More visible gold intercepts, assays coming soon

ASX:TMR   Jul 07, 2022 Announcement

Investment Memo: TMR IM-2022
Objective 2 : Make new discoveries at the Canadian gold project.

This morning our gold exploration Investment Tempus Resources (ASX: TMR) released more preliminary drilling results, reporting more visible gold intercepts at the Blue Vein discovery at its Canadian gold project.

This is the second set of visible gold intercepts since TMR started its 2022 drilling program on 30 May 2022.

TMR has completed ~2,200 metres of drilling over nine holes targeting the Blue Vein. Assays for the first few holes are pending, with results expected over the next few weeks.

This year’s program consists of up to 30 drillholes (for ~8,500m) focused on the following targets:

  • Blue Vein discovery: 15 drillholes targeting extensions to the previous high grade gold intercepts. (First 9 holes drilled here with two visible gold intercepts to date).

  • Main and West veins: 10 drillholes targeting extensions to both discoveries.

  • Ella Zone: 3 drillholes following up a 2m intercept made last year.

  • Exploration holes: up to 5 drillholes focused on making new discoveries.

With assays pending and another ~21 drillholes to be completed, we are looking forward to the newsflow coming from TMR’s 2022 exploration program.

Highly encouraging testwork paves way for Scoping Study

ASX:LCL   Jul 07, 2022 Announcement

Investment Memo: LCL IM-2022
Objective 3 : Commence scoping studies

Colombian-focused gold explorer, Los Cerros (ASX:LCL), has described results from metallurgical testwork at the Quinchia Gold Project’s Tesorito deposit as “highly encouraging”.

LCL has a substantial bank of established resources at Quinchia and the company is now focussed on creating value through building confidence in these resources.

We note that LCL offers substantial leverage to the upside — it is trading on a very low Enterprise Value of <$4M, with existing funds of ~$14M (as at 28 June) and a current market cap of $18.2M.

This first round of Tesorito metallurgical test work was designed to assess physical and metallurgical characteristics of the major lithology types in the Tesorito deposit, and to assess amenability to conventional grinding, gravity, and leach/adsorption processing routes.

Results included:

  • 97% recovery of gold from saprolite and 87% from other units (derived from 24 hour whole ore gold leach tests);
  • An optimal grind size of p80 ~75 micron, which is fine grind and typical of porphyry gold ores;
  • Deleterious elements such as arsenic, mercury, organic carbon and soluble copper are all low and of no processing concern.

LCL also noted that silver recoveries and commentary on potential processing pathways are pending and that gravity beneficiation would add no benefits so is not a required step.

These encouraging met’ test results are an important step to building a PEA (Preliminary Economic Assessment) around the project’s potential production scenarios.

LCL has outlined three broad production base case configurations to be investigated under the PEA framework.

  1. Plant designed and sized based on the Miraflores Underground Reserve. Subsequent expansion or modifications in outer years to then accommodate new materials from other sites within Quinchia (including Tesorito).
  2. Plant designed and sized on Miraflores (as above) plus a potential high grade starter pit at Tesorito, incorporating additional feed in later years.
  3. Plant sized and designed based on Total Quinchia Resources.

The completion of the PEA will go towards LCL meeting our Objective #3 for the company for this year: Commence scoping studies, as outlined in our LCL Investment Memo.

Bill Gates backs start-up for hydrogen storage & transportation

Jul 06, 2022

Macro: Hydrogen

The following Bloomberg article looks at a Bill Gates backed investment in the hydrogen mobility space.

Read the full article here.

Below are our key takeaways from the article:

  • A key part of having hydrogen form part of the global energy mix is to find a way to store and transport it effectively.
  • Spanish startup H2Site is aiming to do this and just secured €12.5M in investments from Bill Gates-led Breakthrough Energy Ventures, French utility Engie SA and Norwegian oil giant Equinor ASA.
  • Current existing methods to store and transport hydrogen are expensive, especially when compared to gas storage/transportation.
  • H2Site aims to find technological solutions to use existing natural-gas pipelines to move hydrogen by diluting natural gas with ~30% hydrogen before being recovered using H2SITE’s filter where it needs to be consumed. The process would use a palladium alloy with the aim of filtering hydrogen at 99.9% purity from a pipe carrying between 5% and 30% hydrogen.
  • Another technology being focused on is transportation via ships within ammonia and methanol. The aim being that projects like the ones in Australia where hydrogen is converted into ammonia then transported using ships could then have hydrogen recovered by undoing the chemical reaction after shipping is completed.

In summary, the article speaks to the volume of capital pouring into the downstream technologies that are required to build up a sound and efficient hydrogen supply chain.

For hydrogen to become a part of the energy mix the infrastructure required to produce, transport and then consume it all needs to be developed to the standards of current energy technologies.

With institutional capital and big names like Bill Gates now making investments into the hydrogen space we think it is a matter of WHEN not IF for the hydrogen sector.

Historically, our best performing Investments have come from industries where we have Invested well ahead of institutional capital arriving on the scene. Our Investments in the green hydrogen space are no different.

The following companies held in our Portfolio provide exposure to an industry that we think is on the cusp of exponential growth:

Province Resources (ASX: PRL)

  • Feasibility stage, green hydrogen, WA (Australia)

Elixir Energy (ASX: EXR)

  • Scoping stage, green hydrogen, Mongolia

Minbos Resources (ASX: MNB)

  • Scoping stage, green hydrogen/ammonia, Angola

📈 Mark Creasy and IGO back $20.4M raise to accelerate drilling

ASX:GAL   Jul 06, 2022 Announcement

Investment Memo: GAL IM-2022 [Archive]
Risk 1 : Financing risk

This morning our long term exploration Investment Galileo Mining (ASX: GAL) came out of a trading halt having raised capital to accelerate drilling at its new PGE discovery in WA.

GAL managed to raise $20.4M via a placement at a share price of $1.20 per share with the shares expected to be issued on the 13th of July 2022.

