New coal bearing sub-basin identified, more drilling to come

ASX:EXR   Mar 31, 2022 Announcement

This morning EXR confirmed that it has discovered a new coal bearing sub-basin.

The company has completed the first well for the 2022 exploration program, reaching a total depth of 804m and logging ~46 metres of coals and leading to another sub-basin being confirmed as coal-bearing to the south of its project area.

Today’s news now confirms that EXR has already started working towards completing its 2022 exploration program, which we set as objective #2 in our 2022 Investment Memo, and that the all-important long term pilot production program is being procured, which we set as objective #1.

EXR has already started drilling a second well ~200m downdip of this well and will be testing for extensions to the coal bearing formations.

Drilling contracting had been completed for the remainder of the 2022 exploration program, whilst works have begun on the 2022 2D seismic acquisition program with the first 47km completed from a targeted ~322km.

EXR also confirmed that it has commenced discussions with drilling contractors to finalise the terms and conditions for the drilling/long term pilot production program scheduled for ~mid year.

What’s next: We want to see EXR continue its exploration efforts and lock in a drilling contractor to drill and complete the long term pilot production wells or progress on its green energy project.

Assay results confirm high-grade lithium pegmatites - Brazil

ASX:LRS   Mar 31, 2022 Announcement

We recently did an in-depth analysis of the latest assay results out of LRS’ Brazilian lithium project.

Here’s the full article: High Grade Lithium in Pegmatites, Open Across Strike Length… Four More Holes from LRS Still to Come

The key points from that article are:

  • LRS announced a peak lithium grade of 3.22% along with grades of 2.22% and 2% - meaning LRS has significantly exceeded our expectations
  • Attention on lithium has never been higher - and there’s four more holes worth of assay results to come in the next few weeks
  • We think the geological trend that LRS is mapping in Brazil bodes well for the next batch of assays because the pegmatites are generally increasing in thickness along strike to the south

This progress directly contributes to Objective #1 from our LRS Investment Memo:

What’s next: We want to see further assays as well as infill and step-out drilling in and around the South Target area eventually leading to a maiden JORC resource at LRS’ Brazilian lithium project.

Twiggy pens multi-billion dollar green hydrogen deal

ASX:PRL   Mar 31, 2022

In a sign of growing momentum behind green hydrogen companies, like our investment in Province Resources (ASX:PRL), Twiggy Forrest’s Fortescue Future Industries has signed a major green hydrogen deal in Europe.

The deal between Fortescue’s renewable energy arm and E.ON, Germany’s largest energy group, is for five million tonnes per annum of Australian green hydrogen.

The hydrogen would be produced in Australia and then shipped to Germany - part of the country’s rapid shift to renewables amid an energy squeeze brought on by the country’s reliance on Russian gas.

Forrest flagged that the project would be “a minimum $50 billion expenditure.

Given the large numbers involved in projects of this scope, there’s a vibrant debate around whether green hydrogen is viable.

We’re of the view that green hydrogen IS a viable part of the energy mix going forward, particularly as electrolyser costs come down.

Electrolysers are a type of equipment that uses electricity to split water into hydrogen and oxygen.

In the context of this technological progress, we’re pleased that PRL has delivered the scoping study we wanted to see so far this year:

Here’s why we invested in PRL.

What’s next: We want to see PRL’s partnership with Total Eren solidified in the form of a Joint Development Agreement.

Budget measures to boost critical minerals

Next Investors   Mar 31, 2022

When the budget was handed down two days ago, one particular line item caught our attention.

The 2022-23 Federal Budget has allocated $250M for critical minerals with $200M over five years for the Critical Minerals Accelerator Initiative (CMAI) and $50.5 million over three years for a virtual National Critical Minerals Research and Development Centre (NCMRDC).

This is on top of a previous $294M already allocated to critical minerals, part of a larger $2B initiative launched last year.

Some of these funds have already arrived in the coffers of Hastings Technology Metals in the form of a $140 loan facility, a neighbour of our rare earths investment, Frontier Resources (ASX:FNT).

The upshot of all of this for us as investors is that Australia is making a concerted effort to secure future supply of critical minerals - minerals needed for the energy transition (renewables like wind power), EVs and defence applications.

In past weekend additions and recent notes we’ve emphasised how this is an emerging theme in both the US and Australia.

We also highlighted in our latest FNT note that: “A U.S. F-35 fighter jet needs 427 kg of rare earths while a Virginia-class nuclear submarine uses nearly 4.2 tonnes of rare earths.

These are the very same fighter jets and submarines that Australia is procuring or may procure from the United States.

That’s just rare earths, and here’s a list of the other critical minerals as per Geoscience Australia:

For a more in depth read, there’s also valuable information in the Australian Critical Minerals Prospectus.

We have a broad range of exposure to critical minerals which is why we want to point out a new feature on our website - portfolio filters.

