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ASX:BPM

BPM Minerals Ltd

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ASX:BPM
- BPM Minerals Ltd
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$0.050

Last Price

Investment Memo:

BPM Minerals Ltd (ASX:BPM)

- LIVE

Opened: 04-Feb-2022

Shares Held at Open: 1,670,000


What does BPM do?

BPM Minerals (ASX:BPM) is an exploration company aiming to make lead-zinc discoveries in the Earaheedy Basin in WA, Australia. BPM also holds other early stage gold-nickel projects across WA.

What is the macro theme?

Lead and zinc are two industrial metals that have moved higher due to an inflation-driven commodities supercycle. Lead is mainly used for Internal Combustion Engine (petrol car) batteries while zinc is primarily used for galvanising steel and making alloys. As fiscal and monetary stimulus increases infrastructure spending - we believe zinc in particular is primed to move beyond its current elevated price to all-time-highs.

Our Big Bet for BPM Big Bet Tooltip

BPM will return 10x by making a discovery and defining a deposit significant enough to move into development studies

Why did we invest in BPM?

Assets near Rumble Resources’ Chinook Discovery

BPM owns Exploration Licenses right next door (40km along strike) to Rumble Resources who made the Chinook Lead/zinc discovery. BPM's projects share fundamental geological similarities with Rumble’s tenements in the region.

Cap Structure

At the start of the year, BPM had only 49M shares and 38M options on issue with a market cap of just $13.7M. With ~$4.4M in cash in the bank and an enterprise value of $9.3M it is highly leveraged to a new discovery.

What do we expect BPM to deliver?

Objective #1: First Lead/Zinc drill holes in the Earaheedy Basin.

  • The Hawkins Project sits ~40km along strike from the Rumble discovery and is the highest priority project for BPM in this region.
  • We want to see the company rapidly define drill targets and then drill them this year.

Milestones

complete Geochemical/geophysical surveys to generate drilling targets

complete Drilling permitting

complete Drilling commencement

complete Drilling results

Objective #2: Side bets: Drilling at the company’s other projects.

We expect BPM will make drilling progress on the company’s other projects, we are looking for:

  • 5,000m of AC drilling at the Santy gold project
  • 2,500m of RC drilling at the Nepean nickel project
  • 5,000m of AC drilling at the Claw gold project.

What could go wrong?

Permitting risk

There is always a risk with exploration projects that the necessary approvals or agreements like land access, heritage and native title agreements are not reached and permits can go un-granted.

Exploration risk

BPM's projects are at a very early stage, most are yet to have high-priority drill targets identified, any drilling programs done in the near-term could return no mineralisation.

Delay risk

We originally invested in BPM back in May 2021, hoping they would drill the Hawkins prospect before Christmas 2021… that definitely didn't happen so we now take BPM’s timelines with a grain of salt - timelines may be delayed.

Financing risk

BPM is a junior explorer with early stage projects. They still need to do a lot of target generation work before the projects are ready to drill, markets may lose momentum and funding for early stage higher risk exploration like this could dry up.

Commodity risk

We are primarily invested in BPM for the lead/zinc drilling at Earaheady, but the market may lose interest if lead and zinc prices cool off.

What is our investment plan?

Our investment plan for BPM is the same as for all our early stage, exploration investments:

  • Invest early (way before the main, initial drilling event)
  • Patiently wait till the drilling event approaches (late 2022)
  • Free carry and take some profit prior to the initial drill results
  • Hold a position into the result
  • Reassess the plan based on the initial results.

Disclosure: The authors of this article and owners of Next Investors, S3 Consortium Pty Ltd, and associated entities, own 1,670,000 BPM shares and 850,000 BPM options at the time of writing this memo. S3 Consortium Pty Ltd has been engaged by BPM to share our commentary on the progress of our investment in BPM over time.

Our Investment Summary

Date of Initial Coverage

19-May-21

Inital Entry Price

$0.200

Returns from Initial Entry

-75%

High Point

-13%

$5.2M microcap BPM is now drilling it’s Claw gold project - 500m from $1.6BN capped gold miner

Feb 1, 2024

$5.2M microcap BPM is now drilling it’s Claw gold project - 500m from $1.6BN capped gold miner

Assays in - What does $6.5M capped BPM do next?

Nov 30, 2022

Assays in - What does $6.5M capped BPM do next?

BPM Sees Lead-Zinc Along Strike From Rumble, Assay Results Next

Jul 19, 2022

BPM Sees Lead-Zinc Along Strike From Rumble, Assay Results Next

BPM drilling restarted - tiny market cap leveraged to success

Jun 30, 2022

BPM drilling restarted - tiny market cap leveraged to success

$10M capped BPM drilling now, 40km along strike from $223M capped Rumble Resources

May 10, 2022

$10M capped BPM drilling now, 40km along strike from $223M capped Rumble Resources