Gas exploration program expanded + hydrogen progress made

ASX:EXR   Mar 25, 2022 Announcement

We caught up with Neil Young, the head of our energy investment Elixir Energy (EXR), following his presentation on Wednesday at the Brisbane Mining and Energy Conference.

EXR is our 2019 Energy Pick of the Year, and has been making steady progress with its flagship Nomgon coal bed methane project in Mongolia, near the Chinese border.

This year, our #1 objective for EXR to achieve is to deliver its maiden pilot production program at Nomgon.

Neil provided an update, expanding the program to a planned ~24 wells, which should both grow and de-risk the gas resources in place.

We’re also pleased to see progress with EXR’s Hydrogen project.

Given the EXR’s team’s track record (Chairman Richard Cottee built QGC from a CSG junior capped at $20M to $5.7B takeover acquisition, Neil was formerly an executive within Santos’ coal seam gas division), as well as first mover advantage within an energy hungry region, we continue to have confidence in EXR’s capability to execute on its vision.

We found the EXR video on its H2 project useful to understand the importance of EXR's strategic location:

On the path to 100Moz Silver Eq. Resource in 2022

ASX:TMZ   Mar 25, 2022

It was good to catch up with David Williams, chairman of our silver investment Thomson Resources (ASX: TMZ), following his presentation at the Brisbane Mining and Energy Conference yesterday.

TMZ has its hands on Australia’s highest grade, undeveloped silver asset - a good place to be with positive sentiment returning of late for precious metals as a safe haven/ anti-inflationary investment.

David provided us an update on their near-term ambitions to build a 100Moz silver equivalent (AgEq) resource feeding a central processing facility in NSW’s Lachlan Fold Belt. That ties in with our main objective we’d like to see TMZ deliver this year, as per our Investment Memo.

David mentioned that TMZ recently doubled its total JORC AgEq resources to 40.2Moz. There are also over 78Moz AgEq in outdated resource estimates across several projects that they are working on bringing into JORC standard quickly. We anticipate that the 100Moz AgEq resource should be ready by Christmas this year.

We also received an updated development timeline. TMZ should commence a pre-feasibility study on their flagship project this year, with a view to a definitive feasibility study commencing later in 2023.

We look forward to seeing the first resource update in the months ahead.

Updated JORC on the cards at copper-zinc project

ASX:AKN   Mar 25, 2022

Yesterday we caught up with the CEO of our copper/zinc exploration investment AuKing Mining (ASX: AKN), Paul Williams, following his presentation at this week’s Brisbane Mining and Energy Conference.

We like that AKN’s flagship asset, the Koongie Park copper/ zinc project in WA, is well advanced.

Paul and the team echoed this, noting that Koongie Park already has a JORC resource residing across two granted mining licenses, meaning that AKN is only a few steps away from transitioning to production (and cashflow). There is a systematic approach to the further exploration, so it will be with interest that we watch for the fruits of this to flow on through more drilling and assays.

We’re keen to see how the flagship advances in the year ahead. Below are the key objectives we want to see delivered.

Objective 1 is nearing completion already, and we suspect it won’t be too long before the JORC resource update is announced to market.

Manganese on Tesla Menu?

ASX:EMN   Mar 25, 2022 Announcement

Our European battery metals investment, Euro Manganese (ASX:EMN), could be a beneficiary of a Tesla battery chemistry pivot.

Elon Musk was quoted as saying at a recent Tesla event in Germany:

I think there’s an interesting potential for manganese.

Manganese is an essential ingredient in batteries for EVs and EMN is ideally located in the Czech Republic surrounded by European gigafactories in neighbouring countries that will crank out the batteries needed to electrify transport in Europe.

EMN’s project is specifically focussed on high purity manganese suitable for EV batteries.

The potential for higher manganese content in lithium-ion batteries has also been widely discussed in both academic and industry circles.

You can see a breakdown of the current performance of various battery chemistries that use manganese below:

Musk’s comments come at a time when VW has announced that its next battery cell factory will be located in Valencia, Spain. That follows its commitment last year to build out a strong European battery supply chain by investing in six gigafactories, including one in Eastern Europe yet to be announced.