On the homepage there’s this button on the right:

Clicking that button will make a drop down menu appear where you can select for certain types of companies.

In this case, if you are searching for critical minerals stocks you could search for the Energy Transition Portfolio, Nickel, Rare Earths, or Lithium, for example.

Check it out.

Another $3M raised via a convertible note

ASX:TMZ   Mar 30, 2022 Announcement

Earlier this week, TMZ announced that it has secured a $3M capital raise via a convertible note agreement. This comes in addition to the $2.6M raised with Patras Capital via a similar funding agreement earlier this month.

These capital raises provide cash in the bank to execute on delivering resource updates across its project portfolio. We listed these resource updates as our primary objective for TMZ to achieve in 2022 in our 2022 TMZ Investment Memo which can be viewed here. Specifically, we are looking to see TMZ combine multiple deposits’ Mineral Resource Estimates to hit 100 Moz AgEq (silver equivalent).

Below are the key terms of the latest convertible note:

The Patras Capital funding agreement was structured similarly where conversions are being made below a 6.9c benchmark price.

We suspect that the two capital raises combined with the recent selling from major shareholder SVL will put some pressure on the share price of TMZ over the coming months as the funds are converted into shares at discounts to the market price.

What’s next: We want to see TMZ complete all of the resource updates as part of its hub and spoke strategy at its Silver projects.

High grade copper and silver in rock chips

ASX:TG1   Mar 30, 2022 Announcement

This morning TG1 announced that it had returned 54.8% copper and 249g/t silver in rock chips from recent fieldwork at its Copper project in the Ashburton basin in WA. Below is an image of the copper filled rock chips.

Interestingly the rock chips were taken from right above a northeast to southwest trending splay fault.

Our armchair geologist interpretation is that the fault-lines and intersections between them often mean an increased probability of mineralisation occurring below the ground, which comes about from thousands of years of rock-movements well below the surface.

TG1 have now confirmed that they will start to overlay these rock chip samples with some ground based IP surveys (Geophysical surveys) to see if there are any anomalies worth drill testing below the ground.

Basically, TG1 has run through the typical target generation works process from Geochemical sampling (Rock chip sampling) to then moving into Geophysical surveys before putting together a list of high priority drill targets.

We are yet to launch our 2022 Investment Memo for TG1 but will be looking forward to the results from the geophysical surveys and incorporating these into the “what we want to see the company achieve in 2022” section of our memo.

What’s next for TG1: We want to see the results from the geophysical survey above. At the same time we are waiting for heritage surveys to be completed at the Mt Boggola copper project.

Wireline logging program unsuccessful at the Merlin-2 well

ASX:88E   Mar 30, 2022

88E put out an update with respect to its wireline logging program which is now nearing completion.

The wireline program was designed to test reservoir quality and ultimately would be the final step of testing before a production test could be done over the Merlin-2 appraisal well.

Unfortunately this morning 88E confirmed that provisional analysis of the wireline logging program showed that the reservoir quality was insufficient and would not be enough to warrant a production testing program.

… so we don’t even reach the starting line where the company runs a production test to assess the oil flow rates.

88E has now confirmed that the Merlin-2 well would be plugged and abandoned before a detailed evaluation of all the drilling data can be obtained.

As further analysis is released by the company we will reset our investment plan for 88E for the next 12 months, also taking into account today’s news.

The announcement went live on the London exchange overnight (Aus time), with the share down ~65% from £0.02 (3.5c AUD) to now trade around the £0.007 (1.2c AUD) mark.

At the time of writing this, the ASX has reacted in a similar fashion with the share price touching 1.3c at the open before settling around ~1.6c where it is trading now.

After big binary drilling events which lead to a disappointing result, we often see a market sell off that assumes the company has no other projects or assets…

This is not the position 88E is in, as it also has the recently acquired portfolio of production assets in Texas, USA, multiple other projects in Alaska (Project Icewine and the Yukon assets), plus other drilling prospects over its Project Peregrine acreage.

We have a well documented investment strategy when it comes to big binary drilling events with our oil & gas exploration investments. In our 2022 88E Investment Memo we set out and followed a clear investment strategy for 88E, like we do for all our investments.

We also recorded in the risks section of our 2022 Investment Memo that there was a scenario where the Merlin-2 well returned no commercial oil discovery.

We always like to record the risks to an investment so that announcements like today don’t come as a surprise. Of course we hope our portfolio companies are successful but with high risk investing it is important to cut out the emotion and focus on facts.

Below is a screenshot of the risks section from our 2022 Investment Memo for 88E, unfortunately in this drill campaign one of the key risks materialised:

Although 88E did in fact find oil and gas in the Merlin-2 appraisal well, it was not of high enough quality to warrant a production test which is still a failure in terms of the overall outcome.

As recorded in our investment plan for 88E (in our memo here) we held a de-risked position into the drill result (in case it WAS a success) and now expect the company to detail its forward plan for the rest of the year across its exploration assets in Alaska, as well as its newly acquired production assets in Texas, USA, at which point we will reassess our investment plan.

