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Good morning ladies and gents. Let’s dive in.

Portfolio company New Horizon Metals holds three assets:

South Australia

Wilan Project — 140km from BHP’s Olympic Dam IOCG deposit (the world’s largest source of copper-gold-REE and uranium), and also close to the major’s Prominent Hill Copper Project acquired as part of its Oz Minerals takeover. 

IOCGs have been identified, with magnetic anomalies coincident to gravity anomalies, one of which has been identified in the south-east of the property and has never been drill tested. In addition, a potential Playa Lacustrine uranium-vanadium occurrence is in the west of the property while diamonds-kimberlite tracer minerals have been found in the north.

Queensland (Mount ISA copper-belt, within the region of Mt Oxide, Lady Loretta & Capricorn)

Bortala Project — contiguous to 29 Metals’ Capricorn Copper Mine which has a Mineral Resource Estimate at 62.5Mt @ 1.8% copper equivalent. The tenure is prospective for Mount Isa/Mammoth-style breccia copper deposits and epigenetic uranium mineralisation within the Eastern Creek Volcanic Formation.

An east-north-east trending linear fault in the south of the project has copper-gold mineral occurrences/historic workings, identified by the Queensland Geological Survey. The geophysical features on the eastern portion of the property signal key target areas for future exploration, adjacent to already known magnetic high zones.

Firey Creek — Fifteen historical targets prospective for primarily copper mineralisation have been identified including historic grab samples of between 7.5% to 15.2% copper in the south east and up to 11.2% copper in the north west of the asset, potentially associated with east-west faulting. 

Previous drilling has intersected anomalous copper including 4m @ 1.4% Cu and 2m @ 1.8% CU. Castillo Copper has comparable underlying geology to Firey Creek, 10 km to the east.

Aruma Resources acquires NHM

On 28 May, ASX-listed Aruma Resources finally acquired these licences after a deal was first announced in late 2022. A new vehicle — NHMHA — has been formed whereby Aruma owns 80% and Power 20% of the new company, which holds the three projects.

Power CEO Sean Wade was enthused to ‘report an important crystallisation event in respect of the NHMHA acquisition by Aruma Resources. This further demonstrates the value of our incubator model and how it serves to add value to shareholders. This transaction represents a continued streamlining of our portfolio and allows for concentration on our highest-value opportunities.’

Another example of tidying up the portfolio and reducing operational manpower requirements.

Aruma plans to commence targeted, systematic field work programs across the new projects to define priority drill targets, with the aim to progressively drill testing priority targets to unlock value.

What is this asset now worth to POW?

As consideration for the acquisition Aruma is to issue:

• 26.5 million fully paid AAJ ordinary shares, which will be subject to escrow for 6 months.
• 24.5 million options each non-transferable and exercisable into one ordinary AAJ share for a nil exercise price upon Aruma securing PEPR approval (and any others required) for drilling at the Wilan Project.
• 28 million options each non-transferable and exercisable into one ordinary AAJ share for a nil exercise price upon AAJ reporting an aggregate drilling intercept (in one drill-hole) of 3m at >600ppm U308, or at least 20m at >0.8% Cu or metals equivalent at one of the new projects.
• AAJ will also pay a 2% net smelter royalty to NHMHA shareholders over any minerals extracted and sold from the tenements.

It’s worth noting that Aruma also holds the Mt Deans Lithium Project within the lithium corridor in south-east WA, which hosts multiple significant hard-rock lithium projects. Aruma thinks it sits within the same host rocks and structures as the nearby and world-renowned Mt Marion, Bald Hill and Buldania Lithium projects. Aruma also controls a variety of exploratory gold projects, giving POW exposure to some additional exploratory upside.

Aruma advised that this is a ‘pivotal acquisition…It will see the Company expand its focus into key high-demand commodities, copper and uranium, via a portfolio of high-potential exploration projects in two of Australia’s pre-eminent, active mineral precincts.’

Managing Director Glenn Grayson noted the ‘company-changing potential of this acquisition. In seeking to expand our asset portfolio we have assessed a number of projects against key criteria designed to drive market support for the company and value accretion for shareholders. We see the combination of quality exploration asset portfolio in high-demand commodities, located in active tier-1 mineral belts in progressive mining jurisdictions as the clear right-fit for Aruma Resources.’

In sterling terms, the total package of 79 million combined shares and options over Aruma is worth a reasonable sum — there’s circa 197 million shares in issue at present and the company has a market capitalisation of £2 million. The company spiked to tenfold this market capitalisation two years ago — and therefore there is also significant potential upside.

This requires something of a judgment call as the options will only ever be exercised in the event the assets come much further along the path to commercialisation (and therefore Aruma’s share price will be substantially higher).

