by James Kwantes
Published first at Patreon
We'd rather get a bargain than pay a premium.
There are "bargains" galore in the junior mining sector right now -- if you believe that rising commodity prices will eventually pull junior stocks skyward with a kind of elastic band effect. It's a big if.
Many juniors are priced for the end of the world, and financings at these depressed share price levels will go some ways to ensuring that outcome. When a junior is able to sell shares at a premium in this environment, it's probably worth paying attention.
FPX Nickel (FPX-V, FPOCF-OTC) pulled it off today (May 30), announcing a $16-million financing at 60 cents per common share. The buyer of the shares is major Finland-based stainless steel producer Outokumpu, which secured a 9.9% stake in FPX. FPX shares closed at 43 cents yesterday; the stock ticked up 8 cents (18.6%) to 51 cents in today's session.
FPX, formerly First Point Minerals, has a large PEA-stage deposit in central British Columbia that hosts a unique type of nickel mineralization: awaruite. Awaruite is a naturally occuring nickel-iron alloy, unlike the sulphide or laterite deposits producing most of the world's nickel.
Awaruite-hosted nickel is a new, niche product in a promotional investment sector where skepticism runs high. Investors have yet to "place their trust" in FPX (bid up the stock), despite extensive metallurgical studies showing FPX's nickel is suitable for both stainless steel and EV-battery-grade nickel -- importantly, much cleaner nickel than is produced from sulphide/laterite deposits.
FPX appears to be gaining traction among end users, however. The Outokumpu deal comes on the heels of two other eyebrow-raising agreements:
the establishment of a global generative alliance with JOGMEC that will see the Japanese government's energy/mineral division fund a world-wide search for other instances of awaruite nickel mineralization;
a $12-million financing that gave a publicly traded corporate strategic investor a 9.95% stake in FPX. Anonymity was part of the deal. The strategic will get diluted by the Outokumpu deal but has the right to top up and maintain the stake.
FPX CEO Martin Turenne is an accountant CEO on the quiet end of the TSXV promotional continuum. He struck quite a bullish tone in a good interview with Mining Stock Education's Bill Powers, referencing Robert Friedland's "Revenge of the Miners" and suggesting that leverage is switching from EV manufacturers to the miners of vital battery ingredients.
The other company that comes to mind for the ability to raise money at premium pricing is Kenorland Minerals (KLD-V, KLDCF-OTC), the Northern-focused prospect generator run by Zach Flood. Back in November 2021, Kenorland closed a $5.2-million investment from Sumitomo Metal Mining at $1 a share. KLD stock was trading at 71 cents at the time.
Sumitomo is Kenorland's JV partner on the Regnault high-grade gold discovery in northern Quebec (20% Kenorland). Kenorland shares are trading at roughly the same levels now, for a market cap of about $45 million. The company has about $18 million in cash and another $14 million in equity holdings.
One more: John Black's Regulus Resources (REG-V, RGLSF-OTC), which is developing the AntaKori copper-gold project in Peru. Regulus closed out 2022 by landing a $20.5-million strategic investment from Nuton, a Rio Tinto venture. Regulus and Nuton will test Nuton's copper sulphide leaching technology using AntaKori ore.
Rio Tinto invested in Regulus at $1.02 a share. Regulus shares had closed the previous day at 82 cents and now trade at 76 cents. Black, Regulus's CEO, was the founding president of Antares Minerals, which sold to First Quantum Minerals for $650 million in 2010.
Pricing is power. If larger companies are paying a premium to get on a junior's shareholder registry during grim times, there's typically a good reason for it.
I own shares of FPX Nickel and Kenorland Minerals. No business relationship wth any company. mentioned in this article.
