Lowell Resources Funds Management Ltd · ASX:LRT
Lowell Resources Funds Management — Lowell Resources Fund — Investor Presentation (September 2020)
49 slides from Lowell Resources Funds Management's investor presentation, Sep 9, 2020
Slide 1: Online Presentation to Unitholders
For personal use only AFSL 345674 LOWELL RESOURCES FUND A.R.S.N. 093 363 896 ASX:LRT Online Presentation to Unitholders 9th September, 2020 1
Slide 2: Disclaimer
For personal use only Disclaimer 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 juri
Slide 3: Fund Summary 30th June 2020
For personal use only Fund Summary 30th June 2020 Overview 10 year performance chart Fund size (NAV) A$33.2 m Net of operating expenses, fees, taxes and interest (to 30 June 2020, indexed at 100)1 Units on issue 27.4m units 230 $0.96 Price 210 Net Asset Value per unit $1.18 Ave Liquidity 190 15,000
Slide 4: Investment Overview & Objective
For personal use only Investment Overview & Objective Overview Lowell Resources Funds Management Ltd Investment has a successful track record for over 16 years The Manager operates through an Investment Objective Committee which incorporates the experience and knowledge of individuals who have direc
Slide 5: Investing in resource equities
For personal use only Investing in resource equities Capitalising on value accretion: optimal stage Full LRF Target Production Investment Stage Initial Production Reserve Financing Discovery Drilling Exploration LRF focus is on the period from discovery to reserve definition 5
Slide 6: Investment Committee
For personal use Investment Committee only Members John Forwood, Richard Morrow, Stephen Mitchell, Stuart Baker, Investment Chief Investment Officer Investment Committee Investment Committee Committee Member Member Member Mr Forwood is a trained Mr Baker has a strong local geologist and lawyer, with
Slide 7: Fund Performance
For personal use only Fund Performance 120% 108.1% Total S&P/ASX Portfolio LRT Change Small ASX ASX 200 Performance in NAV per Resources Resources 100% Index to 30 June unit Index 300 Index 2020 (XSRD.ASX) 12 months +108.1% +-0.1 % -7.0% -7.7% 80% 5 years p.a. +18.7% pa +8.9% pa +10.3% pa +6.0% pa 6
Slide 8: Industry and Portfolio Update
For personal use only Industry and Portfolio Update John Forwood Chief Investment Officer 8
Slide 9: Drivers of Exceptional Performance
For personal Drivers of use only Exceptional Performance Australian Small Cap Manager Driven by Stock Performance Analysis 12 months to June 2020 Selection 120% 100% Exceptional Performance 80% Lowell Resources Fund 60% 108%pa Outperformance contribution from multiple sources 40% Clear diversificati
Slide 10: A tale of halves
For personal use only A tale of 2 halves June 19-June 20 Junior LRT NAV/unit Performance June 2019 to June 2020 Resources Indices $1.30 60 3,000 50 2,500 $1.10 40 2,000 $0.90 30 1,500 $0.70 20 1,000 $0.50 10 500 $0.30 0 0 BMO Junior Oil Index ETF Van Eck Junior Gold Miners ETF XSRD ASX Small Resourc
Slide 11: Historic Asset Allocation
For personal use only Historic Asset Allocation Fertiliser Minerals Battery Minerals Nickel Oil & Gas Base Metals Gold Cash Nov-16 Nov-17 Nov-18 Nov-19 May-17 May-18 May-19 May-20 Uranium Mineral Sands Bauxite Coal Tungsten Helium Vanadium 11
Slide 12: Our Investment Process
For personal use only Our Investment Process Organisation Due Deal Monitoring Investment Disposal: Existing Diligence: Structuring: and Additional Committee On-market / Network In-house Placement/I Reporting: Investment Approval Trade Sale expertise PO/ on- Up to weekly market LRFM prefers to keep A
Slide 13: Stock Selection
For personal use only Stock Selection Top down focus Criteria Management Macroeconomics Geographic location Equity markets 1 Geological setting Resource/ Reserve magnitude Market sectors Grade, metallurgy Commodities 2 Stage Infrastructure and market Indicative economics Resource categories Individu
Slide 14: Commodities vs Stocks
For personal use only Commodities vs Stocks Analysis 1.2 1.0 Commodities radically overvalued 0.8 0.6 Median: 0.46 0.4 0.2 Commodities radically undervalued 0.0 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 2020 GSCI/DJIA ratio. 14 Source Incrementum AG
Slide 15: Commodity Prices
