Updates & New Stocks – February 1, 2014

This week we have updates on Oroco Resource Corp (OCO), Goldgroup Mining (GGA), IsoRay Inc. (ISR) and we introduce a new company called LiqTech International (LIQT) which develops clean air and water technologies.

Goldgroup Mining (GGA – $0.17) produced an initial 285 ounces of gold from its Cerro Prieto heap-leach mine located in Sonora, Mexico.

Keith Piggott, Chairman, President & CEO of Goldgroup, commented: “We have now successfully completed the phase 1 development of the Cerro Prieto mine and are now beginning to produce gold. We are impressed with the Cerro Prieto production thus far as it has met target levels of recovery of gold. Coming off a corrective year in 2013 for the gold sector, we are optimistic about the fundamentals for gold as well as Goldgroup’s prospects into 2014 and beyond.”

Goldgroup is a Canadian-based gold production, development, and exploration Company with significant upside in a portfolio of projects in Mexico, including its flagship 100%-owned advanced stage gold development project Caballo Blanco in the state of Veracruz, and a 50% interest in DynaResource de Mexico, S.A. de C.V., which owns 100% of the high-grade gold exploration project, San José de Gracia located in the state of Sinaloa. The Company also operates its 100%-owned Cerro Prieto and Cerro Colorado heap-leach gold mines, both in the state of Sonora.

Goldgroup reaching production at Cerro Prieto is also good news for Oroco Resource Corp (OCO – $0.045), because when it sold the property to Goldgroup in September of last year, the Company negotiated terms so that it also benefits from the produced gold.

The most important terms of the agreement between Oroco and Goldgroup were:

  • Goldgroup paid Oroco $4.5 million USD in cash on signing of the deal;
  • Oroco received 5.5 million common shares of Goldgroup. Thanks to Goldgroup reaching production at Cerro Prieto, its shares have risen 37 percent in 2014. Goldgroup’s shares in Oroco’s treasury are now worth over $900,000;
  • Starting on January 31, 2015, Oroco will receive six equal monthly installments of $250,000 each;
  • Oroco will also receive $4,125,000 on the second anniversary of the transaction closing date. Goldgroup may elect to pay this amount by issuing and delivering to Oroco 16,500,000 Goldgroup common shares in lieu of cash;
  • In addition, Goldgroup agreed to pay Oroco a production royalty from Cerro Prieto. The royalty is payable for each month in which the monthly average gold price is in excess of $1,250 per ounce. When that’s the case, 20% of the dollar value of that excess is multiplied with the number of ounces of gold produced from the property during that given month, to a maximum royalty of $90 per ounce. For example, when the average daily gold price next month reaches $1,350 and Goldgroup produces 1,000 ounces of gold during that month, it will have to pay $20,000 to Oroco. This production royalty will be payable for each and every of the greater of (i) the first 90,000 ounces of gold produced from the property or (ii) all ounces of gold produced from the Property until the completion of five full years of commercial production.

Thanks to the agreement with Goldgroup, Oroco is, and will continue to be, sufficiently funded to advance its Xochipala Project in Guerrero State, Mexico, a prospect which shares important characteristics with the known gold-bearing structures elsewhere in the Guerrero Gold Belt.

Also in the news this week was IsoRay Inc. (ISR – $0.74), which we introduced last week. The company received a five year extension to its CE mark covering IsoRay’s entire product offering of Cesium-131 seeds, permitting sale in the European market of these products into 2018.

IsoRay is the exclusive manufacturer of Cesium-131, which is the first new isotope to be available in seed form for brachytherapy in approximately 20 years. Cesium-131 allows for the precise treatment of many different cancers because of its unrivaled blend of high energy and its 9.7 day half-life (its unequaled speed in giving off therapeutic radiation).

Brachytherapy is a form of radiotherapy where a radiation source is placed inside or next to the area requiring treatment. Brachytherapy is commonly used as an effective treatment for cervical, prostate, breast, and skin cancer and can also be used to treat tumors in many other body sites.

Thanks to the previous enhanced CE mark for the company’s GliaSite radiation therapy system and the Iotrex isotope used in the system, this five year extension gives Isoray the ability to continue to sell its entire product line in the European market.