$3.7M R&D tax incentive rebate received

ASX:DXB   Mar 29, 2022 Announcement

This morning, our biotech investment DXB confirmed it had received $3.7M through a R&D tax incentive rebate for FY21.

This comes in addition to the already healthy cash balance of $16.2M that the $55 million-capped DXB had in the bank as of 31 December 2021.

Having this much cash means that the company won’t have to worry about trying to raise capital and can instead focus on the Phase III clinical trial for its FSGS product (a rare Kidney Disease). The trial is currently in the patient recruitment stage.

The primary reason that we hold DXB in our portfolio is to see it develop its FSGS product so we are looking forward to more updates regarding the phase III clinical trials throughout this year.

Together with the announcement regarding the rebate, DXB also launched an updated investor presentation which provides a useful snapshot of where DXB is at with its various products:

To see all of the reasons we continue to hold DXB in our portfolio, what we want to see the company achieve in 2022 and the key risks to our investment thesis, check out our 2022 DXB Investment Memo here.

Major shareholder buys $178k in shares on market.

ASX:FOD   Mar 29, 2022 Announcement

Late last week we saw one of FOD’s biggest shareholders ‘Batman Investments’ whose principal is Geelong based businessman Vasilios Votsaris.

With the share price recently touching its 52 week low at 1.7c the strong buying from a major shareholder is another indicator to us that the company is starting to build a base around these levels.

Votsaris’ purchasing seems to have started on 31 January this year and ended on 21 March with a total of $178k purchased at an average share price of 21c.

Mr Votsaris now owns 7.12% of the company.

In our 2022 Investment Memo we listed the turnaround potential for the company as a key reason we continue to hold FOD in 2022.

We see the buying on market by a major shareholder as a vote of confidence in the turnaround strategy and look forward to FOD’s progress on this front this year. The market also seems to like the buying from last week with the share price trading at 2.6c, up 13% today alone.

To see all of the reasons we continue to hold FOD, what we want to see the company achieve in 2022 and the key risks to our investment thesis check out our 2022 FOD Investment Memo here.

Merlin-2 reaches total depth. Wireline testing commenced.

ASX:88E   Mar 29, 2022

Over the weekend we saw this video posted on the 88E Youtube channel which shows that the wireline testing program has commenced at the Merlin-2 appraisal well.

Click on the image below to see the video:

In our last note right before the drilling program began, we set some expectations for the drilling program for what we thought a great result from the drilling program would look like.

Below are those expectations - remember these are our expectations as investors - not 88E’s expectations:

  1. Net oil paying zones (thickness) across the three reservoirs >41 feet (Merlin-1 result was 41 feet).
  2. Drilling program is successful enough to warrant production testing.
  3. Production tests confirm light oil and high flow rates.

So far 88E has confirmed drilling has intersected reservoirs thicker than the Merlin-1 well, and have observed oil shows (which we covered in a previous QuickTake).

The wireline program is designed to confirm reservoir quality and to establish if mobile hydrocarbons are present which 88E have said should take ~7-10 days to complete. If successful, 88E can then move into production testing the well in order to see flow rates from the well.

What’s Next: we will be watching to see whether or not the results from the wireline program deem the well suitable for production testing.

To see why we continue to hold 88E, the key risks to our investment and what we expect the company to achieve in 2022 check out our 2022 88E Investment Memo here.

Bigger fish eating smaller fish supports growth strategy

ASX:VN8   Mar 28, 2022

Our investment Vonex (ASX: VN8) has been aggressively growing its integrated telecommunications business through acquisitions, digesting four telcos over the past two years. This has led to the company posting record sales, PBX customers, and annual recurring revenue in its latest half yearly report.

This strategy is outlined in our second objective set for VN8 in our 2022 Investment Memo: “Grow users through integrated acquisitions and cross-selling opportunities”.

It is a similar blueprint to what fellow telco Uniti Wireless (ASX:UWL) has followed since its inception as a 25 cents per share IPO in 2019. Over the past two years, UWL acquired several smaller companies, including its $610 million takeover of OptiComm in late 2020. The strategy culminated last month with UWL receiving a takeover bid of $4.50 per share from NZ’s Morrison & Co, valuing the company at over $3 billion. Since then, Macquarie has also lobbed a takeover bid for UWL, demonstrating “the intense demand for telecommunications assets in a post-virus world”, as reported in today’s AFR.

As we wrote late last year, it’s a common thematic in the telecommunications industry for telcos to ultimately be acquired. Over 83% of ASX listed telcos with a market cap of between $15M to $500M have been acquired since 2010.

We like the growth trajectory of our VN8 investment, but want to see this translate into becoming both cashflow and EBITDA positive this financial year, as per our Investment Memo objectives:

Commentary on Tesorito’s new JORC resource

ASX:LCL   Mar 28, 2022 Announcement

Last week we looked at our Colombian gold investment LCL after the company reported its long-awaited maiden resource estimate at Quinchia Project’s Tesorito deposit.

