The final weeks of 2020 and the first month or two of 2021 could mark a key period in the development of Power Metal Resources (LON:POW), the multi-asset, multi-commodity investment company headed up by Paul Johnson.
Since he joined the company, last year, Johnson has overseen a significant strengthening of the share price, from around 0.5p in February 2019, to the current price of 1.8p, having run up to 2.5p in October.
He’s been a consistent buyer of shares too along the way, putting in more than GBP350,000 over the past 24 months, and willing and able to buy on the open market.
As recently as 24 November, following a slight share price dip on disappointing drilling news from Canada, when heavy snowfall abruptly stopped the drill programme, he topped up with a further million shares at 1.78p.
“I feel like I’m standing on solid ground when I say that my interests are aligned with shareholders,” he says.
But long-term investors will know that Johnson’s been active in markets for many years now. So what is it about Power Metal that’s different?
For one thing, he’s gained enough experience, through failure as well as success, really to get a handle on how things work in the junior mining space.
But there’s more to it than that.
“Over the past seven or eight years, I’ve been involved with refinancing and/or restructuring about twenty companies and I’ve seen what makes companies do well and do badly,” he says.
“Importantly, central costs in the early days can’t be too high, and reasonable director compensation is a notable factor. Also the key attributes of value generation for shareholders, (strong financing strategy, aggressive business development and proactive communications) have got to be in place for the best performance from any junior exploration company.”
You get the sense that Johnson thinks that if there’s a job that needs doing, in the end he’d better do it himself.
“I decided a while ago to stop working on other vehicles and to focus on Power. So any interesting opportunities I come across are not going into any other vehicle, they will go into our vehicle if they fit with our strategy and we have room to absorb them” he says.
That approach has created, in a short space of time, a company with a very diverse portfolio of assets, upside in all sorts of areas, and lots and lots of newsflow.
“We’re five junior explorers in one wrapper really and working on the company’s marketing and communications lately, including the website and corporate presentation, has really shown the depth and diversity of the portfolio we have built over the last couple of years,” says Johnson.
Thus, there’s the interest in the Molopo Farms nickel and platinum project in Botswana, held in joint venture with Kalahari Key, there’s a copper and a rare earth project, also in Botswana, held in joint venture with Kavango Resources (LON:KAV), there’s the Haneti nickel project in Tanzania, held in joint venture with Katoro (LON:KAT), there’s the Alamo Gold project in the USA, and there’s the Silver Peak project in Canada.
The company also holds further interests in the Democratic Republic of Congo, which are springing back into life, with recent high grade copper and cobalt assay results, and has a major swathe of ground under application in the Victoria Goldfields, Australia, in joint venture with Red Rock Resources.
All told, it’s a portfolio to be reckoned with, and all the more so since serious work is now underway at several of the projects.
Most recently the company reported on the results of a somewhat scaled-down drilling campaign at the Silver Peak project in Canada, where poor weather conditions have disrupted exploration. Nevertheless, high grade silver samples were obtained from a channel sampling programme earlier in the year, with attractive copper credits too.
“We know it’s high grade,” says Johnson. “The question is: how much silver is left? We think potentially an awful lot.”
The company will have to wait until next year to get back in on the ground drilling and make further progress, which disappointed the markets slightly.
But not for long. News from ongoing exploration at Molopo Farms and Haneti is likely to create significant interest in the company as we close out 2020 and move into 2021.
“Haneti’s a potential monster,” says Johnson. “We have an 80 kilometre ultramafic system, and three targets for the drill rig. If we find something it’s going to be a huge system.”
Molopo Farms looks impressive too, with district scale potential for nickel and platinum group metals.
“The first hole is complete,” says Johnson. “The geology’s in line with our expectations and confirmed a feeder zone. There’s significant geophysical targets at depth that we are hunting right now. We’re doing assay testing and downhole geophysics in hole 1 and drilling hole 2 as we speak. We could be on the cusp of hitting something big with this drill programme, which is exactly what we are here to do.”
Work continues meanwhile on Alamo, and on Ditau and the Kalahari copper projects, while in the Congo Johnson says “there’s the possibility of a very large copper-cobalt deposit.”
But it’s not just the exploration assets that have allowed Power Metals to garner support over the past two years. Johnson is highly skilled in the subtleties of a maintaining a successful listing, and one crucial component of that is that the company remains funded far into the future.
“We have GBP1.74mln in cash and listed investments,” he says. “There’s no debt, and we’re either up-to-date or we’ve paid in advance for quite a lot of what we’ve got going on.”
What’s more, there are quite a few in-the-money warrants out there, meaning that whenever a positive news item goes out, money is quite likely to come in. Or, to put it another way, whenever Johnson spends money, he gets new money coming in.
It’s an enviable position to be in, given the spread of assets in their various jurisdictions.
Gold and silver have done very well in 2020, while copper is forecast to go into major deficit in the coming years and nickel seems set to benefit from the battery revolution. The gold and silver interests are tucked away in safe jurisdictions in North America and Australia, and even if some substantial exploration is deemed risker in Africa, the large scale targets mean that the reward on offer is commensurately higher.