Company Interviews Crux Investor

Interview with Graham Donald Carman, President & CEO of Tinka Resources Ltd.
Our previous interview: https://www.cruxinvestor.com/posts/tinka-resources-tk-large-scale-zinc-financed-for-feasibility-study-2714
Recording date: 30th April 2024
Tinka Resources (TSXV:TK) presents a compelling opportunity for investors to gain exposure to one of the world's largest undeveloped zinc projects as the metal approaches a forecast supply deficit. The company's flagship Ayawilca zinc-tin-silver project located in central Peru boasts impressive economics and significant exploration upside.
A 2024 preliminary economic assessment (PEA) showcased the project's potential, including a 21-year mine life producing an average of 90,000 tonnes zinc, 1,500 tonnes tin , 560,000 ounces silver and over 2,500 tonnes lead.
The study outlined an after-tax NPV(8%) of US$434 million and IRR of 26% using conservative metal price assumptions, with highly competitive cash costs of US$0.40/lb zinc net of by-products. The initial capex of US$382 million is expected to be paid back within 2.9 years.
CEO Dr. Graham Carman emphasized the substantial potential to expand the resource and extend the mine life. The company plans to advance Ayawilca to a pre-feasibility study (PFS) over the next 12 months, focusing on infill drilling to expand Indicated zinc and tin resources, further metallurgical optimization, and initiating the permitting process.
Tinka benefits from a strong leadership team with extensive experience in South American mineral discoveries and the backing of major zinc miners Buenaventura and Nexa Resources as strategic shareholders. The project boasts excellent infrastructure, including access roads, power lines, and water supply, and the company has fostered strong relationships with local communities.
The Ayawilca project is well-positioned to capitalize on the impending zinc supply deficit, as demand gradually increases and existing mines face depletion. With limited new zinc projects in the pipeline, Ayawilca represents a scarce and strategically valuable asset. As Tinka continues to de-risk and advance the project, it has the potential to attract significant interest from mid-tier and major zinc producers seeking to secure future supply.
Investors can anticipate a range of catalysts in the coming months, including exploration results, metallurgical optimizations, and the delivery of a PFS. As the zinc market moves into undersupply, Tinka Resources offers a unique opportunity to invest in a high-quality, advanced-stage zinc asset with a clear path to value creation._
View Tinka Resources' company profile: https://www.cruxinvestor.com/companies/tinka-resources-limited
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Interview with Tim Harrison, Managing Director of Ionic Rare Earths
Our previous interview: https://www.cruxinvestor.com/posts/ionic-rare-earths-asxixr-european-recycling-and-african-production-4944
Recording date: 30th April 2024
Ionic Rare Earths (ASX:IXR) is positioning itself to become a key supplier of critical magnet rare earths through its pioneering recycling technology and the development of the Makuutu heavy rare earths project in Uganda.
The company's primary growth driver is its 100%-owned Ionic Technologies business, which has developed a unique process to recycle end-of-life magnets into new magnetic materials. With £3.5 million funding secured from the UK government, Ionic Technologies is currently operating a demonstration plant in Belfast and working towards a commercial-scale feasibility study.
Ionic Rare Earths is targeting first production from a commercial recycling plant in Belfast by 2026, with an initial output of 200 tonnes per annum of magnet rare earth oxides. This would be sufficient to supply a significant portion of the UK's rapidly growing EV motor manufacturing sector. The company is also in discussions with potential offtake partners in Europe.
The company is also pursuing similar partnerships in the U.S., Asia, and Brazil to expand its recycling business globally. A recently formed joint venture with Viridis Mining and Metals aims to establish a rare earths refining and recycling business in Brazil, a key growth market for EVs and renewable energy.
Importantly, the recycling process developed by Ionic Technologies can produce the full suite of magnet rare earths, including the highly valuable heavy rare earths dysprosium and terbium. These elements are essential for high-strength permanent magnets used in EV motors and wind turbines, and are projected to be in deficit as electrification accelerates.