Importantly, the placement closed oversubscribed with cornerstone investments by GAL’s major shareholders Mark Creasy and IGO for a combined $8.7M.

Before the placement mining billionaire Mark Creasy owned 24.82% of GAL and IGO 8.89% for a combined ownership of ~34%. After tipping in $8.7M of the $20.4M raised, we expect to see the combined shareholdings of the two increase.

The significance of this is that IGO has previously purchased projects from Mark Creasy backed companies, including the Nova mine for $1.8 billion and the Silver Knight discovery.

We think that the cornerstone investments from both Mark Creasy and IGO are a strong vote of confidence for the recent PGE discovery GAL made and show that there is institutional interest in the company’s projects.

GAL expects to have $26.5M in cash after the capital raise and is already putting the cash to work procuring a third RC drill program which is scheduled to begin at the end of July followed by a diamond drilling program planned to commence in August.

Next: We are eagerly waiting to see what comes from GAL’s ~4,000m of RC drilling to test for extensions to its new PGE discovery.

Gas shortage the catalyst for a global recession

Jul 06, 2022

Macro: Natural Gas

The following Bloomberg article shines a spotlight on the ripple effects high gas prices have on the global economy.

Read the full article here.

Our key takeaways:

  • Natural gas is the hottest commodity in the world right now. It’s a key driver of global inflation. Prices are up some 700% in Europe since the start of last year raising fears of a continent wide energy induced recession.

  • Russia is cutting back on pipeline deliveries to Europe, the scramble to fill that gap is turning into a worldwide shortage.

  • Germany says gas shortfalls could trigger a Lehman Brothers-like collapse, as Europe’s economic powerhouse faces the unprecedented prospect of businesses and consumers running out of power.

  • The German government is in talks to bail out utilities which are losing some €30 million a day because it has to cover the missing Russian gas at soaring spot-market prices.

  • Deutsche Bank cited growing risks of an “imminent German recession on the back of energy rationing,” and pointed to soaring power prices in Italy and France too. Morgan Stanley also predict that the whole of Europe will be in a downturn by year-end.

The Bloomberg article focuses on the repercussions gas shortages are having on the EU and the German economy in particular.

The German economy is one of the key pillars of the EU region, with a strong manufacturing industry making it an exporting powerhouse. The country is therefore heavily reliant on reliable energy supplies to keep this part of its economy functioning.

The fear that the Bloomberg article highlights is how a shortage in gas supplies or heightened prices could force shutdowns and lead to a recession.

We think this applies not only to the German economy and the EU but to the rest of the world also. With gas likely to become a more important part of the energy mix as the world transitions away from coal and oil we think investment into new supply will need to accelerate.

As a result we hold the following companies as Investment exposures to natural gas. To see the Investment Memos for these companies click on the links below:

Elixir Energy (ASX: EXR)

  • Exploration stage, coal bed methane gas, Mongolia

Invictus Energy (ASX: IVZ)

  • Exploration stage, gas, Zimbabwe

Top End Energy (ASX: TEE)

  • Exploration stage, gas, Northern Territory

Traditional owner consents secured for green hydrogen project

ASX:PRL   Jul 05, 2022 Announcement

Investment Memo: PRL IM-2022
Objective 2 : Secure key stakeholder support

This morning our green hydrogen investment, Province Resources (ASX: PRL) announced progress with respect to securing key stakeholder support for its green hydrogen project in WA.

PRL announced that it has secured land access consent from native title groups covering ~870 square kilometres of land.

Importantly, these consents are a prerequisite for the WA Government to issue Section 91 licences, giving PRL the access it needs to start feasibility study works. So far PRL has secured two Section 91 licences.

PRL also confirmed that it is “continuing discussions with pastoralists, local government and other stakeholders to finalise tenure for the project”.

Securing land access arrangements can be a big hurdle to overcome given the large land footprint a project as big as PRL’s would be situated on. Effectively, without the support of key stakeholder groups, there would be no project to develop.

What’s next: We are watching to see PRL execute its Joint Development Agreement (JDA) with Total Eren which is now due by 31 July 2022.

Promising results from DXB’s R&D pipeline

ASX:DXB   Jul 04, 2022

Investment Memo: DXB IM-2022

Our 2021 Biotech Pick of the Year Dimerix (ASX:DXB) today announced promising results from a preclinical study on DMX-700, an early-stage oral treatment for a life-threatening lung disease - COPD (Chronic Obstructive Pulmonary Disease).

Note that this technology is different to the treatment used in Phase III clinical trial FSGS - our “Main Bet”.

The results showed that DMX-700 provided an 80% reduction in induced lung injury in mice compared to a control group - a statistically significant amount to progress to a clinical trial.

Although this news does not fit into the current objectives we set for our DXB Investment, we think that it adds value to the story, in particular as an extra ‘shot on goal’ targeting a big and important market.

COPD is the third leading cause of death worldwide, and the global market for COPD is valued at US$17B.

There is a significant unmet need for COPD treatment and given the severity of the disease, the FDA in 2018 issued revised guidance to accelerate clinical trials.

We are looking forward to tracking the progress of DMX-700 through to clinical trials and are paying attention to regulatory applications and approvals.

Today’s announcement showcases DXB’s ability to maintain and progress a healthy R&D pipeline - an important part of any biotech smallcap.

Solutions being sought for the food crisis in Africa

ASX:MNB   Jul 04, 2022

Investment Memo: MNB IM-2022

The following Bloomberg article highlights the impacts of the Russia/Ukraine conflict on the food crisis issue across Africa.

Read the full article here.

