According to Tesla Motors Q2 2014 Shareholder Letter:
is (dot) gd/nDilTK
Laying the Groundwork for Future Growth
Earlier today, Panasonic and Tesla entered into a formal agreement to partner on the Gigafactory. Panasonic will invest in production equipment that it will use to manufacture and supply Tesla with battery cells. Tesla will prepare and provide the land, buildings and utilities for the Gigafactory, invest in production equipment for battery module and pack production, and be responsible for the overall management of the Gigafactory. Additional Gigafactory partners for production of cell precursor materials will be announced in the coming months to create a fully integrated industrial complex. Processed ore from mines will enter by railcar on one side and finished battery packs will exit on the other.
In June, we broke ground just outside Reno, Nevada on a site that could potentially be the location for the Gigafactory. Consistent with our strategy to identify and break ground on multiple sites, we continue to evaluate other locations in Arizona, California, New Mexico and Texas. The final site for the first Gigafactory will be determined in the next few months, once we have full visibility and agreement on the relevant incentives and processes for enabling the Gigafactory to be fully operational to meet the timing for Model 3. We see these concurrent efforts as prudent. This vehicle will be our third-generation product and will substantially broaden the addressable market for Tesla, helping to accelerate the transition towards sustainable transportation. Any potentially duplicative investments are minor compared to the revenue that could be lost if the launch of Model 3 were affected by any delays at our primary Gigafactory site.
According to Dundee Capital Markets:
is (dot) gd/tY47N3
Western Lithium USA Corp.
July 31, 2014
BUY, Speculative Risk
Dundee target: C$1.30
Big Stamp of Approval as New President of Clay Division Has Done It All
We recommend Western Lithium with a BUY and C$1.30 share price target. Frank B. Wright, Jr., a 40 year industry veteran, is the new President of Hectatone Inc. His extensive clay and bentonite experience in plant development, operations, sales and marketing (including development of start-up organo-clay operations) will be immediately beneficial to Western Lithium. His relationships and leadership should transform into sales. This major stamp of approval says a lot about the Hectatone product and its improved benefits over bentonite to help the drilling and fracking industry overcome high temperature and pressure challenges. With near record levels of US oil and gas production, drill mud consumption rapidly expands. Clay plant construction is complete. All permits are in hand, commissioning has begun and sales for September are on track. This near-term cash flow opportunity should bridge the gap until potential lithium carbonate production in 2018+.
Initial sales concerns diminishing. Having someone of Mr. Wright's stature on board, with product expertise, production know-how and an extensive Rolodex, should decrease the risk of penetrating this market. We had previously lamented that our main concern surrounding Hectatone™ Organoclay was actually sales, not production. As a new firm breaking into the sector, work is cut out for Western, but with such a rapidly growing industry it should be able to get its foot in the door. While better equipped to do that, it is also in a position to muscle its way in and capture existing market share. We still see the need for WLC to demonstrate the benefits of its drilling clay products, and a great deal of marketing will be required. ....
Buy rating and C$1.30 target
Event - Frank B. Wright, Jr., to become president of Hectatone Inc.
Impact – Very positive
• Effective tomorrow, Frank B. Wright, Jr., will run WLC’s Hectatone operations
• He has 40 years of clay industry experience in plant development, operations, sales and marketing including direct bentonite experience, including development of start-up organo-clay producers
- Was President of one of the world's leading producers of bentonite clay;
- VP of a leading producer and marketer of diverse specialty materials
- President & CEO of a producer with significant market share in markets for Wyoming bentonite;
- President of a company to open new plants in China, India, and Thailand;
- Plant operations manager, product development, and quality assurance manager with drill supply company
• Construction of the clay plan is essentially complete, commissioning has begun and sales are on track for this fall.
• This is a major stamp of approval for WLC from a well-known industry veteran
• His client contacts should directly turn into sales of Hectatone clay as he can attract a diverse client mix
• His leadership could potentially bring further sales and production industry experience to WLC to help this company grow
• We had always suggested that generating initial sales would be the major risk – this helps alleviate our concerns
• US directional drilling technology improving and expanding and domestic oil and gas production has increased to near record levels.
• China and elsewhere is now starting to use directional drilling and Organo-clay technology to realize vast shale and tight oil production opportunities
• Its second project, a lithium carbonate pilot plant is on schedule for Sep but perhaps late Sep/Oct we could see start-up
• Ed Flood, the founder and a director of Western Lithium, has been appointed to join John Macken as Co-Chairman of the Board – he has experience in the financial markets and the mining industry
According to Mackie Research:
is (dot) gd/oqctxv
North American Palladium Ltd.
