Lowell Resources Funds Management Ltd · ASX:LRT
Lowell Resources Funds Management — Lowell Resources Fund — AIA National Conference 2019
32 slides from Lowell Resources Funds Management's conference presentation, Jul 30, 2019
Slide 1: Lowell Resources Fund – Emerging Mining & Oil and Gas
For personal use only LOWELL RESOURCES FUND Emerging Mining & Oil and Gas AIA National Conference Surfers Paradise, July, 2019
Slide 2: Disclaimer
Disclaimer For personal use only Important Notice • This presentation does not constitute investment advice. Neither this presentation nor the information contained in it constitutes an offer, invitation, solicitation or recommendation in relation to the purchase or sale of units or shares in any ju
Slide 3: Where are we in the Resources Cycle?
Where are we….. in the Resources Cycle? For personal use only Indicators to look for: • Historic commodity price levels • Mergers and Acquisitions (M&A) • IPO’s • Capital Raisings (number and amount raised) • Availability of development funding • Emerging Company Index (SPAXEC) • Market reaction to
Slide 4: Commodities vs Stocks
Commodities vs Stocks For personal use only
Slide 5: Central Bank Gold Purchases
Central Bank Gold Purchases For personal use only 2008 GFC changed central banks’ view of gold
Slide 6: Euro Currency Buying Power in gold terms
Euro Currency Buying Power in gold terms For personal use only
Slide 7: US$ Real Interest Rates – Correlation to Gold Price
US$ Real Interest Rates Correlation to Gold Price For personal use only When inflation is higher than real US$ interest rates, it is generally positive for the gold price
Slide 8: Selected ASX listed Gold Companies
Selected ASX listed Gold Companies For personal use only ASX Listed Gold Mining Market Broker Broker Share Premium Company Cap (A$ Valuation Price $/sh to mil) $/sh Valuation Saracen Mineral Holdings (SAR) $3,500 $3.20 Canaccord (June 19) $4.13 29% Regis Resources (RRL) $3,300 $4.70 Canaccord (June
Slide 9: Gold Equities – M&A Building
Gold Equities – M&A Building For personal use only • Red Chris, BC – $1.1bn acquisition by Newcrest • Pogo, Alaska - $420m acquisition by Northern Star • Atlantic Gold, Nova Scotia - $820m takeover by St Barbara • Explaurum, WA – $70m 2018 takeover by Ramelius • Central Norseman, WA - $30m acquisiti
Slide 10: US Oil Production
For personal use only US Oil Production
Slide 11: Gas: LRF increasing exposure
Gas: LRF increasing exposure For personal use only • China's government has recognised the importance of gas in its clean energy strategy. It has set an aggressive target with gas to account for around 10% of energy consumption by 2020 Morgan Stanley Oct 2018 • To achieve that, gas consumption needs
Slide 12: Copper
Copper For personal use only • M&A competition for copper deposits emerging (eg Solgold, MOD) • Refined copper inventories decreasing • mine concentrate supplies are falling • Demand for Cu concs is rising: smelter TC/RCs costs are down to lowest in more Global Copper Supply/Demand Forecast than fiv
Slide 13: Forecast EV Production
Forecast EV Production For personal use only
Slide 14: Nickel
Nickel For personal use only EV batteries are moving from Ni:Co:Mn ratio of 1:1:1 to 8:1:1
Slide 15: Investment Criteria
Investment Criteria For personal use only Quality of Management Board Executives Remuneration Quality of Shareholders external shareholders management 'hurt money' investment Liquidity high daily turnover vs unlisted Size of Funded Program funding in place to reach next significant milestone; or onl
Slide 16: Fund Summary
Fund Summary For personal use only 10 year comparison performance chart Overview (to 30 June 19, indexed at 100)1 Fund size (23 July 2019) A$18.7 m 400 350 Units on issue 2.75m units 300 Unit price (24 July 2019) $4.80 250 Avge Liquidity (per day, prev 3 mths) 2,300 units 200 Discount to NAV 29% 150
Slide 17: Investing in resource equities
Investing in resource equities For personal use only Capitalising on value accretion: optimal stage Full Production LRF Target Investment Stage Initial Production Reserve Financing Discovery Drilling ▪ Leverage: milestone investing “value accretion Exploration model” ▪ LRF focus is on the period fro
Slide 18: Investment Committee
Investment Committee Members For personal use only John Forwood, Chief Investment Officer Joined LRFM in November 2016 Mr Forwood is a qualified lawyer and geologist with more than 25 years experience in the resources sector. He has over 17 years of resources financing experience with RMB Resources,
