Echelon Live Deals & Marketing

Echelon Live Deals & Marketing (Please contact us for any interest)

Live Deals

• Sendero Resources - Best Efforts Private Placement of Units, $3MM - Copper-Gold Exploration in Argentina 

Marketing

• Silver Hammer Mining - Silver Exploration in Idaho & Nevada - Thursday April 13th
• Volatus Aerospace - Commercial Drones & UAV Tech - Available Upon Request

Good morning,

• Echelon Sales Commentary – GMNG Highlight, Echelon Lithium Conference
• SPC Nickel - Lockerby East Phase 1 Drilling Starts with a Bang
• Medexus Pharma - Strong End to the Year qith FQ4 Pre-Announcement Showing Continued Momentum
• Fathom Nickel - Drilling Cuts an Impressive 18.1m of 2.43% Ni 
• Palladium One - Completes Strategic Equity Investment from Glencore
• Converge Technology Solutions - Accounting Policy Change, No Impact to Profit Metrics
• Blackline Safety -  Announces Lease Securitization Partnership

Echelon Sales Commentary

Gamelancer Media
CSE: GMNG
Share Price: $0.11 
Market Cap: $49M, EV ~$55M (including contingent/deferred considerations of $5.3M)
 
 
Yesterday we met with the senior management team from Gamelancer Media Corp., a media and entertainment company that provides creative and curated short form digital media content to some of the world’s largest brands. GMNG has built the world’s largest gaming-related social media network focused on millennials and generation Z to distribute the short-form video content they develop for brand partners to over 38 million followers & subscribers generating over 2 billion monthly views. Gamelancer’s subscriber engagement stands out with its user base averaging 95 minutes each day across its channels. TikTok is globally the fastest growing social media platform and GMNG is very well positioned to benefit from this growth.
 
With Gamelancer’s 2023 contracted revenues sitting 238% higher than FY-2022 revenue, the Company recently released F2023 guidance where it targets revenues of $8.6M, gross profit margins of 68% (vs 60% y/y). Notably, the budgeted 36% reduction in total expenses is expected to leave Gamelancer generating positive EBITDA for the Year.  Preliminary indications for 2024 contained within the guidance release support FY2024 revenues exceeding $18M.
 
WHY WE THINK GMNG IS A BUY:
 

• Compelling Growth & Valuation Upside: Gamelancer’s revenue guidance at $8.6M and gross profit of $5.8M leave its enterprise valuation at 6.4x/9.5x EV/revenues and EV/gross profit while the valuations move to 3.1/4.5 against the preliminary $18M+ revenue guidance for 2024 with gross profit margins left flat y/y versus the 68% within the 2023 guidance.
• Pre-revenue mobile apps/social media names have seen a wide range of $20 to $250 per user in past acquisitions of platforms with owned users. While a meaningful discount is warranted for GMNG given their users are on 3rd party channels,  even with a healthy discount, the undervaluation of GMNG is clear:
  • Using a conservative multiple of $5 to $7.50/user (90% to 95% discount) justifies $0.43 to $0.64/share (289% to 484% upside) value for GMNG given their 38M total follower count

 

 

• Competitive Position: Given the company’s competitive position in the market and its ability to provide tangible value to its brand partners, Gamelancer is optimally positioned to achieve rapid growth with line of sight to profitability
  • Gamelancer is the 68th joint-business partner of TikTok globally, the first in Gaming, and only the second JBP partner in Canada
  • GMNG’s engagement rate across it’s TikTok Channels are 11.6% to 18.7%; some of the highest globally for their channel size
  • Due to GMNG’s ownership of distribution channels relative to competitors, the company can win contracts from brand partners with relative ease by providing significantly lower cost campaigns while boosting engagement and maintaining GMNG gross margins (estimated 68% this year)
• Management Team:
  • CEO Jon Dwyer has a breadth of experience in the gaming and media sectors, having served as Chairman & CEO of Wondr Gaming, SVP at Aquillini Gameco, SVP and Head of Sales & Partnerships at Enthusiast Gaming, and CEO of Aereus Technologies
  • Chief Business Officer Max Desmarais has deep experience in the media industry, notably as CEO of 514 Creative, and digital marketing and web development agency, Co-Founder & President of ScaleLab Network, one of the largest multi-channel networks (MNC) on YouTube in the US with 1,750 channels and 400 million subscribers, and VP of New Media at Principal Media
  • President & COO Mike Cotton was previously CEO of Rumble Gaming, and prior thereto Managing Director of Sport & Media at Ryerson Futures (VC accelerator) as well as with SportsNet New York and Major League Soccer