The market provided a modest response to the milestone, with trading of LCL jumping slightly from 11 cents pre-announcement to about 12.5 cents today.

We noted that respected commodities analyst Warwick Grigor has since provided some insightful commentary on the LCL results in his most recent newsletter. He noted that it was still “early days” with the expectation that more would ultimately be added.

From last week’s announcement, LCL confirmed that after running pit optimisations as part of the Resource estimation process, and using a US$1,800/ounce gold price, the independent Resource Geologist determined an appropriate cut-off off 0.25g/t gold.

Using a 0.25g/t cut-off grade lifts the Resource to 134.3mt grading 0.53g/t gold for a total of 2.3 million ounces of gold, this result sits well above our “Top of the Class” mark.

Given the rise in the gold price, Grigor echoed similar sentiment to ours in regard to the cut-off grade used for the calculation. A cut off of 0.25g/t Au may appear quite low to those more accustomed to 1 g/t Au cut-off grades as typical over the past two decades. Here’s what Grigor wrote:

With five rigs continuing to drill across the Quinchia project area, we look forward to steady newsflow in the year ahead for LCL.

We’re keenly awaiting assay results next month from drilling “Jabba the Blob” – that is, the big magnetic anomaly residing deep between LCL’s Tesorito and Miraflores deposits - our next objective we’d like to see LCL deliver this year.

“Fantastic” nickel cobalt drilling results

ASX:GAL   Mar 28, 2022 Announcement

Galileo Mining (ASX:GAL) has reported high grade nickel and cobalt results from first pass aircore drilling at the Norseman Project in WA.

Drilling at the project was one of the key objectives that we set for GAL to achieve this year, as was to see progress on the project’s cobalt and palladium potential. Given today’s results, we mark this as a success.

Results included up to 1.66% nickel and 0.16% cobalt from the Jimberlana prospect add further weight to the area’s prospectivity. This is an area known to have potential as it is underlain by large and highly conductive EM targets. As mentioned in a Quick Take last week, we were particularly interested in drilling where GAL initially hit a 1m massive sulphide intercept right in between two EM conductors, which we wrote about in a longer Note here.

Additionally, palladium and platinum drill results now extend over nine kilometres of strike length along a well-defined geological trend.

Underwood explained that the high nickel and cobalt assays, combined with the elevated levels of precious metals (gold, palladium and platinum), suggest that the results may be related to basement mineralisation beneath and adjacent to the aircore drill holes.

We’ll be watching GAL’s follow up geophysical surveys and RC drilling that’s planned around and below the nickel, cobalt, palladium, and platinum drill intercepts. This will define the best positions for further drill testing.

To see the reasons why we continue to hold GAL in 2022 and all the key objectives that we set for the company to achieve this year see our 2022 Investment Memo here.

Aircore drilling in the Earaheedy near Rumble Resources

ASX:BPM   Mar 28, 2022 Announcement

BPM today confirmed that it will commence a first pass aircore drilling program at the Hawkins Earaheedy Project in mid-April. It also said that ~1,887m of aircore drilling has now been completed at the Nepean Nickel Project.

The main reason for our investment in BPM was to see it drill the Hawkins Project, which sits next door to $257M capped Rumble Resources’ Chinook discovery in the Earaheedy basin.

The Hawkins drilling program will comprise ~7,500m of aircore drilling to identify higher priority targets that can be followed up with RC/diamond drilling. Essentially, this drilling program is more about ranking follow up drill targets and less about actually making a new discovery.

Drilling will be done over the blue lines on the map below. We are particularly interested in seeing if BPM can prove up drill targets near the “Pinnacles” prospect and around the deep EM targets that sit right near the two major fault lines in the area.

BPM also confirmed today that it has completed ~1,887m of aircore drilling at the Nepean Nickel Project. Results are expected in the next 10-12 weeks. We wrote about these targets in our last note which you can read here.

As we noted above, our main reason for investing in BPM was its lead-zinc drilling at its Hawkins Project, so we are less focused on these nickel results, but if anything were to come from them it would be a pleasant surprise.

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

Next, we will be watching to see drill rigs mobilise on site at the Hawkins project.

Trading halt for Brazilian lithium project assays

ASX:LRS   Mar 28, 2022 Announcement

LRS entered a trading halt today “pending the release of an announcement in relation to assay results from the Salinas lithium project in Brazil”.

We have been covering the drilling program over LRS’s lithium project in Brazil ever since the first two drillholes intersected multiple zones of spodumene bearing pegmatites immediately down-dip from high-grade (2.71% lithium and 1.45% lithium) outcropping pegmatites.

We looked at the first two drill holes in our first note on this drilling program, which can be read here. The assays will likely be from these two drillholes.

