Disclosure: The following represents my opinions only. I am long ABX, ASCU, BNE, BSX, CDR, DPRO, EQX, FOM, HSLV, IMP, KNT, LTC, MMA, NEM, NICU, NRN, NXE, POET, RAK, TAO, TLO, TNZ, TUK (image credit to Luca on Unsplash)
Everyone knows the addage, "You've got to make hay while the sun is shining" and that couldn't be more true of the resource sector right now. As the markets continue to climb the Wall of Worry, the broader indexes are at their highs and many of the stocks in the resource sector are no exception. Gold has broken out to the upside, trading at well over US$3500/ounce as I type this, and many of the base metal stocks aren't doing to shabby at the same time. Broadly speaking, gold and resource stocks appear to offer great value relative to the market with strong balance sheets and high free cash flows common among quality companies. Interest in the developers and the explorers is resilient and investors are receptive to new ideas, evidenced by indexes like the TSX Venture (the hallmark of Canadian junior resource interest) trading at 52-week highs. Stepping back and looking at a 5-year TSX-V chart though shows that the Venture is still well off its highs with plenty of room to run in light of what gold is doing and the discounts to NAV exhibited by many companies. Meanwhile, sentiment towards the energy sector is generally muted, but the valuations there are still compelling for value/contrarian types like me. All in all, this is a fertile market environment and those who follow resources closely know it. Sticking with quality companies, run by quality teams, with quality assets continues to be a winning strategy, so below I run through some of the names that I'm liking for varied reasons.
I often get emails from readers asking me to add them to the distribution list for the blog, so I've added a mechanism for that below. There's a lot of ground to cover, so let's get started...[urcr_restrict]
In a word… rockstar. TNZ continues to wow with its share price performance as the best performing energy stock out there. The company presented at Enercom in Denver last month and followed that up with some institutional meetings afterwards. Word continues to spread and the advantage of the company’s tight share structure, combined with its cohesive/supportive shareholder base, is showing in spades. TNZ’s recent presentations have highlighted that the currently quoted NPVs for the company’s Dutch North Sea assets are likely understated. Since integrating the NOBV acquisition, TNZ is seeing material cost reductions in addition to significant opportunities for optimization, development, and exploration across its asset base. Only a small part of its development pipeline was captured in its last reserve assessment, so even in the do-nothing case, I expect reserve values, particularly in the 1P and 2P categories to see nice bumps when they are reported early next year. The elephant in the room continues to be the timing of the next acquisition, but I truly believe it is simply a matter of “when", not "if", and existing shareholders are patiently waiting as new money enters the name. TNZ’s TTF pricing is superior to just about any other jurisdiction that I can think of which is clearly starting to resonate with a market coming to grips that Russian gas likely isn't coming back. This is a great story, with a great theme, with a great management team. A shout out to Bruce Campbell from StoneCastle Investment Management who recently made TNZ a top pick on BNN’s Market Call show.
No change here except for the fact that some folks are clearly getting tired of waiting for Condor to take flight. Drilling in Uzbekistan will start this month, beginning with a vertical well that will gather data on a number of target horizons, which will be followed by the first horizontal well into the main carbonate reservoir in the area. Once drilling starts, it will continue for quite a while. There’s a lot of low-hanging fruit here and results should start to flow in December from the first horizontal well. This 10,000 boepd asset could grow quickly as horizontal wells are expected to come onstream at 13-20 mmcf/d according to company models.
No change in Kazakhstan as the company continues work on its first LNG plant, scheduled for first production in Q2 2026. CDR has feedgas allocations for three LNG plants already, so there’s a good amount of visible runway in front of them — and notably, the company was able to take a shortcut to completion of its project plant by buying a plant that was already largely constructed. Looking ahead a couple of years, with just four LNG plants, ballpark estimates suggest that the company could generate around $100 million per year of cash flow in Kazakhstan alone. Comparing that to the current circa-$100 million market cap makes the patient speculator in me happy to wait, especially with Uzbekistan about to hit its stride as well.
I’d say the same thing here as I did the last time I mentioned this one. Year-to-date, BNE is tracking to be at the high-end of guidance and the low-end of capex, which highlights its corporate shift towards higher capital efficiencies and higher free cash flows. At the current share price, BNE’s enterprise value is about $300 million. That’s about 62% of the after-tax NPV10 of its PDP reserves and about 37% of the after-tax NPV10 of its 1P reserves. To me, that suggests that this company is fundamentally cheap. With the potential for M&A in its new Charlie Lake core area, I think that BNE is an interesting small-cap energy value play — although it’s not actually that small, with average 2025 production guidance of 15,000-15,200 boepd. The company has an active share buyback in place and has been buying stock back in the $3.50 range. With at tight share structure (36.6 million shares out) that buyback could have a good per-share impact, so the risk-reward here seems skewed to me.
