The best investment opportunities occur when the macro lines up with the micro and creates a unique and timely opportunity to jump aboard a trend just as it’s taking off. The electric vehicle and battery metal revolution is here and global demand for copper is on the brink of moving into overdrive.
Copper is at an inflection point amid an impending supply deficit. Multiple investment research firms are forecasting a 5 million tonne copper supply deficit by 2025 if new production doesn’t come online. This means that one of the two things are likely to happen: 1. Either the copper price rises to levels high enough to encourage new production to come online over the next few years OR 2. Demand will far exceed supply which will trigger a sharp rally in copper prices a few years down the road:
The case for higher copper prices is strong and the recent correction which brought copper back down to test its rising 200-month moving average appears to have come to an end:
Copper (Monthly – 20 Year)
The macro bull base for copper is strong. So now the question is how does an investor play it?
There are large cap copper producers such as BHP or Freeport-McMoran, and there are mid-tier producers & developers, and then there are junior explorers. While the large cap producers are likely to offer steady gains in a rising copper price environment, owning shares of a producing miner is not without risks, as evidenced by the recent VALE tailings dam disaster in Brazil. The largest potential gains come from the junior exploration sector where 1000%+ gains are not uncommon in companies that are able to make a new discovery and advance it to a development stage before being acquired by a producer.
How does one choose which explorer to buy shares in?
From my 16 years of experience being an investor in the junior mining sector I have learned that management team comes first, then quality of project(s), then valuation.
Rockridge Resources (TSX-V:ROCK) is a newly formed copper and battery metals exploration company that boasts a strong management team including President and CEO Jordan Trimble, newly added Director Joseph Gallucci, and strategic advisor Ron Netolitzky (Canadian Mining Hall of Famer).
Jordan Trimble is one of the top young up and coming CEOs in the junior mining exploration sector and he is also CEO of Skyharbour Resources, in addition to being a consultant to both Cypress Development Corp and Aben Resources. Mr. Trimble is a CFA Charterholder and was formerly involved with Bayfield Ventures before it was aquired by New Gold in 2014.
Recent board addition brings an extremely impressive resume which includes being directly involved in raising over $1 billion for mining companies with a focused expertise on Canadian base metal companies. Mr. Gallucci is a capital markets executive with over 15 years of experience in investment banking and equity research focused on mining, base metals, precious metals and bulk commodities on a global scale. His career has spanned across various firms including BMO Capital Markets, GMP Securities, Dundee Securities, and he was a founding principal of Eight Capital where he recently led their Mining Investment Banking Team. Gallucci brings the M&A experience and network needed to take Rockridge to the next level and expand its asset base as the copper & battery metals bull market takes off.
Strategic advisor Ron Netolitzy brings an illustrious career in the mining and exploration industry with over 40 years of experience. Mr. Netolitzy has also been directly associated with three major discoveries in Canada that subsequently went into production: Eskay Creek, Snip and Brewery Creek. In 2015 he was inducted into the Canadian Mining Hall of Fame.
Simply stated Rockridge is assembling the type of all-star management team that investors should want to see before buying shares in any junior mining company.
So what about Rockridge’s projects?
The company was able to acquire a highly prospective copper and battery metals project from Eagle Plains Resources last year. And the best part is that Rockridge was able to acquire this project for a very attractive price; essentially acquiring the project for pennies on the dollar in terms of what has been spent in historical exploration on the project (Leader Mining spent more than C$10 million drilling out the project in the 90s before publishing a non-43-101 historical resource estimate in 1998).
The Knife Lake Project area is an advanced stage copper, silver, zinc and cobalt exploration property in Saskatchewan that has had extensive exploration from the late 1960’s to the 1990’s with the last documented work program completed in 2001. Low base metals prices in the late 90s forced Leader Mining into bankruptcy and Minova ended up taking over the mining leases for Knife Lake from Leader. Minova then sat on the property for about a decade before allowing the mining leases to lapse by clerical error (they simply made a mistake and didn’t make a necessary payment in time). This mistake allowed Eagle Plains to pounce on the Knife Lake mining claims. And now we are here today with Rockridge having optioned Knife Lake from Eagle Plains.
