Latest appointment further bolsters team

ASX:FYI   Mar 03, 2022


On Thursday, our high purity alumina (HPA) investment FYI added an impressive industry veteran to their team.

Mr. Phil Thick has been appointed as a strategic advisor to FYI’s Board, having previously held senior positions at Tianqi Lithium, Shell Australia, Coogee Chemicals and Alcoa Australia. His impressive track record includes instrumental roles in several developments within battery and energy related industries, which certainly fit FYI’s downstream and value-add battery mineral business.

We like this addition to the team, and suspect that Phil’s previous role at Alcoa Australia can only benefit the FYI- Alcoa joint venture.

Final assays from infill drilling program received

ASX:AKN   Mar 02, 2022


On Wednesday AKN released the final assay results from its infill drilling program at its Onedin deposit.

With the drilling program mostly focussed on gathering samples to be used in the upcoming metallurgical testing program AKN delivered some decent copper hits as expected.

  • 66m @ 1.67% copper from 77m
  • 82m @ 0.46% copper from 98m
  • 60m @ 1.04% copper from 92m

Our key objective for our 2022 AKN Investment Memo is to see AKN get its metallurgical testwork done and see if a processing solution can be found for the shallow JORC resource at the Onedin deposit.

AKN is expecting stage 1 of the metallurgical testing to take ~6-8 weeks to complete, with the results expected in April.

Desktop reviews completed at RAS’ Alaskan gold project

ASX:RAS   Mar 01, 2022


RAS announced today that it had identified four historical gold-copper prospects which could be priority exploration targets at its Alaskan gold project.

The four targets came about as RAS completed initial desktop reviews across the entire project area.

The key targets seem to have been identified by RAS based on historical rock chip samples and a combination of regional magnetic surveys. The targets are at a really early stage and look to us like RAS will need to further develop these with more detailed geophysical and geochemical surveying.

Our focus for us in the short term with RAS is on its upcoming halloysite drilling program with strong neurology indications, this is the #1 objective in our 2022 investment memo for RAS.

To see all of the other objectives we want RAS to deliver in 2022 check out our 2022 Investment Memo here.

Drill rig mobilised on site at the Merlin-2 appraisal well

ASX:88E   Mar 01, 2022


On Tuesday, 88E announced that the mobilisation of the Arctic Fox drill rig had been completed ahead of the Merlin-2 appraisal well’s anticipated spud date next week.

The Merlin-2 appraisal well is fully permitted to a total depth of ~8,000 feet which 88E expects will take ~4-5 weeks.

88E also confirmed it would have production testing equipment on stand-by should the drilling program successfully intercept oil paying zones.

With drilling now only ~1 week away, our recent update note is worth reading as it sets the scene for what Merlin-2 could mean for 88E and our expectations from the drilling program.

We think success with the Merlin-2 appraisal well would look something like:

  1. Net oil paying zones (Thickness) across the three reservoirs >41 feet (this is the reservoir thickness intercepted in the Merlin-1 well - so we want to see the same or better).
  2. Drilling program is successful enough to warrant production testing.
  3. Production tests confirm light oil and high flow rates.

One or all of the above is what we would like to see from the Merlin-2 drilling, and that would deem Merlin-2 a success.

MRE for Texas Silver District

ASX:TMZ   Mar 01, 2022


It’s a positive that TMZ got its Texas updated JORC 2012 MRE out on time for Texas.

It now means that TMZ has 40.2 Moz AgEq combined after the Conrad MRE which had 20.7 Moz AgEq.

We’re looking for the completion of the remaining MRE update for Webbs and we think TMZ may now need to drill to hit the 100Moz AgEq nark to do so.

That 100Moz AgEq threshold forms Key Objective #1 in our TMZ Investment Memo.

TMZ has flagged a geophysics program is advancing at Texas so we believe there could be some drilling upside to come there.

TMZ moves methodically, but it’s our view that this is necessary to advance Australia’s highest grade undeveloped silver resource.

The silver price got as high as US$25.60 an ounce on February 24.

