KRR, EDV, WM, OGC
The merger between Karora Resources aka KRR and Westgold Resources aka WGX is now complete, with KRR being delisted tomorrow and WGX listing on the TSX on Aug. 6.
The announcement also resolves the final details I had been worrying about. Current KRR shareholders will receive shares of WGX.TO, 60.8 cents per KRR share, and shares in a spinout company called Culico Metals. I was worried that the shares of Culico Metals, which owns $10M cash as well as a royalty and other considerations, would be worthless to Canadian shareholders of KRR, but it turns out WGX is going to apply to list Culico Metals on the TSXV. This is not a done deal, given the unusual nature of their holdings, but apparently there is a special rule which might apply.
So now we holders of KRR shares wait for the money and shares in the two companies to appear in our accounts.
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West African gold miner Endeavour Mining aka EDV released its Q2 results. Production is weighted towards H2, but EDV still managed a decent 251k oz Au. With several major builds now ramping up to full production, expect costs to decrease in H2, as EDV maintained their annual production guidance. As well, the grid power problems experienced at their Côte d’Ivoire are not expected to continue into H2.
Due to construction spend, EDV's cash stash did decline in Q2 but was still a healthy $387M at quarter end, and is expected to grow in H2 in spite of continuing expenditures on dividends and share buybacks.
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FWIW, in response BMO issued a new analyst report on EDV that highlighted the Q2 earnings miss due to higher costs and taxes, but noting the bias to H2 and improved shareholder return policy, they maintained EDV at Outperform with a target of $36.
Wallbridge Mining aka WM released the results of a recently completed drill programme at Martiniere, which WM hopes to develop in conjunction with their nearby Fenelon project, both part of the Detour gold trend in Quebec. This drilling was aimed both at finding high grade vein clusters and confirming continuity of known mineralized areas, and was successful at both. The high grade intersections included 44.63 g/t Au over 1.1m, 8.52 g/t Au over 1.5m, and 27.48 g/t Au over 1.0m in just one of the holes, while the wider intersections included 24.3m averaging 1.62 g/t Au and 21.1m averaging 2.15 g/t.
WM is also carrying out metallurgical testing on ore from Martiniere, and have already begun another drill programme aimed at finding new sources of ore based on a new reinterpretation of the geology of the deposits at Martiniere.
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OceanaGold aka OGC released its Q2 results, which came in a little lower than expectations with production of 98200 oz Au with costs a little higher than expected. That said, OGC's production for 2024 was always weighted toward H2, so they have still maintained their full year guidance. And thanks to the partial Didipio IPO and the sale of Blackwater, for the first time in a while OGC has more cash than debt, something that is expected to continue to improve as production picks up and costs drop in H2.
Clearly the market was focused on the production miss, but I think that just makes this a good time to establish or add to a position in OGC.
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FWIW, in response BMO issued a new analyst report on OGC. Though noting the production miss, they shrugged it off, maintaining OGC at Outperform with a $4.25 target.
FWIW, Scotia also issued a new analyst report on OGC. Calling the impact Mixed, they kept OGC at Sector Outperform with a target of $4.25.
Saville is now opining that gold probably set its high for the year a little earlier than usual, two weeks ago. He expects a correction to around $2150 to be completed later this year or early next year. However, he also feels that PM stocks have not yet set their highs for the year. |
