Gold project option exercised ahead of non-core asset divestment

ASX:LRS   Jul 08, 2022 Announcement

Investment Memo: LRS IM-2022

Our lithium exploration Investment Latin Resources Ltd (ASX: LRS) has exercised its option to secure 100% ownership over a gold prospect in the southern Lachlan Fold Belt in NSW.

The decision followed the completion of extensive regional exploration including reprocessing and interpretation of the available airborne geophysical data, on-ground reconnaissance mapping, and outcrop sampling and systematic soil sampling.

This prospect — the Peep O’Day prospect — is the southern portion of the original Yarara Tenement and the most prospective area, returning high-grade gold in outcrops over a strike length of 1.3 kilometres.

This all bodes well for LRS, which is currently in discussion with a number of third-party groups in relation to the divestment of Peep O’Day and other non-core assets.

Our primary reason for holding LRS remains its South American Lithium project, so we like to see that the company is making decisions to centre its focus on its lithium business.

✅ Trading halt for assay results at Norseman PGE discovery

ASX:GAL   Jul 08, 2022 Announcement

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

This morning our long term exploration Investment Galileo Mining (ASX: GAL) went into a trading halt “pending the release of an announcement to the market in relation to material drill assay results from the Company’s Callisto discovery (Assay Results)”.

Today’s trading halt comes two weeks after GAL intercepted more sulphides along strike from its discovery hole at its PGE discovery in WA.

Below is an image of where the upcoming assays are likely to be from.

In a previous GAL note, we mentioned that we are watching for the discovery to continue to the east — the sulphide intercepts were a positive first sign that this could be the case.

We then set some expectations for the assay results as follows:

  • Incredible case: 40m at over 3.0 g/tonne
  • Bull case: Mineralisation keeps going, grade increasing to 2.5 g/tonne
  • Base case: Grade above 1.0 g/tonne, 10m + intersection lengths
  • Bear case: Grade below 1.0 g/tonne, intersection lengths reduce

At this stage, we know that the mineralisation continues along strike to the east with every hole so far intercepting greater than 20m of sulphides, with a peak intercept of ~28m.

We now want to see the grades from coming assays be on par or above those from the discovery hole. If we see grades improve off of the discovery hole then the results would be in between our bull case and incredible case expectations.

We think this could be a positive surprise to the market and lead to a move higher in the company’s share price. We are now looking forward to Tuesday when GAL expects to come out of its trading halt.

Environmental and community support for geothermal project

ASX:VUL   Jul 08, 2022 Announcement

Investment Memo: VUL IM-2022
Risk 4 : Stakeholder risk

VUL today reported that it has received preliminary Environmental Impact Assessment (EIA) approval for its Taro license, paving the way for VUL to drill six wells for geothermal energy and lithium.

The State Office for Geology and Mining determined that “the environmental impact of the planned wells, taking into account their size, extent and intensity of action, cannot be assessed as significant. There is therefore no requirement to carry out a full environmental impact assessment for the wells”.

VUL has also confirmed today that community support for geothermal production is growing across Germany’s Upper Rhine Valley region, with the Upper Rhine Council having resolved in favour of supporting deep geothermal projects in Ortenau. This follows an earlier vote of support for geothermal energy production in the area from the City Council of Landau.

These endorsements address some of the Stakeholder Risk as outlined in our 2022 VUL Investment Memo.

Lastly, VUL has provided an update on progress at its Demo Plant at the Zero Carbon Lithium™ Project in Germany.

VUL says that initial commissioning of the Sorption Demo Plant is now planned to commence in late-Q4. This is behind schedule due to previously flagged, unprecedented global supply chain issues with sourcing certain pieces of equipment. However, the commissioning of ‘LiLy’ — VUL’s lithium hydroxide production Demo Plant — remains on track to start commissioning in late Q1 2023.

Binding agreement with leading Italian geothermal group

ASX:VUL   Jul 08, 2022 Announcement

Investment Memo: VUL IM-2022
Objective 5 : More strategic partnerships (to demonstrate execution)

Continuing to grow and diversify its project development portfolio, Vulcan Energy Resources (ASX: VUL | FSE: VUL) today announced it has entered a binding collaboration agreement with Italy’s largest geothermal energy producer, Enel Green Power (EGP).

