MINING AIM: THE H2 EDIT

And welcome to the H2 EDIT — where I take an overview of key portfolio stocks and where they may go over the next six months. These are all shares with mid-term catalysts, all of which I believe could see a sustained move higher before the end of the year.

As ever, these are all based on fundamentals — I don’t do charting. I will note that this list includes some relatively big fish alongside several minnows — and that any potential investment should be tailored to your personal risk appetite.

Let’s dive in.

In alphabetical order

Arc Minerals: ARCM sentiment is exceptionally weak given the world-class JV for Zambian copper exploration with mining major Anglo American. An underwhelming raise and questions over the board’s compensation haven’t helped — the only thing that will is getting the drill bit turning as soon as possible. One decent set of assays could course-correct the stock.

African Pioneer: AFP also continues to control some of the best copper licences in Zambia, with many being explored under its option agreement with FQM. My view remains that a small cap exploring in the country is going to strike the jackpot soon — and then there’s Ongombo in Namibia, where project financing could be over the line within the next six months.

Alien Metals: UFO has disappointed investors for some time, including with the most recent placing. But project financing for Hancock does appear to be close to becoming a reality. As a reminder, this is a straightforward iron DSO asset, and the recent hiring of mine developer Nathan Douglas as General Manager of Operations suggests the long wait may soon be over.

Amaroq Minerals: AMRQ has dropped from highs in common with almost every stock listed on the main board in Iceland — affected by the ripple effect of Alvotech’s issues. However, exploration continues apace — and the completion of the EIA and SIA means the company can now go full steam ahead at flagship Nalunaq to get into production.

Asiamet Resources: ARS continues to optimise its flagship BKM Copper Project in Indonesia — most recently announcing it had found a way to decrease total initial material mined by some 47%. My working theory is that project level financing will be agreed within the next six months, and the share price will re-rate accordingly.

Fulcrum Metals: FMET should soon sign an exclusive licence agreement with Bechtel-affiliated Extrakt to process gold tailings in Ontario — test work at a first site has already begun, and the business could see significant growth given the billions of dollars of gold waiting to be recovered within tailing dumps inside the province.

Galileo Resources: A small-scale mining licence for Luansobe has now been awarded and while there are plenty of other assets in this stable, the optionality at this licence given the exploration potential is exceptional — and a re-rate will be on the cards in the event of any material announcement. 

Georgina: Getting ready to RTO, Georgina is focusing on flagship Hussar in the Officer Basin of Western Australia, where the business is marketing the asset as lower risk than the traditional approach as its redeveloping existing wells that have already demonstrated proven gas flow. Drilling should kick off in Q4, with a view to simply re-enter and deepen existing wells to get the helium and hydrogen out. 

Greatland Gold: This half should see a resolution to the unavoidable uncertainty plaguing Greatland — especially given this morning’s announcement that another member of the Fortescue aristocracy, Dean Horton, is taking the reins as CFO. One way or another, my view is that Greatland now plans to take on 100% of Havieron, and that this plan will be unveiled soon.   

Guardian Metal Resources: Rechristened from Golden Metal in order to better define and attract the company to US investors, Guardian is drilling at flagship Pilot Mountain and may soon see the benefit of US government grant funding for this asset. At the risk of impersonating Keir Starmer (my Dad was a toolmaker), PM is the largest undeveloped tungsten deposit in the US, and the company sits at a perfect storm of political and economic catalysts.

Helix Exploration: Helix remains the best helium play for 2024 in my view and is now fully funded to drill two wells (with the same rig) at Ingomar Dome and Rudyard — the economics at both assets are attractive and the risk-reward heavily skewed to the upside. In particular, the management at Helix represents what industry insiders might pick as their Fantasy Helium team.

Jubilee Metals: After promising no delays to upgrades at Roan, there was another minor delay — which goes to show that if you’re operating in Africa, it’s best to tack on postponement to your expectations, no matter how large or well-funded a company is. But the bottom line is that Jubilee continues to hit fresh record production of chrome and the copper expansion could create a billion-pound company within the next few years. 

Power Metal Resources: POW remains chronically undervalued by the market — its circa 50% shareholding of GMET and JV agreement with ACAM alone are inarguably worth significantly more than its current market capitalisation. I suspect that the current exploration in Saudi Arabia could well deliver even more value and am of the belief that once one of several catalysts concludes, the market cap of POW will rise to circa £30 million by the end of the year.

Prospex: Prospex has assets in Italy and Spain that are extremely attractive to potential buyers — and management have essentially put a ‘for sale’ sign up on everything (if not officially). Pending a few licencing issues, I expect asset sales at a significant premium during this half. There is no debt, no warrants, and the company is profit-making.

Rome Resources: Rome will be covered as the stock of the week shortly, but for brevity, the company is planning to drill targets at an extremely prospective tin asset in DROC. This is the only DROC-based business I would invest in presently as the management team have a strong history of operating in the country and should be able to avoid the common regulatory problems others have faced.

Sovereign Metals: SVML is building a pilot plant at Kasiya (I’ll once again imitate Starmer), the world’s largest rutile and second-largest graphite deposit. This ‘pilot’ operation will process perhaps 5-10% of what the real mine will be capable of — and is in my view clearly the due diligence Rio Tinto needs to see before making an offer for the remaining 85% of SVML’s shares it currently does not own. The offer better be good though, because the comparisons between Sovereign and Fortescue continue to increase. 

Sunda Energy: Previously Baron Oil, Sunda remains my wildcard for 2024. Sunda will drill an appraisal well at Chuditch in the near future, and Chuditch will eventually sell. There’s not much more to say that hasn’t been covered in depth already.

The bottom line

I’ll revisit this list at the end of the year to see what I got right, what I got wrong, and whether investing in these shares at this juncture yielded a profit. One key takeaway (and this is not advice!) is that these shares, like all shares, carry various risks. I am not overly invested into any one company, instead operating a diversified portfolio from a position of financial resilience.

The litmus test for overdependence on one stock is this: are you waking up at 7am and refreshing its RNS feed to check for updates? If so, you’re in too deep.

Let’s get these over the line.