Vonex half year results announced

ASX:VN8   Mar 01, 2022


Our telco investment Vonex is in the midst of an acquisition phase, having acquired four complementary businesses over the past 2 years. This has helped VN8 deliver a strong financial performance over the half-year ending 31 December 2021.

We liked that group revenue increased to $15m, up 54% year-on-year (YoY). Gross profit was also up significantly to $7.5m, up 174% YoY. Underlying EBITDA was up to $3.3m for the half year, versus $0.2m in H1 FY21.

The acquisitions have rapidly expanded VN8’s customer base, with PBX users now exceeding 90,000. This has led to a 104% growth in annual recurring revenue to $34.5M - which we think is quite sold for a company with a market capitalisation of ~ $32M.

The flip side to the acquisitions is that VN8 currently has a high level of net debt ($11.9M) - but given its strong cashflow, we expect most of the debt to be paid back this year. This will free up cash for further acquisitions and possible dividends down the track.

We’re keen to see VN8 continue to grow on several key financial and operating metrics in 2022, whilst fully integrating the most recent acquisitions into its business.

1,000m RC drilling program commenced in the Fraser Range

ASX:GAL   Feb 28, 2022


On Monday, GAL announced that it had started a 1,000m RC drilling program to test three new EM targets as well as re-test two targets in an area that was previously tested with shallow aircore drilling.

In its last round of drilling in ~2018, GAL hit 36 metres @ 0.2% nickel from 18m including a higher grade section of 3 metres @ 0.56 % nickel from 24m during a shallow aircore drilling program where the average depth in each hole was ~41m.

Rarely are nickel sulphide deposits found at that depth and with the nickel price trading at 10 year highs we think GAL is taking shots on goal at the right time in search of a large scale nickel discovery in the Fraser Range region.

Whilst we wait for the assays from ~8,700m aircore drilling program from its norseman project, we will be watching to see if GAL makes any visible sulphide intercepts from this RC drilling program.

Wyemandoo pegmatite rock chip samples

ASX:ARN   Feb 28, 2022


ARN announced today assay results from its last round of rock chip sampling at the Wyemandoo lithium/rubidium project.

Out of a total of 188 assays received by the company, ARN reported a peak result of 1.24% rubidium and in a separate assay a peak grade of 1.05% lithium.

This forms the basis for the geochemical sampling program ARN are using to define drill targets, which it will be following up as soon as the drill rigs are done at the companies Niobe project.

At the moment we are waiting on the assays from all of the pegmatite intercepts ARN has made whilst drilling Niobe.

Final Processed Seismic Data Received

ASX:IVZ   Feb 28, 2022


Today IVZ announced that the datasets from its 2021 2D seismic survey and the re-processing of the US$30M legacy dataset left over by Mobil had largely been received from the 2D seismic consultants.

Next, IVZ will continue with its internal interpretation of the datasets before ranking the anomalies picked up from most interesting to least, so as to finalise the locations for its drilling program now expected to be spud in June 2022.

In our 2022 investment memo we put the “detailed interpretation of seismic data” and final identification of the drilling locations as objective #1. Once this is out of the way, IVZ can shift its focus to the maiden drilling program.

2022 Drilling program kicks off

ASX:EXR   Feb 28, 2022


Today EXR announced that it had started drilling the first of a total 24 well drilling program planned for 2022.

The first of these wells sits right on the border of the tenements that make up the Oyu Tolgoi mine owned by Rio Tinto and will be drilled to a planned total depth of ~700m.

This year, we want to see EXR complete the pilot production program off the back of last year's drilling program.

EXR confirmed that the 2 well extended pilot production program was scheduled to commence around ~mid year. With gas becoming a talking point off the back of the Russia/Ukraine conflict we are eagerly waiting to see if EXR can confirm economic flow rates at its project.

$2.5M funding package + drilling program expanded to 5,000m

ASX:LRS   Feb 28, 2022


Today LRS announced a $2.5M financing package signed with Lind Asset Management over a 14 month loan term.

