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Thomson Resources


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Our Investment Summary

Date of Initial Coverage


Initial Entry Price


Returns from Initial Entry


Our Big Bet for TMZ

TMZ becomes a silver producer by first proving up a large enough silver equivalent resource base that makes its "hub and spoke" development strategy feasible and then by feeding these resources through its centralised processing facility.

Investment Memo:

Thomson Resources (ASX:TMZ)


Opened: 08-Feb-2022

Shares Held at Open: 5,472,728

What does TMZ do?

Thompson Resources (ASX:TMZ) is exploring and developing Australia’s highest grade undeveloped silver asset by combining a number of previously uneconomic projects into a much larger project with a central processing hub.

What is the macro theme?

Silver is both a precious metal and an industrial metal - it typically trails the gold price, is a hedge against inflation and also a key component in the photovoltaic cells in solar panels.

Why did we invest in TMZ?

Highest grade undeveloped silver asset in Australia

TMZ spent much of 2021 in ‘quiet execution mode.’ They’ve spent a lot of time getting the metallurgy work done, necessary to produce an economic project. Should the silver price make a big move upwards the economics of the project would improve increasing the likelihood of production.

Trading at a discount relative to ASX-listed silver peers

As of October 2021, had a EV/Resource Ounce of 54 cents compared to the two other silver focussed ASX-listed peers, which came in at 85 cents and $1.19. For us, this means that pound for silver pound, TMZ could be due for an outsized re-rate if the silver price and development factors click into place.

Strong team

TMZ’s approach to their work is detailed and meticulous. TMZ’s team has decades of mining experience and we think this will aid their strategy of combining multiple different resources into a cohesive whole.

What do we expect TMZ to deliver?

Objective #1: Combine multiple deposits’ Mineral Resource Estimates to Hit 100 Moz AgEq (silver equivalent)

This is the threshold which TMZ believes it needs to hit in order to validate the project as economic. These Mineral Resource Estimates take into account all the latest data, and update the resources to the latest JORC standards. Given TMZ has multiple deposits, TMZ is in the process of updating its Mineral Resource Estimates which should help TMZ reach this threshold.

Objective #2: Complete metallurgical work

A core component of the project is understanding how to process the silver. Metallurgical work is needed to establish recovery rates at TMZ’s collection of deposits - and higher rates of recovery mean it is cheaper to pull the silver out of the ground and turn it into a finished product. We think success on the metallurgical front could unlock TMZ’s potential.

Objective #3: Move to Scoping Study/Pre-Feasibility stage

Metallurgical success may accelerate the Scoping Study and Pre-Feasibility work. The Scoping Study and Pre-Feasibility work is important for attracting institutional investors and giving the market greater confidence that the project is viable.

What could go wrong?

Market risk

Silver price takes a major hit, hurting the TMZ share price. A lower silver price hurts the chance that TMZ goes into production.

Development risk

Metallurgy work fails to find the right way to process TMZ’s resources, and they prove uneconomic.

Funding risk

Margins for success may be thin based on TMZ’s ability to secure funding. TMZ completed an institutional placement of ~$4.8M in October 2021 and subsequently secured $5M via an Equity Funding Facility which allows them to issue new shares in exchange for the ability to pull down more money as needed. TMZ’s access to funding hinges on investor sentiment towards silver, broader market sentiment towards small-caps and factors inherent to TMZ’s development progress.

What is our investment plan?

We have been holding TMZ since December 2020, our entry prices for TMZ are 8.8c and 10c

We still hold 87.7% of our total position in TMZ.

We will hold a position in TMZ to see them get into production around 2023. If objectives in this memo are achieved and the share price re-rates accordingly we will look to take some profit and de-risk our position by selling about 20% of our holding.

Disclosure: The authors of this article and owners of Next Investors, S3 Consortium Pty Ltd, and associated entities, own 5,472,728 TMZ shares and 112,500 TMZ options at the time of writing this memo. S3 Consortium Pty Ltd has been engaged by TMZ to share our commentary on the progress of our investment in TMZ over time.

Investment Milestones for TMZ

✅ Initial Investment: @ 8.3c
✅ Top Slice
🔲 Free Carry
✅ Increase Investment: @ 10c
🔲 Free Carry
🔲 Take Profit
🔲 Price increases 500% from initial entry
🔲 Price increases 1000% from initial entry
🔲 Price increases 2000% from initial entry
✅ 12 Month Capital Gain Discount
🔲 Hold remaining Position for next 2+ years

Our Past Commentary on Thomson Resources

Date Title
25-Feb-2023 $ 0.005 The ups and downs of the small cap market
16-Jun-2022 $ TMZ’s Releases Webbs MRE Chasing 100Moz Target
12-Mar-2022 $ 0.057 Nickel, the War and Under Investment in Exploration
05-Mar-2022 $ 0.060 Mainstream Media Catching on to the Commodities Supercycle
21-Feb-2022 $ 0.066 Why we invest in Oil & Gas and Precious Metals
12-Feb-2022 $ 0.072 Energy Transition Metals, Raw Materials, McKinsey, Supply and Demand Economics
08-Feb-2022 $ TMZ Pressing Ahead with Highest Grade Undeveloped Silver Project in Australia
05-Feb-2022 $ 0.067 The "Lesser Kown" Energy Transition Metals: Copper, Aluminium, Graphite, Helium, Rare Earths
22-Jan-2022 $ 0.081 Our Investment Approach, Energy Cold War, Ukraine, Supply Chain Crisis
18-Dec-2021 $ 0.062 Investing 101: Taking Stock of your Stocks and Diversification
18-Sep-2021 $ 0.105 Why uranium stocks are soaring, one good movie recommendation
11-Sep-2021 $ 0.110 The thematics we are investing in right now
09-Sep-2021 $ 0.105 TMZ closes in on silver production — we increased our position at 10¢
21-Aug-2021 $ 0.105 Market fluctuations and portfolio news and quick takes
14-Aug-2021 $ 0.115 Bookmark it, a new Pick of the Year is coming next week
26-Jun-2021 $ 0.125 June tax loss selling is behind us, KNI IPO expected in August
12-Jun-2021 $ 0.145 What did our investments do this week? CPH, ONE, TMZ, 88E and more...
09-Jun-2021 $ 0.135 Experts Re-Analyse TMZ’s Historical Silver Assets
03-May-2021 $ 0.115 TMZ’s Tin Asset is Suddenly Very Interesting.
27-Apr-2021 $ 0.110 Our Portfolio Performance from January 1st to March 31st 2021
05-Mar-2021 $ 0.135 TMZ Eyes 100 Million oz. Silver Equivalent Resource Base
24-Feb-2021 $ 0.170 News in From Our Favourite ASX Stock to Surf the Silver Squeeze
31-Jan-2021 $ 0.200 Thomson Resources Set to Surge on Savage Silver Squeeze?
07-Jan-2021 $ 0.125 Our Stock Picks for 2021
11-Dec-2020 $ 0.092 Our Latest Portfolio Addition: Australia’s Highest Grade Undeveloped Silver Asset