Noxopharm Ltd V.NOX

Site visit this week by Haywood Securities

[MrMonk]

Niogold is focused on its Marban project where it has defined an open pittable resource across three deposits. Within this project, the company’s efforts have largely centred around the Marban deposit.
 
Key Takeaways:
 

• Location, Location, Location: The Marban project is located in the Abitibi Gold Belt in Quebec, a gold belt that has produced in excess of 170 million ounces of gold. Specifically Marban is located within a 170 km2 square land holding within the Malartic Camp. The project is located 10 km as the crow flies from the Malartic mine (one of Canada’s largest gold mines) and less than 20 km from the mine if driving on back roads. With neighbors like Malartic and the 7 other active mines in the region come benefits such as access to infrastructure, (paved roads, power line crosses the property), skilled labour, and supplies and contractors. Additionally, the proximity to so many active operations raises the probability for a transaction to occur as some companies may look to further solidify their presence in the region or gain feed for mills that are lacking or could benefit.
• Resource Set to Grow and Improve: The Marban property currently hosts a 1.04 million ounce resource in the measured and indicated category. Mineralization is simple with gold hosted with pyrite and there is no arsenic or copper present in the system. The company just completed a 70,000 metre drill campaign, bringing total metres drilled at Marban to 220,000 metres. A resource update set to be released later in Q4/15 should see the resource grow, strip ratio improve, and the confidence level improve as spacing has been reduced to 50 m by 50 m, and in some areas 50 m by 25 m. Niogold will also improve the block sizing in the resource update, making it better suited to the scale of mining that would take place at Marban (currently using 3mx3mx6m). Beyond the planned resource update we highlight the potential for the project to grow with further drilling. Niogold’s efforts have been focused on fast tracking Marban to a PEA stage, however there are opportunities both at Marban and at other properties in the Malartic camp holdings such as Norlartic and Kierens.

 

Source:  Niogold
 

• Multiple Options to Advance: While the preferred outcome for Niogold would most likely be the sale of the project to the Malartic JV, things don’t always work out as preferred so the company is busy demonstrating that there are multiple options to advance the project through completion of key technical work. Results from an ongoing metallurgical test program are set to be released in Q4/15 with the company evaluating both the obvious and common processes like CIP and also a number of unique options that have not been utilized in the region. We expect that results from CIP will demonstrate that recoveries from Marban would be similar to that at other operations in the region and that the ore could be easily processed through the mill at neighbouring Malartic, however we are most interested to see results from a program that has included evaluation of heap leaching and gravity recovery methods including Knelson batch and continuous processes. Niogold indicated that initial heap leaching results are encouraging as the high shearing and schitoss nature of the mineralization allows for economic recoveries. The gravity work is evaluating the potential to recover a concentrate that could be processed at the Horne smelter which is low on feed. Both options could generate attractive capex and opex savings for Niogold if it were to proceed to construction. We expect to see results from this work in the coming weeks. Niogold will include the preferred option in the PEA scheduled for Q2/16.
• Catalysts on the Horizon: With the 72,000 metre drill program completed, there are a number of catalysts on the horizon including results from drilling (100 holes left to release) and metallurgical testing (both in Q4/15), a resource update (by mid-January 2016), and a PEA (Q2/16).
• Repeating Success?: Niogold’s major investor is Osisko Gold Royalties  (18.3%) the spin-out formed after the sale of Osisko Mining in 2014. In addition to financial backing from OSR, Niogold also benefits from direct access to the technical team that was behind Malartic. Niogold has access to the technical team at Osisko Gold Royalties and also has key members of the Osisko Mining team at the management (CEO Robert Wares is former VP Exploration from Osisko Mining) and director level (Chairman is Sean Roosen, Chairman and CEO of Osisko Gold Royalties and formerly Osisko Mining, and Bryan Cotes is a director, former President of Osisko Mining and now President of Osisko Gold Royalties). With intimate knowledge of the camp, including the geology, community, and cost structure, Niogold is much better positioned than many peers to advance the Marban project.

Risks:

• Equity Needed in Near Term: Niogold will require an injection of equity in the near term as it currently has only $2.6 million in cash, which includes $0.7 million of flow-through. The backing of Osisko Gold Royalties limits some financing risk as we expect the pro-rata position would be maintained.
• Permitting: Although the Marban project is located in a region well known for mining, permitting may present a timing risk for the project, particularly if the heap leach option is pursued as that type of operation has never been permitted in the area.
• Land Claims – on the east and north side of the Marban block the claim limits are close to the resource outlines and could impact future development. We expect Niogold would need to complete an agreement with the other claim holders if the project proceeds to construction which could present a financing and or timing risk.

 
Other exploration plays:

• Norlartic Deposit – hosts a 43-101 resource of 316 koz Au in indicated category(at 1.82 g/t Au) and 148 koz Au in inferred category (at 1.44 g/t Au). Niogold is currently completing a re-logging program of historic data and intends to drill this deposit once this review has been completed. 
• Kierens Deposit – hosts a 43-101 resource of 101 koz Au in indicated category (at 2.19 g/t Au) and 99 koz Au in inferred category (at 1.73 g/t Au). Niogold is currently completing a re-logging program of historic data and intends to drill this deposit once this review has been completed. 

Source: Niogold
 
Catalysts:  1) Drill Results-Q4/15; 2) Metallurgical Results- October 2015; 3) Resource Update – before mid January 2016; 4) PEA – Q2/16