{"id":101691,"date":"2017-02-03T13:22:31","date_gmt":"2017-02-03T18:22:31","guid":{"rendered":"http:\/\/countingpips.com\/?p=101691"},"modified":"2017-02-03T13:22:31","modified_gmt":"2017-02-03T18:22:31","slug":"viscount-mining-oversold-despite-key-near-term-catalysts","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2017\/02\/viscount-mining-oversold-despite-key-near-term-catalysts\/","title":{"rendered":"Viscount Mining, Oversold Despite Key Near-term Catalysts"},"content":{"rendered":"
February 3, 2017<\/div>
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By\u00a0<\/strong>Peter Epstein, CFA, MBA \u00a0\u00a0epstein.peter4@gmail.com<\/a>\u00a0\u00a0\u00a0http:\/\/EpsteinResearch.com<\/a>\u00a0<\/span><\/b><\/p>\n

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Viscount Mining\u00a0Corp<\/a>.\u00a0[pronounced \u201cV-eye-Count<\/em>\u201c]\u00a0(TSX-V: VML<\/a>) (OTCQB: VLMGF<\/a>)\u00a0is a project generator with 2\u00a0Silver (\u201cAg\u201d)\u00a0\/\u00a0Gold (\u201cAu\u201d)\u00a0projects in the western U.S.,\u00a0Cherry Creek<\/a>\u00a0in Nevada\u00a0&\u00a0Silver Cliff<\/a>\u00a0in Colorado.\u00a0 The Cherry Creek project covers more than 9,000 acres (3,642 hectares), and was host to > 20 past-producing Ag & Au mines.\u00a0 Management has entered into an exploration earn-in agreement with Summit Mining Exploration Inc., a wholly-owned U.S. subsidiary\u00a0of\u00a0Sumitomo Corp., one of the largest trading & investment companies in Japan.\u00a0 It can earn a 75% interest by producing a\u00a0Bank\u00a0Feasibility Study\u00a0(\u201cBFS\u201d)\u00a0and, in addition, spending a\u00a0minimum of US$ 10 M\u00a0on exploration & development.<\/p>\n

\"\"<\/p>\n

Silver Cliff\u00a0is comprised of 96 lode claims covering much of the prolific, past-producing mineral districts of Silver Cliff & Rosita Hills in Colorado.\u00a0 Management announced a\u00a0blockbuster\u00a0assay<\/a>\u00a0on December 21, 2016, confirming extremely high-grade ore.\u00a0 Seven more assays are pending.\u00a0 Drill\u00a0hole\u00a0K16-01\u00a0included 50 ft. (15.24 m) of mineralized core from 55 to 105 ft. (16.8 to 32.0 m<\/em>) that averaged\u00a0837.4 g\/t Ag (26.9 troy ounces per ton (\u201copt\u201d).\u00a0 It twinned a similar hole at the Company\u2019s\u00a0Kate Silver Resource deposit.\u00a0 Importantly, a Pre-Feasibility Study (\u201cPFS\u201d) was completed in the mid 1980\u2019s. \u00a0[Historical data only, not NI 43-101 compliant<\/em>]<\/p>\n

Near-term catalysts are drill results on both projects, possible M&A activity and identification of a farm-out partner on Silver Cliff.<\/p>\n

Colorado\u2019s Silver Cliff, under-appreciated, compelling valuation\u00a0<\/strong><\/p>\n

The assay for confirmation hole\u00a0K16-01\u00a0at Sliver Cliff included 50 ft. (15.24 m) of mineralized core, from 55 to 105 ft. (16.8 to 32.0 m<\/em>) that averaged\u00a0837.4 g\/t Ag (26.9 opt).\u00a0\u00a0A subset of that interval, 20 ft. (6.1 m), from 60 to 80 ft. (18.3 to 24.4 m), averaged\u00a01,778.5 g\/t Ag, (57.2 opt).\u00a0 That\u2019s a gold equivalent grade of\u00a0~0.80 opt Au.\u00a0 The collar of K16-01 is estimated to be within 4 ft. (1.2 m) of historical drill hole\u00a0DDH 73-2, that assayed at\u00a01,927.7 g\/t Ag\u00a0(62.0 opt<\/em>)\u00a0over\u00a044.3 ft<\/em>. (13.5 m).\u00a0 Silver Cliff is quite impressive, in addition to grade and intercept width, the deposit is near surface, potentially\u00a0amenable to open-pit mining.\u00a0 The magnitude of historical data, while not NI 43-101 compliant, is considerable.<\/p>\n