Key takeaways:

  • 49 million people in 43 countries are facing famine, according to the head of the United Nations World Food Program, David Beasley.
  • Global food prices surged to a record after Russia’s invasion of Ukraine disrupted grain and vegetable oil exports.
  • Grains shortages have driven up prices, with global benchmarks for wheat and corn rising 22% and 12% respectively this year.
  • Food costs account for 40% of consumer spending in sub-Saharan Africa, compared with 17% in advanced economies.
  • In 2020, Africa imported $4 billion of agricultural products from Russia - 90% of that was wheat. Another $2.9 billion of wheat, corn, sunflower oil, barley and soy came from Ukraine, according to Sihlobo.
  • Data also shows that Eritrea and Somalia were almost entirely dependent on Russia and Ukraine for their wheat supplies last year, while Tanzania, Namibia and Madagascar relied on them for more than 60% of supplies.

The article discusses the political viewpoint on the food crisis and brings home just how big of an issue is facing Africa when it comes to food security.

This is where our Portfolio company Minbos Resources (ASX: MNB) fits in.

With its shovel ready phosphate (a key ingredient in producing the fertilisers) project in Angola, MNB could bring into production a project that helps build out an agricultural industry that can alleviate the reliance on agricultural imports across Africa.

MNB is currently working towards a final Investment decision on its project, with the aim of having the project operational in 2023.

To see all of the key reasons we are Invested in MNB, what we want to see the company achieve in 2022, and the key risks to our Investment thesis, check out our 2022 MNB Investment Memo here.

💪 IGO & Mark Creasy cornerstone investors in GAL's cap raise

ASX:GAL   Jul 04, 2022 Announcement

Investment Memo: GAL IM-2022 [Archive]
Investment Thesis 2 : Experienced management team

This morning our long term exploration Investment Galileo Mining (ASX: GAL) went into a trading halt “pending the release of an announcement in relation to a capital raising”.

The AFR reports that, “The term sheet sent to potential investors said Galileo would raise $20 million at $1.20 per share” with IGO and ‘mining billionaire’ Mark Creasey expected to cornerstone the raise.

Read the full article here.

Below are our key takeaways:

  • These cornerstone investments from IGO and Mark Creasy come just weeks after the AFR said fund managers believed that IGO was on the hunt for something to buy in the Fraser Range, with GAL seen as the best possible fit.
  • IGO already owns (~8.89%) and Mark Creasy owns (24.82%) of GAL (before the capital raise).
  • IGO has previously purchased projects from Mark Creasy backed companies, including the Nova mine and the Silver Knight discovery.

With GAL’s recent PGE discovery and its current drilling to test for extensions to grow the size of the discovery, the cornerstone investments are just another vote of confidence for what GAL has on its hands.

We are yet to see how the capital raise plays out in its entirety, but we are looking forward to seeing just how much of the reported $20M is taken up by IGO and Mark Creasy.

Next: We are eagerly waiting to see what comes from GAL’s ~4,000m of RC drilling to test for extensions to its new PGE discovery.

Bill Gates “Green hydrogen would be massive for clean energy”

Jul 04, 2022

Macro: Hydrogen

Investment Memo: PRL 2022, EXR 2022, MNB 2022

General: Macro

The following LinkedIn post from Bill Gates shines the spotlight on green hydrogen as a technology solution for a transition towards cleaner fuel sources.

Read the LinkedIn post here.

When major investors start to talk up a particular technology it is generally a leading indicator for massive institutional capital flows into the sector. And Gates is not just a commentator, but an investor in renewable energy and the transition towards lower emission fuel sources.

(Here is an article on one of Gates’ latest ventures in the space: Bill Gates-Led Fund Backs Startup With Cheaper Way to Move Hydrogen)

For a long time institutional investors have avoided making large scale investments into the green hydrogen space, but that now looks to be changing extremely rapidly.

Historically, our best performing Investments have come from industries where we have Invested well ahead of institutional capital arriving on the scene.

Our Investments in the green hydrogen space are no different. We tend to agree with Bill Gates, that green hydrogen has a place in the transition towards clean energy technologies.

The following companies held in our Portfolio provide exposure to an industry that we think is on the cusp of exponential growth:

Province Resources (ASX: PRL)

  • Feasibility stage, green hydrogen, WA (Australia)

Elixir Energy (ASX: EXR)

  • Scoping stage, green hydrogen, Mongolia

Minbos Resources (ASX: MNB)

  • Scoping stage, green hydrogen/ammonia, Angola

✅ Drilling commences at Hellcat

ASX:PFE   Jul 04, 2022 Announcement

Investment Memo: PFE IM-2022
Objective 1 : Drilling of the newly acquired Lead/Silver project.

The newsflow is about to accelerate for our cashed-up, multi-commodity exploration investment Pantera Minerals (ASX:PFE).

This is as drilling is now underway at PFE’s most recent acquisition, its Hellcat polymetallic project in WA’s Edmund Basin. In addition, a maiden drilling campaign is about to begin at PFE’s manganese project, Weelarana later this month.

As we reported in our most recent update on PFE, drilling is typically the period of most excitement for juniors - especially when it is the first drilling program on freshly identified targets.

At Hellcat, a 1,700 metre diamond drilling program is underway, which should be completed in September. The program will test several high priority gravity targets and modelled electromagnetic conductors.

Hellcat is located near to one of the region’s most significant discoveries of the past two decades, Galena Mining’s (ASX:G1A) ‘Abra’ polymetallic deposit. Furthermore, Hellcat shares the same stratigraphic and structural setting as Abra, alongside a similar geophysical signature.

PFE holds an 80% interest in Hellcat.

This fits in with our #2 Objective we want to see PFE deliver this year.

Next up for PFE will be the commencement of drilling at Weelaranna, followed by assay results at both projects.

Drilling update at flagship gold project

ASX:LCL   Jun 29, 2022 Announcement

Investment Memo: LCL IM-2022
Objective 2 : Test if LCL's two gold systems are connected by drilling in-between them

Our junior gold investment Los Cerros (ASX:LCL) yesterday provided a progress update on drilling at its flagship Quinchia Project in the mid-Cauca gold porphyry belt of Colombia. Quinchia already has an established JORC Mineral Resource of 2.6Moz @ 1g/t Au, all within a 3km radius.

