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$1 Billion Jupiter Gold & Silver Fund acquires ~10% of MTH at a 29% premium to last close


Published 26-JUN-2024 10:31 A.M.


12 minute read

Disclosure: S3 Consortium Pty Ltd (the Company) and Associated Entities own 3,900,000 MTH shares and 2,005,000 MTH Options at the time of publishing this article. The Company has been engaged by MTH to share our commentary on the progress of our Investment in MTH over time.


The biggest planet in our solar system.

... and it also happens to be the name of a very large London based gold and silver fund.

The Jupiter Gold & Silver Fund has over $1BN in funds under management.

The fund “dynamically blends” gold and silver bullion (physical assets), and mining equities.

Those mining equity investments include the ASX listed De Grey Mining. Jupiter invested in De Grey in 2020 - De Grey is now a $2.6BN capped gold developer - that one has turned out pretty well so far.

However exploration companies form just 3% of its total portfolio.

And now there is a new one in the fund.

Jupiter Gold and Silver Fund has just invested $2M into our Mexican gold and silver developer Mithril Resources (ASX:MTH).

This investment was done at 20c/share - a 29% premium to MTH’s last trade.

Jupiter now has a ~ 10% stake in MTH, which is capped at $21M (undiluted, post capital raise).

In total, MTH just raised $3.7M at 20c per share from new and existing institutional, professional and sophisticated investors.

MTH has a “district” scale, high-grade gold-silver project in Mexico.

It is currently drilling at the project and with this new funding injection, the drill program will double to 9,000m - that means continuous drilling through to the end of 2024.

MTH already has a 11 million oz silver and 373,000 oz gold JORC resource.

Ultimately MTH has a goal to double their JORC resource by Q1 of 2025 (note this is just from its “Target 1” - there are more exploration targets on top of this...)

So with drilling happening right now, and drilling for the rest of the year, we are looking out for a stream of assay results which will hopefully deliver some nice high grade intercepts.

The Jupiter Gold & Silver Fund sits within the Jupiter Asset Management Group.

Aside from its investment in De Grey Mining (and now MTH), the Jupiter Gold & Silver Fund counts Sprott Physical Silver ETF as its second largest holding.

Jupiter visited the MTH project in October last year and obviously liked what they saw, now taking a ~10% stake in the company.

We think bringing Jupiter onto the share register is a massive coup for MTH. Especially given exploration companies only count for circa 3% of its total funds under management.

So what's next for MTH?

Like we mentioned above, it's all about drilling and growing its resource - from this drilling we want to see:

  • Drilling in and around the JORC resource - MTH drill underneath the known resource to see if it extends at depths. Ultimately, MTH’s goal is to double its existing 11 million oz silver and 373,000 oz gold resource.

  • Follow up on high-grade hits from 2020 and 2021 - MTH will be following up the high grade hits from previous holes where grades were as high as ~80.3g/t gold and 3,129g/t silver. These could get the market interested if MTH can get similar results...

  • Drilling across other prospects chasing new discoveries - We want to see MTH deliver some major new silver and gold hits across other exploration targets which could contribute to even more resource growth..

Below we share a link to an interview with Jupiter Investment Manager Ned Naylor-Leyland - where he shares his prediction for the silver market, and why the next leg up for the silver price could be to $50/oz.

Another leg up in the silver price (which is still trading at around decade highs) would be the perfect backdrop for MTH’s next 6 months of continuous drilling.

As we mentioned above, Jupiter has a successful track record of investing in development stage mining companies, with the highest profile company being De Grey Mining.

Jupiter first invested in De Grey in 2020 and moved to a substantial holder in 2021 through on-market buying:

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The past performance is not and should not be taken as an indication of future performance. Caution should be exercised in assessing past performance. This product, like all other financial products, is subject to market forces and unpredictable events that may adversely affect future performance.

De Grey Mining has been one of the best small cap mining investment stories of the past five years, and Jupiter was there following its run up from a small cap through to the cusp of production (it recently raised capital to fund construction of its mine).

When a big fund like Jupiter takes a material position in one of our Investments we take interest, particularly if the investment is done at a premium to the market price (and after we Invested).

Clearly the team at Jupiter like what they see with regards to MTH’s project and it is strong validation that the company is heading in the right direction.

The $3.7M in funds just raised will enable an additional 5,000m of drilling on top of existing MTH’s 4,000m drilling planned program.

The goal of MTH’s drilling program is to grow the size of its existing gold and silver resource.

MTH has a 529,000 oz gold equivalent resource (~11 million ounces silver, 373,000 ounces gold) in the “Sierra Madre Trend” in Mexico.