From this\u00a0press release<\/a>\u00a0dated September 13, 2016,<\/p>\n

\u201cDrilling in the 1980s by\u00a0Tenneco Minerals resulted in a historical pre-feasibility study which formed the company\u2019s decision to put the property into production.\u00a0 Known historical silver grades range from below detection to a high of\u00a02,125 g\/t Ag (68 opt) over 13.4\u00a0meters.\u00a0 Plans were halted due to a restructuring of\u00a0Tenneco\u00a0after it was sold.\u201d<\/em><\/p><\/blockquote>\n

On January 19th, Viscount followed blockbuster hole\u00a0K1601\u00a0with\u00a05 additional drill holes<\/a>, including\u00a0K16-05\u00a0that assayed 45 ft. (13.7 m) of mineralized core, from 65 to 110 ft. (19.8 to 33.5 m<\/em>) averaging\u00a0390.9 g\/t Ag (12.6 opt).\u00a0 Another hole,\u00a0K16-08, returned 68 ft. (20.7 m), from 105 to 173 ft. (32.0 t0 52.7 m<\/em>) averaging\u00a0228.6 g\/t Ag (7.4 opt).\u00a0 A subset of that interval, 58 ft. (17.7 m), from 115 to 173 ft. (35.1 to 52.7 m<\/em>), averaged\u00a0265.9\u00a0g\/t Ag, (8.6 opt).<\/p>\n

\"\"<\/p>\n

Regarding the newly reported assays,\u00a0Chairman Kaare Foy\u00a0stated,<\/p>\n

\u201cWe are very pleased with the drill program conducted in 2016 as it has demonstrated that there is significant silver mineralization that occurs at a shallow depth between 50 ft. (15.2m) to about 175 ft. (53.3m) that may be amenable to open pit mining.\u201d<\/em><\/p><\/blockquote>\n

Viscount has 40 M shares outstanding vs. an average of ~115 M among like-sized silver juniors.\u00a0 Peer company shares are up, on average,\u00a0580%\u00a0from their respective 52-week lows.\u00a0 By contrast, Viscount\u2019s share price is just\u00a028%\u00a0above its\u00a052-week low.\u00a0 Viscount has vastly underperformed its peer group for no good reason, possibly offering investors a compelling entry point.\u00a0 Near-term catalysts are drill results on both projects, possible M&A activity and identification of a farm-out partner on Silver Cliff.<\/p>\n

There\u2019s a tremendous amount of exploration, development & production of silver coming out of Mexico.\u00a0 It might be prudent for precious metal companies closely tied to Mexico diversify into the U.S. and Canada.\u00a0 It\u2019s difficult to beat Nevada and Colorado in terms of safe, prolific precious mining jurisdictions.<\/p>\n

\"\"<\/p>\n

Of course, there are plenty of natural resource companies around the globe who could have interest in partnering on Silver Cliff.\u00a0 Proper funding could make it a world-class project and the timing could not be better.\u00a0 Having curtailed or divested exploration and development projects for years, the time is ripe for producers to take a closer look at high-grade mining projects in attractive jurisdictions.<\/p>\n

To that end, management is in discussions with multiple parties on a number of corporate initiatives including M&A and securing a partner at Silver Cliff.\u00a0 My guess is that precious metal companies are watching Viscount\u2019s progress (drill results & upcoming maiden mineral resource report<\/em>) very closely.\u00a0 This is not an unknown district, Silver Cliff\u00a0underwent substantial exploration between 1967 and 1984.\u00a0 Major explorers included\u00a0Freeport, Hecla, Homestake\u00a0&\u00a0Tenneco Minerals.<\/p>\n

Jim Ebisch, Project Manager for the 2016 drill program, had this to say about Silver Cliff,<\/p>\n

\u201cEven given the fact that there is a historical silver resource and PEA [it was a PFS] completed for the Silver Cliff project, we believe the region containing, and immediately surrounding the KSR is materially under-explored, and the historical resource there could be greatly enhanced with just a few strategically placed drill holes.\u201d<\/em><\/p><\/blockquote>\n

From the December 21st 2016 press release,\u00a0Chairman Foy\u00a0commented,<\/p>\n

\u201cThe high silver values in\u00a0K16-01\u00a0represent a solid starting point toward addressing our primary goal for Silver Cliff which is to confirm the historical mineral resource and then look to enlarge that resource by extending the drill program outside the perimeter of the original resource on which the PEA [it was a PFS] was done by Tenneco.\u201d<\/em><\/p><\/blockquote>\n

Silver Cliff is thought to overlie a large caldera and\u00a0porphyry system, which increases the prospect\u2019s potential to host a number of precious and base metal deposits.\u00a0 This has been demonstrated in the mineralogy and grade historically extracted from numerous underground mining operations in the district.\u00a0 The Company has an exploration target of 50 million ounces of silver.\u00a0 However, that potential quantity is conceptual in nature as there has been insufficient exploration to define a mineral resource.<\/p>\n

