Investment Highlights

  • Rockcliff Metals Corporation (“RCLF”, “company”) completed a reorganization, raised $29 million, and installed a brand-new management team in 2019.
  • Key assets include three advanced stage copper projects (two high-grade copper and one gold-rich copper project), and a leased processing and tailings facility in the Flin Flon-Snow Lake greenstone belt in Manitoba – a prolific mining belt with a long track record of base metals and gold production
  • All three projects and the mill are strategically placed, offering the company an option to use a ‘hub and spoke’ strategy, and truck ore from all three projects to a centralized mill. This allows for a significantly faster and cheaper path to production.
  • The combined resource estimate on the three projects (named Talbot, Tower and Rail) is 413 Million Pounds (“Mlbs”) Copper Equivalent (“CuEq”) indicated, and 195 Mlbs of CuEq inferred.
  • RCLF holds a 100% interest on Tower and Rail, and a 51% interest in Talbot. Hudbay Minerals (NYSE: HBM) owns the remaining 49% interest. Hudbay has dominated the Flin Flon-Snow Lake area, and has mined over 145 Mt of ore from over 85 years of operations.
  • RCLF is aiming to complete up to 70,000 m of drilling in 2020 (16,000 m completed), including 20,000 to 30,000 m on Tower and Rail to upgrade the known resource, and 30,000 to 40,000 m on exploration drilling to potentially identify future deposits to continue the hub-spoke model.
  • A Preliminary Economic Assessment (“PEA”) on Tower and Rail is expected in Q2-2020. A production decision is expected by Q4.
  • RCLF also holds five gold properties in the region; Kinross Gold (TSX: K) is earning a 70% interest in one of them by spending $5.5 million over six years.
  • The company’s current Enterprise Value (“EV”) is just $4 million, which we believe significantly undervalues a portfolio of advanced stage assets with a relatively quick path to production.
  • We believe that panic selling due to the coronavirus outbreak is offering value investors opportunities to acquire shares of fundamentally solid juniors, such as RCLF, at attractive valuations.

Risks

  • The value of the company is highly dependent on copper and gold prices.
  • There is no guarantee that the PEA on Rail and Tower will be favorable.
  • None of the projects have had an economic assessment.
  • The estimates / inputs used in our DCF models are very preliminary.
  • Exploration and development risks.
  • Access to capital and potential share dilution.

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