With fresh funding secured, LRS also announced that the 2,000m drilling program at its Lithium project in Brazil would be expanded to 5,000m with the ultimate aim of putting together a maiden JORC resource.

The terms of the funding facility are as follows:

  • $2.75M face value loan, repayable over a 14 month period.
  • LRS to issue Lind 35 million unlisted options with an exercise price of 5c, expiring March 2026.
  • LRS to pay Lind a $75k commitment fee.
  • Funds raised from “in the money” options being exercised must be used to repay the principal of the loan.

So in total over the 14 month loan term, LRS is paying $325k in loan fees and 35m in unlisted options exercisable @ 5c.

In our last note, where we covered LRS’ first spodumene intercept from its drilling program at its Brazilian lithium project, we mentioned we wanted to see LRS shore up its balance sheet so we welcome the news from Monday.

New products hit shelves at Coles

ASX:FOD   Feb 25, 2022


We noticed something new at our local Coles this week, FOD’s plant based protein smoothies had hit the shelves.

We bought both, and our key takeaway (from flavour point of view) is that these things are filling - essentially an entire breakfast / lunch replacement.

Banana was our favourite, but we did like the Raspberry & Chocolate one too.

If you’re invested in FOD, go down and try one for yourself and let us know what you think.

We are keeping an eye out for early sales/market share data from this new product, and how it will help improve FOD’s overall sales and financial performance.

AJX Half yearly results

ASX:AJX   Feb 25, 2022


On Friday, AJX announced that it had increased its revenues by ~46.3% with gross margins consistent with 2H FY21 and from the same period last year's results at 40.1%.

AJX showed a US$1.9M loss in its income statement, but the actual cash outflow was much lower at ~$900k and we note that with the addition of the new BioCoolTM products and new customers AJX had increased its inventories by US$600k.

Earnings call and preliminary annual report summary

ASX:ONE   Feb 25, 2022


ONE reaffirmed revenue guidance of €12.5 - €14m for 2022 - ONE remains one of our favourite investments and biggest positions.

Key metrics (with commentary):

  • 5% Recurring Revenue growth - slightly disappointing, but still time to make up ground
  • 37% Total Revenue growth (due to lumpy outlay of lower margin hardware sales) - this is reflected in non recurring revenue up 120% and cost of sales up 86%
  • 9,487 beds live at 31 December 2021 (+3%) vs 9,121 at 30 June
  • 2,355 beds contracted not yet installed.
  • 11,842 contracted beds - we want to see 15K contracted beds by the end of 2022

40% increase in sales and marketing - means ONE is spending 20% of receipts on sales and marketing so they did what they said they would do here, hopefully, they reap the rewards in the sales pipeline

We think the lag from hardware push should come through in coming quarters with recurring revenue, potentially in the 20-25% range.

ONE has 12,123 beds in RFP/RFI which are still waiting on decisions - these formal processes represent 64% of ONE’s total sales pipeline of 18,927 beds.

RFPs (Request for Proposal) and RFIs (Request for Information) are lengthy affairs that push ONE’s contracted beds through the bureaucratic pipeline.

It’s good to see so many beds potentially there for ONE, now we just want to see its sales and marketing team convert.

Massive nickel sulphides at the Saints nickel project

ASX:AOU   Feb 24, 2022


On Thursday AOU announced that it had made two massive sulphide intersections at its Saints nickel project.

The 7 hole diamond drilling program is mostly being done so that ARN can upgrade its 1.02mt @2% nickel JORC resource. The drilling is mostly infill so the intersection of massive sulphides was somewhat expected by the market.

We are more interested in the grades of the intercepts as opposed to the massive sulphide intercepts themselves, if the drilling was targeting a new discovery then we suspect the market would have reacted a lot differently.

With 3.01m in massive sulphides intersected in one hole and 0.84m in another, all eyes are now on the nickel grades that come back from the drilling program, before AOU can try upgrading the JORC resource.