Since then LRS have continued to intercept spodumene bearing pegmatites along strike and down dip so any indication of lithium mineralisation could really mean LRS are onto something here.

Since drilling started the share price has gone from ~3c to now trade at ~7.6c a ~150% increase off spodumene intercepts. If the assays now come in and prove lithium mineralisation we suspect this could only be the start of a move higher.

LRS has now defined a ~500m spodumene bearing pegmatite structure in the southern part of the project. This could be the first sign of what we hope is a new lithium discovery.

As of the last drilling update, LRS released on the 16th March, LRS had completed 6 out of 14 of the planned drillholes.

With the remainder of the drilling program to focus on the northern section of LRS’s project, we expect to see if the strike length can be increased to the north and will be watching to see if LRS continue to drill out spodumene intercepts.

Of course the ultimate tell of whether or not LRS have made a new lithium discovery will depend on the assays from all those drillholes.

Merlin-2 oil well spudded

ASX:88E   Mar 10, 2022

88E has commenced the Merlin-2 drilling program, targeting 652 million barrels of oil with a planned Total Depth of ~8,000 feet. With the US and the UK sanctioning Russian oil imports, 88E seems to have perfectly timed the drilling program at its Merlin-2 well in Alaska.

While not suggesting this will be the case, we do note that last time 88E completed a drilling program its share price moved higher by over 1,000%. And since then, amid the Ukraine/Russia conflict, the price of oil has reached ~US$128/barrel.

88E expects it to take approximately four weeks to reach the targeted depth of ~8,000 feet. It then plans to conduct production testing to see if the flow rates from the well can be considered commercial.

88E is targeting a prospective resource of 652 million barrels of oil and assuming a successful drilling program, is aiming to convert the prospective resource into reserves.

A new large-scale discovery in Alaska right now could be viewed as strategically important to the USA and to its allies who need to fill in the gap left by Russian oil bans.

In our last note, which you can read here, we set the scene for the upcoming drilling program, highlighting the regional significance of the Merlin-2 well and what it could mean not only for 88E but the majors on the Alaskan North Slope.

With the drilling of the Merlin-2 appraisal well, 88E will meet our key (and single) objective for the company for the year. To see our full 2022 Investment Memo click here.

Marvel Gold shareholding update

ASX:EV1   Mar 10, 2022

Marvel Gold is exploring whether it can conduct an in-specie distribution of its shareholding in EV1.

Marvel holds 50,000,000 EV1 shares, or ~31% of EV1’s register, that are escrowed until November 2023, meaning Marvel can’t sell until then.

An in-specie distribution is when a company passes on its shareholding in another company to its shareholders. In this case, Marvel would transfer its 50 million EV1 shares to its shareholders pro rata, rather than have the company’s treasury hold onto them.

As mentioned in our launch note, one of the key reasons we liked EV1 is because of its tight capital structure.

With Marvel's shareholding escrowed, ~31% of the shares can’t be sold on-market until 16 November 2023. This means that there will be a limited number of shares to purchase on-market, so if EV1 can deliver progress on its graphite project we could see a sharp share price re-rate.

Whatever happens with the shareholding, ideally we would like to see the escrow remain in place.

Nickel hits US$100,000 per tonne, LME suspends markets

Next Investors   Mar 10, 2022

Read the full article here: LME forced to halt nickel trading, cancel deals, after prices top $100,000

Earlier this week we saw what we think is a genuine once in a lifetime move in the nickel price, with the commodity reaching ~US$100,000 per tonne – well above its previous all time highs of ~US$50,000 per tonne.

We have been pretty vocal about the impending shortage of raw materials that will power the electric vehicle revolution. We also knew of the current nickel supply/demand imbalance (nickel is an essential EV battery ingredient). But we don’t think anyone could have forecasted a move this big in such a short period of time.

The move by the LME (London Metals Exchange) to halt trading looks to have come off the back of a large short position taken out by a Chinese company, that is facing losses >US$12 billion.

We think there is more to play out with the nickel price and don’t think that the US$12 billion margin call will be resolved in a day or two with the halt on the LME likely to take a while to sort out.

Though it was great to see the nickel price reaching these levels, we are invested in our nickel stocks because of longer term structural changes to the supply/demand equation for the critical battery metal.

Below is a list of all of our investments with exposure to nickel.

Kuniko (ASX:KNI) - why we invested

  • Zero Carbon copper, nickel, cobalt and lithium, European Union (Norway)

Galileo Mining (ASX: GAL) - why we invested

  • Nickel-Copper-PGE, WA (Australia)

Pursuit Minerals (ASX:PUR) - Memo coming soon

  • PGE, Nickel and Copper (Australia)

Mandrake Resources (ASX: MAN) - Memo coming soon (Catalyst Hunter portfolio)

  • Nickel, Copper, PGE, WA (Australia)

Aldoro Resources (ASX:ARN) - why we invested (Catalyst Hunter portfolio)

  • Nickel, PGE, Rubidium and Lithium, WA (Australia)

Auroch Minerals (ASX: AOU) - Memo coming soon (Wise Owl portfolio)

  • Nickel, Exploration Stage, WA (Australia)

Uranium drilling program on track for completion next week

ASX:GTR   Mar 10, 2022

GTR today announced that its maiden drilling program at its ISR uranium project in Wyoming, USA is nearly complete.

