QIS Update #30 2014 - October 14th 2014
Included in this update:
- Blackbird Energy announces high impact multi-well drill program targeting both upper and middle Montney
- Dalmac Energy grants options
- Manado Gold reports first phase of 2014 exploration program at Takla-Rainbow property is complete
- Newlox Gold Ventures discusses management changes and AGM results
- NTG Clarity Networks announces a $2.28 million renewal LOI
- Quinsam Capital initiates quarterly dividend, provides September update
The Vancouver Small-Cap Conference is less than a month away and will be held on Thursday, November 6, 2014 at the Vancouver Convention Centre. Company presentation times are nearly full and we will soon have the schedule posted on our website. We are very excited about this conference as we have several great fundamental companies coming to speak from a variety of industries. Please register now at www.smallcapconference.ca/register.php to reserve your seat.
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Blackbird Energy Inc. (BBI:TSX-V)
Current Price: $0.29 (coverage commenced Aug 19/11 - $0.18)
Blackbird Energy Inc. has announced a high impact multi-well drill program targeting both the Upper and Middle Montney. The first well, which Blackbird has received its licence for, will target the Middle Montney at Elmworth (100% working interest). The first well will be spud from surface location 14-14-70-07W6 with a vertical depth of approximately 2,330 meters and a lateral length of 2,000 meters to location 6-26-70-07W6. The well is expected to be spud on or before November 1, 2014.
The second high impact well (100% working interest), which Blackbird is currently in the process of licensing, is to target the Upper Montney interval. This well will be drilled from the same drill pad as Blackbird's Middle Montney well at surface location 14-14-70-07W6 with a total vertical depth of 2,260 meters and a lateral length of approximately 2,000 meters.
Blackbird has designed the drill program so that the two wells are drilled in succession in November and December followed by completion of both of the wells in January 2015.
Garth Braun, President and CEO of Blackbird stated, "Blackbird's multi-well drill program is focused on delineating both the Upper and Middle Montney resource with a high capital utility achieved through back-to-back drilling. Blackbird expects this process to yield significant cost savings allowing even more value to be derived from its strong balance sheet once the current financing has been completed."
Financing Upsize and Allocation of Options
Blackbird has also announced an increase to the previously announced non-brokered private placement of Special Warrants to 24,827,587 Special Warrants at a price of $0.29 per Special Warrant for gross proceeds of approximately $7.20 million.
As previously announced on September 22, 2014, Mr. Kevin Andrus has since joined Blackbird's Board of Directors as an independent member. Mr. Andrus is the Portfolio Manager of Energy Investments with GMT Capital Corp., a private investment company based in Atlanta, Georgia. A graduate of the Masters of Business Administration program from Regis University, Mr. Andrus is also a Chartered Financial Analyst charter holder who has spent the past two decades with various investment management companies. Mr. Andrus also sits on the board of DeeThree Exploration Ltd. Blackbird has granted 750,000 incentive stock options to Mr. Andrus. Such options are exercisable at the price of $0.34 for a period of five years until October 7, 2019.
QIS Capital: These are very exciting times for Blackbird Energy shareholders. The company is embarking on a very aggressive and highly prospective drill program which is expected to yield significant production. Blackbird now also has a significant foothold in the institutional side of the market with the recent financing. We are expecting to see a number of new research reports coming out in the coming weeks from those that participated in the financing. Finally, Blackbird has recently also been added to the TSX Venture Select Index.
Dalmac Energy Inc. (DAL:TSX-V)
Current Price: $0.32 (coverage commenced Nov 15/11 - $0.37)
Dalmac Energy Inc. has announced that it has granted stock options to its directors pursuant to the provisions of its stock option plan, with 50,000 options being granted to each director to acquire an aggregate of 200,000 common shares, with an exercise price of $0.38 per share and an expiration date of October 2, 2019.
Manado Gold Corp. (MDO:TSX-V)
Current Price: $0.07 (coverage commenced Dec. 6/13 - $0.065)
Manado Gold Corp. has reported that it has completed its field work program as announced July 23, 2014.
The 2014 program was designed to follow up the 2013 diamond drilling program where drill hole number TR13-88 intersected a porphyry-style copper and gold-bearing mineralized zone with associated pervasive siliceous and potassic alteration. Drill hole TR13-88 intersected 24.52 metres (66.0 to 90.52 m, end of hole) of mineralization grading 2.011 gpt gold, 2.0 gpt silver and 0.18% copper, including a 6-metre section (66.0 to 74.0 m) with an average grade of 4.225 gpt gold, 4.0 gpt silver and 0.35% copper (Note: these intercepts are drilling lengths, not true widths).
The 2014 field work was conducted between July 21 and August 1. It concentrated on re-logging and sampling some of the more than 8,000 metres of unsampled diamond drill core that remains on site originating from the pre-1992 Imperial Metals and Eastfield Resources drilling programs. The work focused on identifying porphyry-style copper-gold mineralization. Manado also carried out prospecting, geological mapping, and rock geochemical sampling within the known South, Red, North and Rainbow Zones, and re-surveyed a number of historic drill hole collars that had been referenced to old, now overgrown, survey grids.