We think 2022 promises to be an exciting year for EMN under new CEO Matthew James, with a number of key milestones to come.

James said in a recent interview that,

Historically the customers have been more focused on lithium, nickel and cobalt. There’s a sense now they’re turning their attention to manganese. The perception has been that there’s plenty of manganese, but where the bottle neck is in the high purity processing capacity.

EMN recently announced a deal with the local Czech government stakeholders as well, further adding to the legitimacy of their project.

What we’re looking for next is progress across our four key objectives for EMN in 2022 :

  • Objective #1: Construction of the Demonstration Plant
  • Objective #2: Definitive Feasibility Study (DFS)
  • Objective #3: First Offtake Partner
  • Objective #4: Early Progress on Project Financing

You can get a more complete high level summary of why we invested in EMN, key risks and our investment plan in our EMN Investment Memo.

Helium well site construction underway; drilling in weeks

ASX:GGE   Mar 25, 2022 Announcement

This morning, our 2021 Catalyst Hunter Pick of the Year Grand Gulf Energy (ASX:GGE) confirmed that construction works had commenced at the site of its proposed maiden well at its US helium project.

With the works expected to be completed by next Monday and the drill rig to arrive on site by 15 April, GGE is now only weeks away from drilling the maiden (Jesse #1) well.

An offtake agreement was secured just last week (as covered in our latest GGE note) and all infrastructure is already in place.

GGE is now closing in on a milestone moment where it could make the transition from explorer to producer and start generating revenues from its helium project. Of course this is all contingent on the success of the maiden drilling program.

We set the drilling of the first well at its helium project as the primary objective we wanted to see GGE deliver in our 2022 Investment Memo. To see all of these objectives as well as why we continue to hold GGE in our portfolio, read our 2022 GGE Investment Memo here.

Trading halt pending an update regarding its permitting

ASX:IVZ   Mar 24, 2022

This morning we saw our 2020 Energy Pick of the Year Invictus Energy (ASX:IVZ) go into a trading halt pending an update with respect to the outstanding permitting of its project.

It’s difficult to say for sure what the announcement will be regarding but given the trading halt quotes that IVZ “will be providing an update in relation to finalising an agreement relating to the Company’s SG 4571 Permit with the Government of the Republic of Zimbabwe” we hope it is related to the production sharing agreement that IVZ said was nearing completion.

In our last note we said that we expected IVZ to make progress converting its Petroleum Exploration Development and Production Agreement (PEDPA) (which was signed in March 2021) into a 25 year production sharing agreement.

This would effectively be the final stage of permitting before IVZ has certainty around tenure, as well as having fiscal and legal frameworks in place, should IVZ make a large scale discovery during its maiden drilling program in ~June.

Below is an image from IVZ’s 2021 Investor Presentation, showing where a Production Sharing Agreement sits in the permitting process.

We will be watching for the announcement, which should be out on or before Monday. If the Production Sharing Agreement is finalised, then the pathway to the potentially basin opening drilling program will be much clearer.

This year’s drilling program is the main reason we are invested in IVZ.

For more on why we continue to hold IVZ in our portfolio and what we want to see the company achieve in 2022, check out our 2022 Investment Memo here.

Trading halt pending an acquisition

ASX:MAN   Mar 24, 2022

Yesterday we saw our junior exploration investment Mandrake Resources (ASX:MAN) enter a trading halt pending news of a “material transaction”.

MAN’s share price closed at 4.7c just before it entered the halt. That gives the company a market cap of $22.6M, and given MAN had ~$16.4M in cash in the bank as at 31 December 2021, MAN’s enterprise value is currently around $6.2M.

That means MAN has almost 2.5x its enterprise value in cash in the bank. Given the uncertainty in the markets at the back end of 2021 and in early 2022, we like that MAN is cashed up and ready to do some deals.

We expect MAN to come out of trading halt tomorrow. Once the acquisition is announced we will cover it on Catalyst Hunter. Subscribe here to get our take on the deal.

More high grade palladium & platinum assays from Norseman

ASX:GAL   Mar 24, 2022

Today our long term exploration investment Galileo Mining (ASX:GAL) put out some more assay results from its recent aircore drilling program at its palladium-nickel-cobalt Norseman project in WA.

