TCRs, Ivanhoe Mines shares now trading at all-time highs. Africa copper miner's market value at $14.55 CAD now at approx. $18 billion. IVN IVPAF *
Star Royalties | DHT Maritime | Kenorland Minerals | QC Copper & Gold’s Intel
“I THINK you need exposure to copper and gold. I would lean toward the market correcting after a historic bull market and copper later this decade going to $7 a pound or more from $4.”
That is 32-year-old Matt Geiger of MJG Capital, a trusted source with an encyclopedic knowledge of his small San Francisco fund’s holdings, all of them resource-cos.
This week, I spent an hour on the horn with Matt. I asked him, of the miners/royalty-cos he featured in his half-year roundup for MJG Capital partners, which two are timely for investors at current prices.
The letter touches on these companies: Kenorland Minerals [Frotet Project’s core samples above], Bravo Mining, Star Royalties, Elemental Altus, Strategic Resources, Lara Exploration and Sama Resources.
As stated here earlier, his investor letter summarizes the “acute pain” (MJG partnership down 8.7% net for the year) that mining investments started suffering in summer 2023. See letter here please.
“The year 2023 can best be described as a tale of two halves,” Matt says. The second half produced a 21% loss in holdings’ value, even holding sizable amounts of cash.
Straightaway the two: Star Royalties STR STRRF, one we have touched on just once or twice here, and Kenorland Minerals KLD KLDCF, a Canada-Alaska property expander and prospector that we have profiled numerous times.
Star Royalties “is the most compelling of our value names.” Star paid $35 million for $17 million worth (a private-co) called Green Star Royalties, a carbon credits company in which Agnico-Eagle and giant Cenovus also staked with cash.
“They could sell all the mineral royalties and be a pure-play carbon-credits company. Star, its shares in crushed mode at $21 millon market value, owns 46% of Green Star and is the operator. See investment history here. And here please.
Matt tells it like it is. “Maybe carbon credits are a huge scam and this is worth zero, but those two multi-billion companies are betting on Green Star.”
Cenovus (in December 2023) put in money at twice Agnico-Eagle’s stake value, Matt points out.
More on that coming. Read the MJG letter please for much more detail.
Kenorland Minerals: thanks to a fresh pact last week with Sumitomo Metal, is holding its “rerated” share value yet still trades at a market cap that is half cash and marketable securities ($20 million enterprise value).
We outlined the Sumitomo hand-off transaction (Québec’s Frotet project) with large property owner Kenorland. We talked with Zach Flood, 38-year-old KLD founder and CEO.
Canada’s Kenorland Minerals shares notched a 20% gain after Kenorland swapped its 20% working interest in the Québec gold camp for a 4% royalty (net-smelter return) from now full-owner Sumitomo Metal. Details here please for Frotet Project agreement.
Matt says the cost of operating Frotet, a gold property with potential and coveted by Sumitomo, got the ‘uh-oh’ expensive stamp from investors, slimming KLD shares.
Now, with a thick Frotet royalty and in a year, freed from operational costs, Kenorland “is afforded a healthy five years of runway, assuming the CAD $5.5 million sole-funded exploration budget expected in 2024 becomes the new normal.”
Kenorland has working camps at gold, copper and other projects across Canada and in Alaska. I do not yet own the shares but did several years ago.
[Online The Calandra Report here please for subscribers.]
Aside from Matt Geiger, and The Calandra Report, the other Kenorland-dedicated investor and-or independent analyst with 4 years of tracking the company is Eric Lemieux. He is a Québec geo-writer.
Eric’s work about Kenorland is deep. Eric tells me today-Thursday, “It’s one to watch.”
His material (LinkedIn) goes back to almost Kenorland’s beginning in late 2018, when Zach Flood pinged me. See Eric Lemieux’s regular reports and tours of Kenorland in Québec here please. And here.
MJG’s Red Flags
This is also outlined in the MJG letter. That is, red flags for investors to note.
“I understand that some of the red flags may come across as overly harsh and, in a couple particular cases, even heartless,” Matt notes.
The lengthy list includes company loans to executives, “too many advisors,” “too many conferences,” hiring of relatives and even divorce.
Several of our TCRs commented that competent execs, faced with drama or personal tragedy, often “bounce back big.”
The letter also ticks off traits of a superior executive team; they include:
— operating within its circle of competence
— focused obsessively on the task at hand
— financial incentives aligned with shareholders
— access to capital markets.
The letter is worth a look, TCRs.
DHT Maritime: Avraam Gabrielidis in Greece tells us about the shipping-co whose shares I track and own profitably for more than two years: DHT
“Spot leasing rates (some boosted by Red Sea attacks on carriers) are $45,000-48,000 this week. Lower compared with a year ago. I believe that DHT will pay a decent dividend for the 4th quarter.”
He continues, “Spot rates a real roller-coaster the last 10 days: from below $50,000 per day up to $68,000-$70,000 USD and back again to low 40s.”
The encouraging situation is related to the fixed 12-month rates, he says. That is, from an average of $32,000-$34,500 per day last Jan-Feb (2023) today is around $38,000-$39,5000. “In fact, it (contract rate) is above $38,000 since October 2023.”
DHT shares are all over the place. Today, for instance, DHT is USD $11.13 high and $10.78 low. Dividend news and results in 2 weeks.
Thank you, all.
* How Ivanhoe put it today (Thursday) in a headline to shareholders and news feed subscribers: Making News: Copper ready to explode on Fed rate cut, Ivanhoe’s Robert Friedland says. Video here please.
We own IVN IVPAF, some for two decades (as a private-co at Platreef in South Africa). Robotics: IVN appears to be in a strong bullish trend. Its 200-day moving average is upwards sloping and the MACD histogram is above zero. Comparative Relative Strength analysis shows that this issue is outperforming the S&P 500.
IVN IVPAF shares pared the week’s approx. 12% gain Friday. See stock price here please.
QC Copper & Gold QCUU QCUUF: We touched on microscoping holding-co OreCap OCI and its stakes in QC Copper QCUU QCUUF and American Eagle EA this month. QC and CEO Stephen Stewart (Toronto) are fortifying the practically ignored Québec developer with a heady resource upgrade at Opemiska’s copper-gold open pit site — see that release please — a fresh drilling strategy; and just now, a dive into digital intelligence for its geology.
The programming in its completed software run-through in the vast property holding (Chibougamou District) — see release please — use geologic inputs much the same as data-scientist-geo-CEO Jean-Marc Lulin does across dozens of Québec concessions for predictive modeler Azimut Exploration AZM AZMTF, whose suffering shares I own.
I asked Stephen for some color about using so-called AI from Windfall Geotech.
“I don’t love the term artificial intelligence in the exploration business. I’d rather describe it as a sophisticated algorithm that identifies trends using inputs like rock samples, drill information and geophysics. The data is overlain, and patterns correlating to mineralized trends are identified.
“The software is powerful and does the work of 10 geologists as it is better, more efficient and less biased at spotting trends. We still require good old-fashioned human intelligence to oversee and control. This software is a helpful tool, but like anything, it offers no guarantees,” he says.
To which we ask the question that Jean-Marc Lulin often poses when describing his methodologies, developed over two decades: “Are rocks agnostic?”
I would add, TCRs, “When is someone going to spawn OI — organic intel?”
Earlier The Calandra Report: Big Miners ‘Reaching Down’
Thom Calandra is a writer and an investor. Research and material are meant as editorial opinion. He is not a professional investment adviser. Please do not consider his reporting as a recommendation to buy or sell securities.