Inflection Point Deals & Gold M&A Heating Up

What is an “inflection point” raise and why do we like them? More gold M&A this week - will cashed up gold investors now move to smaller gold stocks? Big US money is coming to critical metals.

Read our Saturday Weekender note here.

Our ‘Quick Takes’ on news from our Investments

• SS1 is kicking off a phased metallurgical testing program at its giant silver resource in Nevada.
  
  The last time anyone did metwork testing on this project was back in 2006... A lot has changed in mining since then and SS1 will be able to work into its processes all of the learnings from the operators that have been making money from silver-gold deposits in Nevada for decades.
  
• GUE put out a scoping study on its uranium project in Colorado.
  
  The NPV numbers start to look really good for the project when uranium is trading above US$90/lb, at today’s US$69/lb prices the project is marginally profitable.
  
  We think the game changer for GUE is the newly acquired ISR uranium project in Wyoming AND the value of its investment in Enrichment Tech company Ubaryon... more on that here.
  
• We saw two research reports come out for SGQ this week.
  
  The first was from MST Access which put a price target of 12c on the stock.
  
  The second was from East Coast Research - that one had a price target of 12-16c on the stock.
  
  SGQ was trading at 2.6c at Friday’s close. Here’s to hoping one of the two analysts are right... Our Initial Entry Price on the stock is 2c.
  
• Some macro news for SGQ as well this week... $7.5BN Lynas Rare Earth’s CEO said the company was looking at rare earths projects in Brazil, which is precisely where SGQ’s advanced stage rare earths asset sits.
  

• Lynas’ cornerstone asset is Mount Weld - a hard rock carbonatite hosted rare earths project.
  
  SGQ’s project has very similar geology - again a carbonatite hosted rare earths deposit. It’s probably safe to assume Lynas would be looking at things they understand very well? (Maybe, just maybe, our very own SGQ?).
  
  There is a precedent for a WA industry leader doing M&A in Minas Gerais, Brazil, with Pilbara Minerals going in for a project with identical geology when it took over another one of our Investments (Latin Resources).
  
• EIQ raised $17.3M in a capital raise at 30c per share.
  
  We participated in the raise and it looks like EIQ raised more money than it initially sought. The cap raise also had no options attached (it’s rare to see this in today’s market and we like this as long term Investors).
  
  Hopefully that is the last raise before EIQ can turn its AI heart disease detection tech into revenues... We lay out why we think it could be in our Quick Take here.
  
• TRI signed a pilot agreement with a Major League Baseball (MLB) affiliated academy in the Dominican Republic (they love their baseball) to test its single-led ECG algorithm for measuring sleep and mental wellness in high-performance athletes.
  
  This is an interesting development and opens up a new commercialisation pathway to assist with sports performance.
  
• JBY increased its US gold project area by 184%. JBY added 1,861 acres to its project area in Nevada, USA. The new project area sits to the west of JBY’s existing 1.4M ounce gold equivalent JORC resource.
  
  The key takeaway for us was how the new ground gives JBY long term optionality... 1) because JBY could use the ground to build production infrastructure on and 2) because JBY can go after new discoveries on the ground...
  
• TG1 has heritage surveys for its big WA copper target booked in for the “second week of May”.
  
  Quite a bit of newsflow coming from ~$3.8M capped TG1 over the coming months and a lot of action in some of the companies that hold ground next to TG1... Metal Hawk for example is up almost 10x on some drilling nearby one of TG1’s WA gold assets.
  
  TG1’s Joint Venture partner Novo Resources defined a 1.5km long soil anomaly at the JV’s NSW John Bull gold project (that we have seen for ourselves). Novo plans to be drilling that project in June...

Presentations from our Portfolio companies at RIU Sydney

A few of our Portfolio companies were in Sydney for the RIU conference this week.

Here are links to their presentations and interesting snippets we took from the presentations:

Global Uranium and Enrichment (ASX:GUE)

Watch the presentation here

An interesting takeaway for us was at 1:52. Managing Director Andrew Ferrier talked about Uranium Energy Corp in Wyoming which has gone on an acquisition spree, buying up uranium projects in the US.

The connection to GUE? Andrew sold Reno Creek to Uranium Energy Corp back in the day and now has the team that worked on that deal working for him at GUE...

St George Mining (ASX:SGQ)

Watch the presentation here

Executive Chair John Prineas mentioned SGQ would look to increase the size of its drill program and that metwork results should be ready next month...

He also talked about how SGQ’s rare earth resource, as it stands right now, is actually bigger than Lynas’ when it first put Mount Weld into production (and SGQ are aiming to double it by the end of the year).

He also mentioned that discussions with “strategics were ongoing” - Lynas maybe???

Titan Minerals (ASX:TTM)

Watch the presentation here

CEO Melanie Leighton talked about a 5M+ gold ounce resource target multiple times during the presentation.