The results included two of the highest grading drilling results seen to date at the Norseman project with peak intercepts as follows:

  • 8m @ 1.44g/t 2E (palladium + platinum), 0.11% nickel from 8m.
  • 4m @ 1.7g/t 2E (palladium + platinum), 0.11% nickel from 12m.

These grades are especially high for an aircore drilling program.

For context, $2.6 billion capped Chalice’s Julimar discovery has a JORC resource with a palladium grade of ~1.6g/t.

With this latest batch of results, GAL has now proved up to a ~9km strike length and will be following all of these results up with deeper RC/diamond drilling.

With more targets generated worthy of following up with deeper drilling, we think the aircore drilling program has fulfilled its purpose so far, which was ultimately to identify some high priority drill targets for follow up.

We are particularly interested in the upcoming drilling where GAL initially hit a 1m massive sulphide intercept right in between two EM conductors. We have written about this target in our previous GAL note which can be read here.

To see the reasons why we continue to hold GAL in 2022 and the key objectives we set as things we want to see the company achieve in 2022 read our 2022 Investment Memo here.

More on DRC cobalt and KNI's European Cobalt Project

ASX:KNI   Mar 24, 2022

Our Zero Carbon copper, nickel and cobalt investment Kuniko (ASX:KNI) has had a solid two weeks on the market, rising more than 150% since it announced that it had been granted a drilling permit at its Norwegian cobalt project. The current geopolitical environment and cobalt supply concerns no doubt helped too.

In our recent note on our investment KNI, we highlighted a rapidly growing need to diversify the cobalt supply chain amid increased geopolitical tensions.

KNI’s Skuterud cobalt project lies in politically stable and mining friendly jurisdiction — an area that was formerly the largest cobalt producing region of the world.

Currently, some ~70% of it is sourced from the Democratic Republic of Congo which produced 120,000 tonnes in 2021.

Recent media attention has centred on the various challenges the DRC faces in ethically mining the battery metal and their complex relationship with Chinese mine operators.

This New York Times article is of particular interest to us:

The article notes that, “Biden administration officials have been looking for ways to strengthen ties with Congo and gain access to critical resources like cobalt. A delegation of White House officials flew to Kinshasa, the capital, earlier this year for meetings with Mr. Tshisekedi and other top officials. The U.S. government is backing the review of mining contracts in Congo as part of an effort to crack down on corruption.

For us, this underscores how battery metals are taking on an increasingly geopolitical flavour.

Tshisekedi is the president of the DRC and his government has previously pitched a ban on the export of raw cobalt from the country and argued for localising the processing of the battery metal.

According to Reuters, a new local mine administrator is in place at the Tenke Fungurume mine which in 2020, produced 182,600 tonnes of copper and 15,400 tonnes of cobalt. That’s around 10% of total global cobalt production in 2021.

With European EVs needing cobalt more than ever before, we’re eagerly looking forward to KNI’s maiden drilling campaign in Norway, slated to begin in the first week of May.

Here is why we invested in KNI and what we expect it to achieve in 2022 - KNI Investment Memo.

Merlin-2 Well Reaches Total Depth

ASX:88E   Mar 23, 2022

Our oil exploration investment, 88 Energy (ASX:88E) has reached its targeted total depth at its Merlin-2 well of 7,334 feet.

To get a sense for the scale of this project, there’s a very cool drone video on 88E’s LinkedIn page (pictured above).

Being an appraisal well, Merlin-2 was targeting the N18,N19,N20 reservoir targets which we have written about extensively in our previous notes.

During the Merlin-1 drilling program 88E intersected ~41 feet of oil bearing structures across those three targets which we set as a baseline for what we wanted to see 88E achieve with Merlin-2.

Although we are yet to have it confirmed, in today’s announcement 88E did say that “initial observations collected throughout the drilling operations revealed target intervals thicker than those encountered in Merlin-1 with oil shows noted under white light across the three target reservoirs”.

We set the following expectations in our last note for what we wanted to see from the Merlin-2 appraisal well:

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

With today’s announcement we have a sneak peek into the first of these potentially being achieved, and with 88E saying there are “oil shows” noted under white light in the three reservoirs we now know there is oil there.

