In a May 29 research note, PI Financial analyst Brian Szeto reported that Revival Gold Inc. (RVG:TSX.V) announced an NI-43-101 compliant, maiden resource estimate for its flagship Beartrack gold project in Idaho; the resource estimate far exceeded PI Financial's forecast.
The initial resource, based on 458 holes comprising 71,000 meters of drilling, was 2 million ounces (2 Moz) gold at an average grade of 1.22 grams per ton (1.22 g/t). About 61% of the resource is in the Indicated category, and roughly 17% is made up of oxide material. Further, the deposit remains open at depth and to the south.
The base case, Szeto pointed out, assumes a US$1,300 per ounce gold price and a cutoff grade of 0.6 g/t. With a higher cutoff grade of 0.8 g/t, "there are still 1.3 Moz within the resource block model."
The analyst noted that PI Financial views this reported 2 Moz gold resource size as "very positive." He added, "We had been expecting an initial resource of approximately 1 Moz, so the resource announced today is significantly above our expectations." Also impressive, he wrote, is how quickly Revival advanced Beartrack to this stage, in about seven months post acquisition.
Because Revival aims for a 3 Moz resource at Beartrack and Arnett Creek, "this resource means it is well on its way to achieving that goal," Szeto indicated. PI Financial is confident the company will grow the project's resource sufficiently to restart mining operations there.
Szeto reiterated that historically, Beartrack produced 609,000 ounces of gold at 1.34 g/t between 1995 and 2002, when mining was stopped due to low gold prices. Over the period the mine was running, PI Financial determined, the cash cost averaged US$200–250 per ounce but was down to US$140/ounce in the latter days of operation.
For Buy-rated Revival, PI Financial derived a net asset value of CA$3.05 per share and a target price of CA$1.70 per share. Today, the company's stock is trading at around CA$0.85 per share.
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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.
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Disclosures from PI Financial, Revival Gold Inc., Corporate Update, May 31, 2018
I, Brian Szeto, hereby certify that all of 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. I am the research analyst primarily responsible for preparing this report.
1) PI Financial Corp. and its affiliates’ holdings in the subject company’s securities, in aggregate exceeds 1% of each company’s issued and outstanding securities. No
2) The analyst(s) responsible for the report or recommendation on the subject company, a member of the research analyst’s household, and associate of the research analyst, or any individual directly involved in the preparation of this report, have a financial interest in, or exercises investment discretion or control over, securities issued by the following companies. No
3) PI Financial Corp. and/or its affiliates have received compensation for investment banking services for the subject company over the preceding 12-month period. Yes
4) PI Financial Corp. and/or its affiliates expect to receive or intend to seek compensation for investment banking services from the subject company. Yes
5) PI Financial Corp. and/or its affiliates have managed or co-managed a public offering of securities for the subject company in the past 12 months. Yes
6) The following director(s), officer(s) or employee(s) of PI Financial Corp. is a director of the subject company in which PI provides research coverage. No
7) A member of the research analyst’s household serves as an officer, director or advisory board member of the subject company. No
8) PI Financial Corp. and/or its affiliates make a market in the securities of the subject company. No
9) Company has partially funded previous analyst visits to its projects. Yes
10) Additional disclosure: No
Analysts are compensated through a combined base salary and bonus payout system. The bonus payout is amongst other factors determined by revenue generated directly or indirectly from various departments including Investment Banking. Evaluation is largely on an activity-based system that includes some of the following criteria: reports generated, timeliness, performance of recommendations, knowledge of industry, quality of research and investment guidance, and client feedback. Analysts and all other Research staff are not directly compensated for specific Investment Banking transactions.