MRE for Texas Silver District

ASX:TMZ   Mar 01, 2022


It’s a positive that TMZ got its Texas updated JORC 2012 MRE out on time for Texas.

It now means that TMZ has 40.2 Moz AgEq combined after the Conrad MRE which had 20.7 Moz AgEq.

We’re looking for the completion of the remaining MRE update for Webbs and we think TMZ may now need to drill to hit the 100Moz AgEq nark to do so.

That 100Moz AgEq threshold forms Key Objective #1 in our TMZ Investment Memo.

TMZ has flagged a geophysics program is advancing at Texas so we believe there could be some drilling upside to come there.

TMZ moves methodically, but it’s our view that this is necessary to advance Australia’s highest grade undeveloped silver resource.

The silver price got as high as US$25.60 an ounce on February 24.

Vonex half year results announced

ASX:VN8   Mar 01, 2022


Our telco investment Vonex is in the midst of an acquisition phase, having acquired four complementary businesses over the past 2 years. This has helped VN8 deliver a strong financial performance over the half-year ending 31 December 2021.

We liked that group revenue increased to $15m, up 54% year-on-year (YoY). Gross profit was also up significantly to $7.5m, up 174% YoY. Underlying EBITDA was up to $3.3m for the half year, versus $0.2m in H1 FY21.

The acquisitions have rapidly expanded VN8’s customer base, with PBX users now exceeding 90,000. This has led to a 104% growth in annual recurring revenue to $34.5M - which we think is quite sold for a company with a market capitalisation of ~ $32M.

The flip side to the acquisitions is that VN8 currently has a high level of net debt ($11.9M) - but given its strong cashflow, we expect most of the debt to be paid back this year. This will free up cash for further acquisitions and possible dividends down the track.

We’re keen to see VN8 continue to grow on several key financial and operating metrics in 2022, whilst fully integrating the most recent acquisitions into its business.

1,000m RC drilling program commenced in the Fraser Range

ASX:GAL   Feb 28, 2022


On Monday, GAL announced that it had started a 1,000m RC drilling program to test three new EM targets as well as re-test two targets in an area that was previously tested with shallow aircore drilling.

In its last round of drilling in ~2018, GAL hit 36 metres @ 0.2% nickel from 18m including a higher grade section of 3 metres @ 0.56 % nickel from 24m during a shallow aircore drilling program where the average depth in each hole was ~41m.

Rarely are nickel sulphide deposits found at that depth and with the nickel price trading at 10 year highs we think GAL is taking shots on goal at the right time in search of a large scale nickel discovery in the Fraser Range region.

Whilst we wait for the assays from ~8,700m aircore drilling program from its norseman project, we will be watching to see if GAL makes any visible sulphide intercepts from this RC drilling program.

Wyemandoo pegmatite rock chip samples

ASX:ARN   Feb 28, 2022


ARN announced today assay results from its last round of rock chip sampling at the Wyemandoo lithium/rubidium project.

Out of a total of 188 assays received by the company, ARN reported a peak result of 1.24% rubidium and in a separate assay a peak grade of 1.05% lithium.

This forms the basis for the geochemical sampling program ARN are using to define drill targets, which it will be following up as soon as the drill rigs are done at the companies Niobe project.

At the moment we are waiting on the assays from all of the pegmatite intercepts ARN has made whilst drilling Niobe.

Final Processed Seismic Data Received

ASX:IVZ   Feb 28, 2022


Today IVZ announced that the datasets from its 2021 2D seismic survey and the re-processing of the US$30M legacy dataset left over by Mobil had largely been received from the 2D seismic consultants.

Next, IVZ will continue with its internal interpretation of the datasets before ranking the anomalies picked up from most interesting to least, so as to finalise the locations for its drilling program now expected to be spud in June 2022.

In our 2022 investment memo we put the “detailed interpretation of seismic data” and final identification of the drilling locations as objective #1. Once this is out of the way, IVZ can shift its focus to the maiden drilling program.