But we can place a value of circa £200,000 on the deal and a further £100,000 for potential upside (though clearly this could be much higher or lower) to give a £300,000 portfolio value. 

Add it to the £40.65 million of yesterday and we’re up to £40.95 million.

Welcome to Friday, FTSE AIM — and to the next asset in the Power portfolio. This will be a brief update as the weekend beckons.

Power Metal Resources has a 30% interest in the Silver Peak Project, located in southern British Columbia in Canada. The Project consists of a portfolio of claims over a system of high grade, intrusion-related, polymetallic silver-lead-zinc-copper veins, which were once part of the historical Eureka Victoria Silver Mine. 

Originally discovered in the late 1800s, the Silver Peak mines exploited near-surface oxide material ranging from 500 oz/ton to 658 oz/ton silver (based on limited historical evidence). 

Underground mining was conducted via adits of the two main veins, varying in width from 1.5 to 6 m, continued on a small scale under various ownership until 1981.

Underground sampling back in 2011 along the strike of the Victoria vein returned a grade of 8,889 g/t silver with a grab sample from the vein face assayed at 15,517 g/t Ag, 4.3% Pb and 2.94% Cu. 

A Q4 2020 drilling campaign then delineated very high-grade silver (5,270 g/t or 169.5 troy oz/t silver).

Power then initiated a diamond drilling programme in 2021, composed of 19 individual drill holes designed to test for extensions of the Victoria vein along strike and down dip. Highlights included:

• 0.76m of 10,131g/t AgEq (incl. 0.35m of 12,373g/t Ag, 3.44% Cu, 9.45% Pb and 8.63% Sb)

Former CEO Paul Johnson noted at the time that ‘the results are highly impressive and demonstrate the incredibly silver rich veins at Silver Peak. Without question this is an important asset for Power Metal and our partners, particularly in a world where high quality silver projects are hard to secure.’

What is Silver Peak really worth to POW?

The exploration earn-in cost the company a total of CAD$250,000 a few years ago — and Johnson argued that ‘material value can be generated for Power Metal through the listing of Silver Peak.’ At present, the company line is that POW is:

‘currently working with its partners to undertake a potential listing of the Silver Peak project on a recognised stock exchange and to review other commercialisation options for the project.’

Of course, it’s been a long time coming. There is a tension in this particular project, because on one hand, some of the silver grades (and associated by-credits) are inarguably exceptional, and on the other, the asset is correspondingly difficult to explore. There is a video on the company’s site (third down on the left) which gives investors a scale of the size of the project — but also the practical complexities. 

On a side note, it’s in a beautiful location.

For Power, as a minority owner, I'd venture that it makes little sense to spend capital on Silver Peak when other assets in the portfolio — several of which are just as prospective — are likely to enjoy a better return. 

If the owners of the other 70% of Silver Peak wished to spend their own cash, they would be, and therefore this particular asset potentially no longer fits well within the portfolio unless a deal can be reached for further exploration. 

Whoever explores the asset in depth will likely see more exceptional grades, but getting those assays, and then developing a mine, will be expensive.

My view is that Power would be best off selling its 30% share in Silver Peak; the earn-in requirement cost the company circa £150,000 in GBP terms — add in some inflation and drilling expenses, and POW’s 30% of the asset could likely fetch somewhere in the region of £400,000. This cash could then be deployed elsewhere.

However, the company has kept Silver Peak on the books for a reason. Perhaps that IPO, and by extension a self-funding company, may be in the pipeline?

Add in the £40 million of yesterday and we’re up to £40.4 million. 

Next week, I’ll take a look at Haneti, New Horizon Metals, and the corporate interests in Kavango and Red Rock Resources — before creating a fully updated investment case in PDF format for readers to forward to anyone who wants to hear about the value disconnect.

Welcome to Wednesday FTSE AIM.

I’d say we’re about halfway through POW’s portfolio of assets. Today, we’re going to take a look at what was once the flagship — Molopo. Perhaps it still is, though the corporate focus seems to be shifting to Saudi Arabia.

Power acquired an equity stake in Kalahari Key Mineral Exploration Pty Limited in 2019, which 

holds a 100% interest in the Molopo Farms Complex in Botswana. In April 2021, POW earned a 40% direct project interest by funding $500,000 in exploration. POW later increased its interest in KKME, and now holds 87.71% of the company and therefore the MFC Project.

The primary target at the complex is nickel-PGM mineralisation within the major ENE-WSW trending Jwaneng-Makopong shear/feeder zone. Historical drilling at three of the target areas previously resulted in intersections of ultramafic rocks, with visible magmatic nickel sulphides identified in one of the holes.