EGP, part of the Enel Group, is dedicated to the development of energy generation from renewable sources. A global leader in geothermal energy, it has plants in Italy, Chile and the United States.

Under the agreement, VUL and the Italian renewable energy giant will explore future geothermal lithium opportunities for cooperation. This includes assessing the potential of VUL’s Italian project, the Cesano Permit, in a stepwise approach, starting with a joint scoping study.

The Cesano Permit extends over an area of 11.5 km2, 20 km NNW of Rome. EGP has previously explored and drilled a number of wells in the Cesano area and gathered relevant data directly from local reservoirs, including wells that yielded hot geothermal brine with high lithium values.

VUL and EGP will also evaluate the opportunity to cooperate on other geothermal lithium projects in Italy.

China considering US$220Bn in infrastructure stimulus

Jul 08, 2022

Macro: Commodities

The following Bloomberg article highlights China’s plan to spend up to US$220 billion to spur economic growth through infrastructure spending.

All of this new infrastructure will require more commodities.

Read the full article here.

Below are our key takeaways:

  • China’s Ministry of Finance is considering US$220 billion of infrastructure funding aimed at shoring up the country’s beleaguered economy.

  • The funding is to be brought forward from next year’s quota, marking the first time the issuance has been brought forward due to concerns around the dire state of the world’s second largest economy.

  • The funding would primarily be used on infrastructure spending to boost an economy hit by Covid lockdowns and a housing downturn.

  • Commodities rallied in European trading hours following the news, with copper moving 3.6% higher on the London Metal Exchange.

For over two years, we have been writing about an upcoming commodities supercycle brought about by infrastructure spending, following decades of underinvestment in the “real economy”.

All this investment in the “real economy” requires raw materials, which is why we think the macro backdrop for commodities over the next decade is strong.

The Bloomberg article highlights the readiness of the Chinese government to lean on fiscal stimulus to spur economic growth at a time when the Chinese economy is slowing down.

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 for governments worldwide.

Again, this infrastructure spending will increase demand for commodities which we expect will take commodity prices higher.

VW CEO breaks down batteries and supply chain issues

Jul 08, 2022

Macro: Commodities

The following Bloomberg article showcases the moves major carmaker Volkswagen is making in the batteries industry.

Read the full article here.

Below are our key takeaways:

  • VW is pressing forward with investments along its battery supply chain, commencing construction at a new cell factory in Salzgitter, Germany, one of five facilities in Europe under the carmaker’s PowerCo subsidiary.
  • Salzgitter is home to VW’s main motor factory, and it is where the company last year opened an $80 million facility to research, develop and test EV batteries.
  • Roughly $2 billion will be invested in the new cell factory, where production is scheduled to begin in 2025.
  • VW expects its battery business to generate €20 billion in revenue by the end of this decade.
  • VW CEO Herbert Diess said, “We are invested in some startups and we are looking forward to a joint venture together with Bosch for the machine tools and equipment for those plants, so we’re really gearing up to become one of the bigger battery cell producers”.

The news is just another sign that downstream investment in battery supply chains is showing no signs of slowing down.

VW is one of the world's largest carmakers and is heavily investing in downstream production capacity. It expects this part of its business to generate over €20 billion in revenues by the end of the decade.

This is a situation where investment in midstream/downstream (manufacturing/battery industry) is far ahead of upstream investment (mining), this leads to the supply/demand imbalances for the raw materials required to produce batteries only becoming worse.

The imbalance comes from the timing of these mega projects. Building a downstream / midstream facility could take 1-4 years whereas it takes around 7 years on average to bring a new resource discovery into the production stage.

As a result, we think that raw materials prices will remain high for at least the next decade whilst the mining industry catches up to demand.

Nuclear power labelled “Green” by the European Union

ASX:GTR   Jul 07, 2022

Investment Memo: GTR IM-2022

The following Reuters article touches on the news overnight in the EU where lawmakers voted in favour of labelling nuclear power as “green”.

Read the full article here.