Drill results from six holes have now been delivered, namely:

Central Target/Miraflores Deep – a second drillhole (TS-DH61) testing the Central Target between Miraflores and Tesorito deposits and beneath the Miraflores gold resource, returned 393m @ 0.19g/t Au. This shows extensive continuity of gold mineralisation, and is a promising signal that more ounces could ultimately be added to the Miraflores gold resource, which stands at 0.87Moz, including reserves of 0.45Moz Au.

Recall that the first drillhole (TS-DH57) here did not find the potential “Jabba the Blob” porphyry connecting Tesorito and Miraflores that we had initially hoped for, but instead identified Miraflores type breccias 500m below deepest historical drilling. This pointed to a large-scale hydrothermal system, extending from the Miraflores breccia pipe both laterally and at depth. Our in-depth coverage of these results can be found here.

A third hole is now underway to follow up these promising results, seeking to confirm further gold mineralisation below the Miraflores deposit.

Ceibal – results from three drill holes that followed up on two previous moderate grade, gold intercepts (500m @ 0.52g/t Au in CEDDH01, and 586m @ 0.51g/t Au in CEDDH02, both from surface) from late last year. No extensive gold mineralisation was encountered in any of the holes, and so the hunt for the causative porphyry source continues.

Tesorito North/Claras - two holes were drilled to test the southern edge of a +400m gap along the Marmato Fault between northern most Tesorito drilling and the Claras blind porphyry target, ~1km to the north of Tesorito. The assays for both holes returned only low gold mineralisation.

On the trading front, there has been a robust sell off of LCL shares recently, perhaps tied in with uncertainty related to the newly elected Colombian Government as well as general bearish sentiment for the junior exploration sector.

That said, we like that LCL has an extremely robust balance sheet, with $14M cash in the bank and no debt (vs its current market cap of ~$25M, for an EV of ~$11M). This means that it is highly unlikely that the company will need to raise further capital this year.

With LCL having earlier defined a resource at Tesorito, our LCL objective #1 for the year has already been achieved.

Next we want to see progress on our #3 LCL Objective - the PEA (Preliminary Economic Assessment or Scoping Study) is taking place alongside its extensive exploration program.

Of note, LCL stated in yesterday’s announcement that the PEA would be more of a focus given current market conditions, whilst conserving cash by reducing speculative drilling:

We look forward to an update on the PEA, likely within the upcoming quarterly report in late July.

See our LCL Investment Memo for our Investment strategy, key risks, and all of our objectives for LCL for 2022 here.

Side Bet #2: Covid-19 trial recruitment closed, results soon.

ASX:DXB   Jun 28, 2022 Announcement

Investment Memo: DXB 2022

Objective #3: Complete Phase III Clinical Trial to treat pneumonia in patients with COVID-19 (REMAP CAP)

Yesterday our 2021 Biotech Pick of the Year Dimerix (ASX:DXB) announced that recruitment for one of its two Phase III COVID-19 trials (Side Bets) is now closed.

In February, recruitment for critically ill patients in this particular Side Bet was paused due to safety complications unrelated to DXB’s treatment. Recruitment has now officially closed.

The efficacy results will be analysed and published soon, however we don’t expect that to be enough patients in the trial to warrant commercialisation based on the results.

That said, these results will add to a growing body of evidence to support DXB’s lead treatment “DMX-200” capacity to reduce inflammation, and may lead to better targeted clinical trials for patients with pneumonia in the future.

For DXB, this investigator-led study was a ‘free swing’ with the majority of the study funded by a $1M government grant from last year.

DXB still has one more active Phase III study for COVID-19, targeting patients with mild COVID, while the main prize is the Phase III FSGS clinical for a rare kidney disease trial that is currently underway.

What’s next for DXB?: We are awaiting patient recruitment updates for DXB’s FSGS trial, with the key number being 72 patients recruited by the end of this year.

Rig secured, drilling at newly acquired gold project in July.

ASX:TG1   Jun 28, 2022 Announcement

Investment Memo: TG1 2022

Key Objective #1: Drilling at the newly acquired gold project

This morning our junior exploration Investment Techgen Metals (ASX: TG1) confirmed that it has secured an RC rig for its upcoming drilling program at its gold project in NSW.

With the RC drilling rig secured, TG1 expects its drilling program to commence on 15 July 2022.

We covered the various targets TG1 has identified at its gold project in our most recent TG1 note which you can read here: Microcap TG1 pinpoints gold drill targets.

TG1’s gold project has historic surface trenching results which returned results of 160m @ 1.2 g/t gold including higher grade intervals of 5m @ 18.0 g/t gold and 5m @ 7.1 g/t gold.

After reprocessing some historic IP survey data, TG1 has also identified IP chargeability anomalies right below this surface trenching work.

Importantly, none of these targets have been drilled before, and TG1 will be the first company to drill test the structures beneath the surface trenching work.

Stifel to advise EMN on project finance

ASX:EMN   Jun 28, 2022 Announcement

Investment Memo: EMN 2022

Objective #4: Early Progress on Project Financing

It’s good to see our European battery metals Investment Euro Manganese (ASX:EMN) getting its financing ducks in a row ahead of the commissioning of its Demonstration Plant.

EMN appointed US financial services company Stifel (market cap ~US$6B) as Project Finance Advisor for EMN’s Czech Republic high-purity manganese project.

Stifel is very experienced in the battery metals financing space, and is expected to help with moving EMN towards a final investment decision in 2023.

This appointment is good progress on Objective #4 from our EMN Investment Memo:

What’s next for EMN? Completion of the Feasibility Study for the Chvaletice Manganese Project is expected in the coming weeks. EMN has been in “quiet execution mode” for the first half of this year but we expect the second half of the year to be a busy period for EMN with plenty of news flow.

Is copper the next battery material to go exponential?