The geological mapping and rock geochemical sampling work resulted in the discovery of a known but ignored copper-gold mineral showing between the Red and Rainbow Zones. A 5-metre chip sample of the mineralized outcrop returned 0.292 % copper, 0.553 gpt gold and 10.9 gpt silver. The showing is situated near a prominent north-northeasterly trending fault structure that intersects the mineralized Twin Creek fault zone near the West Zone. Further surface work and drill testing will be required to evaluate this showing with considerable exploration potential for porphyry-style mineralization similar to the nearby zones.
The in-fill sampling of unsampled diamond drill core did discover several sections with significant copper, gold and silver values that had not been previously identified. Copper values ranged from 2.8 to 8110 ppm, gold values ranged from trace to 4.51 ppm, and silver values ranged from trace to 10.9 ppm. These results will be collated and compiled with the recent drilling database, and utilized to identify both strike and downdip extensions to the mineralization within the East and West Zones for future drill testing, such as that intersected by drill hole TR13-88.
The company also announced the resignation of Dr. Christopher Wilson as a director of Manado. Dr. Wilson resigned in order to concentrate on his advisory business. The company thanks him for his service and wishes him the best in his future endeavours.
QIS Capital: We are expecting further drill core results from this program in the next few months. The initial drill hole TR13-88 showed significant gold equivalent values and the company hopes to expand this highly prospective hole with previously drilled core in the surrounding area.
Newlox Gold Ventures Corp. (LUX:CSE)
Current Price: $0.045 (coverage commenced March 31/14 - $0.05)
Newlox Gold Ventures Corp. has announced the strengthening of its management team as it advances its corporate objectives. Gary MacDonald, previously an Advisor to the Company's Board of Directors, has been appointed as Chief Executive Officer, while Ryan Jackson has been appointed President. Mr. Donald Gordon has been appointed Chairman of the Board.
Mr. MacDonald possesses over 25 years’ experience in the Natural Resource sector with an extensive background in mining. He currently serves on the board of several public and private companies with extensive domestic and international projects. He represents the fifth generation of a prominent Canadian mining family and possesses a wide knowledge of current and historical mining practices. Mr. MacDonald has worked with several financial and venture capital organizations over the past 25 years in Canada, US, Europe, and Asia. He has experience in investment management and banking, mergers and acquisitions, institutional financings, corporate and capital structuring.
Mr. Jackson holds two degrees from McGill University in Canada: one in Environmental Science and one in Political Science. Mr. Jackson has corporate and operational experience in the mining sector and has served as the Canadian Editor of a European mining industry publication for the past three years.
“Mr. MacDonald and Mr. Jackson have extensive experience in all facets of mining, including engineering, permitting, construction and operations; particularly in Canada, the US, and Latin America,” stated Mr. Gordon. “Newlox will greatly benefit from this wealth of experience as we advance the Company through the next stages of development.”
Newlox Gold Ventures Corp. has reported that all matters placed before the shareholders at its Annual General held on 30 September 2014, were approved. The voting report of the Annual General Meeting is available for review on SEDAR.
QIS Capital: We view this as a positive move for Newlox as those intimately involved in the mining operations of the company now hold more prominent positions. Mr. Gordon was instrumental in the corporate development of the public company. As mentioned in our previous Updates, Newlox has entered expanded production from existing tailings and is expected to report significant cash flow from these operations in the next 12 months. Newlox gave an excellent presentation at The Calgary Small-Cap Conference and will be speaking again in Vancouver on November 6th.
NTG Clarity Networks Inc. (NCI:TSX-V)
Current Price: $0.28 (coverage commenced Feb. 4/10 - $0.045)
NTG Clarity Networks Inc. has announced that the company has received a $2.28 million Letter of Intent from a leading mobile operator in the Gulf region to provide software development resources, telecom consultants, and project management resources. NTG has already started work on this LOI and approximately 40% of the total amount will be recognized in Q3 2014. The remainder of the LOI is expected to be completed by the end of December 2014.
"In the last few years, we have been working hard to establish ourselves as a leading provider of quality telecom software products and services in the Gulf region. The renewal of this contract reflects the increasing satisfaction and confidence of our customers with regards to our extensive expertise in telecom systems and operator requirements." said Ashraf Zaghloul, NTG Clarity’s Chairman and CEO.
QIS Capital: We have received lots of calls from NTG Clarity shareholders in the past month looking for the next contract announcement. This renewal LOI should provide the company with the necessary backlog of work to reach revenue targets for 2014 while setting up the foundation for continued growth in 2015. Management continues to work on several additional fronts to add further contracts in the coming months.
Quinsam Capital Corporation (QCA:CSE)
Current Price: $0.15
Quinsam Capital Corp. has provided an update on activities for September 2014.
Quinsam completed the purchase of investments in Bioniche Life Sciences Inc., Poydras Gaming Finance Corp. and Manitok Energy Inc. in September.