Our key takeaways:

  • On Wednesday, the European parliament backed EU rules labelling investments in gas and nuclear power plants as climate-friendly.
  • The vote in favour of the proposal means the EU can look to pass the proposal into law. For the proposal not to pass, 20 of the EU’s 27 member states would have to oppose the move.
  • The new rules will add gas and nuclear power plants to the EU "taxonomy" rulebook from 2023, enabling investors to label and market investments in them as green.
  • EU financial services chief Mairead McGuinness said "The Complementary Delegated Act is a pragmatic proposal to ensure that private investments in gas and nuclear, needed for our energy transition, meet strict criteria".
  • Slovakian Prime Minister Eduard Heger said the vote result was good for energy security and emissions-cutting targets.

We are Invested in US based uranium explorer GTI Energy (ASX: GTR) because we think nuclear power has one of the lowest carbon-footprints and highest utility rate of all renewable energy technologies currently available.

We think this, combined with its ability to operate on an almost 24/7 basis, makes nuclear power the ideal source for baseload energy generation.

This is where our exposure to GTR comes into play. With uranium being the primary fuel source for nuclear power, we think it is a critical mineral for a green future.

To see all of the key reasons why we are Invested in GTR and the key objectives we want to see the company achieve in 2022 check out our 2022 GTR Investment Memo by clicking here.

EU Parliament to consider gas a "Green" energy source

Jul 07, 2022

Macro: Natural Gas

Overnight, EU lawmakers voted in favour of labelling gas and nuclear power as “green” as part of the continent’s plan to transition away from fossil fuels.

We’ve long been of the view that gas is the natural transitional fuel that can bridge the gap between fossil fuels and cleaner energy sources.

Burning gas to produce power has a far lower carbon footprint compared to coal and oil, with the added benefit of having all of the infrastructure in place to produce and consume it.

We think that the world is ready to embrace it as part of the energy mix for the next decade and potentially beyond that. As a result, we hold several Investments in companies looking to supply gas to energy hungry parts of the world.

The following Reuters article provides an overview of the proposed EU legislation:

Read the full article here.

Our key takeaways:

  • On Wednesday the European parliament backed EU rules labelling investments in gas and nuclear power plants as climate-friendly.
  • The vote in favour of the proposal means the EU can now look to pass the proposal into law. The only risk facing the proposal is if 20 of the EU’s 27 member states oppose the move.
  • The new rules will add gas and nuclear power plants to the EU "taxonomy" rulebook from 2023, enabling investors to label and market investments in them as green.
  • EU Financial Services Chief Mairead McGuinness said "The Complementary Delegated Act is a pragmatic proposal to ensure that private investments in gas and nuclear, needed for our energy transition, meet strict criteria".
  • Slovakian Prime Minister Eduard Heger said the vote result was good for energy security and emissions-cutting targets

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

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.

Gas to bridge the gap between fossil fuels and renewables

Next Investors   Jun 20, 2022

Investment Memo: EXR 2022, IVZ 2022, TEE 2022

General: Macro

The following AFR article further justifies gas’ position as a transitional power source:

Read the full article here.

Our key takeaways:

  • Russian energy giant Gazprom has reduced gas flows into Europe through the Nord Stream pipeline.
  • The EU is encouraging users to burn less natural gas to deal with reduced energy supplies from Russia.
  • Germany is looking to restart coal-fired power plants to conserve natural gas consumption.
  • There’s a focus on ensuring that more gas is available to divert to storage, so that Germany has enough to get through the winter months.

Germany is one of the countries most committed to decarbonising its economy but finds itself reliant on coal-fired power plants for energy supply.

We think this reiterates the need for a transitional energy source to bridge the gap between fossil fuels and renewable energy. Natural gas is an ideal transitional energy source and this is why we hold natural gas exploration exposures in our portfolio.

To check out our Investments in the gas industry see the Investment Memos for the companies 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

Tsunami of capital coming into the green hydrogen sector.

Next Investors   Jun 20, 2022

Investment Memo: PRL 2022, EXR 2022, MNB 2022

General: Macro

The following Bloomberg article puts into context the wave of capital that is moving into the green hydrogen sector globally.