Historical drill results at Knife Lake include 1.37% copper, 5.07 g/t silver, 115 ppm cobalt, 1182 ppm zinc over 60.13m beginning at a depth of 2.37m in hole K-96-02 as well as 0.99% copper, 4.73 g/t silver, 103 ppm cobalt over 38.83m beginning at a depth of 6.11m in hole K-96-36.
Knife Lake also boasts a non 43-101 drill indicated shallow historical resource of 20.3 million tonnes grading 0.6% copper, 0.1 g/t gold, 3.0 g/t silver, 0.06% cobalt and 0.11% zinc. Perhaps most importantly within this resource is a higher grade zone of 11.0 million tonnes grading 0.75% copper in addition to other metals (gold, silver, cobalt, zinc).
Rockridge plans to begin an infill drilling program at Knife Lake in the next week with the intention of upgrading some of the historical resource to modern 43-101 standards. 8-10 drill holes over approximately 1,000 meters will be completed with the aim of delivering a 43-101 compliant resource in Q2 of 2019.
There aren’t many junior base metals exploration companies with market caps around C$10 million that can say they will have a 43-101 compliant resource in an excellent mining jurisdiction (Flin Flon area of Manitoba is famous for its base metals projects). Due to Rockridge’s early stage and tight share structure it meets this criteria.
In order of importance right behind management team is share structure and Rockridge has an extremely tight structure with 23.2 million shares outstanding and 32.1 million shares fully diluted as of March 3rd, 2019. The company also has about C$1.5 million in its treasury which gives a fully diluted enterprise value (at C$.305 per share) of about C$8.3 million. This is basically a shell company valuation for a company that has a very real project with a clear plan of action for upgrading the project in the near term.
Rockridge has an all-star management team, a tight share structure, and a clear plan of action at Knife Lake which ensures steady news flow and progress over the coming months. What more can a junior mining investor ask for?
I have bought shares in the open market and believe that ROCK is a strong speculative buy at current levels and on any weakness.
ROCK on TSX-V – Capital Structure:
Issued & Outstanding Shares: 23.2 million
Fully Diluted: 32.1 million
Treasury: C$2.0 million
Fully Diluted Market Capitalization (at C$.305 per share): C$9.8 million
Enterprise Value: C$8.2 million
The article is for informational purposes only and is neither a solicitation for the purchase of securities nor an offer of securities. Readers of the article are expressly cautioned to seek the advice of a registered investment advisor and other professional advisors, as applicable, regarding the appropriateness of investing in any securities or any investment strategies, including those discussed above. Rockridge Resources Ltd. is a high-risk venture stock and not suitable for most investors. Consult Rockridge Resources Ltd.’s SEDAR profile for important risk disclosures.
EnergyandGold has been compensated for marketing & promotional services by Rockridge Resources Ltd. so some of EnergyandGold.com’s coverage could be biased. EnergyandGold.com, EnergyandGold Publishing LTD, its writers and principals are not registered investment advisors and advice you to do your own due diligence with a licensed investment advisor prior to making any investment decisions.
This article contains certain forward-looking information and forward-looking statements within the meaning of applicable securities legislation (collectively “forward-looking statements”). Certain information contained herein constitutes “forward-looking information” under Canadian securities legislation. Generally, forward-looking information can be identified by the use of forward-looking terminology such as “expects”, “believes”, “aims to”, “plans to” or “intends to” or variations of such words and phrases or statements that certain actions, events or results “will” occur. Forward-looking statements are based on the opinions and estimates of management as of the date such statements are made and they are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Company to be materially different from those expressed by such forward-looking statements or forward-looking information, standard transaction risks; impact of the transaction on the parties; and risks relating to financings; regulatory approvals; foreign country operations and volatile share prices. Although management of the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements or forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Actual results may differ materially from those currently anticipated in such statements. The views expressed in this publication and on the EnergyandGold website do not necessarily reflect the views of Energy and Gold Publishing LTD, publisher of EnergyandGold.com. Accordingly, readers should not place undue reliance on forward-looking statements and forward looking information. The Company does not undertake to update any forward-looking statements or forward-looking information that are incorporated by reference herein, except as required by applicable securities laws. Always thoroughly do your own due diligence and talk to a licensed investment adviser prior to making any investment decisions. Junior resource companies can easily lose 100% of their value so read company profiles on www.SEDAR.com for important risk disclosures. It’s your money and your responsibility.