At ~3:40, she talks about how the current 3.1M ounce gold and 22M ounce silver resource could very easily double with some deeper drilling AND that TTM is currently doing that drilling looking for a big “feeder zone”.

At 6:00 she also mentions Hancock’s major camp expansion at the Linderos copper project and how the JV partner is very committed to drilling out a copper porphyry.

Solis Minerals (ASX:SLM)

Watch the presentation here

SLM will be drilling two copper targets starting this month. That’s two shots at a big copper discovery inside the next 2-3 months...

SLM just raised cash too so it won't need to raise again pre-drilling.

The main takeaway from the presentation was the background of SLM’s team, especially Mike Parker who knows Peruvian copper very well.

Kaiser Reef (ASX:KAU)

Watch the presentation here

In the presentation, Managing Director Jonathan Downes mentioned the Henty gold mine acquisition has a “sub 1 year payback”, which essentially means IF gold prices can stay at current levels (or go higher), KAU could have a fully paid off asset in less than 12 months.

We especially liked the detailed run-through on how KAU could increase processing capacity and the exploration upside at Henty.

Pursuit Minerals (ASX:PUR)

Watch the presentation here

An interesting takeaway from the presentation was Managing Director Aaron’s comments at 8:40 where he mentions PUR is “looking at other opportunities inside Argentina”.

Argentina is becoming more and more interesting from a jurisdiction perspective, so it will be interesting to see what PUR can do here.

Deep dive notes we wrote this week

Titan Minerals (ASX:TTM)

This week TTM put out drill results from its copper porphyry project which is currently operating under a Joint Venture with a subsidiary of Gina Rinehart’s Hancock Prospecting.

The best result was a 735m intercept with copper equivalent grades of ~0.23%.

This is a very big intercept by any copper porphyry standards.

TTM is free carried for 20% on this giant copper project until Hanrine declares a “decision to mine” OR spends the full US$120M on the project - whichever comes first.

While Gina’s Hanrine funds all of that work on the copper project, TTM can spend its own time and cash adding to its already very big gold-silver project called Dynasty in the south of Ecuador.

At Dynasty, TTM has a 3.1M oz gold and 22M oz silver JORC resource.

TTM has been drilling that project since November 2024 and is expecting to upgrade its JORC resource by mid-year.

Good timing considering the recent M&A in southern Ecuador...

TTM had a very big day of trading on Thursday, with big volumes. We wonder who has been buying...

Read more: ⛏️TTM now targeting a 5 million ounce gold resource? Plus first results from copper JV with Gina Rinehart...

Global Uranium and Enrichment (ASX:GUE)

The world’s second largest producer of enriched uranium - Urenco - agreed terms for an investment in GUE’s enrichment technology.

Urenco is the biggest non-Russian/Chinese enriched uranium supplier in the world - Urenco’s FY24 revenues were €1.8BN ($3.2BN).

So Urenco is BIG, and we think the ideal partner to help GUE’s enrichment tech investment further progress the technology.

Urenco has signed a non-binding agreement to invest $5M into Ubaryon - which is the private company that GUE has a 21.9% shareholding in.

After the deal is completed, Urenco will own ~13% of Ubaryon, and GUE will remain as the single biggest shareholder of the technology.

Read more: ⛏️Second largest uranium enricher in the world Urenco agrees terms for investment into GUE’s enrichment tech.

Grand Gulf Energy (ASX:GGE)

A few weeks ago BP announced a new discovery offshore Namibia that flowed 11,000 barrels of oil per day...

The market reacted to that news by sending offshore Namibian explorer Pancontinental’s share price ~100% higher.

Off the back of that news Pancontinental hit a ~$100M market cap.

We think that news is good for our microcap Investment in GGE...

GGE has an application pending for acreage, offshore in Namibia’s Walvis Basin - that project has a 1.1 Billion barrel prospective resource.

With over half a dozen wells planned offshore in Namibia over the next ~12 months, we think more news like this could bring more market interest to GGE.

Especially once GGE’s exploration license application is converted into a granted exploration license.

Read more: 🛢️ GGE’s ASX peer running. A super major discovery with an 11,000 barrel of oil per day flow rate....

Macro News - What we are reading & listening to 📰

Rare Earths

Lynas CEO says company is eyeing rare earths buys in Malaysia, Brazil (Reuters)

We wrote about it earlier in today’s note but the most obvious thing to mention here is how similar Lynas and SGQ’s projects are...

Lynas’s cornerstone project is Mount Weld in WA, a hard rock carbonatite hosted rare earths deposit.

SGQ’s resource sits inside identical geology - a hard rock carbonatite.

Surely Lynas are eyeing assets they know and understand well...