This is just an initial “heads up” on this name that was spun out of Gear Energy earlier this year. This is another small cap energy story with a tight share structure (40 million shares out), no debt (and an undrawn $35 million credit facility in place), and about $10.5 million of positive working capital as of last report. LTC is small right now, but its Belly River drilling program, which will include 4 wells in 2025 could see it exhibit outsized growth over the balance of the year. With enough Belly River inventory to keep it going for quite a while, I think this is one to watch. If the Belly River wells perform as expected, LTC will grow production and cash flow quickly. Investors won’t have to wait too long to get a taste, with the first two wells expected to be onstream later this month.
What was once described as a permeable horizon within the otherwise tight Banff formation, is now being described as a fracture-fairway play. The first horizontal play into the play was a dud and there are no plans for a second one in 2025. When the story changes on an early stage play like this, I’d rather just take my lumps and go elsewhere, which is what I’ve done.
No change here. My most succinct summary of what the situation is here? Chip and a chair. The stock was flushed out down to 9-10c, but the company still hopes to attract a JV partner in Egypt, get new acreage (with or without production), or possibly — both. The stock has perked up a little lately, so it would seem that hope springs eternal. I still have a position in this one and will see if they can pull a rabbit out of the hat by the end of the year.
If you haven’t noticed, gold is through USD$3500/ounce and has totally broken out to the upside. Producers are literally minting money at these prices. The sector is still woefully under-owned, so things could get crazy in this square when the generalists show up. To that end, quant models will be lighting up on the golds now — based on things like earnings and price momentum — so stay tuned. Not having gold exposure is going to look pretty uncool to money managers if this keeps up, and global government debt worries are keeping a firm bid under the yellow metal. Even a very small rotation of global equity holdings into gold and gold stocks would launch them much, much higher… so here’s hoping.
This is a $100 million market cap story without any assayed drill holes, but plenty of visual encouragement from drilling. Visual encouragement can only take you so far though, so assays are going to be important when they start to flow imminently. A lot of people are sticking their necks out on this one, saying that it’s going to be the next best thing since Snowline Gold. Man, I hope they’re right because I’m long too. In this part of the world, bismuth is often associated with gold and the company has seen plenty of bismuth in sheeted veins in drill core thus far. Combine that with the impressive grab samples and trench results from prior surface sampling and you have the ingredients for a good pre-drill speculation, but this is risky given its market cap. If assays from drill holes confirm the theory, it’s party time, but if they don’t then look out below. Decisions, decisions.
No change in my view here, but the market is waiting on assays (expected in the next few weeks) from the summer drill program at the Root & Cellar project in Newfoundland. The company has seen clear indications of an active epithermal system, but doesn’t seem to have hit the “guts” of anything just yet. The alteration, textures, and mineral assemblages seen in drill core are all confirmatory of the exploration model, as is the recent discovery of additional mineralized hydrothermal-magmatic breccia bodies in quarry pits within the project area with assays pending from grab samples taken in the new areas. There is little doubt that NRN is into some prospective geology at Root & Cellar, so I continue to monitor the company’s progress with interest in this emerging greenfields play. Ian Bliss will be at the Precious Metals Summit in Beaver Creek next week where I’m sure he will be updating industry participants on his recent activities. It’s a great time to be a gold explorer, so it will be interesting to see what kind of investor and industry interest he is able to generate.
BSX's Volta Grande project is a top-tier gold asset in Brazil that has had its challenges in the permitting department. Earlier this year, a team with significant in country experience was put in place with the goal of shepherding this project through to development. This project was highly profitable at $1600 gold, so it will be one of the best out there at current prices. The project has good scale, good grade, modest capex, and is supported by a very impressive shareholder base. This is very binary, but the upside potential here is for a multi-multi-bagger and if any team can get this over the line, it's going to be this one.
Equinox Gold (EQX.TO, last at $12.41), K92 Mining (KNT.TO, last at $15.50), Barrick (ABX.TO, last at $37.66), and Newmont (NEM.US, last at $74.88) round out my golds in terms of producers. The first three all screen cheaper than peers on the comp sheets, but I’m not sure that it’s warranted so I’m long all of them. EQX looks like it’s turned the corner in its Greenstone ramp up, KNT is one of the best gold production growth stories out there, and ABX has been penalized for its Mali exposure for long enough that the rest of it just looks really cheap now. When money comes into a sector, especially generalist money, it likes to come into the big names first, and ABX is a big one. My other big one, simply because of its size and ability to attract generalist money flows is NEM, but that’s the smallest of my gold positions. I mention it simply because U.S. money loves to buy NEM.