IsoRay Chairman and CEO Dwight Babcock commented, “The five year extension is a clear indication of the quality and care IsoRay places on producing a truly superior product, and when combined with the enhanced CE mark received several months ago, helps to ensure our future internationally. Specifically, the enhanced CE mark for GliaSite and Iotrex provides several major product improvements: first, an extended shelf life for our catheter from 12 months to now 36 months; second, our Iotrex isotope has had its useful life extended from 19 days to 30 days giving IsoRay the opportunity to utilize more of the product produced within a single batch, and finally, a second source manufacturer for Iotrex was approved giving more production capability and increasing potential batch sizes. These enhancements improve our ability to pursue additional distribution opportunities in numerous European countries due to the extended product life cycle.”

Cesium-131 is FDA-cleared and holds a CE mark for international sales in seed form for the treatment of brain cancer, prostate cancer, lung cancer, ocular melanoma cancer, colorectal cancer, gynecologic cancer, head and neck cancer and other cancers throughout the body. The treatment can be deployed using several delivery methods including single seed applicators, implantable strands and seed sutured mesh, and several new implantable devices. IsoRay also distributes the GliaSite radiation therapy system, used to treat brain cancers.

IsoRay continues to be a very small company to have such a significant range of products. Its value will emerge sooner than later.

A final company we would like to discuss this week is LiqTech International (LIQT – $2.55). The company received a breakthrough production order for flat sheet silicon carbide membranes from the Middle East. The initial flat sheet silicon carbide membranes order is for 250 meter2 and is scheduled for delivery in March.

LiqTech International is a Danish clean technology company with a listing on the NYSE. It makes state-of-the-art filtration products employing ceramic silicon carbide. The products are used in liquid filtration, diesel particulate filtration and to a smaller extend as kiln furniture for the refractory industry.

Finn Helmer, the CEO of LiqTech, commented the following in response to the order: “This first real production order opens up what we believe will be a significant market opportunity. Tests have shown that the flat sheet silicon carbide membrane is unmatched in the market for cleaning drinking water, waste water and pre-reverse osmosis (“Pre-RO”) desalination. Testing is ongoing in 22 additional sites and we expect that our success in recording this particular order will result in significant additional orders from the other test sites.

Further, our initial results in sea water Pre-RO with our new flat sheet membranes have demonstrated a more energy efficient and reliable technology compared to conventional technologies and this is beginning to be accepted by the market. In due course, we will expand our marketing efforts to cover other large applications that can utilize LiqTech’s flat sheet silicon carbide membranes.”

LiqTech’s patented Silicon Carbide (SiC) membrane delivers superior flow rate (Flux) with unparalleled levels of filtration. It is chemically inert, temperature resistant and extremely hard, making it a very durable product which can be applied in clean air and clean water technologies such as:

  • Diesel Particulate filters (DPFs) – As air quality continues to be a major issue, sources of particulate and Oxides of Nitrogen from diesel engines are a major concern. LiqTech is one of the leaders in the supply of Diesel Particulate Filters (DPF). These technologies remove up to 99% of the particulate emitted by the diesel engine. The LiqTech DPF has found its way into engines both old and new and has been a major component in addressing “clean air zones” around the world, including cities in Europe the USA and Korea. Future opportunities for the DPF continue as increasing legislation calls for significant reductions in diesel exhaust emissions especially in rapidly industrialized areas like China and South America.
  • Emission Catalysts – In support of its DPF business LiqTech designs and manufactures a suite of proprietary automotive catalyst coating technologies, designed to meet the latest stringent emission standards in both NOx and PM.
  • Aqua Solution – Aqua Solution is a dead-end filter solution for liquids with low amounts of suspended solids. The membrane substrate has a dead-end design, which yields a more cost efficient filtration performance compared to other filtration principles. Aqua Solution is the ideal alternative to sand filters, thanks to the reduced operating costs, superior filtration and ease of handling.
  • CoMem – CoMem is a ceramic membrane element and is a cross-flow solution for filtration of liquids with a high amounts of suspended solids. The membrane substrates, as well as the coating, are made from Silicon Carbide. CoMem combines the material characteristics of Silicon Carbide with a cross-flow structure to handle higher amounts of suspended solids.
  • Kiln Furniture – SiC’s resistance to very high temperatures, combined with good mechanical strength, makes it an ideal material for manufacturing supports and associated ”kiln furniture” in the firing of Ceramics and other refactory products.

LiqTech has been on our radar for a few months thanks to its fascinating technology. This significant order might very well be the breakthrough the company was waiting for.

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