While investor interest in gold stocks has waned for some time now, there
has been recent signs of life in this sector. Even at the current gold
price of US$1250 an ounce, some of the bigger gold producers have been
looking to acquire the more promising smaller miners and juniors, which
have seen their share prices beaten down by even larger percentages.
On January 13, 2014, for example, Goldcorp (TSX: G) announced a $2.6-billion,
or $5.95 per share,unsolicited takeover bid for Osisko Mining (TSX: OSK),
a substantial discount to the more than $15 per share stock market valuation
it was commanding a couple of years earlier.
Osisko is an attractive target for Goldcorp seeing that the company’s
Canadian Malartic mine (10 million plus ounces of Proven and Probable reserves)
is already producing at a cash cost of C$760 per ounce and, arguably more
important, is located in Quebec, one of the most mining-friendly jurisdictions
in the world.
All of this bodes well for some of Quebec’s othergold juniors, especially
Eagle Hill Exploration (TSXV: EAG). Eagle Hill is developing
its Windfall Lake gold deposit in that province and a July 2012, resource
estimate outlined an Indicated mineral resource of 538,000 ounces of gold
at 10.1 grams per tonne(g/t) as well as an Inferred resource of 822,000
gold ounces of gold at 8.8 g/t.
This places the depositin the top 7% (in terms of grade) of resource-stage
gold projects worldwide, according to the company, which describes it as
well-defined from surface to 500metres depth, and open laterally and at
depth.
“In a depressed market where most gold projects are trading at a significant
discount, Goldcorp chose to pursue a Quebec project, highlighting that
Quebec has high-quality projects and is one of the best mining jurisdictions
in the world. This potential takeover has also breathed a spark of life
into the market, implying that perhaps we’ve hit the bottom and things
are starting to turn around,” said Eagle Hill’s Vice President of Communications
Rhylin Bailie in an interview with SmallCapPower.com.
A recent
Reuters article argued that reserve cuts and associated write
downs by the large gold miners are “seen helping nurse the sector back
to longer-term health by discouraging miners from seeking low-margin growth
at the expense of profits.” This could shift investor interest to higher-grade
projects, such as the one being developed by Eagle Hill Exploration.
Guiding Eagle Hill in its exploration and development is Southern Arc
Minerals, which owns a 26% stake in the company, along with Dundee Corporation,
which has a 30% interest.
Ms. Bailie added that Eagle Hill drilled 28,000 metres between September
and December 2013, and plans to release the remainder of those drill results
by the end of January, and will then proceed to update the resource estimate
before the end of the first quarter of 2014. The company has more than
57,000 metres of new drilling to incorporate into the updated resource
estimate, with 28,000 metres from the recently completed drill program,
and 106 holes totalling 29,208 metres that were drilled after the 2012
resource estimate and before the Fall 2013 program.
“Once we’ve seen the results of the updated resource, we’ll plan the next
steps for the project. We completed a flow-through financing for $2 million
in December 2013, which will of course be used for additional exploration
in 2014. The question is whether we focus on expansion drilling to test
prospective areas that could expand the resource, or focus on infill drilling
to upgrade the existing resource to a higher category,” she said.
Keep up to date with breaking news, commentaries, and interviews by following
Eagle Hill Exploration
here.
To learn more about Eagle Hill Exploration Corporation, you can view their
initiation research report, research bulletins, analyst commentaries and
CEO video interview on their SmallCapPower.com Investor Hub:
HERE.
About Eagle Hill Exploration
Eagle Hill Exploration Corporation (TSXV: EAG) is a Canadian mineral exploration
company focused on the exploration and development of the high-grade Windfall
Lake Gold Deposit, located between Val-d’Or and Chibougamau in Quebec.
In August 2013, Southern Arc Minerals and Dundee Corporation invested an
aggregate of $12 million to purchase a controlling interest in Eagle Hill,
consolidate ownership of the Windfall Lake property and fund an aggressive
exploration program.
Disclosure
Ubika Research has received compensation from Eagle Hill Exploration to
provide analyst research coverage.
About Ubika Research
Ubika is an investment research and capital market services firm based
in Toronto and Vancouver with a proven track record of identifying and
launching coverage of high potential small cap stocks at an early stage,
thus offering timely market insights. Its specialty is small-cap companies
with a market capitalization of <$5 billion.
For additional information contact:
VikasRanjan, Managing Director
Email:
vikas@ubikacorp.com