Mineralogical testing of one of these cores by the University of Witwatersrand has confirmed the presence of nickel sulphides. Assay testing further confirmed the presence of magmatic nickel sulphides, of up to 1.69% nickel alongside encouraging PGE mineralisation.

In 2022, Power completed four moving loop electromagnetic surveys over target areas T1-6, T1-14, T2-3 and T1-3. Four large, untested conductive bodies were identified within all areas tested. 

The results from the 2022/2023 drill program then yielded up to @ 0.81 g/t Pt+Pd+Au & 0.18% Ni from 498.7m in DDH 1-6B.

2024 exploration

On 7 February 2024, POW started drilling for the high-priority conductor at target area T1-14, with a target depth of 700-800m — having completed ground Audio-frequency Magnetotelluric in addition to magnetics, to refine the perfect drill target.

On 23 April, POW announced the completion of drillhole DDH1-14C to a final depth of 832.6 metres, with the successful intersection of the targeted steeply dipping geophysical superconductor at T1-14. 

The company believes the conductor represents a sulphide mineralised carbonaceous mudstone, where the mudstone contains significant levels of pyrrhotite-quartz-calcite veining and localised sulphide dominated veins of what appears to be pyrrhotite. 

With the drillhole complete, the in-country geological team has selected samples from the intervals for certified laboratory multielement and PGE assay testing, with the assay results 

expected shortly. For perspective, previous drillholes completed into this area were unsuccessful in intersecting this key conductor. 

What does this mean for POW?

On this particular mineralisation, there are advantages and drawbacks — like any other. 

For context, pyrrhotite itself isn't particularly valuable (especially at 800m), but it's a very good indicator that there may be nickel and copper nearby. Nickel and copper can be present within the pyrrhotite structure itself, but more importantly, other minerals like pentlandite (nickel) and chalcopyrite (copper) are often found together with pyrrhotite. 

More broadly, carbonaceous mudstone can sometimes concentrate nickel and copper to high levels due to the organic matter acting as a natural trap. In some cases, the nickel and copper may be finely disseminated throughout the mudstone, making the extraction process fairly simple.

The other common nickel-copper deposits include Magmatic Sulphide Deposits and Laterite Deposits. The former represents the ‘gold’ standard (similar to rutile for titanium, spodumene for lithium ore), and are typically developed into large scale mines due to the ease of extraction. However, they are rare already and new finds even rarer.

The latter is typically near-surface and therefore easier to mine, but the nickel and copper content tends to be lower, and the processing can be more energy-intensive.

What POW has — sulphide mineralised carbonaceous mudstone — may sometimes require some complex processing, but grades are typically higher than with laterite deposits. There’s arguably enough evidence that the asset is large enough to justify the 800m depth, but the grade will need to be relatively high to justify further exploration.

The thorny problem is that the asset is so large that what Molopo really needs is a large scale $10 million drilling campaign to definitively demonstrate viability — the hope is that this most recent hole will provide sufficient evidence to the various potential JV partners in the area that this could be worthwhile. 

What is Molopo worth to POW?

This is a gigantic 1,723 square kilometre project, and Rio Tinto among others, has a similarly sized exploration portfolio very close nearby. Utilising the recent acquisition of 56.7% of Kalahari Key Mineral, POW’s 87.71% shareholding has a value of circa £3 million, to include the purchase price and drilling costs thus far.

I’d venture that Molopo may be worth significantly more over the longer term, but to prove this will require a Joint Venture of some kind.

The bottom line is that Molopo is worth circa £3 million to Power right now; add this to the £36 million of yesterday and we’ve up to £39 million in portfolio value.

With a market capitalisation of £20 million.

A quick bite today, as this week is jam packed with content to create — educational articles, bits and pieces on hydrogen, Alien Metals part II and various others. Before we have a look at ION, I wanted to briefly highlight Power’s appointment of Tamesis Partners as joint corporate broker. 

It’s not like hiring Tamesis is some kind of watershed moment, but the LLP is attached to some big names. This is yet more evidence of the corporate buildout, with POW signaling to the market that it’s ready to play the game on a higher level — including listing on the OTC market and getting Purebond, Rick Rule and ACAM in the puzzle.

ION: a smaller piece of the puzzle

Interestingly, and perhaps counterintuitively, Monday tends to be the quietest day for engagement across both my sites and social media. I’m not sure why, but this means it’s probably best to look at a smaller POW asset today, and then tackle something juicy like Molopo tomorrow.

ION is a 100% owned Canadian subsidiary focused on early-stage exploration across three projects in Canada, covering lithium and graphite.

1. Doerksen Bay Graphite Project

This asset is centred around five Saskatchewan Mineral Deposit Index graphite occurrences, including historical rock samples that have returned graphite grades of up to 45% carbon from coarse-grained graphitic gneiss. 