Read the full article here.

Our key takeaways:

  • Major oil companies have a vision for a low-carbon future centred around multi-billion dollar projects that generate renewable electricity and convert it into hydrogen to power trucks, ships or even aeroplanes.
  • Head of power and renewables at commodities trader Trafigura Group Pte Ltd, Julien Rolland, said "This green hydrogen, green ammonia stuff will be the new energy industry”.
  • BP recently announced it is taking the lead in the $36 billion Asian Renewable Energy Hub in the Pilbara, Australia.
  • Total Energies has teamed up with India’s Adani’s conglomerate in a venture that seeks to invest as much as $50 billion over the next 10 years in green hydrogen.
  • Shell’s Vice president for hydrogen, Paul Bogers, said that “It's only a matter of time before Shell Plc follows with a megaproject of its own”.
  • US giant Chevron is rumoured to be ready to spend big on a mixture of green and blue hydrogen projects.

Hydrogen has long been seen as experimental, with companies reluctant to spend big on building projects because the end market was just not developed enough.

Oil and gas supermajors are now investing, or at the very least committing to invest, tens of billions of dollars into green hydrogen projects globally as they look to move towards a cleaner low-carbon future.

Our best Investments have always come when we invested in frontier technologies well ahead of mass adoption, and our Investments in the green hydrogen space are no different.

We hold the following companies in our Portfolio, providing exposure to what we think is an industry 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

Local support for Zero Carbon Lithium Project; project expansion

ASX:VUL   Jun 17, 2022 Announcement

Investment Memo: VUL 2022

Objective #3: Expansion of Scope

Vulcan Energy Resources Ltd (ASX:VUL | FSE: VUL) announced today that the City Council of Landau has voted to support geothermal energy production at VUL’s dual geothermal energy and Zero Carbon Lithium project in Germany’s Upper Rhine Valley.

The Council voted to support geothermal energy production in the area and has taken a positive stance towards the extraction of lithium from geothermal brine in consideration of climate protection goals and the interests of regional urban development.

The announcement follows news this week, as reported in the AFR, that the European Chemicals Agency (ECHA) to the European Commission has proposed to increase regulatory requirements around the control, processing, packaging, and storage of lithium. However, VUL CEO Francis Wedin said that the ECHA’s proposal is based on incorrectly interpreted applications of the classification criteria and did not take into full consideration more recent studies on the subject.

Adding to its growing pipeline of projects, VUL also announced today that it has increased its Exploration Licence Area by 141km2 to a total of 1,163km2.

This is inline with Objective #3 for VUL in 2022, Expansion of Scope, as outlined in our Investment Memo: “We want to see the company expand its scope for future lithium production by acquiring more land holdings and more projects to help meet anticipated rising demand”.

AC drilling program underway at WA gold project

ASX:PUR   Jun 17, 2022 Announcement

General: Exploration

Our exploration Investment Pursuit Minerals (ASX:PUR) has commenced a 5,500m AC drilling program on the four new gold prospects discovered by recent auger sampling at its Commando Gold Project.

The 156 hole program of AC drill traverses over the recently announced auger geochemical and Bottom of Hole (BOH) gold anomalies is expected to take approximately two weeks to complete (a late June finish). PUR expects to receive assay results in late August, after which it will plan additional RC or diamond drilling.

The company managed to locate a rig offering competitive drill rates at relatively short notice so that the program could start on time.

PUR anticipates that the program will identify new areas for follow up drilling in H2 2022.

We're currently putting together an Investment Memo for PUR outlining why we continued to hold, the objectives we want to see the company achieve, risks involved, and our Investment plan.

Workover rig mobilised, flow testing underway.

ASX:GGE   Jun 17, 2022 Announcement

Investment Memo: GGE 2022

Objective #1: Drilling of first well

Our 2021 Catalyst Hunter Pick of The Year Grand Gulf Energy (ASX: GGE) is now a week or two away from knowing whether or not it had made an entirely new helium discovery in the US.

Today, GGE confirmed that a workover rig had been mobilised to the Jesse #1A well site on the 14th of June and stimulation work had commenced in preparation for the all important flow testing program.

