Lowell Resources Funds Management Ltd · ASX:LRT
Lowell Resources Funds Management — Lowell Resources Fund — Investor Presentation (November 2024)
56 slides from Lowell Resources Funds Management's investor presentation, Nov 22, 2024
Slide 1: Lowell Resources Fund Investor Presentation November 2024
LOWELL RESOURCES For personal use only FUNDS MANAGEMENT LOWELL RESOURCES FUND INVESTOR PRESENTATION NOVEMBER 2024 400 350 300 250 200 150 100 50 ABN 36 006 769 982 AFSL 345674
Slide 2: Disclaimer
Disclaimer Important Notice • This presentation does not constitute investment advice. Neither this presentation nor the information contained in it constitutes an offer, For personal use only invitation, solicitation or recommendation in relation to the purchase or sale of units or shares in any ju
Slide 3: 1. Overview
Lowell Resources Fund For personal use only 1. Overview ASX.LRT 3
Slide 4: Fund Summary October 2024
Fund Summary 31 October 2024 Overview 400 LRT 5 Year Total Return For personal use only incl distributions Fund size (NAV) A$56.2 m 350 Rebased to 100 Units on issue 39.8m units Net Asset Value 31/10/24 $1.41/unit 300 (placement) Distribution FY24 paid 31/07/24 $0.152/unit 250 ASX Unit Price on 31/1
Slide 5: ASX Traded Discount to NAV
ASX Traded Discount to NAV 10% For personal use only <$200m ASX LIT/LIVs Avge Discount LRT Discount to NAV 5% 0% -5% -10% -15% -20% -25% -30% -35% Source Bell Potter 5
Slide 6: Fund Summary: Characteristics of the Lowell Resources Fund
Fund Summary Characteristics of the Lowell Resources Fund For personal use only Nature of Fund • Long only, ungeared fund Investee • Small mining & energy companies, predominantly in the exploration phase offering major growth Companies potential Investment • Predominantly listed equities globally T
Slide 7: Our Strategy: Investing in Exploration Stage
Our Strategy: Investing in Exploration Stage Capitalising on value accretion: optimal stage For personal use only Drill out / Resource Feasibility & Production Expansion Reserves LRT TARGET INVESTMENT STAGE Share Price Commissioning Financing Discovery Construction Exploration Time Leverage: miles
Slide 8: Investment Committee
Investment Committee Members For personal use only John Forwood, Richard Morrow, Stephen Mitchell, Stuart Baker, Investment Chief Investment Officer Committee Member Investment Committee Investment Committee Mr Forwood is a trained Member Chair geologist and lawyer, with Mr Baker has a strong local
Slide 9: LICs & LITs Year Pre Tax NTA Performance
LICs & LITs 5 Year Pre Tax NTA Performance For personal use only • Outperformance • Uncorrelated 9
Slide 10: Fund Performance
Fund Performance For personal use only S&P/ASX Small ASX Resources Total Portfolio LRT Change in ASX 200 Index Resources 300 Index Performance to 31 NAV per unit incl Accumulation Index (Total Return) October 2024 distributions (Total Return) (XSRAI) 12 months 0.8% 14.3% -0.7% 24.9% 5 years p.a. 24.
Slide 11: LRT Portfolio by Resource Development Stage
LRT Portfolio by Resource Development Stage 31 October 2024 For personal use only 30% 20% 10% 0% 11
Slide 12: LRT Commodity Exposure
LRT COMMODITY EXPOSURE Mineral Sands Uranium Helium 31 OCTOBER 2024 1% 2% 1% For personal use only Cash 17% Gold & PGM 45% Nickel 1% Battery 3% O&G 9% Base Metals 15% REE Silver 0% 6% 12
Slide 13: Portfolio Characteristics October 2024
Portfolio Characteristics 31 October 2024 Portfolio by Geography of Main Project For personal use only Asia/Pacific, 6% Cash, 17% North America, Europe, 3% 12% Investment Listing Africa, 12% Unlisted London 8% 1% Latin Cash America, 14% North 17% Australia, America 36% 14% ASX 60% 13
Slide 14: We Invest in Explorers because Explorers Make the Discoveries
We Invest in Explorers….because Explorers Make the Discoveries Australian Mineral Discoveries by Company Size For personal use only Source: Minex Consulting 80.0% 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% Unkown Other Small Major Moderate Junior Producer Company Producer Explorer 2000-2009 2010
Slide 15: Australia's Leading Taxpayers