• GMNG provides brands with access to the highly valuable but elusive gaming audience, mainly concentrated on Gen Z & Millennial gamers
  • This is an area of the market that has significant growth & value but is difficult for traditional companies to efficiently target
  • 87.0% TikTok users are above the age of 18, with 62% being between the ages of 18 to 35
  • 2nd most popular category globally on TikTok is Gaming, with 70% of users playing games regularly on their smartphones & 65% have made an in-game purchase in the last 3-6 months
  • GMNG has only a 6% duplication rate across all its channels, growing at an average of 1.5M followers per month
  • Sources: Barclays, Company Data
• The company works with some of the world’s largest and most well-known brands:

 

• GMNG curates short-form video content created both originally (made by GMNG) and created by other users and distributes to users across its network of 38M followers
• Gamelancer’s content is distributed daily to maintain engagement with its user base, which averages 95 minutes each day across its channels
• Branded content is integrated with organic content to ensure a feeling of authenticity amongst viewers and achieving over-indexing on industry average KPI’s in every campaign

GMNG Business Operations Structure:

 

 

The symposium highlights established and emerging companies with conventional and unconventional sources of lithium. Presenting companies offer exciting investment opportunities as they emerge as potential suppliers to the North American lithium market, projected by experts to be among the fastest demand growth regions globally.

Please join us on April 13th from 1:00PM to 3:40PM ET. Kindly register today - we look forward to having you attend.

CLICK HERE TO REGISTER

Coming Today
Main Economic Data/Central Banks/Government
6:15 a.m. Biden meets Rishi Sunak
7:00 a.m.: US MBA Mortgage Applications
8:30 a.m.: US March CPI
9:00 a.m.: Fed's Barkin speaks
9:00 a.m.: ECB's De Cos and BOE's Bailey speak
10:00 a.m.: BOC Rate Decision
10:30 a.m.: EIA US Crude Oil Inventories
11:00 a.m.: Banxico Minutes
11:30 a.m.: US to sell $36 billion 17-week bills
12:00 p.m.: Fed's Daly speaks
1:00 p.m.: US to sell $32 billion 10-year notes
2:00 p.m.: US March Budget Statement
2:00 p.m.: Fed Minutes
2:15 p.m.: ECB's Villeroy speaks
3:15 p.m.: BOE's Bailey speaks
Ukraine's Zelenskiy to address IMF/World Bank meeting in live-streamed talk with Yellen
G-20 finance ministers and central bankers meet in Washington
 

SPC Nickel

Full report here.

Lockerby East Phase I Drilling Starts with a Bang — 7.8m of 2.48% Ni and 0.64% Cu

Event: SPC Nickel has reported initial assay results from an ongoing Phase I drill program on the recently consolidated West Graham and Crean Hill 3 properties in the prolific Sudbury Mining Camp. The drilling is part of a planned ~25,000m (~$5M budget) drill campaign focused on infilling the widely space (100-150m spacing – Exhibits 1, 5 & 6) historic Inco holes on the Crean Hill 3 portion of the newly consolidated property. To date, 14 holes (2,097m) have been completed, with assays reported for just two holes. Initial plan calls for drilling along the higher-grade Boundary area and thereafter advancing toward the north. The drilling is in anticipation of delivering a combined NI43-101-compliant resource estimate by the end of 2023, with a tonnage target range of 20-30M tonnes.