GGE also announced that the rig would “perform several days of flow testing” before final samples for helium concentrations will determine whether or not GGE has in fact made a whole new helium discovery.

In our last note on GGE we detailed our bullish, base and bearish case expectations for the flow test results, to read that note click here.

Iron ore front and centre of Chinese governments mind

Next Investors   Jun 17, 2022

Investment Memo: IRD 2022, PFE 2022

General: Macro

The following article in the AFR highlights just how important securing iron ore supplies is to the Chinese government. Iron ore isnt in the spotlight the same way battery metals are but this article is a clear signal as to its importance worldwide.

Read the full article here.

Our key takeaways:

  • China is moving to consolidate the country’s iron ore imports through a new centrally controlled group by the end of this year
  • China is the world’s biggest consumer of iron ore with its 1 billion tonne a year steel industry absorbing about 70 per cent of global production, most of it supplied by Australia

  • Beijing hopes the new entity can secure lower prices through larger bulk purchases made on companies’ behalf.

  • The Chinese plan will also look to “organise bigger investments in overseas mines”.

At face value this article may seem like a net negative for iron ore explorers/producers, we think it actually highlights just how front of mind iron ore is for the Chinese administration.

The fact that Australia supplies most of Chinese iron ore demand will mean that both sides of the demand/supply curve have equal bargaining power.

We expect demand for steel (and in turn iron ore) to increase significantly into the future and with the investments being made into countries like India for steel manufacturing capacity, we expect the price for iron ore to be largely set by the market.

We hold the following company’s as iron ore exposures in our portfolio:

Iron Road (ASX: IRD)

  • Development stage, Iron ore, SA.

Panterra Minerals (ASX:PFE)

  • Exploration stage, Iron ore, SA.

Superfund now a major shareholder of our lithium Investment

ASX:EMH   Jun 17, 2022 Announcement

Investment Memo: EMH 2022

General: New major shareholder

Yesterday afternoon we noticed that our battery metals investment European Metals Holdings Ltd (ASX: EMH) welcomed a new substantial shareholder to its register.

United Super put out a “substantial shareholder notice” confirming that they now own 5.44% of the company.

On the second page of the notice we saw that a large part of the buying on market happened between the 4th of March and the 10th of June, purchasing a total of ~$7.9M in shares at an average price of $1.06 per share.

EMH is now trading well below that level at ~70.5c per share which tells us that institutional investors clearly see value in EMH shares even above the current trading price.

Energy transition requires 5-6x more key commodities

Next Investors   Jun 17, 2022

General: Macro

We saw the following video on twitter published by Real Vision. The short clip comes from an interview between US hedge fund manager Kyle Bass and Will VanLoh who is the founder and CEO of Quantum Energy Partners - a US private equity fund focused on the energy industry.

Watch the full clip here.

Our key takeaways:

  • Will VanLoh says the energy transition will be very difficult to achieve without significant investment into new mine supply of battery materials.

  • Will also mentions that the move away from internal combustion engines (ICE) to electric vehicles (EV’s) as well as the move away from traditional power generation sources (coal/gas) to wind and solar will need 5-6x more key mineral inputs like copper and lithium.

  • Finally, Will mentions that the world needs to increase its production capacity for concrete and steel by 20-30x to be able to achieve the 2030 energy transition targets.

The conversation largely centres around a debate about whether or not mine supply can catch up with demand for these key materials.

We tend to agree with Will VanLoh that it may be difficult to see a whole heap of new supply come to market, but at the right commodity price, with the right incentive structures in place, we think it can be done.

This forms a large part of our overall commodity supercycle thematic where we see higher pricing over a sustained period of time across most commodities which will then encourage investment into new mine supply.

ResMed to Acquire MediFox Dan for $1B

ASX:ONE   Jun 15, 2022

Investment Memo: ONE 2022

General: Medtech acquisition

ASX listed health giant ResMed (capped at $42B) will shell out $1B for German health software company MediFox Dan.

MediFox operates on a SaaS model and makes software for providers of out-of-hospital care across a range of business functions.