GTR expects the final 9 holes of the ~100 hole maiden drilling program to be drilled in the week starting on 15 March. The full set of final results and interpretations are expected in the first half of April.

The ultimate aim of the current drill program is to identify the depth, grade and width of mineralisation over the project area with a target of announcing a maiden ISR uranium resource, or at the very least, an exploration target which will form the basis for follow up exploration.

In a previous note, we set some expectations for what we want GTR to achieve in this drilling program and we look forward to seeing the last batch of results before we can make an assessment of what GTR has on its hands.

This drilling program forms the basis for the first objective we set for GTR in our 2022 Investment Memo. To see what else we want to see GTR achieve this year check out our 2022 Investment Memo here.

Rig contract executed, drilling to commence in June

ASX:IVZ   Mar 10, 2022

Ahead of its drilling program that’s anticipated to commence in June, IVZ today confirmed that the final drill rig contracts had been signed for its Muzarabani-1 well in Zimbabwe, as well as an option to drill a second exploration well.

As for the option for a second well, IVZ is currently waiting on the formal granting of the extended licence area before committing.

IVZ have agreed on is the Exalo #202 rig, which can drill down to a depth of ~5,000m and is expected to begin mobilisation at IVZ’s project in May.

A key takeaway from today's announcement for us is that IVZ has managed to secure a rig that is powerful enough to drill down to ~5,000m depths.

In the most recent investor webinar, managing director Scott Macmillan mentioned that the seismic data to date showed that a drill rig could test five different structures of interest by drilling to a depth of ~4,500m.

IVZ is still finalising its interpretation of the seismic data it acquired in 2021 as well as the US$30M legacy dataset left over by Mobil as it works to firm up where it will be drilling in June.

We set this as objective #1 in our 2022 Investment Memo which you can check out here.

More high grade nickel intercepted from infill drilling program

ASX:AOU   Mar 09, 2022

Earlier in the week AOU announced another batch of assays from its 2,667m drilling program at its Saints nickel project.

The stand out assays from todays announcement were as follows:

  • 2.13m @ 3.26% Nickel from 167.99m
  • 4.79m @ 2.05% Nickel from 311.98m

Both high grade intercepts, but this came as a result of the drilling program being made up mostly of infill drilling. The purpose of the drilling program is more so for AOU to be able to conduct metallurgical testing which will form the basis for a scoping study being planned.

With the nickel price temporarily hitting US$100,000/tonne overnight, we expect that the scoping study that AOU is putting together will show some really favourable project economics.

Gold trading near all time highs

Next Investors   Mar 09, 2022

Read the full article here: Gold makes run for record high as Ukraine concerns, inflation risks mount

With geopolitical tensions continuously escalating, overnight we saw the gold price trade a few dollars off its all time high at US$2,068 per ounce.

Gold keeps doing what it does and in times of uncertainty/fear the price keeps going up, historically around times of market uncertainty the price of gold tends to appreciate and the gold miners/explorers generally tend to outperform.

We saw this dynamic in mid-2020 after the COVID led lockdown of the global economy - the gold price reached its all time high at the time of ~US$2,072 per ounce.

We are invested in gold companies so that they can act as a hedge in times like this, below is a list of our gold exposures:

Los Ceros (ASX:LCL) - This is why we invested

  • Gold, Exploration Stage (Colombia)

Tempus Resources (ASX:TMR) - This is why we invested

  • Gold, Exploration Stage (Canada, Ecuador)

Titan Minerals (ASX:TTM) - This is why we invested

  • Gold, Exploration Stage (Ecuador)

Ragusa Minerals (ASX:RAS) - This is why we invested (Catalyst Hunter Portfolio)

  • Gold, Halloysite Exploration Stage WA (Australia and Alaska)

Madagascan rare earths divestment completed

ASX:MNB   Mar 08, 2022

On Tuesday, MNB announced the divestment of its interests in its Madagascan rare earths project.

MNB’s interests in the project at the moment is an exclusive option agreement that was signed in 2018 which gave MNB the right to acquire up to a 90% interest in the project.

MNB’s divestment comes as the sale of this option (exclusive right to acquire that 90%) for a total consideration of $2.48M contingent on due diligence being completed.

The acquirer (ALS Hong Kong) has ~8 months to complete this due diligence and needs to exercise the option before the 7th of November 2022.

The payments to MNB will be $10,000 per month for that 8 month period and a $2.4M cash payment if the option is exercised by ALS Hong Kong.

