Sunday Edition: 1st June

Right now, some of the team is travelling through North America getting a first hand look at some of the assets that are being developed by the stocks in our Investment Portfolio.

Over the coming weeks, be on the look out for big updates from them on site, what they have learned and some of the key highlights from each region.

Stay tuned...

In the meantime here’s a quick summary of what we wrote, read, and watched during the week.

Yesterday’s Saturday Edition

Commentary:

• IIQ share price running - price sensitive news coming on Monday.
• Why are biotech conference “posters” such a big deal?
• MTH current in halt pending the release of channel sampling results on Tuesday.

Read yesterday’s Saturday note here: IIQ Poster Presentation - New Data Reveal Monday

• This week CAY secured a major financing deal with a major bank in Cameroon for ~US$140M to fund its bauxite project.
  
  A big debt financing package is usually the hardest part of any project financing, but with this credit facility secured, CAY is in a very good position to set up the mining, rail and transport infrastructure for its project.
  
  CAY expects to make its first shipment of bauxite in the first half of next year.
  
• This week EMD released the 6-month ‘post treatment’ results of its first 8 patients undergoing its MDMA-assisted therapy trial for Post Traumatic Stress Disorder (PTSD).
  
  These results were extremely positive, showing that even six months after treatment was complete, patients continued to improve in both quality of life AND had reduced PTSD symptoms.

Up until now, the main concerns around EMD’s type of therapy were around the durability of the benefits - do the measured benefits recorded at the time of treatment last for months after treatment?

This week EMD has released results confirming they do. We think that this “durability of impact” would be very important to funders (like health insurers) when evaluating the value proposition of EMD’s treatments.

• Occidental Petroleum and Chevron are the next two major oil companies to enter offshore Peru after TotalEnergies started securing acreage last year.
  
  Our micro cap Investment CND was first to its assets...
  
  Then came TotalEnergies and now Chevron and the Warren Buffet backed Occidental...
  
  Fair to say that offshore Peru is becoming a hot spot for petroleum and gas exploration.
  
  CND is on the hunt for a farm in partner to help it drill its multi-billion barrel prospective oil resource.
  
  Nothing like a bit of competitive tension to nudge a deal along.

• SLM is drilling right now for copper and gold in Peru.
  
  A 2,500m drill program is due to begin this weekend, targeting multiple porphyry and IOCG anomalies identified from earlier geophysical and geochemical work.
  
  Here is the safe arrival of the diamond drill rig on site a few days back - not a lot of vegetation to get through here:

We are hoping for SLM to make a similar discovery to its regional peer AusQuest, who re-rated ~700% on a copper discovery.

Ahead of the drill rig arriving on site, SLM’s non-executive Chairman Chris Gale bought up 200,000 shares on market to add to his exposure to an outcome.

We have had a big previous win with one of Chris’s companies - he was the founder and Managing Director of Latin Resources which was taken over by $4.2BN Pilbara Minerals for ~A$560M.

A big part of the reason we are Invested in SLM is because of Chris’s involvement in the company, so seeing him step up and buy on market ahead of this drill campaign is a good sign.

• This week TRI activated its clinical trial site at the West Los Angeles VA Medical Center.
  
  In partnership with the US Department of Veterans Affairs, this trial will evaluate the effectiveness of TRI’s algorithm to screen for a current major depressive episode (cMDE) through sleep.
  
  More importantly however is whether TRI’s algorithm works with single-lead ECG (the type of signal used in an Apple Watch).
  
  If this trial proves that TRI’s algorithm is effective with single-lead ECG, it could open up the possibility of a broad consumer product to detect mental health issues through sleep.
  
  The trial will be completed over 12 weeks with 30 veterans with suspected sleep apnea recruited into the trial.

Kaiser Reef (ASX:KAU)

Earlier this week KAU announced a record gold pour of over 1,200 ounces of gold from the first 10 days of owning its newly acquired Henty gold mine.

(Source - KAU Announcement)

That's $6.2M of gold at today’s gold price of ~A$5,170 per ounce.

And if we take the mine’s previous owner's last reported production “all in cost per ounce” of $3,283/oz...

By our rough calcs that’s ~$2.264M profit to KAU in the first 10 days of owning this new mine.

KAU has been saying they expect 25,000 oz per year production from Henty.

By our calcs, 1,200 ounces produced over 10 days announced on Monday would be 43,800 ounces over a year.

So the first 10 days of production far exceeded expectations...

A glorious way to kick off new ownership of this mine for KAU.

Of course they may have just hit a higher grade section in the mine - it might keep going for longer... or quickly revert back to average.

It's a great start but we are keeping our expectations set to 25,000 oz per year from Henty for now.

Read more here: $98M KAU produces 1,200 ounces of gold (~$6.2M) in 10 days...

Europe’s largest shipbuilder calls on region to build up underwater defences (FT)

With the waning reliance on the US as a reliable defence partner, the CEO of Fincantieri - Europe’s largest shipbuilder - has called on Europe to scale up underwater defence capabilities.