Previous operators have identified three high priority geophysical targets, and a further three secondary targets, these are untested. A modern airborne geophysical survey highlighted numerous untested very low frequency electromagnetic conductors, which are broadly coincident with the SMDI occurrences.

2. North Wind Lithium Project 

Covering some 5,788.5 hectares in northern Ontario, with easy access in an established exploration district. The property hosts seven instances of highly anomalous lithium sediment results, and elevated results of caesium and tantalum along a 16km long trend, within the same water body suggesting a nearby mineralised source. 

The project represents a highly prospective target for lithium, caesium, and tantalum bearing pegmatite occurrences — which make up the majority of hard rock lithium extracted. Exploration from last year saw ION collect 389 soil geochemical samples — covering five pegmatites. Analysis is ongoing.

3. Authier North Project

This asset is just 800m from Sayona’s Authier lithium project which hosts a JORC resource of 17.1 Mt at 1.01% Li2O. Sayona’s April 2023 Definitive Feasibility Study confirmed an AU$2.2 billion pre-tax net present value.

ION has identified two targets; a northern target focused on a possible extension of Sayona’s pegmatite, and an eastern target focussing on potential further occurrences of lithium pegmatites along the perimeter of the La Motte Batholith. Grab samples from the previous licence owners came back with up to 0.42% CR203 and 0.21% Nickel.

Power Metal’s original 2021 agreement to acquire the Authier North and Duval East lithium properties valued the properties at £243,000 — though the agreement was subsequently changed to POW’s favour. 

Portfolio value

If you add on the other projects, some cash spent on exploration, and inflation since then, there’s probably a value of circa £500,000 for all of ION's assets.

While I’m generally positive on the broader portfolio, as part of the ongoing corporate tidy-up, Power needs to either find another asset to be ION’s flagship, sell these ones for what they can, or get any kind of deal over the line with a local partner.

We ended last week with a £34.9 million valuation and are now up to £35.4 million. 

Good morning investors of FTSE AIM — and welcome to your daily Power Metal Resources breakfast. 

I’m pleased to say we’re enjoying a varied diet; on Monday we had uranium, on Tuesday tungsten, yesterday Saudi-based lithium (with copper and nickel to season) — and today we’re going to talk about a POW asset that is a little different to the rest of the items on your plate. 

The grilled tomato.

I’m talking, of course, about GSA. This acquisition — first announced on 29 February — concerns a little-known engineering technology provider and process licensor. I’m sure you (like I was) might be scratching your head attempting to wonder what on earth CEO Sean Wade was thinking. 

I’ll explain, because I enjoyed a lively discussion with Sean earlier this year in which he it made pretty clear that he’s had enough of the dysfunctional capital markets in London. At least that was my interpretation. 

And if as an explorer you don’t want to raise cash through brokers, you either need to go directly to strategics, family offices or UHNWs, which the company has done successfully several times now, or create your own free cashflow.

And this is what GSA is all about.

As per, please remember this is not financial advice, and you should only consider investing in small caps from a position of financial resilience and within a diversified portfolio.

Understanding the acquisition

Power Metal officially completed its acquisition of 75% of GSA on 17 May 2024 (RNS day 20 May) — following due diligence and the standard pre-conditions.

GSA Environmental specialises in the extraction of critical and strategic metals from 'secondary sources' including power station ash, refinery waste, titanium dioxide waste and spent catalysts — by creating a suite of by-products rather than industrial waste. 

It ‘aspires to be the first-choice global provider of technological solutions to environmental problems posed by toxic metals in waste products.’

Wade enthused:

‘I am delighted to announce the completion of this seminal transaction for Power Metal. We have very exciting plans for this business and are looking forward to updating shareholders soon on contract signings and progress towards a significant revenue contribution to the Power Metal portfolio.’

Agreement Terms

Straight off the bat, the absolute maximum POW is going to be paying is £1 million. Here’s the breakdown:

1. POW paid £75,000 in new ordinary shares at the 5-day VWAP price of circa 14.6p each, comprising 514,357 new Ordinary Shares on 24 May.
2. If at any point GSA executes a commercial agreement with a third-party of at least £160,000, a further £75,000 in POW shares is due on the same terms.
3. On 17 May 2025, £250,000 in cash or POW shares (same terms) at GSA’s discretion, on the condition that GSA generates a profit of at least £450,000 in the period.
4. On 17 May 2026, another £250,000 in cash or shares, on the condition that GSA generates a profit of at least £650,000 in the period.
5. On 17 May 2027, another £350,000 in cash or shares, on the condition that GSA generates a profit of at least £1 million in the period.

What does this mean for the bottom line? Well, there are two ways to look at this. The first is that POW is giving GSA shares in the company in exchange for 75% of GSA’s shares (and therefore profits). 

