Gold and Silver miners (Jr and Exploration)

[Edge83]

Mawson Resources Ltd. Report from Eight Capital

(MAW-T: C$0.35) intraday

Rating: BUY

Target: N/A

We reiterate our BUY rating for Mawson Resources with no target.

Disseminated to semi-massive sulphide mineralization identified at four gold prospects at the Rajapalot project in Finland are demonstrating elevated cobalt grades. A re-assaying program has tested four prospects: Palokas, Raja, South Palokas and Rumajarvi for cobalt. All four zones were already known and hosted high grade gold mineralization. Drill core re-assays study and QEMSCAN study was completed, and assays include:

• 0.13% Co, 6.2 g/t Au over 10.8m (PAL0075) – 8.7 g/t AuEq

• 0.05% Co, 7.1 g/t Au over 30.8m (PRAJ0009) – 8.2 g/t AuEq

• 0.07% Co, 7.1 g/t Au over 19.5m (PRAJ0006) – 8.5 g/t AuEq

• 0.06% Co, 8.7 g/t Au over 15.0m (PRAJ-107) – 9.9 g/t AuEq

15 drill holes report elevated cobalt grades. They average 617 ppm (0.06%) cobalt and 4.22 g/t Au. When converting cobalt and gold to gold equivalent, the weighted average grade for all holes increases by 30% to 5.50 g/t Au Eq. While cobalt grades appear modest, they provide a nice accretive addition to gold mineralization and may ultimately provide by-product credits (extra revenue/lower gold costs per oz). Management suggests that Co-Au intercepts also often show better continuity and increased widths than gold only zones (Figure 1). Co occurs within as cobaltite and pentlandite, two commonly occurring sulphide minerals found within cobalt producing mines. Results come from about half of the drill holes that were re-assayed; the rest are pending.

Aggressive district scale exploration. Management is focused on gaining critical mass. While bonanza grade gold is found on the property in the 6km long Rompas N and S and new East Rompas areas, disseminated sulphidebearing zones with bulk-tonnage potential have been the focus of drilling over the past couple of years. The goal is to find gold zones large enough to make an impact to project economics, such that the development of a stand-alone gold operation might be considered. While there have been no public PEAs or other studies completed, gold zones on these prospects are starting to gain critical mass. A +2km long Au trend returned up to 11.6 g/t Au over 10m (Palokas); 3.3 g/t Au over 64m (Raja); and 4.2 g/t Au over 8.4m (South Palokas). The Palokas prospect is the best defined over a strike approaching 500m and east-west trending dip direction ~250m wide.

Cobalt potential may entice speculative investors. MAW's share price has dropped 50% since early March to $0.31/sh. Just prior, Goldcorp (BUY, $23 target, covered by R. Profiti) had invested $8.1 MM on 14-Feb-18, as announced on 7-Feb-18. However, MAW is trading well below Goldcorp’s entry price of $0.45/unit.

Finland refines half the world’s cobalt outside of China. The world’s largest cobalt refinery (Freeport-McMoRan Cobalt , FCX-N, NEUTRAL, US$20 target, covered by R. Profiti) is located 400km to the south of Rajapolot. CRU estimates refining of 22,734 t Co or 18.44% of world mine production of ~123,000 t Co in Finland (2017), with 90% of the sourced from several Chinese-owned mines in the DRC. Meanwhile, Finland mines just 650 t or 0.5% of the world's cobalt.

https://viiicapital.frontline.ca/PDFs/Reports/2018/May/MAW051418.pdf