The significance of this acquisition is that it provides some insight into what multiples companies in the health tech space are willing to pay for growth - which is particularly relevant to our health tech Investment Oneview Healthcare (ASX:ONE).

ResMed’s acquisition of MediFox Dan (which had $83M in revenues last year) will take place at 12x revenue.

We note that in 2021 ONE made €9.7M ($14.7M) from continuing operations of which €5.3M ($8M) was recurring revenue.

Extrapolating roughly from there, a 12x revenue multiple would value ONE at a $177M market cap.

That’s a very large 130% premium to ONE’s current market cap.

While this is just one example, we think it's a good exercise as the broader tech sector gets battered in an inflationary and rate tightening environment.

We think the key takeaway is that tech's not dead as an investment thematic, it's just hibernating. I.e at some point in the sell off, tech stocks should eventually become a decent value proposition once more.

What’s next for ONE: We’re looking for more sales momentum and for ONE to smash through the 15,000 contracted bed marker - a key metric for measuring ONE’s success. ONE recently signed its biggest ever deal for a further 2,441 contracted beds with the BJC HealthCare network.

Investor presentation - Green hydrogen-ammonia in Angola

ASX:MNB   Jun 15, 2022 Announcement

Investment Memo: MNB 2022

General: Investor presentation

Yesterday our long term Investment Minbos Resources (ASX:MNB) released a fresh new investor presentation based solely on its green hydrogen-ammonia project.

We still feel the market is yet to fully catch on to the potential here especially given that Angola is known to have the second cheapest energy costs in the world with an abundance of zero carbon Hydroelectric power capacity.

We feel this uniquely positions MNB in the right place at the right time to get a project like this off the ground.

We did a deep dive into MNB’s green hydrogen-ammonia ambitions in our last MNB note, which can be read here: Green-Hydrogen Ammonia is coming

Also check out the investor presentation released yesterday by clicking on the image below.

Investor presentation - A tale of two energy solutions

ASX:EXR   Jun 15, 2022 Announcement

Investment Memo: EXR 2022

General: Investor presentation

Yesterday our 2019 Energy Pick of the Year Elixir Energy (ASX:EXR) put out an updated slide deck which it presented at the Queensland Petroleum and Exploration association (QUPEX) conference.

The presentation lays out in detail EXR’s forward plan and where the company is at with both its coal bed methane (CBM) gas and green hydrogen project in Mongolia at a time where energy security has become a major talking point in financial markets.

With the long awaited long term pilot production program at its CBM gas project due to start soon and the optionality from the company’s hydrogen project we think there will be a lot more news flow coming from EXR and expect to see the market take an interest in the company later this year.

To read the presentation in full, click on the image below.

PFE: Drilling set to commence at Hellcat

ASX:PFE   Jun 15, 2022 Announcement

Investment Memo: PFE Memo

General: Exploration activity

Our early stage exploration investment Pantera Minerals (ASX:PFE) is preparing the drill rig for its most recent acquisition.

This morning, PFE announced the completion of a heritage survey at its Hellcat polymetallic project in WA’s Edmund Basin, thus paving the way for its maiden drilling programme. An 1,800 metre diamond drilling program is set to commence early next month.

Hellcat is located ~100km from one of the region’s most significant discoveries of the past two decades, namely the ‘Abra’ polymetallic deposit - owned by Galena Mining (ASX:G1A). The project is currently in construction, with first lead and silver production slated for 2023.

We like that Hellcat has the same stratigraphic and structural setting as Abra, and also shares a similar geophysical signature.

PFE acquired 80% interest in the Hellcat Project in December 2021.

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

Next will be the actual drilling activity next month, followed by assay results, which we will await with interest.

Visible gold observed along strike of discovery

ASX:TMR   Jun 14, 2022 Announcement

Investment Memo: TMR 2022

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

Tempus Resources (ASX:TMR) has provided an update on drilling at its Canadian gold project, reporting that it has intersected visible gold. (The market seems to like it as it’s the only stock in our portfolio that opened higher this morning.)

TMR have completed three diamond drill holes to date, targeting the southern extension of the Blue Vein, for a total of 645 metres.

