
0.64
310
361
Including
218.55
219.30
0.27
1.12
490
579
UCM-105
Santa Cruz
204.00
210.00
1.80
1.08
508
595
Including
208.45
209.05
0.18
3.06
1,600
1,845
UCM-106
Santa Cruz
202.60
216.15
7.28
3.54
1,129
1,412
Including
208.15
208.95
0.43
25.40
7,080
9,112
UCM-107
Santa Cruz
229.70
232.20
1.32
0.70
123
179
Including
231.50
232.20
0.37
0.62
164
213
UCM-109
Santa Cruz
267.50
269.80
1.01
1.20
521
617
Including
269.30
269.80
0.22
0.93
707
782
UCM-110
Santa Cruz
248.05
253.00
2.47
1.25
321
421
Including
248.95
249.90
0.48
2.43
565
759
Drill holes UCM-108 and UCM-111 returned no significant results
Guanacevi – Santa Cruz Vein – Porvenir Dos
Hole
Structure
From
To
True Width
Au
Ag
AgEq
(m)
(m)
(m)
(gpt)
(gpt)
(gpt)
APD-03
Santa Cruz
286.85
292.60
2.43
1.43
967
1,081
Including
287.85
288.40
0.23
3.64
5,120
5,411
APD-04
Santa Cruz
246.50
248.80
1.17
1.60
1,460
1,589
Including
246.80
247.30
0.25
2.91
3,340
3,573
APD-05
Santa Cruz
190.70
195.05
2.80
1.38
489
599
Including
193.20
193.75
0.35
2.59
943
1,150
APD-06
Santa Cruz
156.05
157.65
1.29
0.34
214
241
Including
157.15
157.65
0.40
0.45
339
375
Drill holes APD-01, APD-02, APD-07 and APD-08 returned no significant results
Notes to Tables
Silver equivalents are calculated at a ratio of 80:1 silver:gold.
All widths are estimated true widths.
No capping has been applied but high-grade intervals have been highlighted.
Qualified Person and Quality Assurance/Quality Control – Dale Mah, P.Geo., Vice President, Corporate Development of Endeavour, is the Qualified Person who reviewed and approved the technical information contained in this news release. A quality control sampling program of reference standards, blanks and duplicates has been instituted to monitor the integrity of all assay results. All samples are split at the local field office and shipped to ALS Labs, where they are dried, crushed, split and 250-gram pulp samples are prepared for analysis. Gold is determined by fire assay with an atomic absorption finish and silver by aqua regia digestion with ICP finish, over-limits by fire assay and gravimetric finish.
About Endeavour Silver – Endeavour is a mid-tier precious metals mining company that operates two high-grade underground silver-gold mines in Mexico. Endeavour is currently advancing the Terronera mine project towards a development decision, pending financing and final permits and exploring its portfolio of exploration and development projects in Mexico, Chile and the United States to facilitate its goal of becoming a premier senior silver producer. Our philosophy of corporate social integrity creates value for all stakeholders.
This news release contains “forward-looking statements” within the meaning of the United States private securities litigation reform act of 1995 and “forward-looking information” within the meaning of applicable Canadian securities legislation (together, “forward-looking statements”). Such forward-looking statements and information herein include but are not limited to statements regarding future prospects of the Company’s mines and projects. The Company does not intend to and does not assume any obligation to update such forward-looking statements or information, other than as required by applicable law.
Forward-looking statements or information involve known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, production levels, performance or achievements to be materially different from those expressed or implied by such forward-looking statements. Such factors include but are not limited to the ultimate impact of the COVID 19 pandemic on operations and results, changes in production and costs guidance, national and local governments, legislation, taxation, controls, regulations and political or economic developments in Canada and Mexico; financial risks due to precious metals prices, operating or technical difficulties in mineral exploration, development and mining activities; risks and hazards of mineral exploration, development and mining; the speculative nature of mineral exploration and development and risks in obtaining necessary licenses and permits, and challenges to the Company’s title to properties; as well as those factors described in the section “risk factors” contained in the Company’s most recent form 40F/Annual Information Form filed with the Securities and Exchange Commission . and available at www.sec.gov, and Canadian securities regulatory authorities available at www.sedar.com.
Forward-looking statements are based on assumptions management believes to be reasonable, including but not limited to: the continued exploration and mining operations, no material adverse change in the market price of commodities, mining operations will operate and the mining products will be completed in accordance with management’s expectations and achieve their stated production outcomes, and such other assumptions and factors as set out herein. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements or information, there may be other factors that cause results to be materially different from those anticipated, described, estimated, assessed or intended. There can be no assurance that any forward-looking statements or information will prove to be accurate as actual results and future events could differ materially from those anticipated in such statements or information. Accordingly, readers should not place undue reliance on forward-looking statements or information.