The resource is high grade, with 141 g/t silver and 4.8 g/t gold, and its only in the first target area.

The wider region is home to around 10% of the world’s historic silver production and some of the biggest silver/gold producers in the world.

Back in 2021, MTH reached a market cap of $110M off the back of delivering one of the top 10 intercepts for the year.

MTH previously hit intercepts with silver grades of ~3,129g/t and gold grades of ~34.72g/t.

With inflation rising the silver and gold prices have hit all time highs in the last few months and the market is starting to take increasing notice of equities leveraged to the thematic.

Jupiter in particular sees there being a strong supply deficit for silver in the next five years, even more than other common commodities like copper or lithium:

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(Source - Jupiter Asset Management Presentation)

The demand is primarily driven by:

  1. Silver’s use as a hedge against government spending and debt sustainability
  2. Silver’s industrial uses in solar panels

Today the silver price is hovering around the ~US$29/oz.

Given our Investments, we are obviously interested in following the commodity price over the next few months and years.

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Bringing a long term deep pocketed fund onto the register has been a great coup for MTH, and demonstrates the quality of the asset it is developing.

This brings us to our Big Bet...

Our MTH Big Bet

“MTH re-rates to a $150M market cap by expanding its Mexican gold-silver resource with new ultra high-grade silver (and gold) drill hits, taking the project into development and/or attracting a takeover bid at multiples of our Initial Entry Price”

NOTE: our “Big Bet” is what we HOPE the ultimate success scenario looks like for this particular Investment over the long term (3+ years). There is a lot of work to be done, many risks involved - just some of which we list in our MTH Investment Memo. Success will require a significant amount of luck. There is no guarantee that our Big Bet will ever come true.

More on MTH’s new substantial holder, Jupiter Gold and Silver Fund

The Jupiter Gold & Silver Fund was started in 2016 and sits as part of Jupiter Asset Management.

The fund has around US$1BN of assets under management with a key focus on both gold and silver equities as well as gold and silver bullion.

A focus of the fund is on development stage assets in both the Americas and Australia.

And, there is a particular focus on silver equities given that silver has a stronger “beta” compared to gold.

The theory is that silver follows gold, but tends to be more volatile.

This provides the fund an edge compared to the gold price index where it can find undervalued investments and potentially make superior returns over the long run.

As we mentioned above, we listened to Jupiter Fund Investment Manager Ned Naylor-Leyland on the ethos of the fund as well as the outlook for the gold and silver market:

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(Source - Jupiter Asset Management)

It's a great listen, and we have summarised some of the key takeaways below.

The silver market

  • Supply and demand fundamentals for the silver market are extremely tight, with industrial demand for silver from solar panels set to drive demand.
  • The markets “Need a big and powerful move through $50 to solve this fundamental problem”.
  • Even at a $50 price point, Jupiter predicts that mine supply won’t come online quick enough as it will be on the back of a price “breakout” and banks will be hesitant to fund CAPEX for marginal silver projects.
  • This means that existing producers, and developers that can move quickly into production, will be able to take advantage of higher silver prices for longer as supply is slow to catch up.

Mining stocks and development stage companies

  • The goal of the fund is to outperform the gold price index.
  • An edge can be gained by finding mining equities that outperform.
  • Jupiter in particular like development stage companies because this is where it can add the most value.
  • The majors need to replace their depleting reserves, and this will likely come from earlier stage companies building in-ground resources.

So, how does this all affect MTH?

After listening to the Jupiter Investment Manager we can understand why MTH was selected as an investment for the fund.

MTH has a development stage asset, with an existing resource in the silver space.

Out of all of the development stage assets out there, we are very pleased Jupiter picked out MTH to take a substantial holding of.

We think that having a fund like Jupiter on the register will be invaluable for the company as it builds out its JORC resource - a deep pocketed supporter that will be along for the journey as it moves through the stages of the mining company lifecycle into hopefully production.

But what happened to MTH a few years back?

In mid-2020 MTH acquired its Mexican project, drilled it out and published a maiden JORC resource in November 2021.

The drilling at the time was focused on one small part of its project.

Before MTH could drill again for extensions or additional discoveries, macro sentiment changed, and MTH went into cash preservation mode.

The main issue that saw its share price deteriorate was that MTH didn’t fully take advantage of its buoyant share price and higher market cap during 2020 and 2021 to raise a big chunk of cash to fully drill out the project.

Then precious metals sentiment turned negative for a few years and the window to raise a decent amount of cash was gone.