The next step will be for 88E to test the reservoir quality and on that front, 88E Managing Director, Ashley Gilbert says that in 7-10 days results from the wireline program will be out.

Wireline logging is basically running a set of sensors down the drill hole to find out if there’s oil there. Think of this as the precursor to running a full production testing program.

A great result now would be for the wireline programs showing the well is IS suitable for production testing which 88E have previously said could take ~10 days to complete once started. If we see production testing commence then 88E can move towards announcing a maiden reserve figure over its project Peregrine.

This is high-risk, high-reward investing for us and there are a number of key risks - including the possibility that the drilling returns nothing.

Here is why we invested in 88E, key risks and what we expect them to achieve in 2022.

Fertiliser prices moving higher off the back of Ukraine/Russia

ASX:MNB   Mar 23, 2022

Overnight we saw reports from the Guardian and CNBC highlighting the impact the Russia/Ukraine conflict is having on the prices for the raw materials that are used in the supply chain for fertiliser markets.

The three types of fertilisers are:

  • Nitrogen fertiliser (Ammonia based) - Prices are up almost 400% from 2020 levels, MNB are working on this.
  • Phosphorus fertiliser - Prices are up almost 300% from 2020 levels, MNB are working on this.
  • Potassium fertiliser -

The standout for us was the impact the conflicts in Ukraine/Russia is having on nitrogen fertiliser prices which is an ammonia based fertiliser. With almost all of the ammonia used in nitrogen fertilisers being produced using natural gas, the recent increases in the price of gas (mostly because of supply chain scares out of Russia) has put some serious tailwinds behind the price of nitrogen fertilisers.

This is a key reason for our investment in MNB. MNB’s phosphate fertiliser project is nearing development and this is complemented by plans to build a hydro-powered ammonia plant to produce zero carbon ammonia (used to produce nitrogen fertiliser) in Angola (which has the second cheapest source of of energy because of an abundance of underutilised hydropower).

MNB is in the final stages of developing its project at just the right time, with the potential to supply competitive, zero carbon fertiliser products to both Africa and the rest of the world.

To see all of the reasons why we invested in MNB, and what we want the company to achieve in 2022, check out our 2022 Investment Memo here.

Metwork drilling leading up to maiden trial mining program at it

ASX:LRS   Mar 22, 2022

This morning our investment Latin Resources (ASX:LRS) announced that it had commenced a 10 hole diamond drilling program at its WA halloysite project with the ultimate aim of:

  1. Upgrading its 207mt JORC resource.
  2. Obtaining core samples from the existing JORC resource footprint, so they can be used in upcoming metallurgical testing programs.

At the same time LRS also confirmed that permits have been submitted for a small scale test pit where a pilot mining run would take place.

Today’s announcement will directly contribute to objective #2 of “What we want to see LRS achieve in 2022” as part of our 2022 LRS Investment Memo - which is to see LRS secure offtake agreements for its halloysite project.

With the drilling program designed so that product qualification work can be done through metallurgical testing and the permitting commenced on a pilot mining run, the upcoming drilling program is just a precursor to producing some of the end product that LRS will be hoping to sell to customers.

Also, given that the program is made up of diamond infill drilling we don't expect the JORC resource to get too much bigger. Instead, we expect to see some of the inferred resources move into the measured/indicated category.

Maiden resource expands Quinchia gold project to 2.6Moz

ASX:LCL   Mar 22, 2022

Our Colombian gold investment Los Cerros (LCL) today announced its highly anticipated maiden resource at its Tesorito prospect, coming in at 1.3Moz Au, at a grade of 0.81g/t Au.

This takes the total resources for the Quinchia Project to 2.6Moz gold @ 1.02g/t Au, with potential for a high-grade starter pit of 540koz Au at 1.23 g/t Au.

This was the #1 Objective that we set for LCL to achieve this year in our 2022 Investment memo. As per the Memo, we consider the size of the Tesorito maiden resource estimate as a pass mark.