2022 Drilling program kicks off

ASX:EXR   Feb 28, 2022


Today EXR announced that it had started drilling the first of a total 24 well drilling program planned for 2022.

The first of these wells sits right on the border of the tenements that make up the Oyu Tolgoi mine owned by Rio Tinto and will be drilled to a planned total depth of ~700m.

This year, we want to see EXR complete the pilot production program off the back of last year's drilling program.

EXR confirmed that the 2 well extended pilot production program was scheduled to commence around ~mid year. With gas becoming a talking point off the back of the Russia/Ukraine conflict we are eagerly waiting to see if EXR can confirm economic flow rates at its project.

$2.5M funding package + drilling program expanded to 5,000m

ASX:LRS   Feb 28, 2022


Today LRS announced a $2.5M financing package signed with Lind Asset Management over a 14 month loan term.

With fresh funding secured, LRS also announced that the 2,000m drilling program at its Lithium project in Brazil would be expanded to 5,000m with the ultimate aim of putting together a maiden JORC resource.

The terms of the funding facility are as follows:

  • $2.75M face value loan, repayable over a 14 month period.
  • LRS to issue Lind 35 million unlisted options with an exercise price of 5c, expiring March 2026.
  • LRS to pay Lind a $75k commitment fee.
  • Funds raised from “in the money” options being exercised must be used to repay the principal of the loan.

So in total over the 14 month loan term, LRS is paying $325k in loan fees and 35m in unlisted options exercisable @ 5c.

In our last note, where we covered LRS’ first spodumene intercept from its drilling program at its Brazilian lithium project, we mentioned we wanted to see LRS shore up its balance sheet so we welcome the news from Monday.

New products hit shelves at Coles

ASX:FOD   Feb 25, 2022


We noticed something new at our local Coles this week, FOD’s plant based protein smoothies had hit the shelves.

We bought both, and our key takeaway (from flavour point of view) is that these things are filling - essentially an entire breakfast / lunch replacement.

Banana was our favourite, but we did like the Raspberry & Chocolate one too.

If you’re invested in FOD, go down and try one for yourself and let us know what you think.

We are keeping an eye out for early sales/market share data from this new product, and how it will help improve FOD’s overall sales and financial performance.

AJX Half yearly results

ASX:AJX   Feb 25, 2022


On Friday, AJX announced that it had increased its revenues by ~46.3% with gross margins consistent with 2H FY21 and from the same period last year's results at 40.1%.

AJX showed a US$1.9M loss in its income statement, but the actual cash outflow was much lower at ~$900k and we note that with the addition of the new BioCoolTM products and new customers AJX had increased its inventories by US$600k.

Earnings call and preliminary annual report summary

ASX:ONE   Feb 25, 2022


ONE reaffirmed revenue guidance of €12.5 - €14m for 2022 - ONE remains one of our favourite investments and biggest positions.

Key metrics (with commentary):

  • 5% Recurring Revenue growth - slightly disappointing, but still time to make up ground
  • 37% Total Revenue growth (due to lumpy outlay of lower margin hardware sales) - this is reflected in non recurring revenue up 120% and cost of sales up 86%
  • 9,487 beds live at 31 December 2021 (+3%) vs 9,121 at 30 June
  • 2,355 beds contracted not yet installed.
  • 11,842 contracted beds - we want to see 15K contracted beds by the end of 2022

40% increase in sales and marketing - means ONE is spending 20% of receipts on sales and marketing so they did what they said they would do here, hopefully, they reap the rewards in the sales pipeline

We think the lag from hardware push should come through in coming quarters with recurring revenue, potentially in the 20-25% range.

ONE has 12,123 beds in RFP/RFI which are still waiting on decisions - these formal processes represent 64% of ONE’s total sales pipeline of 18,927 beds.

RFPs (Request for Proposal) and RFIs (Request for Information) are lengthy affairs that push ONE’s contracted beds through the bureaucratic pipeline.

It’s good to see so many beds potentially there for ONE, now we just want to see its sales and marketing team convert.

