Independent Investment Research

We initiated coverage of Auric Mining Limited (ASX:AWJ) back in June 2021, when the company was an advanced explorer and prior to it taking the plunge into gold production. Since then, the company has successfully transitioned to production status via a relatively low-risk strategy of contract mining and toll treatment, firstly at its Jeffreys Find deposit and now at its Munda deposit, in Western Australia. Proving that miners don't have to be big to be successful, AWJ's share price performance reflects its success. With its production focus now moving from Jeffreys Find to Munda, AWJ has today announced the definition of a Starter Pit Reserve of 7,400 contained ounces (calculated using a gold price of A$3,500 per ounce (current spot price A$4,133). Mine planning is based on a total of 125kt @ 1.8g/t from the Starter Pit, with the financial model projecting Undiscounted Cashflow of $5.3M at All in Sustaining Cost (AISC) of $2,635 per ounce, over a 5-month mine life, including toll treatment. #gold #commodities #resources #exploration #mining #equities #metals #ausbiz

The below chart shows the rolling 12-month correlation of the S&P/ASX 200 Acc. Index returns and the change in the Australian Government 10-year bond yield over the 10 years to 31 October 2024. After a period of relatively uncorrelated returns, the return of the S&P/ASX 200 Acc. Index has become highly negatively correlated to the change in the bond yield.

The Vaughan Nelson Global Equity SMID Fund (Quoted Managed Fund) (ASX: VNGS) (“VNGS” or the “Fund”) is an Exchange Traded Managed Fund (ETMF) that listed in June 2022. The Fund provides exposure to the Vaughan Nelson Global SMID Cap strategy, which has an inception date of June 2020. The Fund is the quoted class of the investment strategy with the strategy also being offered through an unlisted unit trust. The Fund seeks to provide exposure to small and mid cap global equities with the objective of outperforming the MSCI ACWI SMID Cap Index, after fees and expenses and before taxes, on a rolling five year basis. The Responsible Entity (RE) of the Fund is Investors Mutual Limited who has appointed Vaughan Nelson Investment Management L.P (the “Manager”) as the Manager of the Fund. The Manager is a US based asset manager that was founded in 1970 and provides equity and fixed income strategies with US$17.8b AUM as at 30 June 2024. The Manager has a fundamental, bottom up investment process with a targeted return approach. The portfolio only incorporates stocks that the Manager believes can generate returns of 50%+ over a three-year period (~15%p.a. compounded), in the event the investment thesis plays out as expected. The portfolio will typically comprise 40-80 positions with the allocation to a single investment typically not exceeding 5% at the time of investment and the top 10 holdings typically accounting for 20%-25% of the portfolio. The strategy is managed in a benchmark unaware manner with the portfolio typically having an active share of greater than 90%. The Manager uses proprietary factor analysis to ensure that the portfolio is diversified across factors and that the strategy does not have unintended factor bets. This allows the Manager to build a relatively concentrated portfolio while being representative of the investment universe from a risk profile perspective. The Manager is paid a fee of 1.12% p.a (inclusive of the net effect of GST), calculated and accrued daily and paid monthly in arrears. No performance fees are applicable.

We have completed an update report for Acurx following the release of the September quarterly results and business update on 13 November 2024.  Our price target has declined slightly from $11.77 to $11.57 per share ($7.57 per share on a fully diluted basis and $9.97 per share using the treasury stock method). The decline is a result of the dilution from the shares issued during the September quarter through the ATM program. The Company is progressing with the necessary requirements to advance to the Phase 3 trials. With the CMC approved, the Company is well placed to commence the first of two Phase 3 trials next year. IIR continues to view there to be material upside for Acurx with our price target representing a 536% premium to the share price as at 13 November. The capital position of the Company has been weighing on the share price, however the Company has access to sufficient capital to enable it to potentially commence the first trial on a limited enrolment basis until additional capital can be raised. While the Company continues to search for a strategic partner there are a number of potential government grants that may be available to fund (either in full or partially) the Phase 3 trials for ibezapolstat, providing the Company with options. 

The Pharma & Biotech market had a relatively muted month. There were a number of companies that experienced strong share price movements but this was on limited newsflow and limited liquidity. In this edition of Movers & Shakers we take a look at 4 Pharma & Biotech companies whose share prices rallied in October on the back of positive announcements.