Bumpy ride, but operating near full year guidance: Despite some bumps in the quarter, LDI’s Q2 operating results were largely in-line with our estimates. For the quarter underground production averaged ~2,900 tpd, slightly below the company’s operating guidance of 3,000 tpd for the first half of the year. The lower than expected underground production lead to the palladium head grade decreasing to 3.1 g/t from 3.3 g/t in Q1/14. We note the grade remains ahead of 2014 guidance of 3.0 g/t. Recoveries of 83.6% were below Q1/14 recoveries of 84.5% but were better than guidance of 82.0%.
Many questions remain unanswered: We remain concerned with the Company’s ability to meet its short and long term financial obligations. The company had a cash position of $44.3 million and a total debt balance of ~$247MM at the end of Q2/14. Subsequent to the end of Q2, PDL paid $23.5MM to Brookfield in order to revert back to a 15% annual interest rate from 19% previously. However to receive this rate PDL must also start making quarterly interest payments, which exceed the current income from operations. We continue to assume a $70 million financing in 2015 for interest payments and unknown capital expenditures in 2015 and 2016; however should no financing occur, PDL has enough cash to survive the next 2 quarters. Additionally with the Brookfield debt coming due in 2017, the company’s current cash flow is clearly insufficient to cover the sizeable repayment. The company is presently reviewing stope size and blast design, the possibility of running the mill on a full-time basis, and is evaluating a Phase 2 shaft sinking expansion; however, little information was provided on how PDL intends to meet its upcoming financial obligations. It is clear, however, that quarterly earnings from operations of $4.9MM will not suffice.
ACTION – SELL
We maintain our SELL recommendation and target price of $0.20/share
According to TMXmoney, an insider sells 750,000 shares of Western Lithium USA Corporation stock on July 30, 2014.
is (dot) gd/vNGZw6
is (dot) gd/4ASF59
North American Palladium Ltd.
C$0.30 target price
2Q14 - Costs Trend Higher; Thesis Unchanged
2Q14 results did not make us change our view on PDL shares. We still see very little margin for operating error at LDI due to the high interest burden on its debt load (combined negative ~$2 mln FCF over the next 6 quarters) and project its cash balance declining to sub-$10 mln by year-end (potentially re-introducing further financing risk), unless current strong PGM prices stay steady or improve amid the work resumption at South African PGM mines. Even if PGM prices continue to cooperate with PDL, the presence of prohibitively-high-cost Brookfield debt and its maturity in 2017 will continue to hover over the equity and serve as a major headwind for the stock, in our view.
- Production of 39.2 koz Pd was fairly in-line with RJL estimate of 39.6 koz Pd, as lower-than-expected U/G production rates were offset by better ore grades (Exhibit 1). LDI averaged 2,900 tpd during 2Q from U/G, slipping from its growth pace observed over the past three quarters and highlighting the fact that reaching 5,000 tpd by 2014-end may prove to be challenging (although not impossible), especially with the fatality at LDI impacting July production rates.
- EPS loss of ($0.03) missed our forecast of ($0.02) on higher production costs (up 16% vs. RJL and up 4% q/q on a per-tonne basis), which were impacted by continued reliance on bringing some ore up the ramp, as PDL was upgrading the ore handling system (completed at June-end) and dealing with oversized muck that had to be hauled up via trucks (Exhibit 2).
- Positive U/G grade reconciliation could serve as a tailwind towards PDL reaching its 170-175 koz guidance for the year. After the head grades surprised to the upside (vs. our estimates) twice this year already, averaging 4.9 g/t Pd in 1H14, we have revised our U/G grade forecast up by 12% to 4.4 g/t over 2H14 ....
is (dot) gd/4e0Oqy
Asanko Gold Inc.
DYNAMITE HILL METALLURGICAL RESULTS
Asanko Gold announced metallurgical results for the recently discovered Dynamite Hill deposit on the Asanko Gold Mine. Results were not materially different than our forecast and we are maintaining our Speculative Buy recommendation and C$3.15 target price. Upcoming significant catalysts include ground breaking in August 2014, definitive project plan (Phase 1) in late Q3/14E-Q4/14E and a scoping study for Phase 2 (Q1/15E).
- The company announced metallurgical test work results for the near surface Dynamite Hill Deposit located 7 km from the proposed processing facility for the Asanko Gold Mine. The company reported averages between 93.2% and 96.2% across the various mineral types which is slightly higher than our forecasted 92% recoveries for that deposit.
- We have already incorporated Dynamite Hill into the fully funded and permitted Phase 1 of the Asanko Gold Mine and are maintaining our forecast of ~200koz Au being mined for The Dynamite Hill deposit starting in 2017.