This divestment means MNB can focus more capital towards the development of its Angolan fertiliser project. We will be releasing our 2022 Investment Memo for MNB very soon where we will set some expectations for what we want to see MNB achieve in 2022.

More palladium from air core drilling at Norseman project

ASX:GAL   Mar 08, 2022

Today, GAL announced another batch of assay results from its recently completed 8,700m aircore drilling program at its Norseman project.

The goal of this aircore drilling is to identify targets for follow up RC drilling, and the assay results released today delivered some impressive intercepts, with peak results as follows:

  • 18m @ 0.29g/t palladium from surface.
  • 22m @ 0.21g/t palladium from surface.
  • 32m @ 0.2g/t palladium from surface.

These type results are more than enough for GAL to commit more capital to its Norseman project and come back with heavier rigs that can test these anomalies at depth.

We covered the first batch of results and highlighted what we think is the most interesting target we want to see GAL follow up on its Norseman project in our last note which you can read here.

With the palladium price up ~15% at one point overnight as markets fear supply disruption from Russia (who make up ~40% of global production), if GAL was to make a discovery at the Norseman project it would be coming at a great time.

Our 2022 Investment Memo for GAL has two clear objectives and that is to see the company aggressively drill both its projects, to see this and why we invested in GAL check out our 2022 Investment Memo here.

$2.6M placement with strategic investment fund

ASX:TMZ   Mar 08, 2022

Today, TMZ announced a $2.6M placement with energy and resources focused institutional investor Patras Capital.

The placement is split into 4 separate tranches meaning TMZ will get the $2.6M over a 4 month period with the first $650k received today.

The placement is being done at a 15% discount to a “benchmark price” set by TMZ at 6.9c meaning the first $650k was placed to Patras at 6c/share. Patras will also be receiving listed TMZOA options on a 1:2 basis (1 listed option for every 2 shares issued).

We generally prefer simple cap raise structures, but at least this give TMZ to raise subsequent tranches at less dilutive share price levels during a time when silver (and all precious metals) prices are likely to rise (which would likely improve TMZ’s share price)

TMZ is currently in the middle of updating its resource estimates across its deposits so the extra funding comes at a good time, check out our 2022 Investment Memo here to see what we want to see TMZ achieve in 2022:

Nickel price up ~76% overnight touching 15-year highs.

Next Investors   Mar 08, 2022

Oil, wheat, nickel storm higher on fears of supply chaos

We have been investing in exploration stocks for over 20+ years but have never seen anything like the move in the nickel price overnight.

At one point the spot price for nickel in London was up ~76% to 15-year highs of US$51,000/tonne. This type of move intraday is almost unheard of in commodity markets let alone in a metal like nickel.

We think that a part of the move overnight comes from the escalation with the Russia/Ukraine situation as Russia makes up ~10% of global nickel supply but also has something to do with the structural tailwinds for nickel demand with it being a critical metal for the production of EV batteries.

At the moment ~7% of nickel demand comes from the battery manufacturing sector, long time readers will know that we have been investing in nickel exploration stocks anticipating the exponential uplift in demand as the sector scales up.

Below is a list of all of our investments with exposure to nickel.

Kuniko (ASX:KNI) - This is why we invested

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

Galileo Mining (ASX: GAL) - This is why we invested

  • Nickel-Copper-PGE, WA (Australia)

Pursuit Minerals (ASX:PUR) - Memo coming soon

  • PGE, Nickel and Copper (Australia)

Mandrake Resources (ASX: MAN) - Memo coming soon (Catalyst Hunter portfolio)

  • Nickel, Copper, PGE, WA (Australia)

Aldoro Resources (ASX:ARN) - This is why we invested (Catalyst Hunter portfolio)

  • Nickel, PGE, Rubidium and Lithium, WA (Australia)

Auroch Minerals (ASX: AOU) - Memo coming soon (Wise Owl portfolio)

  • Nickel, Exploration Stage, WA (Australia)

Food security now a global concern

ASX:MNB   Mar 07, 2022

Another fallout from the Russia/Ukraine conflict is with respect to global food supplies as covered by major news outlet Al Jazeera.

Russia and Ukraine supply a third of the world's wheat, which is now trading at 14-year high prices. More importantly though, countries are realising that food supplies are now just as susceptible to supply chain disruptions.

The key takeaway from the coverage in this news report was that the Middle East and Africa were most susceptible to these shortfalls as other exporters look to protect domestic supplies.

This is where MNB fits in, with its phosphate project in Angola, MNB is building a nutrient supply and distribution business that stimulates food security in Angola and the broader Congo Basin.

MNB’s project in August was considered a ‘Project of National Importance to Angola” by the Angolan government, with all of the developments of late we think the project is now significantly more important.

New T cell therapy approved for Multiple Myloma

ASX:ALA   Mar 07, 2022

Last week the FDA approved a new CAR T cell therapy for Multiple Myeloma - the main cancer that ALA is targeting (source).