Nevada\u2019s\u00a0Cherry Creek Project: \u00a0Farmed-out to Sumitomo Corp<\/strong><\/p>\n

While Cherry Creek is billed as the, \u201cflagship\u201d project, management owns 2 crown jewel assets.\u00a0 If spun off to shareholders, either would make viable, financeable standalone companies.\u00a0 I\u2019m not suggesting spinoffs are on the table, just that the projects are quite compelling.\u00a0 Especially so, in light of Viscount\u2019s evolving \u201cproject generator\u201d business model, in which capital expenditures are minimized (cash burn low<\/em>) due to prudent farm-outs.\u00a0 For example, spending on advancing Cherry Creek will be virtually zero for years to come (assuming Sumitomo sticks with the project<\/em>)<\/p>\n

\"\"<\/p>\n

Having a partner like Sumitomo, who, by the way, has\u00a0no other precious metal exploration projects\u00a0in North America, is as good as it gets.\u00a0 Cherry Creek has been de-risked by this strong vote of confidence, but ample risk remains as, in the end, it\u2019s still an exploration project.\u00a0 I found it encouraging that in November the initial drill program announced in September was increased by two-thirds from 18 holes for a total of 14,336 feet (4,380 m), to 34 holes for a total of 24,000 feet (7,317 m).\u00a0 Initial drill results are expected in the near future.\u00a0 This farm-in,\u00a0with a multi-billion dollar partner, is one of the best I\u2019ve seen in the project generator space.\u00a0 Viscount\u2019s carried through BFS 25% interest could be worth a fortune in a few years.<\/p>\n

Supportive of Cherry Creek\u2019s prospects,\u00a0Mark Abrams, on Viscount\u2019s Technical Advisory Board, stated,<\/p>\n

\u201cRecent soil sampling by Summit Mining at Flint Canyon has yielded gold and pathfinder element anomalies (Hg, As, Sb, Tl) similar in size and tenor to soil geochemical sampling results at other mines and advanced properties in the region, including\u00a0Kinross Gold\u2019s Bald Mountain,\u00a0Newmont\u2019s Long Canyon,\u00a0Agnico-Eagle\u2019s West Pequop\u00a0and\u00a0Pilot Gold\u2019s Kinsley Mountain.\u201d<\/em><\/p><\/blockquote>\n

It\u2019s nearly impossible to overstate the significance of being free carried through a BFS.\u00a0 If it were to cost another US$ 20 M for all the steps leading up to and including delivery of a BFS, combined with US$ 10 M in exploration & development, that would total US$ 30 M [equal to ~C$ 40 M<\/em>].\u00a0 Compare that\u00a0potential cumulative\u00a0outlay\u00a0to the Enterprise Value (\u201cEV\u201d) of Viscount [(~C$ 26.5 M \/ US$ 20 M) @ C$0.55\/share].\u00a0 The potential value of Cherry Creek (C$ 40 M from Sumitomo alone<\/em>) more than covers Viscount\u2019s EV.\u00a0 That suggests investors are effectively getting Silver Cliff for free. \u00a0[Readers beware, this assumes that Sumitomo completes the 75% earn-in<\/em>]<\/p>\n

\"\"<\/p>\n

Viscount\u00a0has 40.4 M shares outstanding and 59.1 M fully-diluted.\u00a0 All warrants & stock options are in-the-money, except 2 classes struck at C$0.70\/shr.\u00a0 Full exercise of in-the-money warrants and options would generate\u00a0C$ 3.5 M in cash proceeds.<\/p>\n

Investors looking for a team with direct experience in the U.S., Canada, Mexico, Australia, the UK, Chile, Peru, Brazil, Japan, Ecuador, Venezuela, Boliva, the Middle East, Hondouras, Guatemala, Argentina, China, Indonesia,\u00a0Uzbekistan, Brazil, Thailand, Panama, Africa and the Arctic, have come to the right place.\u00a0 The team\u2019s connections across the world should serve the Company well as existing and new projects are prudently advanced along with credible farm-out partners.<\/p>\n

\"\"<\/p>\n

Conclusion<\/strong><\/p>\n

To date, Nevada has grabbed most of the attention, but\u00a0Silver Cliff\u00a0in Colorado is under-appreciated, leaving it undervalued.\u00a0 How cheap is it?\u00a0 If one believes like I do that\u00a0Cherry Creek\u00a0is worth at least C$ 40 M, as long as Sumitomo is involved, then investors get Silver Cliff for free.\u00a0 Alternatively, if one ascribes\u00a0zero value\u00a0to Cherry Creek, (getting it for free<\/em>) then the Company\u2019s EV implies US$0.40 per ounce of Silver in the ground at Silver Cliff (based on an exploration target of 50 M ounces<\/em>).\u00a0 US$0.40\/oz. is hardly an aggressive valuation for an open-pit amenable, monster-grade, silver deposit.<\/p>\n