The thing is, as GSA is almost certainly not going to sell any shares, all this does is increase the market capitalisation of the company without damaging the effective free float. And you’d imagine POW plans to buy out that remaining 25% at some point in the future.

While GSA has the right to demand cash from term 3 onwards, I’d expect the founders will only ask for cash if they need it to grow the business — and remember, POW is now the majority shareholder.  

Of course, you might think this is all a bit too clever, so I’m happy to reduce the contract to the lowest common denominator. If GSA generates £1 million in profit by 17 May 2027, POW will have paid £1 million in either cash or shares. Assume it’s mostly shares, but £750,000 in cash would be POW’s share of the profits and the most GSA can ask for in cash is £850,000.

So the worst case scenario is that POW pays £100,000 in cash more than its share of the profits (£850,000 to £750,000), and then has a positive cash flow asset for the ever after. You’d assume if GSA is doing that well, £100,000 in cash would be worth it — even if they wanted cash which seems unlikely.

And for those of you thinking this is all very well, but why spend money on an asset that may only be profitable three years from now — POW will still exist in three years. It’s similar to pushing off going to university because it takes three years to do — you’ll still be three years older in three years’ time whether you choose to improve your life/corporate chances or not.

What does GSA do?

GSA was founded back in 2003 and specialises in metals extraction from secondary sources including refinery residues, Titanium Dioxide waste, fly ash and spent catalysts. It can get economic quantities of metals like scandium, yttrium, niobium and other rare earth elements, in addition to vanadium and nickel out of waste. 

As you might imagine, this is likely to be high margin activity as the company is literally making profits from the rubbish produced by other companies — who are likely more than happy to be rid of it. Accordingly, the theory is that the tech will undercut the production costs of traditional mining.

I’m sensing a Fulcrum Metals vibe, but on a smaller scale initially. 

I love new mining techs, and GSA uses hydrometallurgical techniques via its meta extraction technology to reduce harmful environmental impact by preventing harmful compounds from going to landfill — and perhaps even negating the need for landfill at all in some cases.

It’s even working with a ‘major Saudi Arabian mining company’ to analyse processes to extract REEs and other metals from the tens of millions of tons of tailings in Saudi Arabia — and is in discussions with several mining and smelting companies to find solutions for their current and future mine tailings and slag residue.

GSA even has two MoUs with major Saudi Arabian suppliers of vanadium and nickel bearing fly ash. This is still in the early stage, though research to optimise the metal extraction process route (read figure out a flow sheet) is in progress.

Not sure what a flow sheet is?

The idea is to create a detailed plant design, and perhaps go down the construction, commissioning and operation route for ‘potentially several treatment facilities initially in Saudi Arabia.’ Remember, POW is launching Power Arabia’s IPO at some point soon — and is already now well established in the country.

There is a carefully crafted plan being painstakingly delivered behind the scenes. 

But does the tech actually work? That’s the real question — more and more companies seem to have developed technology specifically for tailings — simply because you can buy assets for pennies and processing costs so little. 

GSA has a UK government grant through Innovate UK within a research consortium with partner the University of Lincoln and commercial supplier MLC and metals trader Lipmann Walton. GSA supplies the tech for metals extraction/concentration, the university supplies the tech for polymer manufacturing and filtering — and MLC supplies the waste samples and offers practical technical advice.

There are two million tons of metal containing waste in the UK, and GSA is already working with one firm to develop ‘a demonstration scale plant in the UK to process two types of industrial waste for extraction of critical metals from a single plant in the region of 20,000 ton per annum throughput.’

If this plant works, the plan is to build a much larger 200,000 tons per annum capacity plant also 

in the UK.

So short answer — it appears the tech has been proven to work in the lab but needs to be put through its paces in practice. For perspective though, GSA does bring on board a lab with significant testing capacity, reducing lead times and costs for soil sampling and rock chip sampling in early-stage exploration, and therefore there is an additional advantage.

But if it was already proven in the field, it would cost a lot more than £1 million.

What this all means for Power Metals

The idea is that GSA could become a significant revenue generator, which has long been one of Wade’s primary objectives. It’s a planned departure from the traditional early-stage exploration projects and will hopefully reduce the reliance on asset disposals and fresh equity capital — which are both typically expensive and unpredictable.

But the bigger picture is Saudi Arabia. The acquisition immediately strengthens the Saudi presence in-country and will likely make JVs and project acquisitions easier.

I want to highlight two quotes from Sean’s 1 March BlytheRay interview:

• ‘We think this is a highly profitable business with fantastic growth potential, and we're very, very excited about doing this deal.’
• ‘This is a major step forward for us in respect to our relationships not just with the government but really our profile and our status as a serious player and operator in the region (Saudi).’