For personal use only Commodity Prices COMMODITY 1-YEAR CHANGE PALLADIUM 81.90% SILVER 48.42% IRON ORE (62% FINES) 42.96% GOLD (USD) 27.08% URANIUM 21.54% NEODYMIUM (CNY) 19.76% COPPER 18.58% GOLD (AUD) 17.58% TIN 11.64% ZINC 6.73% COBALT 4.83% LEAD -5.32% NICKEL -7.96% MANGANESE ORE (37%) -18.05% T
Slide 16: Fed Balance Sheet vs Small Resources
For personal Fed Balance Sheetuse only vs Small Resources Analysis Analysis 300% increase in ASX junior resources index post GFC stimulus 16
Slide 17: 2008 GFC: Gold and Equities
For personal use only 2008 GFC: Gold and Equities Metals Figure: Small Resources Index and Gold US$/oz 1995-2011 17
Slide 18: Real Interest Rates vs Gold
For personal use only Real Interest Rates vs Gold Markets 18
Slide 19: Gold & Silver Prices
For personal use only Gold & Silver Prices Gold and Silver US$/oz $2,000 $25 In FY2020, the top 10 ASX gold producers (ex $1,750 $20 NCM) had an average operating margin of A$841/oz $1,500 $15 (4.1Moz produced) $1,250 $10 3/06/2019 3/09/2019 3/12/2019 3/03/2020 3/06/2020 Gold Silver 19
Slide 20: Euro & USD Currency
For personal use only Euro & USD Currency Buying Power in gold terms Analysis 120 100 USD -83% 80 Euro -84% 60 40 20 0 1999 2002 2005 2008 2011 2014 2017 2020
Slide 21: Current Gold Boom: may have only just started
For personal use Current Gold Boom: only may have only just started Gold Booms Source Incrementum AG 21
Slide 22: Copper
For personal use only Copper Copper Price US$/lb $3.20 $3.00 $2.80 $2.60 $2.40 $2.20 $2.00 22 08/2019 11/2019 02/2020 05/2020
Slide 23: Mining Equity Raisings
For personal use only Mining Equity Raisings Markets In the June Quarter 2020, cash inflows to the 646 exploration companies on the ASX rose by 60% to $1.34bn 23
Slide 24: Oil & Gas Sector Update
For personal use only Oil & Gas Sector Update Stuart Baker, Investment Committee Member 24
Slide 25: Oil & Gas
For personal use only Oil & Gas Commodities Oil Global Supply-Demand (MMbopd) 2.0 In 2021, there 1.5 may be under- supply, by up to 1.0 1-2MMbopd 0.5 0.0 -0.5 -1.0 -1.5 Source: IEA data. Y-axis is global demand less supply, in million bopd -2.0 25
Slide 26: Oil & Gas
For personal use only Oil & Gas Commodities The US rig count is 90% down from 2014 peak and global count down 54%. 26
Slide 27: Australian Domestic Gas
For personal use only Australian Domestic Gas Commodities Reserves (in 000 PJ) and reserves life in years 60 Eastern Australia gas 50 reserves are not being replaced 40 30 20 10 - 2014 2015 2016 2017 2018 2019 2P Reserves ('000 PJ) Years Production 27
Slide 28: Australian Domestic Gas
For personal use only Australian Domestic Gas Commodities AEMO expect east coast gas shortage from 2023 28
Slide 29: Case Study: Adriatic Metals
For personal Case Study: use only Adriatic Metals Companies Adriatic Metals Plc $2.00 LRF Exits Adriatic Metals Plc (ASX:ADT) $1.80 First mover mineral explorer in $1.60 Bosnia staked the Vares/ Rupice historic Zn-Ba mine $1.40 Discovered and defined the Rupice polymetallic deposit 9.4Mt $1.20 @ 1.8
Slide 30: Case Study: De Grey Mining
For personal Case Study: use only De Grey Mining Companies De Grey Mining De Grey Mining (ASX:DEG) $1.00 $0.90 Gold explorer with a huge land position over the Mallina Shear $0.80 LRF Investments Zone in the Pilbara, WA $0.70 $0.60 Gold Resource of 2.2 Moz $0.50 A$/sh New Hemi discovery with multi-
Slide 31: Case Study: Andromeda Metals
For personal Case Study: use only Andromeda Metals Portfolio 0.08 LRF exits investment Andromeda Metals 0.07 (ASX:ADN) 0.06 Boutique kaolin project developer, focused on the 0.05 Poochera halloysite clay JV (earning 75%), located on the 0.04 Eyre Peninsula, in South Australia 0.03 LRF initial invest
Slide 32: Case Study: Syrah Resources
For personal use only Case Study: Syrah Resources Portfolio Syrah Resources 7.00 LRF exits investment Limited (ASX: SYR) 6.00 Australian-based industrial 5.00 minerals and technology company, with a focus on 4.00 graphite in Mozambique 3.00 LRF initial investment was in December 2009, at 2.00 around
Slide 33: Case Study: Kidman Resources
For personal use only Case Study: Kidman Resources Portfolio Kidman Resources Limited (ASX: KDR) 2.50 Fast-growing Australian resource company, focused on gold and 2.00 lithium, located near Southern LRF Exits Cross, in the Archaean 1.50 Forrestania belt of Western Australia LRF increases exposure 1