Next Investors   Jun 02, 2022

Investment Memo: KNI 2022, GAL 2022, MAN 2022, TG1 2022, AKN 2022

General: Macro

Long time readers will know that we have based a fair few of our Investments around the electrification macro thematic. The following transcript from the “Odd Lots” podcast published by Bloomberg shines the light on one of the most critical industrial metals in the world, copper.

Read the full article here.

According to Goldman Sachs, thanks to booming demand for electric vehicles (EV’s) and the overall shift to electrification, coupled with minimal investments being made into new mine capacity, alongside minimal investment in new mines, copper might be the tightest commodity market the world has ever seen.

The key topics touched on in the podcast are as follows:

  • Why the copper deficit is going to get so big — 5:35
  • Why total demand is going to boom — 8:15
  • Where will the copper come from? — 11:30
  • It takes longer and longer to build a new mine — 14:22
  • Peak production is on its way — 22:13
  • The copper bear case — 30:06
  • Why copper $100K is possible — 35:19

This isn’t the first time Goldman Sachs have spoken about the tightness in the copper market, late last year publishing “Copper is the new oil” just over 12 months ago now, where again the US investment bank claimed that “A surge in green capex—combined with the lack of copper mining projects—will lead to a multi-year bull market in copper”.

We tend to agree with this viewpoint, with copper already the 2nd most used industrial metal in the world and the electrification boom likely to increase demand by multiples from where it is today we think the outlook for copper demand is likely to outstrip the supply response.

This is why we hold Investment exposure to copper explorers across our portfolio’s. Below is a list of these portfolio companies:

Kuniko (ASX: KNI) - Next Investors Portfolio

  • Zero Carbon Copper, nickel, cobalt and lithium, Exploration stage, (European Union - Norway)

Galileo Mining (ASX: GAL) - Next Investors Portfolio

  • Nickel-Copper-PGE, Exploration Stage, (Australia)

Mandrake Resources (ASX: MAN) - Catalyst Hunter Portfolio

  • Copper, Exploration Stage, (Chile)

TechGen Metals (ASX:TG1) - Catalyst Hunter portfolio

  • Copper/gold, Exploration Stage, (Australia)

Auking Mining (ASX:AKN) - Catalyst Hunter Portfolio

  • Copper, Exploration Stage, (Australia)

China stimulus to add fuel to the commodity supercycle fire?

Next Investors   Jun 02, 2022

Commodities portfolio

General: Macro

We have been writing about what we think is an upcoming commodities supercycle for over 2 years now. The following Bloomberg article highlights China’s plan to tap a $120 billion credit line to spur economic growth through infrastructure spending.

All of this infrastructure spending requires more commodities.

Read the full article here.

Below are our key takeaways:

  • China has ordered state owned banks to set up US$120 billion in lines of credit for infrastructure projects as it leans on construction to stimulate the Chinese economy.
  • China’s call comes after official data showed that economic activity contracted in April and unemployment rose sharply.

The article highlights the readiness of the Chinese government to lean on fiscal stimulus to spur economic growth in times of contracting GDP growth numbers. We think that these type measures are likely to become the norm with governments all around the world responding to any slow down with more fiscal stimulus by way of infrastructure spending.

Generally governments would try to respond to slowdowns in economic growth by cutting interest rates, with this tool exhausted after the COVID pandemic we think infrastructure spending will become the new policy of choice all around the world.

We think that this will result in an increased demand for commodities at a time where the supply side response just isn’t coming in to play. We think all of this should take commodity prices higher.

Infill drilling revelas more spodumene bearing pegmatites

ASX:LRS   Jun 02, 2022 Announcement

Investment Memo: LRS 2022

Objective #1: JORC resource at its Brazilian lithium projects

This morning our exploration Investment Latin Resources (ASX: LRS) announced that its infill drilling program at its Brazilian lithium project has intercepted more spodumene bearing pegmatites.

Particularly important was the fact that the this intercept was made down dip from hole 16 (SADD016), which is a good sign that the discovery is getting bigger at larger depths.

LRS also confirmed that the infill drilling program would now consist of ~100 holes over 22,000 to 25,000m with the aim of getting a maiden JORC resource put together over the new discovery.

Next: We are looking forward to LRS making more progress on this front and think that a JORC resource will be the next key catalyst to re-rate LRS’ share price.

Commences next phase of HPA project development with Alcoa

ASX:FYI   Jun 02, 2022 Announcement

Investment Memo: FYI 2022

Objective #1: Commission demonstration plant

Our Wise-Owl specialist batteries metal tech investment, FYI Resources (ASX:FYI) has announced the completion of the first of three development phases for its high purity alumina (HPA) project.

The HPA project is a joint venture with the Australian subsidiary of the +$10B capped Alcoa — a leading global aluminium producer (65% Alcoa : 35% FYI). The project aims to produce HPA that is purer and substantially cheaper than the current predominant process, and leaves a much smaller environmental footprint.

The JV now progresses to Phase 2, the development of a demonstration plant in WA which will produce up to 240 tpa HPA. Whilst this is less than the initial 1,000tpa production goal, the quantity isn’t the important aspect.

What matters is seeing FYI’s technology scale up from the pilot plant level. If that can be achieve, the JV will likely progress to the third and final phase — the development of a 9,000 tpa production facility.

HPA is drawing heightened attention as a key component for separators in electric vehicles batteries and demand for HPA is soaring as consumers switch from gas guzzlers to EVs, with the market expected to tip into a supply deficit from around 2024.

Today’s news fits in with the main objective we want to see FYI deliver in 2022 — to commission the demonstration plant. The key catalyst for this will be Alcoa signing off on the demonstration plant funding, which is expected in December 2022.

Fund managers committing $16 trillion to meet net-zero targets

Next Investors   Jun 01, 2022

General: Macro

Regular readers will know that we are committed to filtering all of our Investments based on their ESG footprint. The following Bloomberg article shows how the Investment community is now committing $16 trillion of funds under management toward meeting net-zero targets.

Read the full article here.