What’s it worth to the balance sheet? We’re assuming £1 million in profits over three years, so let’s say circa £330,000pa in profit. Use a typical 8x multiplier and take away 1x for risk and this leaves circa £2.3 million. I’d also remove that £100,000 potential cash payment in excess of the profit share for a £2.2 million value at present.

Of course, there is significant upside potential as well, but better to account small and dream big.

Add this to the running total and we’re at a £32.4 million for the balance sheet.

First Development Resources tomorrow!

Onto day three of the Power stable, and it’s time to consider the company’s efforts in Saudi Arabia — where it seems clear the corporate strategic focus is. 

For context, as discussed on Monday, ACAM is on board with the uranium licences in the Athabasca, spin-off Golden Metal is running the show at Pilot Mountain in Nevada, and Power now has spare manpower to get cracking with operations in Saudi.

Let’s dive in.

Saudi Arabia 2024

It all started with CEO Sean Wade attending the 10-11 January Future Minerals Forum in Riyadh, with a booth booked and all. He also participated in a panel discussion on day one, talking all things junior mining.

Wade noted at the time that ‘The Future Minerals Forum is one of the world's largest gatherings of senior government and industry representatives dedicated to creating a secure and responsible mineral value chain in Africa, Western and Central Asia.’

It wasn’t a wasted trip. 

On 12 January, POW announced it had signed an Memorandum of Understanding with MISA — 

the Ministry of Investment of the Kingdom of Saudi Arabia — and in the presence of  His Excellency Bandar Alkhorayef, Minister of Industry and Mineral Resources.

The agreement was to explore JV efforts focused on the Kingdom’s natural resources, with MISA to support investment in exploration activities, develop upstream and downstream projects targeting multiple strategic minerals, and attract reputed national and international mining and mineral development companies to drive the commercialisation of Saudi Arabia's mineral resources.

The RNS noted that: 

‘MISA and POW are looking to complement the activities of each other through establishing a mutually beneficial relationship in order to pursue suitable exploration opportunities in Saudi Arabia. POW will offer highly experienced technical support to potential exploration projects, and MISA will provide project opportunities and potential support for such projects as applicable.’

This is important stuff, and requires you to understand two background factors. 

The first is Saudi’s Kingdom 2030 vision, put forward by Crown Prince Mohammed bin Salman in 2016. You can broadly split the vision into two ideas — social reform and economic plans. 

Socially, the country wants to increase women’s workforce participation from 22% to 30%, increase tourism, promote cultural events (World Cup 2034 anyone?), increase homeownership from 47% to 70%, improve transport networks, improve government efficiency, introduce legal reforms, and implement new anti-corruption measures. It’s also got big plans for improving healthcare accessibility, as well as reorienting the education system towards STEM. 

Economically, in addition to some fairly major infrastructure ideas including mega-city NEOM, Saudi is painfully aware that its oil will eventually run out. Oil accounts for circa 40% of GDP and 75% of fiscal revenue and is as crucial to the economy as the real estate market is to China.

Saudi wants to reduce this oil dependency, including heavily investing in renewables to account for 50% of the energy mix by 2030, and combatting desertification. But the big idea is to encourage private sector investment — aiming for the private sector to contribute 65% of GDP by 2030 to reduce economic dependence on oil.

Interestingly, a key component of the plan is to strengthen its Public Investment Fund to support corporate growth both abroad and within its borders — POW may benefit from this at some point.

While much of the 2030 vision is not relevant to POW, it’s important to understand the context — there are big plans afoot in Saudi and it wants external companies to bring their expertise to the country. And perhaps this is where the company has not explained the strategy.

Saudi Arabia, unsurprisingly, has a lot of money floating around. And it wants to diversify the economy. What it lacks is the expertise to make this happen — there are dozens of potentially exceptional assets in the country that are not being explored or developed simply because the skillset to explore for critical minerals or precious metals isn’t there; everyone native to Saudi is focused on oil.

This is the exact opposite of the UK, Canadian or Australian markets where there are plenty of decent teams, but capital is hard to come by. But what you need to break into Saudi is a heavy hitter or two that tells the country you mean business — and for POW, that was Rick Rule and Purebond.

Accordingly, on 1 February, POW announced it had raised £1.3 million at a small premium (with no warrants, amazing) ‘cornerstoned by UK-based high net worth investors and a strategic Saudi Arabian investor.’

The company noted that the financing demonstrated ‘the ability of the Company to secure direct funding from strategic investors, helping to move the shareholder register to include a greater proportion of longer term and institutional holders.’ Or in other words, POW can get capital without the massive discounts seen over the past couple of years on AIM — without warrants and with shares going into ‘sticky’ hands.

On that note, I hate the term sticky hands so would love to hear alternative suggestions.