Bioniche is a focused, human therapeutics company with a late-stage asset for bladder cancer for which Bioniche is now preparing for the filing of a Biologics License Application, projected to be submitted prior to March 31, 2015. QCA participated in a unit offering by Bioniche which included particularly attractive 5 year warrants.
Poydras is an operator of slot machine-type gambling equipment in US casinos. Quinsam likes the cash flow generation characteristics of the business. The company recently announced a major acquisition which we expect to sharply boost reported EBITDA.
Quinsam bought shares in Manitok after it announced favourable production information from its second "Entice" well. The stock had earlier fallen from favour after it reported its second quarter results. QCA thinks that the stock will recover as more Entice well data are released.
"Quinsam has pursued a very selective investment strategy since implementation of the company's new business plan in November 2013. Management is of the opinion that this approach provides the opportunity for the company to earn extraordinary returns and we believe that our performance in September 2014 clearly illustrates the impact of the strategy" said Roger Dent, CEO of Quinsam.
To provide background, September was a challenging month for small cap stocks in Canada, with the TSX Venture Exchange declining by approximately 11%, its worst performance in many months.
The company closed the month with a total portfolio of $2.6 million. As at the end of the preceding month, the unaudited total value of the Quinsam's cash and equity investments was approximately $1.9 million. To give an earlier reference point, Quinsam had assets of approximately $0.2 million in October 2013. Quinsam raised net proceeds of $0.6 million in November 2013 and further net proceeds of approximately $0.9 million in March 2014 for total investable proceeds and starting assets of approximately $1.7 million.
The largest contributor to Quinsam’s September performance was EnerDynamic Hybrid Technologies, which commenced trading in September. QCA also saw an increase in value by another of its large holdings, Nuvo Research, with lesser gains in other investments as well.
An important component of QCA’s business strategy is the accumulation of purchase warrants at little or no cost. Quinsam now holds approximately 2.1 million warrants with an aggregate basic exercise value of approximately $1.1 million. The exercise value is not an indication of the economic value of the warrants; but is provided to investors so they can understand the amount of upside leverage that Quinsam is accumulating through its warrant portfolio. Management values unlisted warrants at intrinsic value, which is believed to be a conservative approach.
Initiation of Quarterly Dividend
Quinsam management believes that dividends should be an important facet of shareholder returns whenever possible. Accordingly, it has been a goal of Quinsam management to have a meaningful dividend on Quinsam shares. With the impact of Quinsam's differentiated strategy being made evident in its most recent results, the board feels that the time is now right to initiate a regular quarterly dividend on Quinsam's shares.
The board has approved an initial quarterly dividend of $0.001 per share ($0.004 per share per year). This represents an indicated dividend yield of 2.5% based o the most recent trading price of $0.16 per share. The initial dividend will be paid on November 7, 2014 to shareholders of record on October 22, 2014. This dividend will not be designated as an "eligible dividend" for Canadian income tax purposes. Future quarterly dividends will be subject to Board approval.
Announcement of Shell Initiative
In Canada it is a common practice for companies that wish to go public to do so by merging with an existing "shell" company. The owners of shell companies can generate excellent investment returns on such a transaction in the correct circumstances.
It has been a goal of the company's management for Quinsam to obtain a meaningful stake in a shell company. This is because Quinsam's management believes that it has the ability to identify and execute a successful "shell" transaction and thereby generate strong investment returns.
Quinsam is evaluating a number of alternatives to obtain a meaningful stake in a shell company. In addition, the company is interested in hearing from major shareholders in shell companies that might welcome the involvement of Quinsam. Quinsam hopes to have further news on this matter in the fourth quarter.
QIS Capital: Quinsam has shown very steady positive performance over its first year of operations. Even more impressive is seeing the company institute a quarterly dividend in that first 12 months. Quinsam’s relationships and expertise in the small-cap markets have enabled the company to carve out a special niche in an underfollowed marketplace. Despite the fact that we have experienced very turbulent markets in 2014 and the TSX-V index is down about 13% year-to-date, Quinsam has posted very solid investment and shareholder returns.
Disclaimer: This article is for informational purposes only. The information contained within this article should not be construed as offering investment advice. Those seeking direct investment advice should consult a qualified, registered, investment professional. BOEs may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 Mcf: 1bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. The company profiled assumes no liability for the information presented. This is not a direct or implied solicitation to buy or sell securities. Readers are advised to conduct their own due diligence prior to considering buying or selling any stock. The author(s) owns directly or indirectly 229,000 shares, 350,000 options, and 706,348 warrants of Blackbird Energy Inc., 93,000 shares and 200,000 options of Dalmac Energy Inc., 453,000 shares and 400,000 warrants of Manado Gold Corp., 1,062,000 shares of Newlox Gold Ventures Corp., 1,519,500 shares and 100,000 options of NTG Clarity Networks Inc., and 895,000 shares of Quinsam Capital Corporation. QIS Capital may have a financial relationship with these companies and may trade in the stocks mentioned. No stock exchange has approved or disapproved of the information contained herein. Copyright © 2003 - 2014 QIS Capital Corporation.