Value Microcaps Junior Miners

[dr_airtime]

TMM.TO-NES.V Merger Notes

Sure everyone say this. Holder of Timmins and have held NES.V in past. It this is executed successfully new merged company could be successs story and now has the backing of some big Vancouver resource money.

Notes on Timmins-Newstrike merger conference call and Q&A period.

http://www.gowebcasting.com/events/timmins-gold-corp/2015/02/17/timmins-gold-corp-combination-with-newstrike-capital-inc/play

My big worry is that Timmins may not be the best long-term (i.e. 6 month holds with TMM.TO when by at what feels like major sector bottom like January generally do very well in last 3 years) trading stock if market doesn’t bid higher due to dilution concerns to fund next mines.

Call

Key takeaway is slide 12 where Newstrike CEO reiterated that Timmins has the lowest capital requirements out of high-growth peers (Argonaut, Alamos, B2Gold) so perhaps least risky expansion play in junior gold producer sector.

Combined company AISC @ $780 using PEA assumptions. More like $800-$900 AISC using realistic non-PEA assumptions.

Plan is to sequence production. They will need capital but there is no rush so perhaps they can non-dilutive project finance. They want to do Caballo Blanco first. There is some fierce local resistance here I believe FYI.

Slide 16 – Newstrike’s Ana Paula LOM head grade is second only to Torex’s Los Merolos – it is one of best low-capex gold projects around.

Political risk in Guerro Gold Belt is significant:

http://www.mineweb.com/news/gold/mexican-mining-kidnap-victims-found-safe/

Q&A

Newstrike ran a sale process, so if the outcome was a combination with Timmins that means other companies wanted to acquire with share price so Newstrike must feel like they have the most upside potential hitching on to Timmins which is a low market cap producer (i.e. easier to double than a Senior). Newstrike CEO also picked Timmins’ mine building experience and Mexico experience.

Ana Paula – 6-12 months focusing on mettalurgy and sourcing equipment. Anticipate smooth permitting in Guerro Gold Belt (Torex Los Morelos, Goldcorp Los Filos permitted, etc.).

CEO did say they might not need full feasibility – just work on processing and metallurgy. Gravity Flotation & CIL like Torex’s Morelos. 41% of recovery from gravity alone. 75% was used in PEA and management is targeting 10% improvement to 85% this year.

Newstrike is large landholder so there is exploration upside with Newstrike combination too.