Massive nickel sulphides at the Saints nickel project

ASX:AOU   Feb 24, 2022


On Thursday AOU announced that it had made two massive sulphide intersections at its Saints nickel project.

The 7 hole diamond drilling program is mostly being done so that ARN can upgrade its 1.02mt @2% nickel JORC resource. The drilling is mostly infill so the intersection of massive sulphides was somewhat expected by the market.

We are more interested in the grades of the intercepts as opposed to the massive sulphide intercepts themselves, if the drilling was targeting a new discovery then we suspect the market would have reacted a lot differently.

With 3.01m in massive sulphides intersected in one hole and 0.84m in another, all eyes are now on the nickel grades that come back from the drilling program, before AOU can try upgrading the JORC resource.

CAY enters trading halt

ASX:CAY   Feb 24, 2022


On Monday, our latest investment CAY went into a trading halt with respect to permitting at its bauxite project.

We read this news piece on Saturday afternoon which showed that the two tenements (sitting outside of the area where CAY’s resource is) were under an MOU with a Chinese state owned entity.

The MOU listed that they would be handed as exploitation permits (earliest stage of permitting in Cameroon). Importantly the MOU was with the national mining company Sonamines and not issued by the Ministry of Mines.

It didn’t look great for CAY holders however 48 hours later, we read this news piece which showed the Ministry of Mines (the main regulatory body in Cameroon) had cancelled this MOU and said that permitting was a ministry duty and not up to the national mining company Sonamines.

This was swift action from the government who look to us like they were not consulted when that MOU was signed.

We will be watching to see updates CAY provides and hope that everything is resolved this week.

Drilling commenced at nickel targets

ASX:BPM   Feb 23, 2022


Last week we put out a note on BPM’s Nickel targets identified next door to our other portfolio company Auroch Minerals nickel project.

Today BPM announced that drilling had commenced across the 11 identified EM conductors. To read more about these 11 targets, read our last note here.

The 3,000m of Aircore drilling is expected to take a few weeks and we don't anticipate any assays coming in for at least another 4-6 weeks after that.

GGE Appoints Managing Director

ASX:GGE   Feb 23, 2022


Today GGE announced the appointment of Dane Lance as its managing director.

Lance is a senior oil and gas professional and reservoir engineer with over 16 years industry experience. He has a focus on “resource maturation and monetisation” - a perfect fit for GGE who will be drilling its maiden well at its helium project very soon.

Lance has worked for Woodside, Ophir (including technical evaluation of the ~$500m Ophir acquisition of Salamander) and Oil Search in previous roles.

We think the experience in monetising new discoveries is important especially given GGE’s project sits in an infrastructure rich area where new discoveries can quickly be brought to market.

KNI drilling program update

ASX:KNI   Feb 22, 2022


KNI announced today that the drilling program at its main cobalt target (Skuterud) is on track for Q2-2022.

With the applications for a drilling permit lodged and drilling contractor “Norse Diamond Drilling AS” awarded the contract, the 7-hole, 2,800 metre program appears to be on schedule.

KNI also announced that after further review of the geophysical and geochemical data the Vangrofta copper target wasn't of sufficient size to warrant further drilling.

This comes as KNI has spent the last 6 or so months refining the highest priority drill targets to allocate its funds to drill test in 2022.

EM surveys completed at newly acquired lead-silver project

ASX:PFE   Feb 21, 2022


On Monday PFE announced that it had completed EM surveys over the two main target areas at its newly acquired lead/silver project in WA.

The EM survey results are yet to be received but PFE is aiming to analyse the results and prepare a drilling program which is expected to commence in Q2-2022.

Read our deep dive into the newly acquired Hellcat asset, where we discuss why we like the project and where we compare it to Galena Minings' deposit that is currently being put into development.

RC drilling scheduled on Fraser Range EM targets

ASX:GAL   Feb 21, 2022


Today GAL announced that it had contracted 1,000m of RC drilling over some EM targets in the Fraser Range region.

Drilling is planned to commence later this month, and assays to start coming back from the labs in April-May 2022.


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