Below are our key takeaways:

  • Fund managers have committed to net-zero emissions by 2050 , promising to manage 39% of their funds under management with an ESG focus.
  • The commitment comes from Allianz Global Investors, BlackRock Inc. and Royal London Asset Management which represents $16 trillion in funds under management.

The article highlights how important ESG consciousness is becoming for company’s worldwide with the allocators of capital now putting in place ESG filters before making new investments. Companies that want to be able to attract new investment need to become more ESG conscious.

As part of our due diligence process, we always look at the ESG credentials of company’s before making new investments. We think that for companies to thrive in the medium to long term they need to be ESG conscious and in some way report the company’s ESG footprint.

All-In podcast discusses “critical minerals”.

Next Investors   Jun 01, 2022

Next Investors

General: Macro

This interview from the All-In Summit broadly discusses the critical minerals supply chains and how there has been decades of underinvestment in the physical economy in the West.

Watch the entire interview here.

Below are our key takeaways:

  • The “real economy” has been starved of investment in the West. Most of the incremental commodities capacity over the last decade has come from China who has continued to make investments in both downstream and upstream capacity in the “real economy”.
  • Four of the top 10 OEM carmakers (by battery manufacturing capacity) are based on China.
  • More investment in minerals like nickel, copper, cobalt, lithium and rare earths is required to meet future demand for battery manufacturing capacity. James claims “the world needs >US$200 billion in CAPEX per annum to satisfy future demand”. Chamath claims that the number is closer to US$3 trillion over the next decade.
  • The cost of capital upstream is limiting new investment in new projects, James claims that there is a good chance that the downstream operators like Tesla who have a much lower cost of capital may look to move upstream and acquire new mining projects directly.
  • The panel also makes reference to the recent Tesla earnings call where Elon Musk mentions that Tesla is considering “becoming a mining company” by purchasing and operating mines specifically in the critical minerals space. The panel also specifically mentions Elon’s quotes encouraging entrepreneurs into the lithium mining industry.
  • In the future where these minerals are considered “the new oil”, countries will need to build up strategic reserves just like they have done so with oil and gas. The panel also touched on the security risks that could come as a result of geopolitical tensions over a rush to try and secure supply chains of these minerals.

One thing that really stood out for us was around the idea that there could be a merging of downstream operators with upstream mining businesses.

We have seen the cost of capital issues in developing mines first hand here in Australia, where the government has had to come in and provide loans to companies like Iluka Resources (recently loaned $1.3 billion from the federal government) because capital markets were unwilling to finance large scale commodities related projects.

We believe that the “critical minerals” investment thematic is only just getting started and think that the future of mining will be for the operators to have some presence either via partnerships, direct equity stakes or joint ventures in downstream capacity.

Share Purchase Plan closes raising $533k

ASX:KNI   Jun 01, 2022 Announcement

Investment Memo: KNI IM-2022
Risk 3 : Funding risk

This morning our battery metals exploration Investment Kuniko (ASX: KNI) announced that it has raised $533k from shareholders through its share purchase plan (SPP).

The capital raise was completed at $1 per share, on the same terms as the recent placement that was completed raising $8M.

Combined, KNI has now managed to raise $8.5M via both the placement and share purchase plan (SPP) at $1 per share. This should mean that KNI now has over $13M in cash in the bank.

Lithium market faces structural supply side issues

Next Investors   May 31, 2022

Investment Memo: VUL 2022, EMH 2022, LRS 2022, RAS 2022

General: Macro

With the lithium price up almost 500% since January 2021, there’s talk that it could be due for a pullback. The following Bloomberg article doesn’t support that view, however, highlighting the long term structural supply issues faced in the lithium industry.

Read the full article here.

Our key takeaways:

  • Analysts at Macquarie Group warn of “a perpetual deficit”, while Citigroup has nearly doubled its price forecast for 2022, saying an “extreme” rally could be coming.
  • The shortage of lithium is so acute that in China the government corralled suppliers and manufacturers to demand “a rational return” to lower prices.
  • Investment in the electric vehicle (EV) industry has grown faster than any other clean energy sector over the past few years, outstripping even wind and solar power. If battery makers can’t get enough lithium, it could slow the adoption of clean-energy vehicles, making it harder to meet global emissions targets.
  • Supply issues and high prices have prompted acquisitions and joint ventures from battery makers moving down the supply chain and into the mining sector directly.
  • Fitch Solutions have also labelled lithium a “strategic mineral,” and warned of “rising government intervention.”

The article is a really good deep dive into the structural issues in the lithium markets. For us, it points to just how important it is for the junior exploration space to make new lithium discoveries to match the exponentially increasing demand for lithium.

Without massive investment in new exploration, we simply don't get enough lithium to be able to catch up with the demand from battery makers.

We hold investments from the exploration stage all the way up to development ready projects in the lithium space. Below is a list of our portfolio companies:

Vulcan Energy Resources (ASX:VUL) - Next Investors Portfolio

  • Zero Carbon Lithium development stage, Germany (European Union)

European Metals Holdings (ASX:EMH) - Wise Owl Portfolio

  • Lithium, development stage, Czech Republic (European Union)

Latin Resources (ASX:LRS) - Catalyst Hunter Portfolio

  • Lithium, exploration stage, Brazil

Ragusa Minerals (ASX:RAS) - Catalyst Hunter Portfolio

  • Lithium, exploration stage, Northern Territory

Sasanof-1 primary target to be drilled between 2nd and 5th June

PRM and GLV   May 31, 2022

Investment Memo: PRM/GLV 2022

Objective #1: Drilling of the Sasanof-1 well in May 2022

Yesterday our gas exploration Investments Prominence Energy (ASX:PRM) and Global Oil and Gas (ASX: GLV) reported that over the weekend the drill rig at the Sasanof-1 well had reached a depth of ~2073m with all of the casing down to that depth run and cemented in place.

The update also confirmed that the next stage of drilling would see the rig penetrate the primary target zone, where we hope our Investments drill into a large gas bearing column.