POW has put the new capital to good use; on 12 March, the company noted that subsidiary Power Arabia had been established to encompass activities across the Arabia Gulf — including potential JVs outside the Gulf with entities domiciled within the region.

At the time, POW noted that it had several binding MoUs for potential JVs on existing exploration licences in the final stages of negotiation — with initial groundwork to begin in April. 

It also advised that Power Arabia was going through the pre-IPO funding motions with a plan to list in London when ready. 

Interestingly, POW also noted that ‘conversations are progressing with investors, both from the Gulf and internationally, who have indicated significant interest in a regionally focused investment vehicle.’

Wade advised that ‘We have now made several trips to the region and are establishing ourselves as a credible partner for a number of existing licence holders. We are currently looking at formal arrangements to acquire suitable exploration opportunities with various separate entities, of which several are currently close to execution.’

On 26 March, POW signed a mutually binding earn-in agreement with Saudi based RIWAQ Al-Mawarid for Mining, a special purpose subsidiary of EV Metals Group.

RIWAQ controls 15 tenements in the Balthaga Suite, approximately 400 kilometres east of Jeddah in the south of the Arabian Shield, covering almost 1,5000 square kilometres. 11 of these tenements already have exploration licences, while the other four were at the time waiting for approval. 13 of the licences are prospective for hard rock lithium, with one considered prospective for nickel sulphides and the final licence potentially hosting a copper/molybdenum porphyry system.

POW can earn a 20% interest over the tenements by funding $350,000 in expenditure within 12 months (i.e. by 26 March 2025), and a further 10% interest if POW spends an additional $150,000 in the six months thereafter (i.e. by 26 September 2025). 

And once an interest is earned in the tenements, the two parties have signed a non-binding agreement to form a contributing joint venture in proportion to their Tenement interests.

Wade noted that ‘Our intention is to form a long-term partnership with EVM, RIWAQ's majority owner to provide upstream opportunities for EVM's growing midstream processing operations. RIWAQ have a number of other licences currently under application, highlighting further growth opportunities beyond this initial agreement.’

It’s also probably worth noting POW’s acquisition of GSA — where a MoU with a major Saudi Arabian supplier of fly ash is in place, with several further discussions ongoing — but this will be the topic of tomorrow.

The question is one of what Power Arabia is actually worth to Power Metal Resources — and this isn’t particularly easy to decide. I think we could perhaps consider First Class Metals and Golden Metals for some clues; FCM launched its IPO at 10p per share for a £6.56 million market capitalisation — GMET launched at 8.5p per share at a £7.16 million market capitalisation.

Assuming the parent retains 50% of Power Arabia, and the company is targeting a circa £7 million valuation, then you can probably assign circa £3.5 million to the balance sheet. There is of course uncertainty around this figure, but then we’re not including qualitative data including presumably significant further progress on signing more deals which may be close to being announced.

We got to £26.7 million yesterday — add on today’s £3.5 million and we’re up to £30.2 million. GSA tomorrow!

Good morning team, and welcome to POW Part II. The value disconnect between Power Metal Resources’ market capitalisation and its balance sheet has annoyed me for the better part of a year — so my current mission in life is to get it in front of as many eyeballs as possible until it doesn’t exist anymore.

Yesterday we had a crack at the Athabasca uranium assets (see below), and today it’s POW’s shareholding (and warrants) in Guardian (formerly Golden) Metal Resources. For those with short memories, GMET was spun out from Power and its long term performance is arguably the litmus test for the parent’s business model.

The good news is that the model is working. Guardian Metal shares were changing hands for as much as 26p apiece during trading yesterday, and during pre-market trading today the company’s market capitalisation has risen to £29 million — more than tripling since October. Looking at the US OTC trades, it also seems likely a whale might be buying in the background.

Well done to CEO Oliver Friesen. 

Yesterday, GMET once again issued shares at a premium to Purebond — this time raising £506,250 at a premium valuation of 22.5p per share with no warrants attached to the deal— the funds are to be used for further exploration. As a reminder, Purebond is also a TR1 holder in Power.

A premium raise with no warrants is rarer than hen’s teeth in this market — and importantly, the previous March raise with Purebond for £750,000 did come with warrants. This suggests that over the past three months, GMET has been hitting the gym — and now has a strong enough negotiating hand to set the terms.

I’m not going to go into detail on Guardian Metal, but have covered the stock in serious depth, most recently at:

The Golden Metal Resources EDIT

Grant funding incoming?

But for those of you with poor attention spans, GMET owns 100% of the largest undeveloped tungsten deposit in the United States, which appears likely to benefit from US government grant funding in the near term. 

Tungsten is becoming an ever more critical mineral, and it is in the strategic interests of the US government that the company’s Pilot Mountain is developed.