Good shareholders make a big difference and HSLV has those for sure. This one just keeps marching higher and I can’t really say that it represents good value here today, but sometimes you just follow the winners. There’s a lot of potential with HSLV, but it has some backfilling to do in my opinion. That’s not to say it won’t happen — or that its relentless rise will stop — but if I’d never heard of it I would have a hard time buying it here. That’s not going to stop backers from piling on to a winning team here though, so while the music is playing this one is likely to remain a star.
I haven't said much about NICU for a while, but with the stock making new highs, a little update is warranted. The ramp up of production at the McCreedy West copper mine well underway, the market is starting to get visibility on NICU's potential for self-funded expansion and development of its substantial asset base in Sudbury, Ontario. What really has NICU running right now are early indications that there may be another high-grade Levack-type deposit lurking along a well-defined mine trend. Recall that the NICU management has a long history dating back to the very successful FNX Mining, which made some investors very rich on the back of its Levack Footwall discovery many years ago. With NICU management now back in its old stomping grounds, high grade hits along the Levack Mine trend are conjuring memories of those days and the potential for a repeat performance. The company trades at around half of analyst-modelled NAVs, so it's not expensive yet and a Levack-type discovery could set this one really running higher. Stay tuned here.
With more massive sulphides intersected in TLO’s most recently discussed drill hole at its ultra-high-grade nickel-copper discovery underneath the existing Tamarack resource area, the market is ready for some more assays from this one. Additionally, TLO is now drilling wedge holes off of prior drill holes which will allow them to define what could be a “feeder” zone with greater speed and accuracy. No one knows how big the aptly-named “Vault” zone will be, but with the grades encountered just far, it won’t take much tonnage to build a significant resource. There’s a blue-sky scenario in play now that could see TLO appreciate to multiples of its current price, but the drills will have the final say, so stay tuned. Located in the U.S., the Tamarack project could become highly attractive to a lot of players with the current focus on local strategic minerals down there. There’s the Boulderdash project too, but for now Tamarack is on the main stage.
Nothing new to say. Every day this project gets closer to (expected) approvals early in 2026. The is the best asset, in the best jurisdiction, with the best economics. It's a king-maker asset. Tick tock.
Drilling is underway at MMA's shallow oxide targets near First Quantum’s Kansanshi mine and at the massive Dumbwa exploration target. My view here is unchanged and I’ve even added stock on recent strength. If Dumbwa hits, this is going to go nuts. If Dumbwa doesn’t hit, I’m probably more or less backstopped by the oxides that are destined to go through Kansanshi some day. It might not be a totally free call option on Dumbwa anymore, but it’s certainly not an expensive one. This could have a very interesting finish to the year and news could start flowing in the relative near-term, particularly from the oxide drilling. This is still off the radar of most institutions, so a re-rate could be on the table some day if results warrant it.
Real project, real people, real scale, and this likely actually gets built. When I saw the deal that Hudbay got on its Copper World asset, I just rubbed my hands together. ASCU is too big and to “doable” not to get scooped up by a larger player… or at least that’s my theory and I’m sticking to it.
This multi-decadal asset is nearing production and seems to be back on schedule after a prior time-and-budget-hiccup. It’s one of the only things in the copper cupboard that is actually coming into production soon and has very good financial backers and shareholders. This is a high quality asset in a high quality jurisdiction, run by a high quality team, trading at an attractive valuation (when an asset has a mine life as long as this one, NPV calculations understate the long-term value/attractiveness to larger companies). This won’t stay independent forever.
I’m still sticking with Intermap Technologies (IMP.TO, last at $3.17) and POET Technologies (POET.US, last at $5.25) as my two tech stocks for the same reasons I’ve mentioned before, with a side dish of Draganfly (DPRO.C, last at $6.23) given the mega-trend towards drone technology for defence, commercial, and mission-critical applications. Look, all three of these names are outside of my sphere of competence, but I’ve followed all of them long enough to believe that they are all close to infection points in terms of profitability, market awareness, or hopefully both.
As always, I'm hopeful that readers have been able to find some worthwhile nuggets of wisdom in my commentary here and I can never cover it all. I appreciate the interest and wish everyone good luck in their journeys within this market. Plenty of hay has been made so far in my universe and I'm optimistic that there's still a lot of potential out there for those who devote the time and energy required in order to find and research lesser-followed companies within the resource sector.
Happy hunting.[/urcr_restrict]
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