The rig is expected to reach the primary target area between the 2nd and 5th of June which means at some point next week we will know whether or not our Investment has paid off.

In our last note, we set some expectations for the drilling program, to read the article in detail and to see what we want to see from the drilling results check out the note by clicking on the image below.

2022 drilling program commenced at Canadian gold project

ASX:TMR   May 31, 2022 Announcement

Investment Memo: TMR 2022

Objective #1: Make new discoveries at the Canadian gold project.

This morning our junior gold exploration investment Tempus Resources (ASX:TMR) commenced its 2022 exploration program at its Canadian gold project.

The 2022 drilling program is following up over ~39-holes (9,826m) of drilling that TMR has completed since November 2020.

This year’s program will consist of up to 30 drillholes (for ~8,500m), focused mostly on the following key targets:

  • Blue Vein discovery: 15 drillholes targeting extensions to the previous high grade gold intercepts.
  • Main and West veins: 10 drillholes targeting extensions to both of these discoveries.
  • Ella Zone: 3 drillholes following up a 2m intercept made last year.
  • Exploration holes: up to 5 drillholes focused on making new discoveries.

Below (in green) is where TMR plans to drill as part of the 2022 drilling program.

TMR’s goal for the program this year is to increase the historic resource to support the development of a high-grade mine. The company plans to put out an updated resource estimate on completion of the 2022 program.

Four new gold prospects at Commando

ASX:PUR   May 31, 2022 Announcement

Pursuit Minerals (ASX:PUR) was up as much as 28% this morning after announcing the discovery of four new prospects and a number of new gold anomalies at its Commando Project.

Commando, which PUR acquired in December 2021, is a portfolio of highly prospective exploration tenements adjacent to multi-million ounce gold deposits, 38 km north from Kalgoorlie in WA.

PUR today reported on the results of the first geochemical sampling program ever done across this tenement package.

The company reported very high levels of anomalism which it considers very encouraging and highly significant. The results provide PUR with new quality targets for its upcoming AC drilling program at the project.

What’s next?

PUR’s exploration team is now:

  • Preparing to complete 5,000m of AC drilling of anomalies (mid-June 2022); and
  • Investigate geophysics such as ground penetrating radar (GPR), passive or active seismic in deep cover areas to clarify underlying geology and structure.

First patient recruited in rare kidney disease Phase 3 trial

ASX:DXB   May 31, 2022 Announcement

Our biotech investment, Dimerix Limited (ASX: DXB), has recruited the first patient to its DMX-200 ACTION3 phase 3 clinical trial in patients with FSGS kidney disease.

ACTION3 is a pivotal (Phase 3), multicentre, randomised, double-blind, placebo-controlled trial of the efficacy and safety of DMX-200 in patients with FSGS (Focal segmental glomerulosclerosis) who are receiving a stable dose of an angiotensin II receptor blocker (ARB).

That’s a lot to take in, but this is a significant moment for DXB - Phase 3 is actually happening and a lot of groundwork had to be laid for DXB to get to this point.

The trial will recruit across 75 sites in 12 different countries globally, with ethics and regulatory submissions now made in all 12 countries and those with approvals proactively screening for suitable patients.

Part 1 of the trial will conclude after the first interim analysis, once 72 patients have completed 35 weeks treatment — expected in the first half of 2023 (subject to recruitment).

This dosing and the ethics and regulatory submissions support our #1 Objective for DXB this year: to progress these Phase 3 trials.

What’s next?

We’re looking for further recruitment updates and word that all sites for the study are fully set up.

Drill targets identified, rig on its way

ASX:TMZ   May 31, 2022 Announcement

TMZ: Drill targets identified, rig on its way

Investment Memo: TMZ IM

General: Drilling update

Today our precious metals development investment Thomson Resources’ (ASX:TMZ) announced results from their latest geophysical survey delivering “compelling high priority targets” at their Texas project in southern QLD.

Drilling will commence shortly to see what lies below at Texas, particularly at the Twin Hills and Silver Spur deposits.

Today’s news fits in with our Objective #1 of our 2022 Investment Memo - for TMZ to deliver a total combined resource across its silver deposits of ~100 million silver equivalent ounces. Presently, TMZ sits at ~40.2 million silver equivalent ounces. The hope is that the new drilling campaign will find more resources that can be added to the current tally.

Next news we are keen to see are the assay results from this drilling, which should be available in the next quarter.

✅ Rhodium picked up in assays, discovery now more valuable

ASX:GAL   May 30, 2022 Announcement

Investment Memo: GAL IM-2022 [Archive]
Objective 3 : Cobalt and palladium exploration at Norseman

Late last week our long term exploration Investment Galileo Mining (ASX: GAL) put out more assays from the recent discovery hole made at its PGE project.

In a note on Thursday we mentioned that the company was waiting on assay results that were testing the discovery intercept for rhodium mineralisation.

Today we received those results with rhodium values up to 0.094 g/t with average values across the 33m interval of 0.05 g/t.

At first glance this may seem like a low number but the rhodium price trades at ~US$15,450 per ounce as a result of increasing demand for rhodium linked to its use in automotive pollution control systems.

This means that even a small amount of rhodium can add a lot value to any new discovery

For some context, the Platreef project in South Africa which GAL has previously compared its discovery to is a much deeper underground deposit and has rhodium grades measuring ~0.14g/t as part of its ore reserves.

With GAL’s first result coming back at an average grade across the first intercept of 0.05g/t, we think this is a good start especially considering GAL has heaps of drilling to come to test for extensions to its new discovery.

Next: We want to see the 4,000m RC drilling program start to test for extensions to the discovery into the main primary target zone.

Global Helium Atlas Licence Secured

ASX:NHE   May 26, 2022 Announcement

Investment Memo: NHE IM-2022

Our helium Investment, Noble Helium (ASX:NHE), has secured the licence for the helium Atlas, otherwise known as “Global Atlas of Helium Occurrences and Exploration Play Fairway Analysis.