In parallel with its recycling initiatives, Ionic Rare Earths is advancing the 60%-owned Makuutu project in Uganda, which is considered highly prospective for heavy rare earths. The company is currently producing a mixed rare earth carbonate from a demonstration plant for evaluation by potential offtake partners.
The investment case for Ionic Rare Earths rests on its exposure to the exponential growth in demand for magnet rare earths, driven by electrification and decarbonization. With a proven recycling technology, first-mover advantage, and a clear path to commercialization, the company is well placed to become a major supplier of recycled magnet rare earths outside of China. In addition, the Makuutu primary development project provides direct exposure to critical heavy rare earths, diversifying the company's supply sources and mitigating development risks.
Key catalysts for Ionic Rare Earths over the coming year include the completion of the Belfast commercial feasibility study, the signing of offtake and funding agreements for both the recycling and primary development businesses, and further progress on global expansion opportunities. With a strong macro tailwind, experienced management team, and government and industry support, Ionic Rare Earths represents a compelling opportunity for investors to gain exposure to the rare earths sector and the global energy transition._
View Ionic Rare Earth's company profile: https://www.cruxinvestor.com/companies/ionic-rare-earths-ltd
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Interview with Terry Holohan, CEO & Managing Director of Resolute Mining.
Recording date: 1st May 2024
Resolute Mining, a gold producer operating in West Africa, has undergone a transformative three-year turnaround under CEO Terry Holohan. Despite inheriting significant operational challenges at the company's flagship Syama mine in Mali, Holohan and his team have systematically worked to stabilize and optimize the asset, positioning Resolute for profitable growth.
When Holohan took the helm in 2021, the Syama underground mine and sulphide processing plant were struggling with inconsistent performance. Suboptimal mine sequencing and design issues had hampered a transition to automation, while the processing plant battled frequent roaster instability due to variable ore feed. Holohan's first priority was assembling a team of technical experts to tackle these issues head-on.
"We had to essentially rebuild the plant over a quarter," Holohan recounted. "It was back to basics and joined up thinking required."
With the operation stabilized, Holohan turned to aggressive exploration to drive organic growth. Resolute has added 3 million ounces of gold reserves over the past three years, bringing the total to 10 million ounces. This reserve growth has underpinned an expansion project at Syama that will lift annual production from 200,000 ounces to over 230,000 ounces, utilizing latent capacity in the mill.
Crucially, this growth is being self-funded by Resolute's improving cash generation. The company has eliminated its debt balance and is generating net cash even after funding $20 million in annual exploration. As Syama's expansion lifts production, unit costs are forecast to continue trending lower, significantly expanding margins.
Holohan's turnaround strategy has not been without risks, including a dilutive equity raising early on. However, he emphasized that the raising facilitated vital investments and attracted key North American shareholders who "really bought into the idea that we've got a growing asset here." Holohan sees further potential to scale Resolute into a larger, multi-asset producer over time.
"Over the next five years, everybody internally and with the fund managers and the shareholders, we all know that there's a tier one mine in the making," he stated, referencing the industry's classification for mines producing over 500,000 ounces annually.
Resolute also appears well-positioned to navigate the challenging jurisdictional landscape in West Africa. While Mali has suffered instability and terrorism threats in recent years, Resolute's operations are located in the far southwest of the country near the Cote d'Ivoire border, an area that has remained secure and calm.
While Resolute's turnaround is not yet complete, the company has already demonstrated its ability to deliver operational consistency, with 11 straight quarters of improving production and costs. As it brings additional production online at better margins, Resolute is well-positioned to create value for shareholders in the coming years.
With a proven management team, robust balance sheet, organic growth pipeline, and long-term optionality for further value-accretive M&A, Resolute presents a compelling opportunity for investors looking to gain exposure to an under-the-radar gold producer in the early innings of an operational turnaround.
