SLM raises $4.5M

Today our Peruvian copper Investment Solis Minerals (ASX: SLM) announced it has raised $4.5M in a placement to drill two of its four highly promising Peruvian copper projects.

We’ve previously talked about how SLM has a lot of “shots on goal” across its copper projects.

Peru is the world’s second largest producer of copper and SLM has consistently delivered promising pre-drill exploration works across these four projects, at a time where the copper price remains elevated amid a strong push towards decarbonisation and electrification:

(Source)

In our latest note on SLM, we pointed out how recently a micro cap ASX stock made a copper discovery in Peru that delivered a quickfire ~700% return.

That company was AusQuest - and we think it shows the warm reception new copper discoveries get from the market, especially when they are in proven copper jurisdictions like Peru.

Here is what happened to AusQuest post discovery...

The past performance is not and should not be taken as an indication of future performance. Caution should be exercised in assessing past performance. This product, like all other financial products, is subject to market forces and unpredictable events that may adversely affect future performance.

We’re hoping SLM can achieve something similar or better when it drills the Ilo Este and Chancho al Palo copper targets in southern Peru in the coming months (pending final approvals):

(Source)

Read more about SLM in our latest SLM note:

SLM: Micro cap copper explorer about to drill… AusQuest up 700% on copper hit.

How does this impact our SLM Investment Memo?

We see this raise as reducing funding risk for SLM:

Funding risk

SLM is a very early stage exploration company with zero revenue and is reliant on capital raises (or attracting a farm in partner) so it can undertake high-risk / high reward exploration programs. There is a risk that market conditions deteriorate and investors shun high-risk explorers like SLM, and SLM is unable to raise capital without significant dilution of existing shareholders.

Source: 9 July 2024 SLM Investment Memo

It also means our attention now turns to exploration risk, as we think SLM now has a pathway to a re-rate, should it make a copper discovery:

Exploration risk

SLM’s projects are all considered early stage prospects. This means SLM is yet to make a discovery on the projects. Inherently there is a risk that drilling programs return results with no mineralisation and the projects are not considered valuable.

Source: 9 July 2024 SLM Investment Memo

We’ll be keeping an eye out for those final drill approvals as well.

What’s next for SLM?

SLM has four different projects, with different styles of targets that it plans to drill all before the end of 2025.

We’ll be looking out to see the progress of SLM as it nears drilling across the four projects, conscious that permitting timelines and drill contracting may alter the progression of the projects.