Today's results include those from hole WG-23-026, which was previously reported to have encountered an unexpected 7.8m interval (170.05-179.9m) of massive to semi-massive sulphide mineralization. Assays from that highlight interval run 2.48% Ni and 0.64% Cu over 7.8m within a wider 143m section of "West Graham-style" mineralization (5-20% disseminated to blebby sulphides. SPC notes that Individual massive sulphide samples within the highlight interval returned values as high as 5.88% Ni over 0.57m. Nearby hole WG-23-020 (drilled to the south) cut 0.53% Ni and 0.27% Cu over 44m.

By comparison, West Graham hosts an historic resource of 8.55M tonnes of Indicated Resources at 0.45% Ni and 0.31% Cu, with another 2M tonnes of Inferred material at 0.38% Ni and 0.30% Cu. The Boundary Zone between the neighboring properties contains an historic 0.27M tonnes at 0.57% Ni and 0.33% Cu, while VALE's neighboring Crean Hill 3 property has an historic mineral inventory of 16.8M tonnes at 0.42% Ni and 0.30% Cu.

Key Asset: SPC acquired the Lockerby East property in 2016. The project covers 3.9km2 and includes the formerly producing Lockerby East mine (1970-2015 produced 9.6M tonnes at 1.83% Ni and 1.08% Cu) and adjacent shallow West Graham Ni-Cu resource. The properties are situated ~20km southwest of Sudbury and Vale's Clarabelle Mill and ~1.5km east of Magna Mining's (NICU-TSXV, NR) Crean Hill mine (Exhibits 2, 6 & 7). The Lockerby East property area retains haul roads and high-voltage electrical power infrastructure from previous operations.

Historic (1958-1960) drilling at Crean Hill 3 by former owner Inco returned grades and thicknesses similar to those at the adjacent West Graham deposit, including 44.48m (TW estimated at 70%; starting 436.89m down hole) at 0.60% Ni and 0.27% Cu, including 4.42m of 2.29% Ni and 0.30% Cu. SPC believes the Crean Hill 3 mineralized zone extends from the SPC-Vale property boundary to the west for more than 600m (Exhibit 5). 

Crean Hill 3 Acquisition: SPC can earn an 100% interest in Crean Hill 3 (from surface to 264.3m below msl (550m vertically). Under the deal, SPC will act as operator and must deliver a Feasibility Study by June 30/26 (SPC can extend the deadline to June 30/28 by completing a NI 43-101-compliant Pre-Feasibility Study by the former deadline) SPC must also pay Vale $1M in cash at the Feasibility Study Deadline. Upon earning 100%, SPC would grant Vale a 1% NSR on the combined project and a 37% net profits royalty (NPI) on any net profits — payable only if the net present value of all after-tax net profits earned during the calculation period exceed zero at an 8% discount rate (reflecting an 8% return on capital for SPC). Vale retains a right of first refusal (ROFR) on the sale of the project or any part thereof, and a ROFR on any ore (or concentrates produced via wholly owned SPC mill) produced from the project.

Medexus Pharma

Full report here.

MDP-TSX: C$1.59 | SPECULATIVE BUY | Target Price: C$3.00 | Projected Total Return: 89%
 
Strong End to the Year with FQ4 Pre-Announcement Showing Continued Momentum in Key Growth Products; Reiterating Spec. Buy Rating, C$3.00 PT

Event - Medexus reported preliminary unaudited FQ422 (period ending March 31, 2023) revenues that were ahead of consensus expectations, with key products IXINITY, Gleolan, Rasuvo and Rupall again driving growth. As the company continues to derive significant operating leverage from its established sales infrastructure, we continue to believe the Company's top line is poised to grow meaningfully in the coming years via successful growth product launches and label expansions. As such, We continue to view MDP as a compelling opportunity for investors and reiterate our Spec. Buy rating and $3.00/shr target price.

