Last Price:
Date of Initial Coverage
18-Feb-20
Initial Entry Price
$0.200
Returns from Initial Entry
-76%
TMR becomes a gold producer following the discovery of enough new gold sources to justify the restart of its onsite gold mill.
Opened: 28-Jan-2022
Shares Held at Open: 3,432,000
Tempus Resources (ASX:TMR) is an exploration company focussed on gold in Canada and Ecuador.
Gold is considered a safe-haven asset that performs well when the overall market sentiment is negative.
Historically the gold sector outperforms other asset classes in times of increased volatility (i.e bubble crashes, Inflation or geopolitical tensions).
With inflationary pressure popping up all over the world and heightened geopolitical tensions due to supply-chain issues. We think that gold serves as the perfect hedge against an unexpected economic shock occurring.
Fast Pathway to production
TMR’s Canadian assets have had historical production of over 230,000 ounces and comes with a fully permitted mine. The project also has existing processing infrastructure in place so any new discoveries can be quickly put into production, especially if the gold price goes on a run.
Location
TMR’s Gold project in Ecuador is a nearology play, the asset sits adjacent to CA$2.6B capped Lundin Gold’s Fruta del Norte project. A discovery here could lead to a positive re-rate in the TMR share price.
Capital structure
Company highly leveraged to new discoveries with only 125M shares on issue. With a market cap of $15M and $4.3M in cash TMR has an EV of ~$10.7M.
Objective #1: Make new discoveries at the Canadian gold project.
Milestones
Drilling program commencement
Drilling results
Objective #2: Upgrade the JORC resource at the Canadian gold project.
We want to see TMR complete another round of drilling at the Blue-Vein discovery both infill and extensional. Off the back of these results, we want to see TMR upgrade the JORC resource for its Canadian gold project.
Milestones
JORC resource estimation commenced
JORC resource completed
Objective #3: Re-start exploration at the Ecuador Gold project, and identify drill targets.
Milestones
Soil sampling works completed
Drill targets identified
Exploration risk
TMR has no established economic resource, this means the company is dependent on a new discovery being made to make it economically feasible to get its assets into production and producing cash flows. If a new vein or mineralised system is not found at its Canadian project then the project may become stranded.
Financing risk
TMR is doing high-risk high-reward exploration drilling which means they need access to capital that is willing to finance this type of exploration. TMR is heavily reliant on good market conditions and positive sentiment in the gold-space.
Commodity risk
Gold is a commodity that shines in periods of market volatility & negative sentiment. This doesn't happen often and when it does it can be for a very brief period.
Ecuador country risk
In late-2021 a federal election meant a more mining friendly government came into power in Ecuador but there is still a risk that the government and regulators look to make structural changes to the mining industry. The mining industry needs a stable geopolitical environment given it requires long-dated capital investment, there is a risk the government makes changes that deter capital investment and/or make projects uneconomic to explore/mine.
The TMR share price took a beating in the last quarter of 2021, being sold off from its August 2021 high of 29.5c to be now trading at around 12c.
This has been disappointing for us and a lot of long term investors - we have been holding TMR for almost 2 years now, and have not sold a share. Our average entry price is ~18c across four separate investments.
Hitting our above objectives this year combined with a positive gold price should see TMR’s share price re-rate, given the low number of shares on issue (~125M). In 2022 we will look to sell about 20% of our holding if TMR trades above 30c.
Disclosure: The authors of this memo and owners of Next Investors, S3 Consortium Pty Ltd, and associated entities, own 3,432,000 TMR shares at the time of publication. S3 Consortium Pty Ltd has been engaged by TMR to share our commentary and opinion on the progress of our investment in TMR over time.
✅ Initial Investment: @ 20c
🔲 Top Slice
🔲 Free Carry
✅ Increase Investment: @ 34c
🔲 Free Carry
✅ Increase Investment: @ 14.5c
🔲 Free Carry
✅ Increase Investment: @ 17.86c
🔲 Free Carry
✅ Increase Investment: @ 5c
🔲 Free Carry
🔲 Take Some Profit
🔲 Price increases 300% from initial entry
🔲 Price increases 500% from initial entry
🔲 Price increases 1000% from initial entry
✅ 12 Month Capital Gain Discount
🔲 Hold remaining Position for next 2+ years
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