Opened: 08-Feb-2022
Shares Held at Open: 5,472,728
What does do?
Thompson Resources (ASX:TMZ) is exploring and developing Australia’s highest grade undeveloped silver asset by combining a number of previously uneconomic projects into a much larger project with a central processing hub.
What is the macro theme?
Silver is both a precious metal and an industrial metal - it typically trails the gold price, is a hedge against inflation and also a key component in the photovoltaic cells in solar panels.
Our Big Bet for
TMZ becomes a silver producer by first proving up a large enough silver equivalent resource base that makes its "hub and spoke" development strategy feasible and then by feeding these resources through its centralised processing facility.
Why did we invest in ?
Highest grade undeveloped silver asset in Australia
TMZ spent much of 2021 in ‘quiet execution mode.’ They’ve spent a lot of time getting the metallurgy work done, necessary to produce an economic project. Should the silver price make a big move upwards the economics of the project would improve increasing the likelihood of production.
Trading at a discount relative to ASX-listed silver peers
As of October 2021, had a EV/Resource Ounce of 54 cents compared to the two other silver focussed ASX-listed peers, which came in at 85 cents and $1.19. For us, this means that pound for silver pound, TMZ could be due for an outsized re-rate if the silver price and development factors click into place.
Strong team
TMZ’s approach to their work is detailed and meticulous. TMZ’s team has decades of mining experience and we think this will aid their strategy of combining multiple different resources into a cohesive whole.
What do we expect to deliver?
Objective #1: Combine multiple deposits’ Mineral Resource Estimates to Hit 100 Moz AgEq (silver equivalent)
This is the threshold which TMZ believes it needs to hit in order to validate the project as economic. These Mineral Resource Estimates take into account all the latest data, and update the resources to the latest JORC standards. Given TMZ has multiple deposits, TMZ is in the process of updating its Mineral Resource Estimates which should help TMZ reach this threshold.
Objective #2: Complete metallurgical work
A core component of the project is understanding how to process the silver. Metallurgical work is needed to establish recovery rates at TMZ’s collection of deposits - and higher rates of recovery mean it is cheaper to pull the silver out of the ground and turn it into a finished product. We think success on the metallurgical front could unlock TMZ’s potential.
Objective #3: Move to Scoping Study/Pre-Feasibility stage
Metallurgical success may accelerate the Scoping Study and Pre-Feasibility work. The Scoping Study and Pre-Feasibility work is important for attracting institutional investors and giving the market greater confidence that the project is viable.
What could go wrong?
Market risk
Silver price takes a major hit, hurting the TMZ share price. A lower silver price hurts the chance that TMZ goes into production.
Development risk
Metallurgy work fails to find the right way to process TMZ’s resources, and they prove uneconomic.
Funding risk
Margins for success may be thin based on TMZ’s ability to secure funding. TMZ completed an institutional placement of ~$4.8M in October 2021 and subsequently secured $5M via an Equity Funding Facility which allows them to issue new shares in exchange for the ability to pull down more money as needed. TMZ’s access to funding hinges on investor sentiment towards silver, broader market sentiment towards small-caps and factors inherent to TMZ’s development progress.
What is our investment plan?
We have been holding TMZ since December 2020, our entry prices for TMZ are 8.8c and 10c
We still hold 87.7% of our total position in TMZ.
We will hold a position in TMZ to see them get into production around 2023. If objectives in this memo are achieved and the share price re-rates accordingly we will look to take some profit and de-risk our position by selling about 20% of our holding.
Disclosure: The authors of this article and owners of Next Investors, S3 Consortium Pty Ltd, and associated entities, own 5,472,728 TMZ shares and 112,500 TMZ options at the time of writing this memo. S3 Consortium Pty Ltd has been engaged by TMZ to share our commentary on the progress of our investment in TMZ over time.
TMZ’s Releases Webbs MRE Chasing 100Moz Target
Jun 16, 2022
Jun 16, 2022 |
10 min
Thomson Resources (ASX:TMZ) released its latest Mineral Resource Estimate (MRE) for its Webbs deposit last week - another tick mark for the company on the road to a planned 100Moz silver equivalent resource across its five deposits.
TMZ Pressing Ahead with Highest Grade Undeveloped Silver Project in Australia
Feb 8, 2022
Feb 8, 2022 |
15 min
Thomson Resources (ASX:TMZ) is working on Australia’s highest grade undeveloped silver project and today announced the results of its metallurgy studies, revealing a substantial improvement on historical recoveries.
TMZ closes in on silver production — we increased our position at 10¢
Sep 9, 2021
Sep 9, 2021 |
10 min
Since we first invested, TMZ has been busy working towards silver production by implementing a Hub and Spoke strategy. Under this model, TMZ is targeting previously owned silver assets with in-ground infrastructure and bringing together projects that might be difficult individually but TOGETHER they work.
Experts Re-Analyse TMZ’s Historical Silver Assets
Jun 9, 2021
Jun 9, 2021 |
4 min
Today our silver investment Thomson Resources (ASX: TMZ) has announced a group of experts are re-analysing historical data from its multiple silver projects in order to re-model the silver resource size.
TMZ’s Tin Asset is Suddenly Very Interesting.
May 3, 2021
May 3, 2021 |
4 min
Thomson Resources (ASX: TMZ) original tin asset is looking very interesting for a potential sale, spinout or some drilling
More promising tin results from Bygoo project, NSW
Feb 8, 2023
Feb 8, 2023 |
1 min
$3.5M in funding secured
Jan 4, 2023
Jan 4, 2023 |
2 min
Sale of non-core silver asset
Dec 6, 2022
Dec 6, 2022 |
1 min
First look at hub and spoke strategy economics
Oct 7, 2022
Oct 7, 2022 |
1 min
Tough Funding Environment
Oct 7, 2022
Oct 7, 2022 |
1 min
Why Small Caps Stand to Benefit from Precious Metals Push
Oct 26, 2024
Oct 26, 2024 |
25 min
Can you feel it? The small end of the market is… feeling good again? It’s being led by gold and silver price rises that are (finally) driving serious interest into a few smaller gold and silver stocks. And people are remembering how it feels when small stocks deliver price rises on high volumes.
The ups and downs of the small cap market
Feb 25, 2023
Feb 25, 2023 |
18 min
Today we cover two stocks that have delivered on their plan so far and that we think are looking to have a great run in 2023, contrasting with two stocks where certain risks have materialised, share prices have suffered and what we plan to do next.
Tax loss selling over, market back in August?
Jul 2, 2022
Jul 2, 2022 |
19 min
Tax loss selling over, catalysts in, market back in August? A selection of 10 of the most beaten up stocks in our Portfolio in the last six months
Nickel, the War and Under Investment in Exploration
Mar 12, 2022
Mar 12, 2022 |
15 min
The commodities bull is being driven by a potent cocktail of inflation, war, growing demand from the energy transition, geopolitical squabbles, declining grades and years of low exploration spend.
Mainstream Media Catching on to the Commodities Supercycle
Mar 5, 2022
Mar 5, 2022 |
26 min
It looks like the commodities supercycle we have been predicting is now underway. We’ve been saying it's coming for a long time but are now seeing firm evidence that it's here across further recent commodity price spikes and mainstream media reports.
