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On June 27,2016 Newmarket Gold had a press release telling the public about the drill results from their recent drilling program south of the Fosterville mine.It has been the position of this blog that sometimes a press release can be more important to investors than a quarterly report.This is one of those press releases.The results in this drilling report show that not only has the Fosterville mine got extensive resources in the north where the Phoenix and Lower Phoenix ore bodies are contained.There now is evidence of an extensive ore body in the south.Newmarket makes it clear that they have more work to do to delineate the size of this new deposit.
Three Fault Lines
Past blogs on Blogdaleupsome have used information in other Newmarket (formerly Crocodile Gold) to try and estimate the size of the total ore body at the Fosterville mine.With the new information given on the extensions from the Phoenix and Lower Phoenix structures this blog on January16,2015 concluded that the ore body could be as big as 5 million ounces of gold.read about the size of the Fostervilleore body. The three main deposits are The Central,the Harrier and the Phoenix reserves.Little mining is now going on in the Central ore body.And not much miming is being done on the old Harrier deposit.Most of the ore coming out of the Fosterville mine comes from the Phoenix structure.There is a Phoenix and a Lower Phoenix structure and little work has started on the Lower Phoenix structure to date.Although the ore body seems to be huge Newmarket is only producing 200,000 to 225,000 ounces a year.Principally coming from the Harrier and Phoenix structures.
The Harrier reserve
In the past the impression has been given that mining is winding down at the Harrier reserve.But now Newmarket has completes drilling on 14,000 metres of property south of the Harrier south gold system.Intercepts have shown from 10 to 22 grams per tonne of gold.And the same grade for the Osprey gold system.It appears that Osprey is south and east of the main Harrier reserve.The width of the mineralization is only 3 to 5 metres so the size of the ore body cannot yet be determined.And Newmarket intends to do more drilling to delineate the ore body further.
Conclusion
It now seems that the original Fosterville mine was almost all done on the surface.There was only a limited amount of underground drilling going on in the old mine. There has been an extensive ore body found north of the Phoenix and Lower Phoenix structures.And now it appears that there will be a sizeable ore body found south of the Harrier fault.Furthermore Newmarket reports that the new deposit is at about the same depth as the Lower Phoenix reserve.It is possible but not likely that this is a continuous ore body.Either way it is now likely that the total reserve may be as big as 6.5 to 7 million ounces.No final speculation will be made by this blog until we see the width of the gold intercepts. see analysis of gold deposit size; use Workathon for anlysis of resource stocks
On April 27,2016 Interrent REIT came out with a very important press release.Thye announced that they had an unconditional sale of properties in Kingston, Ontario for combined proceeds of $21.2 million; this comes in at $105,000 per suite.Interrent also announced that they have sold in total 461 suites recently (in Belleville, Brantford,Brampton and Kingston) for combined proceeds of $52.5 million or $113,500 per suite.So the price per suite for the Kingston properties was slightly below the average in the other non-core properties.This is part of their asset allocation strategy that will put more capital into the core areas of Ontario and Quebec.It was not clear from the press release if there remains a significant amount of non-core assets yet and whether they will all be sold.
The Strategy
As the picture above shows Interrent realizes that only the core areas like Toronto and Montreal and Ottawa will get above average growth in rents and asset values.The outlying areas like Kingston and Brampton and Belleville will only get average increases that are in line with their historical growth.Interent announced in their press release that this strategy is expected to increase both occupancy and rent per suite.This blog believes that this is correct.For example, rental revenue has increased since 2015 by 20% and by more than 50% since 2012.Also operating income was constant since 2015 but increased by about 48% since 2012.Interent has consistently recycled capital since 2012.As a result the stock price has reflected these better financial numbers as it has moved from $6.50 per share in February to the present price of $7.80.
Conclusion
Sometimes important pieces of business strategy can be revealed in a single press release.This is the case here as Interrent revealed that they are recycling $52.5 million.This is only about 4% of their total asset base of $1.23 billion but it will have an effect and it is very likely that more of their non-core assets will be sold off.In addition, they made almost $10 million of net proceeds on these sales.Operating income was $40 million in 2015 and is on track to hit $48 to $50 million for 2016.This should be good enough to move the stock closer to $9 per share by Christmas. use Workathon for analysis of Cdn. reits;get clearer analysis of Cdn. reits