Revenue Ahead of Consensus as Key Products Continue to Gain Momentum – Medexus announced that it expects to deliver $28.0M to $28.5M in revenue for FQ422, ahead of consensus at $27.8M and slightly below our $28.8M estimate, for impressive growth of at least 38.1% y/y. Management highlighted that IXINITY (Factor IX replacement for hemophilia B patients) continued its positive sales trend, reflecting both new patient conversion as well as strong retention of existing patients. Similarly, sales of glioblastoma imaging agent Gleolan have continued to grow as the company successfully executes its post-transition sales and marketing activities after acquiring the product in March 2022. Rasuvo has held its position as the leading methotrexate autoinjector in the relatively mature US branded methotrexate market, while prescription allergy medication Rupall showed meaningful growth y/y despite FQ4 being a seasonally weak quarter for this product class.

Base Business Strength Leads to Sixth Consecutive Revenue Beat Versus Consensus – With the full audited financial results expected in late April or early May, we highlight that the midpoint of the preliminary revenue range represents the sixth consecutive beat versus consensus. The company continues to demonstrate that, despite delays to the potential FDA approval of Treosulfan, management has been able to successfully leverage its sales teams and infrastructure to meaningfully grow the existing portfolio assets. Meanwhile, the potential approval of Treosulfan in late C2024 (mid-F2025, 40% probability of approval) continues to provide significant upside optionality for investors.

Board Update as New Chairman Announced, Expecting Seamless Transition – The Company also announced that long-time board member and chair of the audit committee, Michael Mueller, has been elected to succeed current chair and managing partner of life sciences venture capital firm Lumira Ventures (private), Peter van der Velden, who has chosen to step down. Along with being the current chairman of the board of Laurentian Bank (LB-TSX, NR), Mr. Mueller has strong business leadership experience from previous senior positions at TD Bank (TD-TSX, NR) and the Public Sector Pension Investment Board as well as at MDS Capital Corporation (acquired) and other funds and ventures.

Valuation – Our F2024 and C2023 estimates remain materially unchanged and, as such, we reiterate our Speculative Buy rating and C$3.00/shr price target, which is derived using the average of our DCF (13% discount rate, 3% terminal growth) and 6.0x C2023 EV/EBITDA valuations. MDP currently trades at 4.0x C2023 EBITDA, below Canadian peers at 7.0x, and below the DCF value of the portfolio ex-Treosulfan, which we estimate to be C$2.20/shr, while the risk-adjusted value of Treosulfan is estimated to be C$1.00/shr (40% probability of approval).

Fathom Nickel

Fathom Nickel (FNI:CSE) | Watch List | $0.18Close

Drilling Cuts an Impressive 18.1m of 2.43% Ni and 0.18% Co at Gochager Lake

• And up to 28.23g/t Pt-Pd-Au over 0.7m

• 58.2m (from 124.45m) at 1.49% Ni, 0.38% Cu, 0.11% Co and 0.07g/t 3PE, including
  • 18.1m (from 128.15m) of 2.43% Ni, 0.51% Cu, 0.18% Co and 0.06g/t 3PE; and
• 0.7m (244.1m) at 1.16% Ni, 0.19% Cu, 0.07% Co and 28.23g/t 3PE.

• 2.4m (250.9m) at 1.38% Ni, 0.43% Cu, 0.11% Co and 0.27g/t 3PE, including
• 0.4m (252.9m) of 1.82% Ni, 0.18% Cu, 0.14% Co and 1.36 g/t 3PE.

• Further BHEM surveying around holes GL23003 and GL23004 to better define the geometry of the mineralization and off-hole responses in the 2023 drilling and historic holes.
• Surface geochemistry, mapping and prospecting and ground proofing recommendations derived from a 2008 VTEM survey.
• Follow-up drilling in Q3-Q423.