Fincantieri expects its underwater division to “double in size over the next two years”.

We think this is a good macro backdrop for our Investment AML3D (ASX:AL3) which sells 3D printing systems and software to the US Navy and defense manufacturers.

AL3 is already rapidly expanding into the US, however has set aside $5M from the $30M that it raised last year to explore (and potentially set up) in the UK/European market.

In April, AL3 signed its first deal into the UK Defence market with an alloy test contract with BAE Systems.

China’s battery giant eyes world domination (The Economist)

Fresh off the back of a listing on the Hong Kong exchange and a A$7B capital raise ($HK35.7 billion) CATL is set to expand globally.

CATL already supplies 38% of the global EV market (including Tesla, BMW, Toyota and Volkswagen).

But while the Chinese EV market has thrived, there is a much slower uptake in the West (given the China-US tariff situation, and cost to produce EV’s domestically).

This has caused a plummet in the lithium carbonate price, with Reuters reporting this week that lithium major SQM had missed its revenue forecasts.

If CATL is able to set up facilities within the US and other Western countries in a technology sharing agreement, then it may help to drive prices down and mass adoption in these markets.

This Hong Kong listing may be just the first step.

Is this the bottom of the cycle for our battery metal hopefuls? We hope so.

Battery metals companies we are Invested in:

• Multi-Commodity - ION
• Lithium - PFE, PUR
• Graphite - SGA

Albanese government approves massive Woodside North West Shelf development (AFR)

This felt like the first week in a long time when the winds of fortune finally turned towards domestic natural gas in Australia.

Being a fossil fuel, but also a vital energy source, natural gas has been a “hot button issue” in the net zero conversation in Australia.

A transition fuel? A setback to net zero? An opportunity? A necessity?

There were a few key pieces of news announced this week that signified Australia’s stance on the matter.

Under Labor, domestic natural gas will be a part of the transition to net zero, and the government will support projects and invest in our energy future.

Here is what happened this week:

• The Albanese government approved a massive Woodside North West Shelf development (AFR)
• Westpac relaxed its climate targets making it easier to lend to gas projects in Australia (AFR)
• The Albanese government signalled an intention for an “East Coast Gas Reserve” for Australia (AFR)

With the commanding victory by the Labor party at the recent election, Albanese now can invest in new gas projects without worrying about political fallout from the far left.

This is particularly good news for gas exploration companies in Australia.

We are invested in Elixir Energy (ASX:EXR), exploring for natural gas in the Taroom Trough in Queensland.

EXR has the largest holding in the basin and is next door to majors like Shell, Santos and Omega Energy.

As the need for domestic natural gas heats up we expect extra attention on EXR and the Taroom Trough region.

(sorry for the terrible pun)

FDA commissioner says research on psychedelic treatment ‘top priority' | On Balance (News Nation)

In a recent public interview, the head of the FDA acknowledged growing support for psychedelics like psilocybin and MDMA.

It’s a big shift for the organisation that less than a year ago rejected Lykos Therapeutics' application for approval of its MDMA-assisted therapy.

While these substances remain Schedule I in the US, it appears that the FDA under Donald Trump is now pushing for faster data review timelines and more responsiveness to frontline clinicians.

In Australia, we have a different regulatory framework where we have “downscheduled” psychedelic drugs, so that clinicians with “Authorised Prescriber” status can administer them to patients in a commercial setting.

Our Investment Emyria (ASX:EMD) has clinicians with Authorised Prescriber status, and may look to take advantage of the new FDA outlook on psychedelics.

EMD had previously flagged the US as a potential expansion territory (see slide 7 from an investor presentation in February last year).

But since the FDA rejected Lykos' application for MDMA-assisted therapy, EMD has dropped references to the US in subsequent investor presentations.

If the regulatory sentiment around psychedelics begins to soften in the US, EMD could be in an extremely good position to return its attention to the US market, taking all of the lessons, relationships and reputation from its expansion in Australia.

The initial decision by the FDA to reject Lykos has likely warded off other potential market entrants for MDMA-assisted therapy, leaving EMD to steadily build up its business in Australia under the friendlier regulatory framework.

EMD is currently earning money in Australia from its MDMA-assisted therapy treatment and proving out its “scale up” business model where payers (like insurance companies) will pay for expensive patient treatments.

According to EMD’s last quarterly report it expects the first payer pilot trials “in the coming months”. We think the data release we saw earlier in the week (see more on that above) can only help in this cause.

Q&A With Brad Valiukas From Kaiser Reef (The Pick Magazine)

Listen to Brad Valiukas from KAU discuss what the Henty project acquisition means for the company.

JMM and Tribeca Nuclear Forum - GUE (from 1:27:00)

Listen to GUE’s managing director Andrew Ferrier present at the Jane Morgan Nuclear Forum. Andrew highlights the importance of GUE’s US-based projects to the bi-partisan ambitions of the US to secure its energy and nuclear future.

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Bye for now.