Slide 19: Investments by Commodity June 2019
Investments by Commodity 30 June 2019 For personal use only Mineral Sands, 1% Bauxite, 1% Fertilisers, 1% Nickel, 1% Uranium, 1% Battery, 10% Gold, 36% Cash, 5% O&G, 16% Classified by main commodity of investee company’s lead project. Base Metals, 27%
Slide 20: Significant Performers
SIGNIFICANT PERFORMERS For personal use only • Au-Ag-Pb-Zn-Ba deposit in Bosnia • Invested $285k at 19cps (mostly as seed) Adriatic Metals • Share price at 25 July A$1.04/sh • 50% of 300koz pa Gruyere gold mine in WA • Invested $294k at 16cps Gold Road Resources • Share price at 25 July A$1.37/sh •
Slide 21: Portfolio by Company
Portfolio by Company For personal use only LRF Portfolio by Value 30 June 2019 $1,800,000 $1,600,000 $1,400,000 $1,200,000 $1,000,000 $800,000 $600,000 $400,000 $200,000 $-
Slide 22: LRF Portfolio by Project Stage
LRF Portfolio by Project Stage For personal use only Portfolio Value by Stage of Project 30 June 2019 40% 35% 30% 25% 20% 15% 10% 5% 0% Grass Roots Exploration & Feasibility Pre Development Development Production Cash Resource
Slide 23: Investment Overview & Objective
Investment Overview & Objective For personal use only Overview Investment Objective ▪ LRT’s investment objective is to maximise absolute returns to its ▪ Lowell Resources Funds Management Ltd (“LRFM” or unitholders over the medium to longer term, along with annual “The Manager”) manages the Lowell R
Slide 24: Historical Performance
Historical Performance For personal use only Investment Portfolio Performance (IPP) LRT (after Res 300 ASX 200 fees)1 10 year 8.35% pa 3.85% pa 10.02% pa 1Investment performance figures reflect the historic performance of Lowell Resources Fund, net of fees 5 year 0.39% pa 7.86% pa 8.85% pa 2 Methodo
Slide 25: The Manager
The Manager For personal use only Lowell Resources Funds Management Ltd Stephen Mitchell, Chairman Richard Morrow, Director Joined LRFM in February 2011 Joined LRFM in November 2017 Mr Mitchell has over 30 years’ experience in the resources sector with Mr Morrow is an equity partner with Melbourne-b
Slide 26: Portfolio Characteristics
Portfolio Characteristics For personal use only WEIGHTING 30 JUNE 2019 Unlisted LSE/AIM Cash 4% 3% 5% TSX 9% Portfolio by Geography of main project 30 June 2019 Cash, 5% Asia/Pacific, 3% Africa, 11% North America, 12% ASX 79% Latin America, 10% Europe, 12% Australia, 47%
Slide 27: Stock Selection
Stock Selection For personal use only Top down focus Criteria • Macroeconomics ✓ Management • Equity markets ✓ Geographic location 1 ✓ Geological setting ✓ Resource/reserve magnitude • Market sectors ✓ Grade, metallurgy • Commodities 2 ✓ Stage ✓ Infrastructure and market • Resource categories ✓ Indi
Slide 28: Our Investment Process
Our Investment Process For personal use only ▪ LRF will typically hold less than 5% shareholding ▪ Allows a range of exit alternatives in relatively illiquid stocks ▪ In a boutique fund, these positions can still ‘move the needle’ for performance
Slide 29: Case Study: Syrah Resources
Case Study: Syrah Resources For personal use only Syrah Resources Limited (ASX: SYR) 7.00 LRF exits investment ▪ Australian-based industrial minerals and 6.00 technology company, with a focus on graphite in Mozambique 5.00 ▪ LRF’s first investment in SYR was in 4.00 December 2009, at around $0.18/sh
Slide 30: Case Study: Kidman Resources
Case Study: Kidman Resources For personal use only Kidman Resources Limited (ASX: KDR) 2.50 ▪ Fast-growing Australian resource company, focused on gold and lithium, located near 2.00 Southern Cross, in the Archaean Forrestania belt of Western Australia ▪ LRF’s first investment in KDR was in August 1
Slide 31: Lowell – a unique investment opportunity
Lowell – a unique investment opportunity For personal use only • Fund focus - One of the very few investment funds that offers exposure to the junior resources sector across Australia and global stock exchanges in unlisted and listed companies • Successful track record for 10+ years - Superior perfo
Slide 32: Contact
Contact For personal use only Lowell Resources Funds Management Limited Cremorne Capital Limited Investment Manager Responsible Entity ACN 006 769 982 ACN 006 844 588 AFSL 345674 AFSL 241175 Address Address Level 6, 412 Collins Street, 8 Chapel Street, Melbourne VIC 3000 Richmond VIC 3121 Tel: (03)