 
At Albert Lake, FNI continues to evaluate results of a winter gravity and two-hole drilling, BHEM program performed in an area of robust soil geochemistry. Deep penetrating, surface geophysics, additional BHEM surveying and additional MMI surface geochemistry are being contemplated ahead of additional drilling in mid-Q323.

Palladium One

Full press release here.
 
Palladium One Mining  Announces Completion of Strategic Equity Investment by Glencore

Toronto, Ontario--(Newsfile Corp. - April 12, 2023) - Palladium One Mining (TSXV: PDM) (FSE: 7N11) (OTCQB: NKORF) ("Palladium One" or "PDM") is pleased to announce that, further to PDM's news release dated March 30, 2023, it has completed a C$4,252,050 non-brokered private placement financing (the "Private Placement") with a wholly-owned subsidiary of Glencore plc ("Glencore"). Pursuant to the Private Placement, PDM issued 28,347,000 common shares ("Common Shares") at C$0.15 per Common Share. Upon completion of the Private Placement, Glencore owns approximately 9.99% of the issued and outstanding Common Shares of PDM on a non-diluted basis.
 
Net proceeds of the Private Placement are intended to be used for exploration and development activities at the Company's nickel projects, for future exploration and development activities, working capital and general and administrative expenses.
 
In connection with the Private Placement, Palladium One and Glencore entered into an investor rights agreement (the "Investor Rights Agreement"), pursuant to which Glencore is entitled to certain customary rights including participation rights on future equity security issuances and a right to nominate an individual to the technical committee of Palladium One. Under the Investor Rights Agreement, Glencore will agree to certain customary transfer and standstill restrictions.
 
The Common Shares issued pursuant to the Private Placement are subject to a four-month hold period from the date of issuance in accordance with applicable securities laws. No commissions or finder fees are payable in connection with the Private Placement.

Converge Technology Solutions

Converge Technology Solutions Corp (TSX: CTS, $3.99, Speculative Buy, PT $9.00) – Pipeline flat q/q suggests upside where 90% of Q4 pipeline booked in the quarter. Backlog clears 6-8 weeks vs 6-8 months one year ago.
 

• Accounting Policy Change: In May 2022, IFRS 15 introduced new interpretations of treating revenue from the resale of standard software licenses. Given this, CTS applied this accounting policy change to report the resale of standard software licenses on a net basis (as it was previously reported on a gross basis).
• Overall, the accounting policy change did not have an impact on the reported gross profit, net income and Adjusted EBITDA. However, the move boosts our gross profit and EBITDA margins for 2023 from 22.7%/27.5% to 6.6%/8.0% - we see the higher margins as a positive valuation consideration.
• Without the accounting policy change, CTS would have been able to meet their Q4 and FY22 mid-point targets that were released during the pre-quarter release.
• Below is a table that highlights the impact of the accounting policy change:

Exhibit 1: Accounting Policy change on Revenue

Blackline Safety

• Blackline (BLN-TSX, Speculative Buy, PT $3.50) announced a $50M+ securitization partnership with CWB Maximum, whereby CWB Maximum would purchase receivables that stem from the Company’s leasing program (Echelon acted as advisors).
  • As you may recall, the Company has been working on becoming EBITDA positive exiting the current fiscal year (Oct 31 year end). Among other things, they increased pricing of their product and dramatically decreased their opex.
  • This morning’s announcement is another step toward improving BLN’s financial strength and liquidity in a non-dilutive manner, positioning BLN to achieve its positive EBITDA target exiting F2023.
• For background on the leasing program, Blackline provides the option for customers to purchase outright its devices or to lease through its G7 lease program.
  • While the lease model is attractive as it provides strong client retention, there is a significant negative impact to cash flow with a lease generally taking 1.5-2 years for the cash flow to breakeven vs. a standard purchase (where initial payment is made up front).
  • Through the new facility, the Company can elect to sell its lease receivables to CWB Maxium within 30 days of signing a new customer contract.
• BLN closed out last quarter with a net cash position of $15.5M ($23.5M in cash against $8.0M of borrowings).