Three Under-The-Radar Resource Plays

Source: Streetwise Reports 09/27/2023

Lowell Resources’ John Forwood sees exploration upside and strategic potential in three resource stocks.

John Forwood is the CEO of Lowell Resources Funds Management. Lowell Resources Funds Management has managed the ASX-listed Lowell Resources Fund (LRF) portfolio for 20 years. It operates through an Investment Committee incorporating seasoned professionals across minerals, energy, geosciences, broking, banking, and funds management. LRF (ASX code ‘LRT’) provides broad exposure to junior mining and energy companies, actively managed by LRFM per its investment philosophy. The fund aims to take profits when available and exit investments once targets are reached.

Forwood has been running the Lowell portfolio since 2016. Prior to this, he worked for the South African investment bank Rand Merchant Bank, where he also focused on the resource sector.

However, before getting into the finance side of things, Forwood’s background was built on geology. He worked as a field geologist, primarily looking for copper and gold for small-to-midsized mining companies. With this foundation in geology and knowledge of the financial side, we at Streetwise decided to sit down with Forwood and speak about what companies have caught his eye.

Sanu Gold Corp.

The first company Forwood spoke about was Sanu Gold Corp. (SANU:CSE;SNGCF:OTCQB). Sanu Gold is a junior mining company focused on discovering multi-million-ounce gold deposits in West Africa’s renowned Siguiri basin. As a young exploration company, Sanu is dedicated to uncovering major new gold resources in this prolific region for gold production.

Forwood first got in contact with Sanu through its CEO, Martin Pawlitschek, while attending the Beaver Creek Precious Metals Conference in Colorado. Forwood was first interested in the company due to its projects in Guinea. Lowell Resources Fund had existing investments in Guinea, and Forwood noted, “Guinea has been a happy hunting ground for us.”

Guinea had been a jurisdiction that a lot of investors tended to shy away from due to a coup in the last few years. However, Forwood commented, “The mining industry itself has actually experienced pretty much plain sailing during that period.”

With a liking for the area, all Forwood needed to see was the projects.

“Martin showed me the data of the three projects that Sanu had or was acquiring at the time,” Forwood said. “They were remarkable for such an early stage. There had been a lot of very good foundation work done in terms of exploration, in particular, the termite mound sampling, and that was really comprehensive. There were some great gold anomalies. And then the project looked relatively undervalued.”

Now invested in the company, Forwood praised them for being relatively low-impact in terms of environmental footprint. While they are still a small company, he stated, “It’s important that you have confidence that the management will do the right thing.” He noted as the projects progress, he has faith in Sanu’s leadership team to get things done the right way.

Lastly, Forwood noted the recent channel sampling Sanu conducted on the Bantabaye Permit.

The highlights of the company’s recent work include an average of 1.1 grams per ton (g/t) gold (Au) over 43 m, including 4.2 g/t Au over 6m from channel sampling on Target 7. According to the company, the channel sampling has shown evidence of “sheared and hydrothermally altered felsic volcanics and returned gold mineralization over its entire 43m length, with individual samples returning up to 13.5 g/t over 1m.” The press release also stated that “rock chip samples from Target 7 returned grades of up to 25.2 g/t Au.”

Forwood called it “a really nice result” and said, “It shows that there’s a substantial mineralization system. It could be a very large mineralizing system there. As investors, we like to see the potential for something that’s really big. And for a company that today has an enterprise value of around only CA$3 million, it’s amazingly undervalued.” [OWNERSHIP_CHART-10892]

According to data from Reuters, insiders and management at the company own around 17% of the total shares outstanding. The largest individual insider shareholder is Fatou Sylla Gueye, with over 7% ownership and 5.10 million shares. Martin Joachim Pawlitschek owns 4.19% with 2.91 million shares, Vince Sorace owns 3.60% with 2.50 million shares, Galen Stuart McNamara owns 0.97% with 0.68 million shares, Gavin Cooper owns 0.58% with 0.40 million shares, and Fiona C. Childe owns 0.26% with 0.18 million shares.

Institutional investors own around 7% of the company. The largest institutional shareholders are Commodity Capital AG, with nearly 4% and 2.62 million shares. US Global Investors has around 2% and 1.29 million, and Palos Management has around 1% ownership, with 0.80 million.

The company does not report any strategic investors or partnerships. The remaining shares are held by retail and high-net-worth investors.

The company’s monthly burn rate is CA$150,000. Its monthly drilling cost varies according to how much drilling they do at any one time, but the average all-in drill cost is US$120 million.

During the February 2023 financing, 5.556 million warrants were issued, as well as 276,440 broker’s warrants.