Fun fact - SGQ’s resources are currently bigger than what Mount Weld was when Lynas first put the project into production all those years ago...

AND SGQ is looking to double the resource by the end of this year

USA - Critical raw materials

Trump Administration Boosts Domestic Mineral Production—Adding 10 More Critical Mineral Production Projects to the Federal Permitting Dashboard (US Government)

Another 10 projects added to the fast-tracked permitting dashboard and the US government is planning to add more in the coming weeks.

Interestingly, the US government isn't discriminating on commodities.

This is good news for US-based projects where the underlying commodity is currently out of favour (lithium has entered the chat).

Here is a list of the 10 projects with the focus commodity highlighted:

Gold

Gold Road Resources takeover: Investors cash in on gold deals (AFR)

There is more gold M&A happening at the big end of town in an all cash deal...

Our view is that we will see a trickle down of cash from major gold companies into the hands of the mid-cap players and eventually into the small caps.

(like we talked about in yesterday’s Saturday edition)

Gold Road is one of the 10 biggest gold stocks listed on the ASX, if the deal with Gold Fields is completed, it would mean ~$3.7BN cash goes back into the hands of Gold Road shareholders.

That cash will need to go somewhere, and if some of the shareholders start looking for their next Gold Road, they will have to start looking at much smaller companies...

See our commentary on what gold M&A means for smaller companies here: How the U.S. Just Made Gold Mining a Strategic Priority

Silver

Silver Slingshot (Catt Calls)

On Thursday we watched the “Silver Slingshot” webinar with silver bulls Michael Oliver, Eric Sportt and Phil Baker.

The session opened with an interesting discussion by Michael Oliver reading the silver charts.

Charting can sometimes be more of an art than a science, but the key takeaway is that “silver is set for breakout” and once it hits $34-35 then it is “game one” for the price to move upwards.

The discussion moved to silver supply, and Phillip Baker explained how the silver market is in a structural deficit.

This is because silver production is predominantly a bi-product. Which means that even if the silver price moves up, silver production doesn’t always follow.

Finally, Eric Sprott talked about the money that is sitting on the sidelines ready to flow into the silver and gold markets.

“With the gold price so high, major gold producers will net $160B in pre-tax profits this financial year... that amount will need to be invested somewhere.”

Given the traditional silver-gold ratios, there is an argument that the silver price has not been properly realised, and could be as high as US$250 per ounce if it is properly valued against gold.

Overall it was an interesting round table discussion and reminder of why we like silver.

(we will post the link to the video once it becomes available)

Defence

US ability to defeat China in Taiwan threatened, top Indo-Pacific commander warns (Financial Times)

The commentary from American military commander Samuel Paparo in this article was interesting...

Paparo’s main view seems to be that the US is falling behind China in terms of defence manufacturing capacity and speed to manufacture.

We think this strengthens the macro theme behind our Investment in AML3D (ASX:AL3) which sells 3D printing systems and software into the defence industry.

AL3’s systems allow for manufacturing times much faster than conventional casting processes’.

See our latest AL3 note here: Trump announces tariffs to revive US shipbuilding - AL3 3D prints metal ship parts fast... in the USA.

Lithium

Australia's Lake Resources shares surge after strategic review launch (Reuters)

Lake Resources isn’t the first lithium brine stock that is talking up M&A potential.

Galan Lithium had similar news a few months ago, and after rejecting a takeover bid that was 3x higher than its share price at the time, the company went on to raise some cash.

We are taking this as yet another signal that the valuation of some of these bombed out lithium stocks are starting to look attractive for larger players with a longer term view than the market...

Gates, Bezos-backed KoBold to buy stake in DRC lithium project (Mining.com)

Remember Azure Minerals?

The company with a giant lithium project in the DRC that had some issues with the government, and has been in suspension for nearly three years now...

Well, that project is back up for sale and to none other than US-based company KoBold.

We have written in the past about how countries will look to use their natural resources to “do deals” with the US Government, particularly under the new Trump tariff regime.

This deal shows that the US is even looking in Africa, to secure the critical resources needed for its future.

Nickel

Indonesia Hikes Nickel, Tin Mining Royalties in Bid to Fund Prabowo Policies (Bloomberg)

Nickel is one of the “battery metals” that has really taken a beating over the last 2-3 years.

The main reason for the beating is an oversupply of nickel coming out of Indonesia. All of that supply all of a sudden becomes “at-risk” if the Indonesian government starts to intervene in its domestic mining industry.

To be clear, we don't think the oversupply will correct overnight here, but news like this are things we are keeping an eye on.

What else we are watching and listening to:

Rick Rule: The Gold Rush, Trump on Uranium, & Why $60 Oil Isn't Sustainable

Mastering the Lassonde Curve's Valley of Despair (Rick Squire) (Money of Mine Podcast)

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Bye for now.