This is a set of data that tracks helium occurrences around the world - a powerful tool to have if NHE is to morph into a significant player in the helium market down the track.

With the agreement executed, NHE now has an important bit of IP in its hands, which should help the company in making future acquisitions.

While it is still early days for NHE, we think the company is doing everything it said it would do in the Prospectus when it IPOed.

As part of the licence agreement, NHE now has access to ongoing technical support from two of the foremost experts on helium globally, Professors Gluyas and Ballentine:

What’s next for NHE: We’re looking for gradiometry to commence and further stakeholder engagement in Tanzania as NHE moves to finalise drill targets towards the end of the year.

Proof of Concept CBG Trial Success

ASX:BOD   May 26, 2022 Announcement

Investment Memo: BOD 2022

General: Additional clinical trial

Our medical cannabis Investment, BOD Australia (ASX:BOD), has announced that its “Proof of Concept” CBG trial was successful.

CBG, or cannabigerol, is a non-intoxicating cannabinoid which BOD has been exploring for a range of therapeutic uses, including fibromyalgia, inflammatory bowel disease and irritable bowel syndrome (IBS).

This is what the product looks like:

BOD found that, “74% of trial participants reported a noticeable improvement in

their conditions within two to four weeks of using MediCabilis™ CBG 50 twice a day.

That’s a solid result for a novel therapy and should make doctor’s feel more comfortable prescribing BOD’s CBG product in the UK and Australia.

As BOD Investors, we’re glad that BOD’s R&D/clinical trial pipeline is starting to deliver results and we’re hoping these trials lead to more sales.

What’s next for BOD: We’re looking for an update on patient recruitment for their two main clinical trials - one for Long-Covid and another for insomnia. These trials form Objective #1 and Objective #2 in our BOD investment memo.

Well services contract signed, drilling targeted for July.

ASX:IVZ   May 26, 2022 Announcement

Investment Memo: IVZ 2022

Objective #4: Drilling of the Mukuyu-1 well

Invictus Energy (ASX: IVZ) has signed a well services contract with Baker Hughes - one of the world’s leading oilfield service providers, operating in more than 120 countries.

The contract covers most of the services required during drilling programs, from project management to more technical things like wellhead supply and installation.

IVZ also reaffirmed its anticipated spud date of July, with the drill rig expected to start mobilising on site in early June.

That means we should start to see images of the rig on site very soon.

The first well will be drilled on the Mukuyu prospect — the largest undrilled prospect in onshore Africa with an estimated prospective resource of 8.2 TcF and 247 million barrels of conventional gas condensate on a gross basis.

Withdrawal from PGE rights acquisition deal

ASX:AKN   May 26, 2022 Announcement

Investment Memo: AKN IM

Corporate: Transaction update

Today, our Catalyst Hunter base metals exploration investment AuKing Mining (ASX:AKN) announced its withdrawal from an agreement with Astral Resources (ASX:AAR, formerly called Anglo Australian Resources) to acquire the PGE (platinum group elements) right and remaining 25% interest not already owned of its flagship Koongie Park project in WA.

The reason for the withdrawal is that the $6M funding required for the acquisition fell through. AKN announced a $7.1M capital raise in March, with a placement completed raising $3.61M, and the remainder to be raised via a rights issue that was fully underwritten by Vert Capital. However, there were clauses that allowed for termination of the underwritten amount, which Vert Capital has exercised - in essence, the stock market has crashed, along with AKN’s share price.

Whilst the acquisition deal is now dead, we still like that AKN secured substantial funding to progress exploration activity, and were keen to move to full ownership of its flagship, as it points to management’s confidence in the asset - especially as we await the next catalyst and key milestone, i.e results from the metallurgical testwork. We consider this to be the key to unlocking the value in AKN’s JORC resource - with results likely in the next few weeks.

As at 31 March 2022, AKN had cash reserves of $1.127M. With the recent placement raising north of $3.6M, AKN is in a healthy position to fund progression of Koongie Park for the remainder of the year.

Cobalt drilling almost half completed, assays pending

ASX:KNI   May 25, 2022 Announcement

Investment Memo: KNI IM-2022
Objective 2 : Drilling of highest priority drill targets in 2022

This morning our battery metals exploration Investment Kuniko (ASX: KNI) put out an update on its drilling program across three of its highest priority cobalt targets in Norway.

The drilling was initially planned for ~2,800m across 7 different diamond drillholes. As of today, KNI has completed ~1,007 metres of drilling mostly at the first “Døvikkollen B” target with the first drillhole started at the second “Damtjern'' target started on the 20th of May.

KNI expects drilling at the highest priority target “Middaghsvile” to start at the beginning of June. This is the target where previous drillers Berkut Minerals missed the giant geophysical anomaly and is the closest to the historic mine shafts.

To read more about these three targets and our deep dive into this drilling program check out our last note on KNI here: KNI is Now Drilling for Cobalt in the EU - Three EM Targets to Aim For

With drilling ongoing, KNI has also confirmed that the turnaround times for results will be ~90 days from drilling being completed.

Results are being submitted to the assay labs on a weekly basis so we should start to see the first batch of assay results within the next 60-90 days given some of the drilling has already been completed.

Ongoing soil sampling across a 9km cobalt trend

ASX:KNI   May 25, 2022 Announcement

Investment Memo: KNI IM-2022
Objective 1 : Results from geophysical and geochemical surveys and analysis

This morning our battery metals exploration Investment Kuniko (ASX: KNI) confirmed that it has completed solid sampling across a ~9km long strike zone in and around the historic cobalt works of the old Skuterud cobalt mine.

KNI confirmed that ~1,017 soil and rock samples had already been collected with another program commenced to collect samples across six separate target areas where no sampling work had been done previously.

KNI expects the results from these programs to come back in August of this year, so in line with when we can expect the assays from the drilling program.

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