There are 69.45 million shares outstanding, with 57.69 million free-float traded shares. The company has a market cap of CA$4.17 million, and it trades in the 52-week period between CA$0.06 and CA$0.46.

Rugby Resources

The next company Forwood mentioned was Rugby Resources Ltd. (RUG:TSX-V). Rugby Resources Ltd. is evolving its mineral exploration efforts to find future-focused minerals. Rugby Resources is focused specifically on mineral exploration and does not take discoveries to the mining stage. [OWNERSHIP_CHART-10932]

Rugby has a new porphyry copper discovery in Colombia that Forwood notably pointed out is right next door to where Rio Tinto Plc (RIO:NYSE; RIO:ASX; RIO:LSE; RTPPF:OTCPK) has been drilling.

“It looks like this system could all be a part of one large system,” Forwood said. “And we think that potentially what Rugby has found might even be better than what Rio Tinto has found immediately to the south.”

Forwood pointed out the immense exploration upside within the company, saying, ” Rugby is also a company that’s extremely undervalued. It’s trading around five cents a share with management that has been there and done that before in South America.”

The management for Rugby had come from Exeter Resource Corp., where they made a couple of significant discoveries.

According to Market Watch, Rugby Resources has a market cap of CA$10.88 million and 241.75 million shares outstanding. It trades in the 52-week range between CA$0.04 and CA$0.15.

Reuters reports that 21.99% of the company’s stock is with management and insiders. President, CEO, and Director Bryce Roxburgh has 11.03%, with 29.26 million shares. COO and QP Director Paul Joyce has 2.87%, with 7.62 million. Chairman Yale Simpson has 1.93%, with 5.12 million, and Director Robert Reynolds has 1.80%, with 4.78 million.

1.58% is held by institutional investor Konwave AG, with 4.20 million shares.

The rest is with retail investors.

Talon Metals

Last but not least, Forwood touched on Talon Metals Corp. (TLO:TSX). Talon Metals is a base metals exploration and development company, currently in a joint venture agreement with Rio Tinto on the Tamarack Nickel-Copper-Cobalt Project in central Minnesota. The Tamarack Project comprises a large land area (18km strike length) with high-grade nickel intercepts outside of the current resource area. Under the joint venture, Talon has earn-in rights to acquire up to a 60% stake in the Tamarack Project. Currently, Talon holds a 51% interest.

Talon is focused on two key objectives: (1) expanding and infilling the current high-grade nickel resource in accordance with NI 43-101 to shape a potential mine plan for regulators, and (2) following up on additional high-grade mineralization across the Tamarack Intrusive Complex. Talon has an agreement with Tesla Inc. to supply approximately 75,000 metric tons (165 million lbs) of nickel in concentrate (plus cobalt and iron by-products) from the Tamarack Project once commercial production begins over an estimated six-year timeframe.

Forwood pointed out that Talon Metals is one of Lowell’s largest holdings. One reason Lowell is so optimistic about the company is due to the large prospectivity in its joint venture with Rio Tinto.

Forwood said, “They’re earning a majority and some super high-grade intersections of nickel plus copper plus some PGMs.” However, according to Forwood, the company’s share price has been beaten. [OWNERSHIP_CHART-1441]

“It has come down from short of 80 cents to be trading in the 20 cent range,” he said, “but it’s a high-grade discovery and potentially also very large.”

Lastly, Forwood also commented, “Being a potential producer of nickel in the U.S. is highly strategic. Talon has secured a US$114m grant from the U.S. Department of Energy for the construction of a battery minerals processing facility and has a partnership with Tesla.”

Market Watch notes that Talon Metals has a market cap of CA$246.83 million and 851.14 million shares outstanding. It trades in the 52-week range between CA$0.23 and CA$0.63.

According to Reuters, 3.62% of the company is with management and insiders. Executive Chairman Warren Newfield has 2.20%, with 18.69 million shares. Director Henri van Rooyen has 0.40%, with 3.37 million, and CFO Vince Conte has 0.31%, with 2.64 million.

Strategic investor Pallinghurst Nickel International Ltd. has 17.27%, with 146.99 million shares.

19.83% is with institutional investors. Resource Capital Funds has 15.70%, with 133.61 million shares. Amati Global Investors Ltd. has 1.77%, with 15.05 million, and Van Eck Associates Corp. has 1.05%, with 8.97 million.

The rest is held by retail investors.

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Important Disclosures:

1. Sanu Gold Corp. is a billboard sponsor of Streetwise Reports and pays SWR a monthly sponsorship fee between US$4,000 and US$5,000.
2. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Sanu Gold Corp.
3. Katherine DeGilio wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee.
4. The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.

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( Companies Mentioned: RUG:TSX-V,
SANU:CSE;SNGCF:OTCQB,
TLO:TSX,
)

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