Australia’s Leading Taxpayers For personal use only Nov 1, 2024 – 12.04pm Australian miners “paid more corporate tax than all other sectors of the economy combined in 2022-23, new data from the Australian Taxation Office shows, with Rio Tinto, BHP and Fortescue paying a combined $43 billion.” 15
Slide 16: Market Thematics: 2. Key Market Factors
Market Thematics For personal use only 2. Key Market Factors 16
Slide 17: Oil: Inflation Adjusted WTI
Oil: Inflation Adjusted WTI For personal use only 17
Slide 18: Inflation Input: US unemployment
Inflation Input: US unemployment For personal use only 18
Slide 19: Inflation Input: Freight Rates
Inflation Input: Freight Rates For personal use only 19
Slide 20: Commodities Undervalued vs Equities
Commodities Undervalued vs Equities For personal use only 20
Slide 21: ASX Resource Equities - Austex
ASX Resource Equities - Austex For personal use only 21
Slide 22: Small Caps vs Large Caps
Small Caps vs Large Caps For personal use only Small Caps decoupled from Large Caps 22
Slide 23: Australian Gold Producer Margins
Australian Gold Producer Margins For personal use only Calendar Change Average Year from 2019- (AUD/oz) Even where costs rise H1 2024 2023 in dollar terms, as fast as prices do, margins AISC A$2,000 +35% expand due to the different Average +38% denominators. A$3,450 price Margin A$1,450 +42% Source
Slide 24: Gold Price vs HUI Gold Index
Gold Price vs HUI Gold Index For personal use only Gold Price 40% above 2011 peak, but HUI 50% below HUI’s earnings per share expected to quadruple this year compared to 2016. Gold Equities decouple from Gold Price 24
Slide 25: Central Banks & Gold
Central Banks & Gold For personal use only Ukraine War China Gold Reserves can grow 25
Slide 26: Gold share of reserves
Gold share of reserves For personal use only 26
Slide 27: Australian Gold Producers' Margin
Australian Gold Producers’ Margin For personal use only 27
Slide 28: Australian Gold Producers: Increasing cash balances
Australian Gold Producers For personal use only Increasing cash balances 28
Slide 29: Cash holdings - Australian Gold Producers
Australian Pre-Production Gold Multiples Cash holdings - Australian Gold Producers For personal use only 140 $1,200 120 $1,000 100 Average Net Cash incl $800 Bullion and 80 Investments: A$353m $600 60 $400 40 $200 20 0 $0 CMM EMR GOR GMD WAF WGX RMS RSG VAU RRL PRU Qtrly Production (koz au) Net Cash
Slide 30: Australian Pre-Production Gold Multiples
Australian Pre-Production Gold Multiples For personal use only Pre- Pre- Average Producer Producer (A$EV/oz) Source: Morgans Median Average Global A$44/oz A$82/oz Advanced A$65/oz A$93/oz 30
Slide 31: Gold in USD vs US CPI – 1980's
Gold in USD vs US CPI – 1980’s For personal use only 31
Slide 32: Investment Examples: 3. Recent Outperforming Stocks
Investment Examples For personal use only 3. Recent Outperforming Stocks 32
Slide 33: Azure Minerals
Azure Minerals For personal use only Azure Minerals LRT Investment $4.50 $4.00 $3.50 $3.00 $2.50 $2.00 $1.50 $1.00 $0.50 $- Jul-21 Jul-22 Jul-23 Jan-21 Jan-22 Jan-23 $(0.50) $(1.00) LRT Trade (A$ mil) AZS Price 33
Slide 34: Southern Cross Gold SXG.ASX
Southern Cross Gold SXG.ASX $3.50 LRT For personal use only $3.00 Investments $2.50 $2.00 $1.50 $1.00 $0.50 Seed $- 05/17/2022 09/26/2022 2/07/2023 06/19/2023 10/27/2023 3/08/2024 34
Slide 35: Case Study: De Grey Mining
Case Study: De Grey Mining De Grey Mining (DEG.ASX) For personal use only $1.80 $1.60 LRF Sales $1.40 $1.20 $1.00 LRF Investments $0.80 $0.60 $0.40 $0.20 $0.00 35
Slide 36: Current Positions: 4. Largest Holdings
Current Positions For personal use only 4. Largest Holdings 36
Slide 37: Top Positions
Top 10 Positions LRT Portfolio at 31 October 2024 For personal use only Code Company Commodity Portfolio Weight Comment RMS Ramelius Resources Gold 6.9% Held from scrip takeover of Musgrave Minerals AAR Astral Resources Gold 6.1% WA Goldfields M&A or standalone development PDI Predictive Discovery G
Slide 38: Lowell – a Unique Investment Opportunity
Lowell – a Unique Investment Opportunity For personal use only 01 Fund Focus • One of the few investment funds that offers exposure to the junior 01 02 resources sector across Australia and global stock exchanges in unlisted and listed companies 02 Successful track record for 20 years • Superior per