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Learn more: https://cruxinvestor.com/companies/resolute-mining
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Interview with Sean Roosen, Founder & CEO of Osisko Development Corp, and Oliver Turner, Executive VP of Karora Resources Inc.
Recording date: 30th April 2024
The gold mining sector presents a compelling investment opportunity currently, based on the perspectives of two highly successful mining executives - Sean Roosen of Osisko Group and Oliver Turner of Karora Resources.
The key argument for gold miners is the disconnect between the strong performance of the gold price and the lagging response of gold mining equities. With the gold price at high levels, gold miners are poised to generate significant free cash flow. However, this improvement in fundamentals has not yet been reflected in the share prices of gold mining companies.
Roosen and Turner believe this disconnect provides an attractive entry point for investors. They expect the upcoming quarters to demonstrate the cash flow growth potential of the sector as high gold prices flow through to the bottom line. As this fundamental improvement becomes more apparent, they see the potential for generalist investors to return to the sector and drive a positive re-rating of gold mining equities.
To capitalize on this opportunity, they advise investors to focus on miners with high-quality assets and proven management teams. Roosen stresses that "it starts with the quality of your project. If you don't have a good asset, the cost of capital is not going to be there for you." Turner similarly emphasizes the importance of acquiring assets that have true operational synergies.
Another key element is backing management teams with a track record of value creation. Roosen uses the analogy "you need a good jockey. A fast horse is not enough", to illustrate the point that the best assets still require the right team to deliver shareholder returns. Turner points to the strong returns his team previously generated at Klondex Mines, Karora and new lithium spin-out Kali Metals as evidence of this principle.
Importantly though, both emphasize the need to take a long-term, multi-year view to allow the investment thesis to fully play out. Part of this means being willing to go against market sentiment to acquire fundamentally attractive assets during downturns when valuations are more compelling. Roosen and Turner have successfully applied this approach with Canadian Malartic, Beta Hunt, and Higginsville.
At a macro level, the outlook for gold appears constructive. Increasing central bank purchases, the prospect of a Fed pivot, and constrained global supply growth are all seen as supportive of a strong gold price going forward. When combined with the margin expansion and free cash flow growth a high gold price enables, the stage appears set for a significant re-rating of gold equities as this fundamental improvement becomes more apparent.
In summary, the combination of an attractive macro backdrop for gold, robust underlying fundamentals that have not yet been reflected in valuations, and the proven ability of companies like Osisko Group and Karora Resources to create value from these conditions makes gold miners a compelling opportunity currently for investors with a multi-year time horizon.
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Learn more: https://cruxinvestor.com/companies/karora-resources
https://www.cruxinvestor.com/companies?*=osisko
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Interview with Gregory Martyr, Executive Chairman of Capital Metals PLC
Recording date: 1st May 2024
Capital Metals (AIM:CMET) is an intriguing investment opportunity in the mineral sands space, with its high-grade Eastern Minerals Project located on the east coast of Sri Lanka. The project boasts a resource of over 17 million tons at an impressive grade of 17%, making it one of the highest-grade mineral sands projects globally.
The company aims to produce ilmenite (50% of revenue), zircon (20% of revenue), rutile, and garnet through a four-stage process, with a modest capex of approximately $80 million for the first 10 years. The project's economics are compelling, with a base case valuation of $155 million and an upside case of $235 million, compared to the current market cap of just $15 million.
Despite recent challenges, including a dispute with a former minister and the economic crisis in Sri Lanka, Capital Metals has persevered and strengthened its position. The company is now well-funded, with $2.5 million in the bank, and is in advanced discussions with potential partners, LB Group and Sheffield Resources, to secure funding for the project's development.
The agreement with the chosen partner will involve a 50% stake in the project in exchange for funding Capital Metals into production. This deal is expected to be announced by mid-May 2024, with the goal of reaching a final investment decision (FID) by Q1 2025 and commencing production in the first quarter of 2026.