Our valuation is primarily influenced by the valuation (NPV8%, 1.0x, C$704 M, C$4.08, 2016 start-up) of the combined Obotan and Esaase gold projects (Phase 1 and 2, respectively), known as the Asanko Gold Mine (AGM). We have netted our asset valuation (C$4.08) against negative balance sheet items (Dec 31, 2015, C$0.47) and corporate G&A and interest expense (C$0.46). Our valuation assumes a financially diluted share count of 175.5 M shares.
We anticipate an updated plan of operations for Phase 1 in Q4/14. At our LT gold price curve, the Asanko Gold Mine generates a 24% internal rate of return with a 6.3 year payback, which falls within the Phase 1 mine plan. The project still generates a 16-18% return at a gold price curve (-10%, LT US$1298) below our forecast with a
Here are some more recent Asanko Gold Inc. analyst reports:
is (dot) gd/cPnKJn
ow (dot) ly/zIaVD
Vancouver, British Columbia, July 29 2014 - Asanko Gold Inc. ("Asanko" or the "Company") (TSX, NYSE MKT: AKG) is pleased to announce positive results from the metallurgical test work program conducted on the Dynamite Hill deposit. Dynamite Hill is a recently discovered near surface deposit located 7 km from the processing facility, set to begin construction next month, at the Company's flagship Asanko Gold Mine ("AGM" or the "Project") in Ghana.
The metallurgical test work program, conducted by Metallurgy Pty Ltd in Western Australia, was undertaken to assess the gravity and cyanide leach amenability of the oxide, transitional and fresh material from the Dynamite Hill deposit, as well as the comminution characteristics.
The results have confirmed that the material from the deposit presents consistent and similar leach kinetics to the other deposits which make-up the Project. It is expected that the Dynamite Hill material will blend well with the ore from the other four Phase 1 Project pits; Nkran, Adubiaso, Abore and Asuadai and confirms that the standard gravity and Carbon-in-Leach processing facility designed for Phase 1 is appropriate for treating material from Dynamite Hill.
Results of metallurgical testing show that the gold recovery averages between 93.2 and 96.2% across the various mineral types with an average of 95%. Gravity gold separation test work indicates that approximately 50% of the gold is expected to be recovered in the gravity circuit. Comminution testing indicates that the Bond work index varies between 10 kWh/t for softer oxide ore and 16 kWh/t for the harder fresh material, which is a similar range as the other deposits at the Project.
A maiden Mineral Resource Estimate ("MRE") for Dynamite Hill is currently being compiled by the Company and is expected to be published in September 2014, along with a definitive mine plan which will be included as part of the overall Definitive Project Plan for Phase 1.
Here are some recent Western Lithium USA Corporation analyst reports by Dundee Capital Markets:
is (dot) gd/EF4kZi
Flickr: Rubicon Minerals' Photostream:
is (dot) gd/vPsuSm
Rubicon Minerals' albums on Flickr:
is (dot) gd/0ZKUhs
DragonWave Inc. Prices C$25 Million Public Offering of Units
OTTAWA, ONTARIO--(Marketwired - July 25, 2014) - DragonWave Inc. (the "Company") (TSX:DWI)(NASDAQ:DRWI), a leading global supplier of packet microwave radio systems for mobile and access networks, announced it has priced an underwritten public offering (the "Offering") of 13,850,000 units (each a "Unit") at a price to the public of C$1.80 per Unit, for gross proceeds of approximately C$25 million. CIBC is acting as the sole book-runner for the offering and H.C. Wainwright & Co., LLC is acting as lead manager (together, the "Underwriters"). The Company has also granted the Underwriters an option, exercisable at the offering price for a period of 30 days following the closing of the Offering, to purchase up to an additional 15% of the issue to cover over-allotments, if any.
The Company intends to use the net proceeds from the Offering to strengthen its balance sheet, to fund working capital and for general corporate purposes.
Under the terms of the Offering, each Unit consists of one common share (each, an "Offered Share") and one half of one warrant (each whole warrant, a "Warrant"). Each whole Warrant entitles the holder thereof to purchase one common share of the Company at an exercise price of C$2.25 for a period of two years from the closing date of the Offering, subject to acceleration and adjustment. The Offered Shares and Warrants are immediately separable. The Company intends to apply to list the Warrants on the NASDAQ Stock Market ("NASDAQ") and the Toronto Stock Exchange ("TSX"). There is no guarantee that the Warrants will be listed on NASDAQ or the TSX. The Company expects that any exercise of the Warrants will result in the cash proceeds from the exercise of such Warrants being paid to the Company.