We note also that the grade is decent for a shallow gold porphyry deposit and that there are currently five rigs at the project — meaning that this is just the starting mark for the total project gold resources.

LCL is now examining the prospects of a Tesorito-Miraflores (where most of the 2.6Moz are located) development optionality, through metallurgical test work and a Preliminary Economic Assessment (similar to a scoping study).

We were pleased to also get an update on Central Target, or what we’ve previously referred to as ‘Jabba the blob’ that may connect the Tesorito deposit and Miraflores brescia pipe. LCL reports that the first drill hole here was terminated at 1,205m downhole due to “rig depth capability”. We look forward to seeing the full assay suite, expected in April, which will show the significance of intersected hydrothermal alteration, veining and breccias. A second drill hole at the same site has commenced.

We like that LCL retains a very strong cash position of $17.8M, meaning that it is well funded to keep growing its gold resources at Quinchia.

We will cover today’s announcement in more detail later this week.

Significant palladium & platinum results out of Norseman

ASX:GAL   Mar 21, 2022

GAL today announced that it has received further positive palladium and platinum assay results from aircore drilling at its Norseman Project in WA.

Six out of seven holes drilled on a single line returned significant results with maximum grades of four metres at 0.69 g/t 2E (palladium plus platinum). The location of the aircore results extends the known strike length of anomalous palladium and platinum to over eight kilometres.

At the very beginning of the air core drilling program GAL hit a 1m massive sulphide intercept and then after running EM surveys in the area found that the intercept sat right in the middle of two large EM conductors.

The primary reason for air core drilling was to set up new drill targets that could be followed up with RC drilling. These results have now identified a new target for follow up RC drill programs, with the aim of locating potentially economic mineralisation.

With GAL confirming PGE’s across a ~8km of potential strike length and the high priority EM targets (Jimberlana) found, we think the air core drilling program has been relatively successful and are looking forward to seeing the follow up drilling across GAL’s Norseman project.

The current and planned drilling sees GAL meet the third objective that we set for it in our 2022 GAL Investment Memo.

While progressing its palladium exploration program, GAL is also working to meet the first two objectives that we identified for the year relating to its Fraser Range nickel project. Having undertaken its first drill program of the year at the Fraser Range project, GAL confirmed that it plans to increase its activities here and continue to develop more targets for drill testing during the year.

Lead-silver exploration now underway

ASX:PFE   Mar 21, 2022

Pantera Minerals has commenced field exploration at its Frederick lead/silver project. This comes after PFE last week completed a comprehensive ground gravity survey and an in-depth review of all available surface sampling. Survey results are expected in four weeks.

PFE’s lead/silver projects (the Frederick Project and the nearby Hellcat Project) are located in WA’s Gascoyne region, which is in a similar geological setting to Galena Mining’s globally significant lead-silver project Abra Pb-Ag deposit.

While we didn’t state an objective in our 2022 Investment Memo for PFE to achieve with this project, the field work aligns with its strategy of year round exploration and complements work at the PFE’s other projects — including its main Iron Ore project.

Drilling of the flagship Yampi Iron Ore project remains our main objective for PFE this year. Here we want to see the company delineate a large, high grade iron ore resource, which might one day attract the attention of a bigger company as a takeover target. As mentioned in our last note on PFE, the team is keen to commence the next drill campaign here once the wet season passes, likely in Q2 2022.

Our other objectives for the company this year, along with the risks involved and our own investment plan for the stock see our Investment Memo, here.

Brisbane Mining & Energy Conf hosting EXR, FYI, AKN, TMZ & NHE

Next Investors   Mar 21, 2022

Several of our Portfolio Companies will be presenting at this week’s Brisbane Mining and Energy Conference on Wednesday and Thursday (23-24 March).

These conferences are great for investors to hear companies present their investment case and to talk directly to management.

We will be in attendance and look forward to updating our readers on key developments from these presentations and chatting to management.

For those interested, you can attend in person or online by registering here.

Halloysite drilling to commence this week

ASX:RAS   Mar 21, 2022

Today, RAS announced that its maiden air core drilling program would commence at its WA halloysite project, right next door to Latin Resources’ Halloysite-Kaolin deposit which has a 207 million tonne inferred mineral resource.