Capital Metals has a lean corporate structure and a strong shareholder base that has supported the company through recent challenges. The company's management team, led by Executive Chairman Greg Marr, brings extensive experience in the resources sector and is focused on delivering value to shareholders.
The Eastern Minerals Project benefits from a simple, well-established mining process and strong demand for its products, particularly ilmenite, which will be sold primarily to pigment producers in China. The company is committed to maintaining its social license to operate and has plans to contribute to local communities through job creation, infrastructure improvements, and education initiatives.
In conclusion, Capital Metals presents a compelling investment case, with a high-grade, long-life mineral sands resource, a clear path to production, and significant upside potential. As the company secures funding and advances the Eastern Minerals Project, investors may be well-positioned to benefit from the growing demand for mineral sands and the project's attractive economics.
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View Capital Metals' company profile: https://www.cruxinvestor.com/companies/capital-metals
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Jon Bey, CEO of Standard Uranium Ltd. (TSXV:STND) and Wayne Heili, MD of Peninsula Energy Ltd. (ASX:PEN)
Recording date: 25th April 2024
The uranium market is poised for significant growth, driven by increasing global demand for clean, reliable nuclear energy. As the world seeks to combat climate change and meet rising electricity needs, nuclear power is emerging as a critical part of the solution. This creates a compelling opportunity for investors to position in high-quality uranium companies that are advancing projects towards production.
Two companies that stand out in this regard are Standard Uranium and Peninsula Energy. Standard Uranium is a project generator focused on the prolific Athabasca Basin in Canada. The company has assembled a portfolio of drill-ready projects and is actively advancing them using a capital-efficient model. By partnering with other companies to fund exploration, Standard Uranium is able to minimize dilution while retaining upside exposure to potential discoveries.
As CEO Jon Bey explains, Standard Uranium's approach is to extensively de-risk projects before seeking partners. This includes staking prospective ground, identifying drill targets, securing permits, and signing agreements with First Nations. The result is a turnkey operation that is highly attractive to partners and investors alike. With four projects set to be drilled this year using other companies' money, Standard Uranium offers multiple shots on goal for a major discovery.
Peninsula Energy, meanwhile, is focused on bringing its Lance project in Wyoming into production. Lance hosts a robust resource of 54 million pounds, with the potential for significant expansion. The project benefits from existing infrastructure, a licensed production area, and a supportive jurisdiction. Peninsula is currently investing in a plant expansion that will enable it to produce up to 2 million pounds per year, with initial production targeted for late 2024.
As CEO Wayne Heili points out, Peninsula's all-in sustaining costs are expected to be in the low $40s per pound. With the uranium spot price currently around $90 per pound and long-term contracts being signed at even higher levels, Lance is well-positioned to generate strong margins and cash flow. The company has a clear path to production and a management team with a track record of delivering results.
Both Standard Uranium and Peninsula Energy are led by experienced executives who have a deep understanding of the uranium market. This is critical in an industry where expertise and relationships are essential for success. With a combined decades of experience in exploration, development, and operations, the management teams at these companies are well-equipped to navigate the challenges and opportunities ahead.
From a macro perspective, the uranium market appears to be in the early stages of a prolonged bull market. Years of low prices have led to supply cutbacks and underinvestment, even as demand has continued to rise. This has created a structural deficit that is only now starting to be reflected in the market. As utilities scramble to secure long-term supply and financial players enter the market, the potential for further price appreciation is significant.
In this environment, investors should look for companies with high-quality assets, experienced management teams, and a clear path to value creation. Standard Uranium and Peninsula Energy check all of these boxes, offering exposure to both exploration upside and near-term production. While patience may be required as the uranium bull market plays out, the potential rewards for positioning early could be substantial.
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Learn more: https://cruxinvestor.com/companies/standard-uranium
https://cruxinvestor.com/companies/peninsula-energy
https://cruxinvestor.com/categories/commodities/uranium
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