According to TD Securities:
is (dot) gd/lpPQrG
Rubicon Minerals Corp.
Recommendation: SPEC. BUY
12-Month Target Price: C$2.25↑
Resuming Coverage Post-Financing
We are resuming coverage of Rubicon Minerals following the close of a bought deal financing. The company sold a total of 7.1mm flow-through common shares at a price of $1.70 to raise gross proceeds of $12mm.
We estimate that the company now has approximately $241mm in available funds, comprised of $180mm in cash on hand, $50mm in proceeds from the sale of a gold stream to Royal Gold, and $11.4mm in net proceeds from this offering.
The company has suggested that it has $168mm in capex remaining to complete its Phoenix Gold Project in the Red Lake camp of Ontario. In addition to the project capex, we believe that the company requires working capital and corporate expenses of $30mm–$40mm and that it intends to spend an additional $14mm on exploration for total capital requirements of $212mm–$222mm.
Impact: SLIGHTLY POSITIVE
We believe that Rubicon has the funds to cover its capital requirements, as noted above, while leaving a buffer of $19mm–$29mm. Raising additional funds for a more aggressive exploration program is appropriate, in our view, given the encouraging exploration results reported to date.
Although the company has not confirmed that it will do so, we believe it is possible that it could complete a resource update in Q4/14 or Q1/15 (with an updated mine plan to follow) and we see potential for a resource expansion of up to 500koz Au at slightly higher grades.
After making adjustments for the closing of this financing, the company’s working capital position, and for our precious metal price-deck update (July 10), our corporate NAV5% increases to $2.29/share (from $2.11/share) and our target price increases to $2.25 from $2.00.
DragonWave announced a proposed public offering of units for an expected C$21.5 million with a 15% over-allotment available. The offering is expected to price before market open on 25 July 2014. Each unit will consist of one common share and one half warrant exercisable for a period of two years. Additionally the company announced an $80 million mixed shelf following the public offering which provides the company with flexibility to raise additional capital as required.
Cash squeeze position comfortable, for now. The company reported its Q1/F15 results on 10 July 2014 and ended the quarter with US$15.6 million in cash. For Q2 (Aug), management expects cash to exit at $12-13 million considering an additional $2.5 million from the credit line and ignoring any additional cash raised. We also note that a key covenant on an existing credit line, which remains in place, has been a $10 million minimum cash balance held with the creditors. Management previously indicated it expects to turn cash flow positive in F2015 but would not provide further granularity. With an uncertain timeline, an injection of cash should ease concerns that the company could face a cash squeeze.
Waiting for the turning point. In our view the master agreement with Reliance to support its 4G/LTE deployment in India was a milestone agreement for the company. We believe that the contract win could be a turning point for DragonWave if the company can turn the initial order into a long-term opportunity though clarity on timing would provide better visibility. We suspect a better balance sheet would help progress through diligence checks that large carriers (like Sprint and Reliance) perform on vendors.
Mixed shelf could be viewed as an overhang. Though the cash position appears more stable if the C$21.5 million offering closes, an $80 million mixed shelf could pose an overhang as investors could face further dilution if equity rather than debt is raised.
Here are some recent Rubicon Minerals Corporation analyst reports:
is (dot) gd/NLcRdK
Here are some recent Asanko Gold Inc. analyst reports:
is (dot) gd/1o0tP2
According to Canaccord Genuity:
Green light given. Asanko Gold announced that their board of directors has approved the construction of Phase 1 (Obotan) of the Asanko Gold Mine (AGM) in Ghana. As Canaccord Genuity Mining Analyst Joe Mazumdar expected the decision in July 2014, this is in line with his forecasts. Next significant potential catalysts include ground-breaking in August 2014, definitive project plan (Phase 1) in late Q3/14E-Q4/14E and a scoping study for Phase 2 (Q1/15E). Mazumdar forecasts commercial production in H1/16, in line with company estimate, for Phase 1 but a slower ramp up to full capacity (3.0 Mt/y) by H1/17 (vs. H2/16, company estimate). His AGM mine plan (which includes Phase 1 and 2) delivers an average production profile of 216 koz/y over a 21-year mine life at a C2 cash cost of US$874/oz, requiring US$321 M of upfront capital including US$106M for the Nkran pre-strip with an additional US$208M required for sustaining and reclamation capital. With Asanko’s current cash position (Q2/14, US$231M) plus the recently successfully executed US$150M secured debt facility from Red Kite, the company is well capitalized to fund the development of Phase 1.
According to Dundee Capital Markets:
Uranerz Announces US$10 Million Financing
Uranerz Energy (URZ-T)
Sell, High Risk, C$1.40 Target
Impact: Neutral. URZ announces marketed $10 MM public offering.
