Golden Metal Resources: further golden opportunity?

It’s been a few months since I last took a look at Golden Metal Resources (GMET, GMTLF) — 

• Valentine’s Day 2024 for the last comprehensive publication
• Mid-October 2023 when I predicted tungsten may be ripe for a Chinese export ban
• And early July 2023 when I first interviewed CEO Oliver Friesen

But the time has come for an update. Before we get started, it’s important to do two things first:

1. Read the Valentine’s Day piece if you do not know the base investment case. This is a series, not a sitcom — you can’t jump in at the end.
2. While Golden Metal is arguably one of the best opportunities in the junior resource sector today, it is still a small cap with all the associated risks. While none of this article is advice, it’s important to consider your risk tolerance — including factors such as diversification and financial resilience.

Let’s dive in.

Time to buy Golden Metals now?

As long-time followers will know, I like my shares with a strong investment case and weak sentiment, scooping them up before the fundamentals start to shine through and sentiment improves. This was the strategy last year — with great results. 

The problem for would-be investors in GMET looking at the company today, is that the stock is changing hands for 16p, up from less than 8p a year ago. Clearly sentiment is extremely positive, and the stock is unlikely to sink with multiple near-term catalysts ahead. Indeed, I would expect further rises through the rest of 2024 — so the ‘cheap’ shares are long gone.

The good news though is that 16p is still cheap relative to the potential.

With no further ado, here’s the catalysts to consider:

Now, I am no Sherlock Holmes, but unless there’s another Pilot Mountain in Nevada in need of grant funding for a feasibility study, it looks like GMET is close to releasing some explosive news.

Even more excitingly, this is just one grant among many that are likely to have been applied for back in June 2023 when the company’s advisor grants advisor Chang Turkmani came on board. 

These grants (based on other companies’ timelines) take circa 12 months for approval — so investors may be due both a series of quality assays and grant funding at the same time.

I recently covered Lynas Rare Earths for a blue chip client, and it’s a strange feeling to see the name of that company on the same slide as GMET’s asset — and perhaps speaks to the disconnect between the importance of Pilot Mountain and the company’s market capitalisation. 

It doesn’t take a genius to look at that slide and see that even the smallest grants are for millions of dollars — and even if some of the numbers include loans of some kind, Pilot could be due a massive windfall.

Imagine if it’s not $3 million, but $10 million. Or more.

To bring you back to Earth — it’s not granted. Yet. 

For some added speculation, I’d venture a few guesses on the timeline. There may be some kind if political element to the funding — unofficially or not, it may be that before getting awarded a grant, the company needs to conduct some drilling themselves. If you want the US government to back you, you have to back yourselves; in the same way as management stakes in a company matters.

It could be that the parameters of any potential feasibility study are still being negotiated. For example, the kind of study that GMET could do would be smaller than what a major could accomplish regardless of cash available — and strikingly, the slide lists the project and NOT the company, which could imply they expect the study itself to be conducted by a larger company.

And besides, the best place to build a mine or find a resource, is where one has already been before.

And the rest....

Beyond Pilot, there are three more factors to consider:

1. Finances

Golden Metal has an enviable financial position — on 11 March, it raised £750,000 at a 5.3% PREMIUM (sorry, but what’s that? Been a while) of 15p per share from a single investor to explore more of Garfield and help with all the shenanigans at Pilot. This investor also got some two-year warrants at 25p per share, which is very much fair enough.

There have also been masses of warrants exercised, and yet the share price has held up — leaving the company well capitalised AND suggesting that those exercising their warrants are holding their shares. There’s also circa £3.5 million in warrants at 17p to exercise, and if I’m right in the share price trajectory, this will be the company’s source of funding through the rest of 2024 other than the grants.

2. Garfield 

With what could be another company’s flagship, GMET’s second asset feels very much like a gym buddy who’s coming a bit too close to your personal best on the Bench Press.

Most recently, GMET announced yesterday that it has staked further land to increase Garfield’s project area from 909 acres to 2,268 acres — around 1,400 UK football pitches, and a 67% increase in size.

For context, it’s a good idea to get this land as others will be paying attention to Garfield’s growing potential. Staking is all about competition rather than capital costs; it’s cheap to do, but this means it’s easy for somebody else to stake adjacent plots.

The company notes that there is ‘growing evidence that a buried copper porphyry system may exist at Garfield,’ and further that this ground covers ‘an additional magnetic geophysical high target which was partially imaged during the previously completed ground magnetic survey as well as a combined total of 25 historical datapoints.’

GMET is finalising exploration plans, with CEO Oliver Friesen — who was recently on site — enthusing that:

‘To see the size and scale of the copper mineralisation evident at surface within the newly staked ground and, more importantly across the entire Garfield footprint, was very exciting. I also visited multiple strongly copper mineralised sites proximal and near to the buried magnetic targets identified and announced last week, which has further enhanced our excitement about those particular porphyry targets.’

3. Nuclear Fusion technology

The wider investing world is asleep to this, but a tokamak reactor in France called WEST just made an absolutely massive breakthrough in nuclear fusion technology.

For reference, current nuclear power is fission-based, which comes with a host of problems. But fusion at scale would create no harmful emissions, with the main byproduct being helium only. 

It can be fuelled via hydrogen isotopes obtainable through water, and therefore would be effectively limitless and extremely cheap. Fusion releases millions of times more energy than fossil fuels and is much safer than fission as there is no risk of a runaway chain reaction like with fission. And it also produces very limited radioactive waste.

It’s essentially the Holy Grail of energy — and the stumbling block has been containing the heat of the hot plasma created during the process. But this French reactor was upgraded from a carbon interior to a tungsten interior, and was accordingly capable of containing plasma at 50 MILLION DEGREES CELSIUS, for a full six minutes, and at higher energies and densities than has ever been achieved in the past.

Further, the International Thermonuclear Experimental Reactor recently decided to make the switch from beryllium to tungsten — this is the key global nuclear fusion project, which is a joint collaboration between China, the European Union, India, Japan, South Korea, Russia, and the United States — and is expected to be operational in late 2025.

It’s like the Space Station, it doesn’t matter what wars are going on — this joint project is happening. And while it may be some way off, if ever, you only need to look at the creation of the internet, or the car, or more recently the AI boom, to see how fast tech can develop, and how quickly tungsten demand could explode.