The 60 hole, ~1,750m drilling program is set to be done on a ~400m strike zone right along the border of RAS and Latin Resources’ grounds. The ultimate aim of the drilling program will be to delineate a maiden JORC resource over RAS’s grounds.

Drilling is expected to commence on Wednesday (23 March).

We set the drilling of RAS’s halloysite project as objective #1 in our 2022 Investment Memo for what we want to see RAS achieve this year. With drilling now expected to commence in the coming days we will be watching to see the results.

To see what else we want to see RAS achieve in 2022 and why we continue to hold RAS in our portfolio, check out our 2022 Investment Memo here.

All-in podcast highlights food shortage risks

ASX:MNB   Mar 21, 2022

The latest episode of one of our favourite podcasts dropped over the weekend (All-in podcast E72: Impact of sanctions, deglobalization, food shortage risks, macroeconomic outlook and more).

Discussed from ~15:21 onwards is how the sanctions on Russia and disruption to the global agricultural supply chain is placing the world at risk of food shortages in the coming years.

The key takeaway was the heightened risks to the food supply chains. And as investors in MNB, we found the podcast particularly interesting.

Scientist and investor David Friedberg lays out the three types of fertiliser needed to grow the world’s food and how supply chains for all three are being impacted by geopolitical tensions/sanctions. The three types of fertiliser are:

  • Nitrogen fertiliser (Ammonia based) - MNB are working on this.
  • Phosphorus fertiliser - MNB are working on this.
  • Potassium fertiliser

He also touches on how the prices of all three of these have shot up in recent months with Russia being a key supplier and placing restrictions on exports to the rest of the world as it tries to safeguard its food supplies.

What really stood out to us was Friedberg’s take on the price of nitrogen fertilisers. He mentioned that with almost all of the world’s nitrogen fertilisers being produced using natural gas, and the price of gas now almost double where it was last year, the costs of these nitrogen based fertilisers have become out of reach for some farmers.

This is why we are invested in MNB. Its phosphate fertiliser project is nearing development and it has plans to build a hydro-powered ammonia plant to produce zero carbon ammonia (used to produce nitrogen fertiliser).

Angola has the world’s second cheapest source of energy so our investment MNB is perfectly positioned to establish alternative sources of supply when the world most desperately needs it.

To see all of the reasons why we invested in MNB, and what we want the company to achieve in 2022, check out our 2022 Investment Memo here.

MRE for Texas Silver District

ASX:TMZ   Mar 01, 2022

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

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

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

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

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

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

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

Vonex half year results announced

ASX:VN8   Mar 01, 2022

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

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

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

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

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

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

ASX:GAL   Feb 28, 2022

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

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

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

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

Wyemandoo pegmatite rock chip samples

ASX:ARN   Feb 28, 2022

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

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

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

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

Final Processed Seismic Data Received

ASX:IVZ   Feb 28, 2022

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

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

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

2022 Drilling program kicks off

ASX:EXR   Feb 28, 2022

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

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

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

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

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

ASX:LRS   Feb 28, 2022

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

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

The terms of the funding facility are as follows:

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

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

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

New products hit shelves at Coles

ASX:FOD   Feb 25, 2022

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

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

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

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

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

AJX Half yearly results

ASX:AJX   Feb 25, 2022

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

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

Earnings call and preliminary annual report summary

ASX:ONE   Feb 25, 2022

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

Key metrics (with commentary):

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

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

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

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

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

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

Massive nickel sulphides at the Saints nickel project

ASX:AOU   Feb 24, 2022

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

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

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

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

CAY enters trading halt

ASX:CAY   Feb 24, 2022

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

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

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

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

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

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

Drilling commenced at nickel targets

ASX:BPM   Feb 23, 2022

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

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

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

GGE Appoints Managing Director

ASX:GGE   Feb 23, 2022

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

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

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

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

KNI drilling program update

ASX:KNI   Feb 22, 2022

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

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

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

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

EM surveys completed at newly acquired lead-silver project

ASX:PFE   Feb 21, 2022

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

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

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

RC drilling scheduled on Fraser Range EM targets

ASX:GAL   Feb 21, 2022

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

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

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