Deal details: Unit at $1.25, with ½ warrant at $1.60, exercisable for 30 months. This is a marketed deal. Offered at a 13% discount to last close.
URZ announced intentions to sell up to 8 MM units priced at US$1.25 for gross proceeds of $10 MM. Proceeds will be used for development of mining facilities, and general working capital purposes.
We recently downgraded URZ to SELL given its exposure to current uranium spot prices and relative valuation to peers. Current plans suggest the company will sell partially into spot, which would be unfavorable given above average total cash costs of ~$35/lb. We expect 47% of its production to be hedged this year and 33% next. We sense it possible that should low spot prices persist, URZ won’t charge ahead at full speed developing and permitting its pipeline in Wyoming. A lower production profile than its peers already means that there is less cash available to cover corporate costs, pay down debt or finance completion of its Nichols Ranch ISR plant. Despite remaining a market favorite for years, in our view it has become overvalued. Positively, the company recently hired two key personnel and operations remain on track with first production expected shortly (see note).
Valuation: URZ trades at a premium to peers on essentially all metrics.
• P/NAV of 1.32x vs. 0.88x for peers
• EV/lb of $6.38 vs. $3.95 for peers
• 2015 EV/EBITDA of 23.4x vs. 15.5x for peers
is (dot) gd/gkCPFe
Uranerz Announces US$10 Million Financing
CASPER, WYOMING--(Marketwired - July 16, 2014) - Uranerz Energy Corporation ("Uranerz" or the "Company") (TSX:URZ)(NYSE MKT:URZ)(FRANKFURT:U9E) is pleased to announce that it intends to offer and sell to the public in the United States and Canada an aggregate of up to 8,000,000 units of the Company at a price per unit of US$1.25 ("Units") for gross proceeds of up to US$10,000,000, before deducting the placement agents' fees and estimated offering expenses (the "Offering"). Each Unit will be comprised of one share of the Company's common stock ("Common Share"), and one half of one common share purchase warrant, with each whole warrant ("Warrant") exercisable to purchase one additional Common Share for a period of 30 months following the closing of the Offering at an exercise price of US$1.60, subject to adjustment and acceleration provisions. The Warrants will be transferable, however, the Company will not apply for listing of the Warrants on any securities exchange.
Haywood Securities Inc. and Cantor Fitzgerald Canada Corporation have agreed to act as co-lead agents in relation to the proposed Offering of the Units ("Lead Agents") on behalf of a syndicate of agents (the "Agents"). All offers of Units in the United States will be made by U.S. registered broker-dealers.
Closing is anticipated to take place on July 25, 2014, subject to satisfaction of the conditions to closing set forth in an Agency Agreement, including receipt of approval of the NYSE MKT LLC and the Toronto Stock Exchange. Upon mutual agreement between the Company and the Lead Agents, the Agents may place up to an additional 1,600,000 Units at the same price as the offering price to the public, such mutual agreement to be made at any time up to four business days prior to the closing of the offering.
According to Dundee Capital Markets:
is (dot) gd/3CeD57
Two Kyushu Reactors Meet Safety Requirements - But Hurdles Remain
Japan's nuclear watchdog, the Nuclear Regulatory Authority (NRA) has approved a 400-page Draft Safety Report for Sendai Nuclear Power Plant Reactors No. 1 and 2 in Kagoshima Prefecture. These reactors were on shortlist for priority screening by the Japanese Nuclear Industry and the NRA due largely to Kyushu Electric Power's positive attitude towards implementing safety measures. The new safety standards are widely considered some of the strictest globally. They include safeguards against various natural disasters, and almost any other type of nuclear accident.
NRA commissioners agreed to provide for a 30-day public comment period that will last until August 15th. A final draft report would be issued regarding the safety and technical merits of the plant. Kyushu Electric must garner local support for political sign off from both local and Prefecture levels of Government. We aren't sure how long this process might take, however industry chose these reactors due to the expectation of fewer hurdles. With two applications completed, we certainly hope it sets a precedent for the other 17 applied reactors in the application pipeline (see Table 1 for a full list).
Today's safety approval marks a major step towards eventual restarts. It is probably the most significant since formation of the NRA itself. We see this as positive for the equities but not necessarily for the uranium price yet. This psychological barrier should help in the short term, however, only when a number of reactors in Japan actually get back to consuming uranium, do we expect the nuclear industry to resume contracting and sourcing uranium. This would be expected to drive uranium prices higher. As we have said - this industry needs higher prices in order for any sustainable rally in the stocks to persist (see 14-July-14 note).