\"\"<\/p>\n

Both projects have tremendous upside, as soon as this year, and beyond.\u00a0 Near-term catalysts are drill results on both projects, possible M&A activity and identification of a farm-out partner on Silver Cliff.\u00a0 Management is actively pursuing other assets to fill its project generating machine.\u00a0 A modest number of shares outstanding suggests the stock price could shoot higher, without impacting the investment rational for a giant like Sumitomo\u00a0or a potentially well-healed (partner-to-be-named later<\/em>) at Silver Cliff.\u00a0 Viscount is one of the best project generators (so far a silver junior<\/em>) in the sector.\u00a0 Anyone looking to buy a basket of precious metal companies for year 1 of the Trump experiment, should seriously consider Viscount at current levels.<\/p>\n

Disclosures:\u00a0<\/strong><\/p>\n

The author, Peter Epstein, CFA, MBA owns shares in Viscount Mining, purchased in the open market.\u00a0 He has no prior or existing relationship with the Company.\u00a0<\/em><\/p>\n

The content of this article is for information only. Readers fully understand and agree that\u00a0nothing\u00a0contained herein,\u00a0written\u00a0by Peter Epstein of\u00a0<\/em>Epstein Research<\/a>,\u00a0<\/em>[ER]\u00a0<\/em>including but not limited to, commentary, opinions, views, assumptions, reported facts, estimates, calculations, etc. is to be considered, in any way whatsoever, implicit or explicit investment advice. Further,\u00a0nothing\u00a0contained herein is a recommendation\u00a0or solicitation to buy or sell any security. The content contained herein is not directed at any\u00a0individual or group. Mr. Epstein and\u00a0<\/em>[ER]\u00a0are not\u00a0responsible, under any circumstances whatsoever, for investment actions taken by the reader. Mr. Epstein and\u00a0<\/em>[ER]\u00a0have never been, and are not currently, a registered or licensed financial advisor or broker\/dealer, investment advisor, stockbroker, trader, money manager, compliance or legal officer, and they\u00a0do not\u00a0perform market making activities. Mr. Epstein and\u00a0<\/em>[ER]\u00a0are not\u00a0directly\u00a0employed by any company, group, organization, party or person. Shares of\u00a0<\/i>Viscount Mining\u00a0are highly speculative, not suitable for all investors. Readers understand and agree that investments in small cap stocks\u00a0can result in a 100% loss of invested funds. It is assumed and agreed upon by readers that they consult with their own licensed or registered financial advisors before making investment decisions.<\/em><\/p>\n

At the time this article was posted, Peter Epstein owned shares in\u00a0<\/em>Viscount Mining.\u00a0<\/i>Readers understand and agree that they must conduct their own research, above and beyond reading this article. While the author believes he\u2019s diligent in screening out companies that are unattractive investment opportunities, he cannot guarantee that his efforts will (or have been) successful.\u00a0Mr. Epstein &\u00a0<\/em>[ER]\u00a0are not responsible for any perceived, or actual, errors including, but not limited to, commentary, opinions, views, assumptions, reported facts & financial calculations, or for the completeness of this article or future content. Mr. Epstein &\u00a0<\/em>[ER]\u00a0are\u00a0not expected or required to subsequently follow or cover events & news, or write about any particular company or topic.\u00a0Mr. Epstein and\u00a0<\/em>[ER]\u00a0are not experts in any company, industry sector or investment topic.\u00a0<\/em><\/p>\n<\/div>\n

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\n","protected":false},"excerpt":{"rendered":"

By\u00a0Peter Epstein, CFA, MBA \u00a0\u00a0epstein.peter4@gmail.com\u00a0\u00a0\u00a0http:\/\/EpsteinResearch.com\u00a0 Viscount Mining\u00a0Corp.\u00a0[pronounced \u201cV-eye-Count\u201c]\u00a0(TSX-V: VML) (OTCQB: VLMGF)\u00a0is a project generator with 2\u00a0Silver (\u201cAg\u201d)\u00a0\/\u00a0Gold (\u201cAu\u201d)\u00a0projects in the western U.S.,\u00a0Cherry Creek\u00a0in Nevada\u00a0&\u00a0Silver Cliff\u00a0in Colorado.\u00a0 The Cherry Creek project covers more than 9,000 acres (3,642 hectares), and was host to > 20 past-producing Ag & Au mines.\u00a0 Management has entered into an exploration earn-in […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-101691","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/101691","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/comments?post=101691"}],"version-history":[{"count":1,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/101691\/revisions"}],"predecessor-version":[{"id":101692,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/101691\/revisions\/101692"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=101691"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=101691"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=101691"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}