In this edition of the LMI Monthly Update we take a look at the key news items and announcements during October, which included the commencement of trading of MRE and a new LIC coming to market. We also take a look at the state of play of premiums/discounts across a range of categories, with the current environment providing a number of attractive opportunities for investors to potentially enhance returns.

We initiated coverage of Toubani Resources (ASX: TRE) in June @ $0.175 (current price $0.285) based on its strong fundamentals as an emerging, low-cost gold producer of significant scale. Encouragingly, the company has since gone from strength-to-strength in the space of just a few short months. The primary catalyst has been the release of TRE's much-anticipated Definitive Feasibility Study (DFS) for its Kobada Gold Project in southern Mali, which has confirmed Kobada as a significant gold development asset - underpinned by its large scale, free-dig and open pittable oxide resource. Kobada ranks as one of the few +150,000oz p.a. gold development projects in West Africa, whilst also possessing one of the lowest capital intensities in the sector. The DFS revealed project post-tax NPV8% of US$635 million and an IRR of 58% at a gold price assumption of US$2,200/oz - but there is significant upside at current gold price levels - with post-tax NPV8% increasing to US$897 million, with an IRR of 73% at US$2,600/oz. All-in Sustaining Costs (AISC) of US$1,004/oz and C1 Cash Costs of US$825/oz are ultra-low and were prepared on the basis of the current cost environment, leading to rapid post-tax payback period of 1.5 years at a gold price of US$2,200/oz (1.25 years at US$2,600/oz). #gold #equities #ausbiz #commodities #resources #exploration #Mali #Africa #resources

The ASX Small Ordinaries Resources Index (AXSRD) has continued its solid recovery since its September 2024 low, now trading at close to its highest level for the past 12 months and having closed the performance deficit relative to the ASX All Ordinaries Index, as demonstrated in the graphic below. The ASX Small Ordinaries Resources Index (blue line – up 13%) and the ASX All Ordinaries Index (purple line – up 18%) over the past 12 months. The junior sector has benefitted from the implementation of concrete China economic stimulus measures, accompanied by a coincident recovery in various commodity prices – with stabilization in iron ore and crude oil, gains in the uranium and lithium sector, and the continuing outperformance of gold and silver.

We have updated our rolling 12-month commodity price graphic. We see that aluminium, silver, gold, tin and copper are continuing to lead the way, whilst lithium is the biggest laggard. Aluminium – up 74%, Silver – up 47%, Gold – up 38%, Tin – up 25%, Copper – up 22%, Uranium – up 9%, Nickel – down 12%, Iron Ore – down 12%, Crude Oil – down 16%, Lithium – down 60%. #commodities #resources #gold #silver #aluminium #tin #copper #uranium #nickel #ironore #crudeoil #lithium

We are pleased to initiate coverage of Southern Hemisphere Mining Limited (ASX: SUH), which is an advanced copper exploration company operating in Chile. Recent targeting work on the company's flagship 100%-owned Llahuin Porphyry Cu-Au-Mo Project (located less than 70km from the 6.1 billion tonne Los Pelambres porphyry deposit), has defined several compelling drill targets. These are at a range of depths, and highlight the potential for additional discoveries to significantly grow the current Mineral Resource Estimate (MRE) of 169 Mt @ 0.43% CuEq. The company has recently commenced a ~5,000m drilling programme that will look at expanding the current defined mineralisation, as well as test several of the newly defined targets, with an updated MRE expected in H1, 2025. The current Resource inventory is restricted to three relatively shallow deposits, with work to date that includes significant drilling, barely scratching the surface of an intrusive complex with a strike length of between 5km and 6km, and with mineralisation thus far recognised over a strike length of 3.7 km. This has also so far been poorly tested at depth, highlighting the potential (supported by targeting work) for the higher grades and larger zones commonly found deeper in these systems. On the technical front, first-pass metallurgy has highlighted excellent flotation characteristics, and the overall resources defined to date include relatively shallow, low strip ratio higher grade cores, that could prove feasible as low cost starter pits on any future operation. There is also the potential to include molybdenum as a valuable credit to the copper and gold. The Los Pelambres Project has several advantages that should overcome what to some may seem a relatively low grade (although similar to that of many operations globally and with upside) - being located at a low elevation within the Coastal Cordillera of North-Central Chile, close to infrastructure, including road, electricity and ports, and in an active mining district, just 375km from Santiago. It is also located just 8km from Santiago-listed Pucobre’s El Espino IOCG development project. #copper #equities #exploration #commodities #resources #Chile #mining #ausbiz