Slide 39: Contact
Contact For personal use only Investment Responsible Entity Manager LOWELL RESOURCES CREMORNE CAPITAL LIMITED FUNDS MANAGEMENT ACN 006 769 982 ACN 006 844 588 AFSL 345674 AFSL 241175 Address Level 6, 412 Collins Street, Address Melbourne VIC 3000 8 Chapel Street, Tel: (03) 9642 0655 Richmond VIC 312
Slide 40: Appendix: Resources Market Information
Appendix 1 For personal use only Resources Market Information 40
Slide 41: Rotation / Trickle Down - AUSTEX
Rotation / Trickle Down - AUSTEX For personal use only THE ASX RESOURCES MARKET QUARTILE RANGES Data to 8 Nov 2024 MARKET CAP LAST 24 LAST 12 LAST 6 LAST 3 LAST ONE MTHS MTHS MTHS MTHS MTH FIRST >$63m 37% 25% 5% 19% 2% QUARTILE SECOND >$16m - $63m -22% 7% 9% 22% 1% THIRD >$6.5m - $16m -47% -27% -7%
Slide 42: Lead Time for New Mines
Lead Time for New Mines For personal use only 42
Slide 43: Lead Time for New Mines
Lead Time for New Mines For personal use only 43
Slide 44: IEA Metals Recycling
For personal use only IEA Metals Recycling -
Slide 45: Copper Consumption 1900-2023
Copper Consumption 1900-2023 For personal use only 45
Slide 46: Oil Market
Oil Market For personal use only Oil traders reported to return to metals in H1 2024 46
Slide 47: Appendix: Fund Structure and Process
Appendix 2 For personal use only Fund Structure and Process 47
Slide 48: Fee Structure
Fee Structure Gross Asset Value Existing Management Fee For personal use only < $20m $300,000 p.a. plus 0.6% Next $20m - $50m 2.100% Next $50m - $150m 1.600% Next > $150m 1.600% PERFORMANCE FEES (calculated 6 monthly) Variables Existing Benchmark 10% pa outperformance Fee rate 17.5% Calculated & Pai
Slide 49: Stock Selection
Stock Selection Top down focus Criteria For personal use only Management • Macroeconomics Geographic location • Equity markets 1 Geological setting Resource/ Reserve magnitude • Market sectors Grade, metallurgy • Commodities 2 Stage Infrastructure and market Indicative economics • Re
Slide 50: Our Investment Process
Our Investment Process For personal use only Organisation Due Deal Monitoring Investment Disposal: Existing Diligence: Structuring: and Additional Committee On-market / Network In-house Placement/I Reporting: Investment Approval Trade Sale expertise PO/ on- Up to weekly market LRFM prefers to keep
Slide 51: Application in Equities Portfolio
Application in Equities allocation Portfolio For personal use only Core Manager Core Manager 2 3 Lowell Resources Fund Core Manager (LRT.ASX) 1 Small Caps • There is a compelling case for Lowell Resources Fund to be in an equities portfolio (Australian or Global), as one of the small cap manager all
Slide 52: Appendix: Portfolio Analysis
Appendix 3 For personal use only Portfolio Analysis 52
Slide 53: LRT Commodity Allocation over Time
LRT Commodity Allocation over Time For personal use only Battery, 4% 2% 5% 5% 2% 7% 4% Nickel, 8% 7% 10% 8% 12% 6% 7% 1% 13% 16% 6% Oil & Gas, 7% 9% 8% 9% Base Metals, 6% 9% 19% 17% 15% 21% 21% 19% 19% 20% 22% Au/Ag/PGM, 57% 37% 54% 50% 42% 42% 48% 45% 34% 16% Cash… 12% 9% 7% 5% 4% 3% 4% 2016 2017 2
Slide 54: LRT Project Stage Allocation
LRT Project Stage Allocation Porfolio by Project Stage For personal use only 100% 7% 6% 4% 2% 2% Production, 13% 80% 14% 14% 19% 22% 20% 22% 60% Feasibility, 18% 19% 45% 59% 38% 40% 47% 14% 35% Exploration & Resource, 37% 20% 33% 23% 25% 18% 15% Grass Roots, 14% 17% 0% 2018 2019 2020 2021 2022 2023
Slide 55: Portfolio X-ray
Portfolio X-ray Portfolio 30th Sept 2024 For personal use only Market Cap # of stocks % of portfolio Stock Weight # of stocks % of portfolio $1b+ 2 10% Cash - 9% $350m-$1b 2 10% 5%-10% 3 18% $100m-$350m 5 12% 1-5% 24 43% $10m-$100m 36 50% <1% 51 30% <$10m 29 18% *includes cash Number of investments:
Slide 56: LRT Top Holdings
LRT Top 20 Holdings LRT Holdings by Value For personal use only 31 October 2024 USL CVV UNITY PDI MTH RMS HAN RUG SANU STN SPD ADX MM8 MZZ AAR FVL COI TWO RZ AZ9 56
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