Slide 34: Significant Performers
For personal use only SIGNIFICANT PERFORMERS $0.7m invested at average entry price of A$0.077/sh. Share price June 2020 A$0.42/sh. Musgrave 100% existing resources of 613koz @ 3.0g/t Au at Cue, WA Minerals 100% bonanza grade new shall zone identified of 18m @ 179.4g/t Separate Evolution $18m earn-in
Slide 35: Contributors to performance
For personal use only Contributors to performance Portfolio 12 Months ASX Code Positive Contribution % DEG De Grey Mining 47% MGV Musgrave Minerals 22% PDI Predictive Discovery 15% ADT Adriatic Metals 11% CDV Cardinal Resources 6% CTM Centaurus Metals 5% GOR Gold Road Resources 2% OKU Oklo Resources
Slide 36: Investments by Commodity
For personal use only Investments by Commodity Portfolio 30 June Mineral Bauxite Uranium Sands 1% 2020 1% 1% Fertilisers Cash 0% Nickel 15% 2% Battery 4% O&G 6% Gold 58% Base Metals 12% 36
Slide 37: Portfolio Characteristics
For personal use only Portfolio Characteristics PORTFOLIO GEOGRAPHY BY MAIN PROJECT 30 JUNE 2020 Asia/Pacific, North 1% America, 6% Cash, 15% Europe, 2% INVESTMENT LISTING 30 JUNE 2020 Africa, 14% North America Unlisted London Cash 7% 3% 0% 15% Latin America, 9% Australia, 53% ASX 75% 37
Slide 38: Portfolio X-ray
For personal use only Portfolio X-ray Portfolio Market Cap # of stocks % of portfolio $1b+ 1 12% Stock Weight # of stocks % of portfolio $350m - $1b 0 0% > 10% 3 42% $100m - $350m 3 20% 5% - 10% 1 6% $10m - $100m 37 49% 1.0% - 5% 20 41% < $10m 14 4% < 1.0% 31 11% Cash 15% 38
Slide 39: Portfolio by Company
For personal use only Portfolio by Company LRF Portfolio by Value 30 June 2020 $5.0 $4.5 $4.0 $3.5 $3.0 $2.5 A$ Millions $2.0 $1.5 $1.0 $0.5 $0.0 39
Slide 40: LRF Portfolio by Project Stage
For personal use only LRF Portfolio by Project Stage LRF Portfolio Value by Stage of Project 30 June 2020 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% Grass Roots Exploration & Feasibility Pre-development Development Production Cash Resource 40
Slide 41: LRT Unit Traded Price vs Underlying NAV
For personal use LRT Unit Traded Price vs only Underlying NAV LRT Unit Discount to NAV vs Peers (Source Bell Potter) 5.0% 0.0% -5.0% -10.0% -15.0% -20.0% -25.0% -30.0% -35.0% LRT Unit Price Discount ASX Listed LIC <$200m Market Cap 41
Slide 42: Fund Summary
For personal use only Fund Summary Characteristics of the Fund Nature of Fund Long only, no gearing fund Investee Junior resource companies, including gold, Companies base and specialty metals, and energy. Investment Focus on global listed and unlisted Type resources equities Distribution 100% of ta
Slide 43: Application in Equities Portfolio
For personal Application in use only Equities allocation Portfolio 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 alloc
Slide 44: Lowell a unique investment opportunity
For personal use Lowell a unique investment only opportunity 01 Fund Focus One of the few investment funds that offers exposure to the junior resources sector across Australia and global stock exchanges in unlisted and listed companies 01 02 Successful track record for 10+ years 02 Superior performa
Slide 45: Fees
For personal use only Fees Management Fee Where Total Gross Calculated and accrues daily and is Investments are equal to or less than $50 million: payable from the Fund to the Responsible The higher of: Entity (and proportionately on-paid to the a) $25,625 per month plus 0.627% per annum of the Inve
Slide 46: Fund Performance
For personal use only Fund Performance 120% 108.1% Total S&P/ASX Portfolio LRT Change Small ASX ASX 200 Performance in NAV per Resources Resources 100% Index to 30 June unit Index 300 Index 2020 (XSRD.ASX) 12 months +108.1% +-0.1 % -7.0% -7.7% 80% 5 years p.a. +18.7% pa +8.9% pa +10.3% pa +6.0% pa 6
Slide 47: Contact
For personal use only Contact 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 48: Q&A
For personal use only Q &A Sign Up! Video Article Media Updates https://www.lowellresourcesfundsmanagement.com.au/contact-us.html 48
Slide 49: Read full presentation notes
For personal use only Read full presentation notes www.lowellresourcesfund.com.au/investor-centre/announcements.html 49
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