Our first objective for TMR this year, as outlined in our 2022 Investment Memo was for the company to make new discoveries at its Canadian gold project. Works would include high impact drilling with a focus on discovering new gold veins over the project area, and further drilling of the areas around the newly discovered Blue-Vein.

Today’s announcement works towards that objective, with visible gold observed in drill hole EZ22-03. This is an encouraging sign that the Blue Vein structure and gold mineralisation extends along strike to the south of last year’s discovery drill hole (EZ21-12).

The core from the first three drill holes is currently being cut with samples to be dispatched to the lab this week, so we look forward to those assays.

Acquisition completed, drilling for uranium in July

ASX:GTR   Jun 14, 2022 Announcement

Investment Memo: GTR 2022

General: Project acquisition

This morning our uranium exploration Investment GTI Resources (ASX: GTR) confirmed that it had completed the acquisition of an additional ~13,800 acres in ground next to its existing uranium projects in Wyoming, USA.

The acquisition of the “Green Mountain” project now means GTR holds ~35,000 acres across in the uranium capital of the US, Wyoming.

Interestingly the newly acquired grounds all sit against a border shared with Rio Tinto.

GTR expects to start target generation and permitting works across the newly acquired acreage this month ahead of a planned ~100,000 foot exploration program across its entire project portfolio in the basin scheduled for July.

Permit submitted for second helium well in the US

ASX:GGE   Jun 14, 2022 Announcement

Investment Memo: GGE 2022

General: Exploration

Our 2021 Catalyst Hunter Pick of The Year Grand Gulf Energy (ASX: GGE) has confirmed it is fast tracking permitting for its second helium well at its US helium project.

With the Jesse #1A well intercepting a large 62 metre gas column, GGE has “accelerated” the permitting process for a second helium well over its project area.

GGE expects to drill this second well in Q3 2022.

While the announcement didn’t detail where the next round of drilling would be targeted, in our last note we covered all of the follow up exploration prospects inside its project area and mentioned that the next round of drilling would be dictated by the results from the Jesse #1A well.

If a commercial discovery is confirmed we could see GGE drill the same structure to increase flow rates and expand the reservoir size. Alternatively, GGE might look to drill an exploration well over another one of its prospects.

Below is an image from our last note showing the four main prospects that sit inside GGE’s project area.

Almost ready to flow test for helium concentrations

ASX:GGE   Jun 14, 2022 Announcement

Investment Memo: GGE 2022

Objective #1: Drilling of first well

A workover rig had started mobilising at Grand Gulf Energy’s (ASX: GGE) Jesse #1A well site to begin flow testing for helium concentrations.

This comes two weeks after GGE intercepted a 203 foot (~62 metre) gas column in its maiden drilling program at its US helium project.

GGE didn't give any indication of timing for the results from the flow testing program but we expect at least an update within the next week or two.

As mentioned in GGE’s announcement today, “flow rates and laboratory analysis of sampled helium concentration will be the ultimate determinant of a successful commercial discovery”.

In our last note on GGE we detailed our bullish, base and bearish case expectations for the flow test results, to read that note click here.

3D Models reveal carbonatite REE Targets

ASX:LNR   Jun 10, 2022 Announcement

Investment Memo: LNR 2022

Objective #1: Complete EM surveys to generate targets

This morning our rare earths exploration Investment Lanthanein Resources (ASX: LNR) announced the results from more geophysical works being done ahead of the maiden drilling program at its REE project.

Today’s news highlighted the presence of a number of intrusive carbonatite occurrences. LNR believes these represent “larger tonnage style REE targets that extend to over 2km depth”.

The 3D modelling has put together at least three different occurrences, varying in size as follows:

Intrusive target LI01:

  • 4.3km in diameter at surface, extending ~1km at depth.

Intrusive target LI03:

  • Circular ~2.8km diameter from a depth greater >2km.

Intrusive target LI05:

  • 2km x 1.3km structure with the source at ~2km depth.

This brings to light a geophysical target that LNR likens to the Mount Weld Project owned by Lynas Rare Earths (capped at $8.2 billion). The Mount Weld Project is well defined by similar geophysical works that describe a “vertical cylindrical body, 3 to 4 km in diameter”.