Anyone investing in POW who wants a lowdown should read those two articles.

Good morning, everyone! Those of you following the articles today may be starting to sense something of a theme. 

So far, you’ve enjoyed a thorough look into Amaroq Minerals' delightful copper and nickel exploits. A couple of weeks ago we took a look under the hood of Asiamet Resources’ flagship, and doubtless there will be more to come soon.

The theme is that many of these promising companies simply have too many assets to consider in a single article, and instead need to be split into two or three separate pieces. Nowhere is this truer than with Power Metal Resources — which has myriad assets spread all over the world — so I’m just going to cover one asset at a time every day until we’ve got through them all.

Starting with the uranium. This might take a while.

Before we get going though, I do think there’s a couple of salient points worth highlighting. The first is the investor base — Rick Rule (via Term Oil), Purebond, Paul Johnson, at least one Saudi Arabian investor, and now ACAM. As financial backing goes, that’s not bad at all.

The second is that Power Metal’s merchant bank/IPO spinoff/landholding model is a well-known and popular strategy in the US, Canada and Australia — and pretty much an anathema to London. Golden Metal has of course been a resounding success (thus far), but having done much of the legwork, you would hope more proof of the business model is coming. 

I’d also tie in the share price performance to the undervaluation of strategic land packages alongside weak investor sentiment, both of which are finally starting to see some uplift.

POW shares may have further to go, but actually if you take a step back the stock is up by circa 75% over the past five years, 11% over the past year and 22% year-to-date. Of course, at around 18p per share post consolidation, it’s valued by the market at less than a third of its January 2021 peak.

But that might change soon.

As ever, please remember to consider your risk tolerance, alongside your diversification and financial resilience. Nothing on FTSEAIM.CO.UK is to be taken as investment advice.

Let’s dive in.

While there was initially a plan to IPO some of these assets into a new vehicle entitled Uranium Energy Exploration, the company noted on 25 March that ‘a number of significant potential strategic investors have indicated their preference for alternative deal structures which may include a different combination of assets, or an enlarged asset set with an enhanced business model.’

On 3 June, investors got the RNS they were waiting for.

POW announced that ACAM LP had agreed non-binding terms to enter into a Joint Venture with all of the company’s Athabasca uranium licences. Exclusive negotiations are now ongoing for up to the next eight weeks.

Here’s the context: ACAM also helped out financially in the early days at Jubilee Metals and has since converted its debt into equity at a 7.02% shareholding. I covered this African giant in depth a few months ago and will releasing an update in the next few weeks. ACAM is also the Gardaq JV partner with Amaroq — I took a seriously in-depth review of the potential here just hours ago.

ACAM only backs winners. And now you can add it to the growing list of POW’s backers.

Here’s the details:

ACAM has entered into a legally binding subscription agreement to purchase Notes with attaching Warrants for £2 million. The Notes have a term of five years, bearing interest at 10% per annum payable semi-annually, at the option Power in cash or through the issuance of new shares. The 13,333,333 Warrants are exercisable for five years at a price of 15p per share. 

A non-binding term sheet has been signed with ACAM, whereby both parties plan to enter into a JV concerning all of the Athabasca licences. ACAM (or an affiliate) will invest £10 million into equity in POW subsidiary Power Metal Resources Canada for a majority interest of 70%.

POW will also receive up to £4 million in cash, ‘conditional upon a sale transaction completing or other value realisation by the Investor, subject to the Investor achieving a minimum return threshold on its investment.’

Assuming the JV goes through, it will conduct at least five ‘significant, high impact drilling programmes with an experienced financial partner, with significant advancement on several more.’

It’s worth noting that the UEE IPO will be aborted, at a cost of £500,000 — to be met through the proceeds of the notes, with the balance for general corporate purposes.

CEO Sean Wade enthused that ‘whilst there can be no guarantee that the Joint Venture will complete, we are confident that we will achieve a successful outcome and will update shareholders once the legally binding documentation is finalised. ACAM have already made a significant commitment to the Company pursuant to the Subscription and we look forward to working with them to successfully conclude the proposed Joint Venture.’

There are of course a few technical details to highlight. Interest payments can be made in shares or cash — as POW’s a junior, you can generally assume it will elect to settle in shares — but the terms are fair, simply being the 10-day VWAP prior to the payment date.

While the notes remain outstanding, the company must use 20% of the proceeds of any future raises to redeem the notes for cash. It must also redeem the notes for cash using either 50% or 100% of the proceeds of any asset sale fetching above £300,000, dependent on the VWAP compared to the warrant exercise price. 

The warrants are already in the money and will be re-set in proportion to any dilution. I would note though that ACAM has a reputation for exercising its warrants deep in the money.