An in depth discussion of this development can be found at 1:19:22 on last week's episode of our favourite podcast - the All In Pod.

In there, biotech expert David Freedberg explains in depth the benefits of cell therapy in treating cancers compared to traditional chemotherapy as well as a high level overview on the limitations of the technology, including the exorbitant cost as well as the reliability issues.

The cost of the therapy currently sits around US$400-450K for a “one time shot” at eliminating the cancer, however Freedberg believes that the cost of the therapy “could be reduced to US$4000” through new innovations and technology.

ALA is involved in this cutting edge space by developing an ‘off the shelf’ cell therapy to mitigate the cost and reliability issues of existing cell therapy treatments.

In our 2022 Investment memo the first reason “why we invested in ALA” is based on the economics of these therapies and how we think ALA’s tech could potentially be the key to reducing the costs of these therapies through an “off the shelf” solution.

Check out our 2022 ALA Investment Memo here where you can read more about why we invested and what we want to see ALA achieve in 2022.

Assays received from Nickel project

ASX:ARN   Mar 04, 2022

ARN ended the week with some of the final assays from the drilling program completed at its last Nickel project at the back end of 2021.

Peak results from the program were as follows:

  • 7.86m at 0.53% Nickel from 269.5m
  • 4.26m at 1.22% Nickel from 277.14m

The positives from the drilling program is that ARN has managed to intersect massive sulphides and confirmed there is nickel in them. However, the market didn't seem to react to the results, we think because of the nickel grades.

With nickel now trading at US$28,000 per tonne we think that the market may at some stage start to take an interest in these types of results.

Our focus for ARN in our 2022 Investment Memo (coming soon) is around the rubidium/lithium project where ARN is currently in the middle of a drilling program. Be on the lookout for our memo launch in the coming weeks.

Company Project Update

ASX:88E   Mar 04, 2022

88E closed out the week by providing an update on the exploration work its neighbour (London listed Pantheon Resources - currently capped at £1 billion) has been doing.

In Q2021, Pantheon drilled the “Talitha-A” well, ~4.5km to the north of 88E’s Project Icewine permit boundary.

Pantheon recently re-entered that same well and completed a production testing program - confirming light oil flows over a 3 day testing period.

For us the key takeaway from the work Pantheon did at Talitha-1 was Pantheon's commentary around the formations from which the light oil was recovered all extending down into 88E’s Project Icewine.

88E also confirmed that it would use the data Pantheon had gathered to put together a prospective resource for Project Icewine, focused on the eastern parts of the permits, before the end of the June quarter.

In our latest note we mentioned that once the drilling at Merlin-2 was completed that we would expect 88E to go back into its Project Icewine some time this year. With Pantheon’s share price going from 35p to now £1.40, clearly there is market interest for exploration in and around 88E’s Project Icewine permits.

We haven't included Project Icewine in our 2022 Investment Memo as yet because all of our focus for the time being is on the Merlin-2 appraisal well which 88E expects to be spudding next week. After Merlin-2 is drilled we will look to update our investment memo based on the results.

With the oil price trading at near 10 year highs of US$110/barrel, 88E could not have picked a better time to take a swing for the fences on a potential company making oil and gas discovery. Click here to read our latest note which sets the scene for the Merlin-2 well.

More outcropping ironstones found at FNT's REE project

ASX:LNR   Mar 03, 2022

Today FNT’s field sampling program yielded what we think are good early signs that Rare Earths could be present on their tenements.

154 rock chip samples were taken and have been sent to the lab for assays.

FNT is getting the rocks classified into potential groupings of monazite, carbonatite and ironstone.

Ironstone is particularly interesting, as ironstones played a key role in the discovery that ~$500M market capped Hastings Technology Metals made at the next door Yangibana project.

The presence of carbonatite is also worth noting as Australia’s only Rare Earths producer, ~$10B market capped Lynas Corp, found their massive Mt Weld discovery in carbonatite.

For conext, the total grade of Rare Earths across Hasting’s project is ~1% and the nearby Dreadnought Resources re-rated in June-July 2021, in part, on the back of ironstone rock chip sample assays of 11.2% Total Rare Earth Oxide (“TREO”).

We think FNT is well placed in an emerging major Rare Earths district in WA, and we’re looking forward to what they come back with in terms of assays from the labs.

We wanted to see FNT advance their Rare Earth’s project by drilling (Key Objective #2) - and we now know that FNT is planning drilling for Q2 2022, which is just around the corner.

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

Latest appointment further bolsters team

ASX:FYI   Mar 03, 2022

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

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

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

Final assays from infill drilling program received

ASX:AKN   Mar 02, 2022

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

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

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

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

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

Desktop reviews completed at RAS’ Alaskan gold project

ASX:RAS   Mar 01, 2022

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

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

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

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

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

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

ASX:88E   Mar 01, 2022

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

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

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

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

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

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

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

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