It is still far too early to draw conclusions from all of this, but the target generation works have thrown up some really interesting targets that we can't wait for LNR to drill.

Heritage surveys delayed to the second half of June

ASX:LNR   Jun 10, 2022 Announcement

Investment Memo: LNR 2022

Objective #2: Delivering a drilling campaign on WA rare earths project

Our rare earths exploration Investment Lanthanein Resources (ASX: LNR) has postponed its heritage avoidance surveys due to positive COVID-19 cases on site at its REE project in WA.

In our last note, we said that we expected drilling to commence in early April/May, so it’s a little disappointing to see the drill program delayed to the second half of the year. But these sort of things are outside of the company’s control.

Without completing the heritage avoidance surveys, LNR can’t get its drill rig on site, hence drilling has to be delayed.

We are hoping there are no further delays and this is resolved in June/early July.

We now await an update to the market on when LNR expects to commence drilling — we hope that it will be at some point in the current quarter.

Agreement with CBA’s strategic telecoms partner

ASX:VN8   Jun 10, 2022 Announcement


CORPORATE: Strategic partnership

This morning, our small cap telco investment Vonex (ASX:VN8) announced its partnership with More, the Commonwealth Bank (CBA) -backed telco provider, perhaps best known for its Tangerine broadband services.

Both parties have entered binding heads of agreement which will see VN8 become More’s exclusive provider of Hosted PBX services to new and existing CBA customers. VN8 will also deliver a new hosted PBX and IP telephony enablement platform for More's new and existing small to medium enterprise (SME) customers.

As we’ve mentioned previously in covering VN8, we like the company’s aggressive growth through acquisition strategy, which has fast-tracked improvements in several key metrics we track for VN8 (notably annual recurring revenues and PBX customers). The acquisition strategy has helped lead to today’s More partnership, as it is actually through VN8’s subsidiary, 2SG Wholesale - the first of VN8’s four acquisitions over the last 2 years.

Upon full release of the Platform and migration of existing Hosted PBX business services, VN8 expects a significant increase to annual recurring revenue from the More partnership, predominantly from license fees, hardware and call carriage. In addition, Vonex will charge a one-off fee for the initial software development and an ongoing monthly management fee for the platform.

Today’s news fits in with both the key objectives we’d like to see VN8 achieve this year, namely to become bottom-line positive and continue to grow its market share and national customer base.

We look forward to the upcoming quarterly and full year results, which will reveal how VN8 are tracking on these objectives.

Promising sampling at Linderos copper/ gold project

ASX:TTM   Jun 09, 2022 Announcement


GENERAL: Exploration results

Our exploration investment Titan Minerals (ASX:TTM) announced early exploration results from its Linderos project in Southern Ecuador earlier today.

Channel sampling at the Copper Ridge porphyry copper prospect returned promising copper and coincident molybdenum results, including:

  • 46m @ 0.24% copper, 9.71ppm molybdenum in channel CRC040
  • 32m @ 0.21% copper, 3.91ppm molybdenum in channel CRC051

At the nearby Meseta Gold prospect, promising gold results from channel sampling included:

  • 4.5m @ 12.69g/t gold and 3.48g/t silver in channel MGC22-025
  • 2.9m @ 9.81g/t gold and 2.69g/t silver in channel MGC22-024

These results have led to numerous drilling targets ahead of the initial drilling to test the potential of these high priority targets in 2H22.

Today’s news fits in with our #2 Objective we’d like to see management deliver this year:

We take confidence that a turn around is not too far away with TTM, noting that several directors have being increasing their holdings recently:

  • Managing Director Matt Carr purchased $102.5k in shares on market
  • Newly appointed director Tamara Brown purchased $20k in shares on market
  • Non-Exec chairman Peter Cook purchased $152k in shares on market.

We consider directors purchasing shares in times where a company’s share price is depressed off the back of a news vacuum is generally a positive sign, as the people closest to the company see value in topping up their shareholdings.

To see all of the key objectives we want to see TTM achieve in 2022, the reasons why we continue to hold TTM in our portfolio and the key risks to our Investment thesis, check out our 2022 TTM Investment Memo here.

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