The company's valuation slowly dwindled with poor precious metals sentiment, money for drilling wasn't there so 'kick the can down the road' small raises diluted shareholders.

Then a protracted merger process that didn’t eventuate ultimately resulted in tired and disengaged shareholders and not enough cash to do anything.

MTH was forced to suspend and raise money to fix the balance sheet at a crunched valuation a few months ago...

Which is where we Invested.

This was BEFORE the silver price started running.

Which means that there are lots of potential targets for MTH to drill that were left untested.

Now however, MTH is in a much better funding position, with a further $3.7M of funds coming in, on top of the $3M cash it held at May 2024. It now has plenty of capital to grow its JORC Resource materially over the coming months.

More on MTH's drilling plan

Again, MTH is drilling in two key areas:

1. Drilling in and around the JORC resource - MTH drill underneath the known resource to see if it extends at depths. Ultimately, MTH’s goal is to double its 11Moz silver and 373koz gold resource.

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2. Follow up on high-grade hits from 2020 and 2021 - MTH will be following up the high grade hits from previous holes where grades were as high as ~80.3g/t gold and 3,129g/t silver. These could get the market interested if MTH can get similar results...

3. Drilling across other prospects chasing new discoveries - This is more exploration based drilling, and drill targets will become more clear as geophysics data from a recent LiDAR survey is interpreted.

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The main target for this round of drilling is to extend the existing JORC resource. With an additional $3.5M raised the company will be able to conduct a further 5,000m of drilling beyond what it initially anticipated.

If the company is able to use this capital to make a new discovery, this will be an unexpected surprise for us and an additional upside to the expansion of the JORC resource.

MTH confirmed that the target is to double the existing JORC resource by the end of this year, and this is what we are looking for it to achieve.

What do we want to see next from MTH

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🔄 Drill results from ~9,000m program

With currently underway, we are hoping MTH can replicate the high grade hits from 2020 and 2021.

If MTH can put out the silver grades in the thousands of grams per tonne or gold grades in the high teens we think the market could react by re-rating MTH’s share price higher.

The focus for the first round of drilling will be on the area where MTH already has a JORC resource so we are hopeful the drill results come in strong.

🔲 Exploration Drilling Targets Identified

MTH recently did some LiDAR and Magnetic surveying on its project.

The goal of that program was to rank new drill targets across its project.

We are also looking forward to these results, primarily because these could help MTH deliver new discoveries on top of the area where its existing JORC resource sits.

What could go wrong?

Exploration Risk

With drilling about to start, the key risk in the short term is “exploration risk”.

There is always a risk that MTH fails to deliver any intercepts of interest.

Given MTH will be targeting areas where there is already an existing JORC resource any results below the ones that form the existing JORC resource could lead to a re-rate lower in MTH’s share price.

Commodity Price Risk

Both gold and silver are of interest to the market right now.

If the price of gold or silver cools, investor interest in the MTH project may wane as investors look to chase the next hot commodity.

We list more risks to our MTH Investment Thesis in our Investment Memo here.

How does this news affect our MTH Investment Memo?

Risk Mitigated: Funding Risk

The announcement today mitigates some of the funding risk for MTH. With $3.7M raised at 20 cents, a premium to the current share price, it is less dilutive for existing shareholders and a strong positive for the company.

Unexpected Upside: Large Fund Joins Register

There was also unexpected upside that was not forecast in our Investment Memo, that a Large Fund has joined the register.

This would advance our “Investment Thesis” for the company as Jupiter Gold & Silver Fund have a proven track record of success with companies like De Grey Mining.

Our MTH Investment Memo:

In our MTH Investment Memo, you can find the following:

  • What does MTH do?
  • The macro theme for MTH
  • Our MTH Big Bet
  • What we want to see MTH achieve
  • Why we are Invested in MTH
  • The key risks to our Investment Thesis
  • Our Investment Plan



General Information Only

S3 Consortium Pty Ltd (S3, ‘we’, ‘us’, ‘our’) (CAR No. 433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information and is for informational purposes only. Any advice is general advice only. Any advice contained in this article does not constitute personal advice and S3 has not taken into consideration your personal objectives, financial situation or needs. Please seek your own independent professional advice before making any financial investment decision. Those persons acting upon information contained in this article do so entirely at their own risk.

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The information contained in this article is current as at the publication date. At the time of publishing, the information contained in this article is based on sources which are available in the public domain that we consider to be reliable, and our own analysis of those sources. The views of the author may not reflect the views of the AFSL holder. Any decision by you to purchase securities in the companies featured in this article should be done so after you have sought your own independent professional advice regarding this information and made your own inquiries as to the validity of any information in this article.

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