Lowell Resources Funds Management Ltd · ASX:LRT
Lowell Resources Funds Management — Lowell Resources Fund — Bell Potter Melbourne (October 2019)
37 slides from Lowell Resources Funds Management's conference presentation, Oct 9, 2019
Slide 1: Lowell Resources Fund
For personal use only LOWELL RESOURCES FUND Emerging Mining & Oil and Gas Bell Potter Melbourne October, 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: Fund Summary
Fund Summary For personal use only Overview 10 year performance chart Net of operating expenses, fees, taxes and interest Fund size (30 Sep 2019) A$18.4 m (to 30 Sep 2019, indexed at 100)1 Units on issue 2.75m units 400 Unit price (30 Sep 2019) $5.01 350 Avge Liquidity (per day, prev 3 mths) 2,400 u
Slide 4: 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 5: Investments by Commodity September 2019
Investments by Commodity 30 September 2019 For personal use only Mineral Sands, 1% Bauxite, 2% Nickel, 5% Fertilisers, 1% Uranium, 1% Battery, 6% Cash, 3% Gold, 38% O&G, 18% Classified by main commodity of investee company’s lead project. Base Metals, 25%
Slide 6: Portfolio Characteristics
Portfolio Characteristics For personal use only WEIGHTING 30 SEPTEMBER2019 Unlisted LSE/AIM TSX 3% 1% 5% Cash 3% Portfolio by Geography of main project 30 September 2019 ASX Cash, 3% Asia/Pacific, 1% North 88% America, 13% Africa, 14% Latin Europe, 9% America, 9% Australia, 43%
Slide 7: Case Study: Andromeda Metals
Case Study: Andromeda Metals For personal use only Andromeda Metals Limited (ASX:ADN) 0.08 LRF exits investment ▪ Boutique kaolin project developer, focused on the Poochera halloysite clay JV (earning 0.07 75%), located on the Eyre Peninsula, in South Australia 0.06 ▪ LRF’s investment in ADN was in
Slide 8: 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 technology company, with a focus on 6.00 graphite in Mozambique 5.00 ▪ LRF’s first investment in SYR was in December 2009, at around $0.18/share 4
Slide 9: 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 Exits ▪ LRF’s first investment in KDR was i
Slide 10: 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 30 Sept A$1.075/sh • “diluent” product successfully tested or trialled at numerous heavy oil locations • Invested $852k at 5.9cps Indago Energy
Slide 11: Portfolio by Company
Portfolio by Company For personal use only LRF Portfolio by Value 30 September 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 12: LRF Portfolio by Project Stage
LRF Portfolio by Project Stage For personal use only LRF Portfolio Value by Stage of Project 30 September 2019 40% 35% 30% 25% 20% 15% 10% 5% 0% Grass Roots Exploration & Feasibility Pre Development Development Production Cash Resource
Slide 13: 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 14: 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 15: 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 16: 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 17: 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 18: 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 19: Resources IPOs: ASX v TSX
Resources IPOs: ASX v TSX For personal use only ASX USD M raised 1,400 120 # IPOs 1,200 100 1,000 80 800 60 600 40 400 200 20 - 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 IPO Capital Raised USD M (LHS) # IPOs (RHS) YTD TSX* USD M raised 1,40
Slide 20: More Risk Capital Investment
For personal use only 1500 1600 1700 1800 1900 2000 2100 2200 2300 30/09/2016 31/10/2016 30/11/2016 31/12/2016 31/01/2017 28/02/2017 31/03/2017 30/04/2017 31/05/2017 30/06/2017 31/07/2017 31/08/2017 30/09/2017 31/10/2017 30/11/2017 31/12/2017 31/01/2018 28/02/2018 31/03/2018 30/04/2018 31/05/2018 30
Slide 21: Commodities vs Stocks
Commodities vs Stocks For personal use only
Slide 22: Years of Underinvestment in Resource Development
5 years of Underinvestment in Resource Development For personal use only
Slide 23: Central Bank Gold Purchases
Central Bank Gold Purchases For personal use only 2008 GFC changed central banks’ view of gold
Slide 24: Euro Currency Buying Power in gold terms
Euro Currency Buying Power in gold terms For personal use only
Slide 25: US$ Gold Prices and Real Year Bond Yield
US$ Gold Prices and Real 10 Year Bond Yield (inverted) For personal use only
Slide 26: 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 27: ASX Gold Equities: M&A Picking up
ASX Gold Equities: M&A Picking up 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 acqu
Slide 28: Gas: China switching to Australian LNG
Gas: China switching to Australian LNG For personal use only
Slide 29: O&G: Global Macro
O&G: Global Macro For personal use only 14.0 1,800 Rise of USA production has “wrong footed “ the market and increases risk of over supply. 12.0 1,500 But can this continue, with US rig count and frac crew utilisation in 10.0 1,200 decline since October 2018, and shale well depletion rates very 8.0
Slide 30: XJO Junior O&G Index
For personal use only XJO Junior O&G Index
Slide 31: Domestic Gas & LNG
Domestic Gas & LNG For personal use only Structure of east coast gas market points to an enduring crisis and there is still no co-ordinated Federal + State energy policy. 15.0 This southern winter (warmer / dry weather) Australian east 12.0 coast gas prices have softened. 9.0 Three years of high pri
Slide 32: LRF O&G Holdings: Leverage to themes
LRF O&G Holdings: Leverage to themes For personal use only 1. For exposure to east coast gas markets, we are invested in Comet Ridge (COI), and Real Energy (RLE) • RLE: Key asset is the “Windorah Gas Project” in Western Qld and have defined a very large 2C gas resource of 330 PJ. Needs capital+techn
Slide 33: 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 34: Nickel
Nickel For personal use only EV batteries are moving to higher Ni:Co:Mn ratios: Previous 1Ni:1Co:1Mn to 8Ni:1Co:1Mn
Slide 35: Bauxite
Bauxite For personal use only Indonesian is studying the possibility of bringing forward export bans on other minerals, including bauxite, in addition to nickel ore
Slide 36: 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 37: 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)
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