Time to reload into Gunsynd for the next furlong?
“…With a market cap of £5m, and a share price that has hovered between 1p and 1.5p for the past year, Gunsynd may now be a horse worth backing for commodities investors…”
As the global economy tentatively emerges from the shadows with the promise of a vaccine against Covid-19, and the – slow – resolution of the uncertainty surrounding the outcome of a particularly contentious US Presidential election, new investment opportunities are opening.
Technology and health care came to the market’s rescue for much of the year. Now analysts are highlighting the promise of commodities. The price for copper, a traditional bellwether for global growth, is up, touching its highest prices for two years this autumn as China’s economic juggernaut moves through the gears again.
Demand for the metal has been further charged by China’s commitment to going carbon-neutral by 2060, and the prospect of green stimulus programmes in Europe, and – possibly – following the election of Joe Biden, in the United States. Copper is an essential component for wind, solar, batteries and electric vehicles: an EV, for example, needs more than three times as much copper as an internal combustion car.
The prospect of an economic recovery oriented towards green technologies is also driving up the value of nickel, a metal increasingly in demand from electric vehicle makers, as well as the steel manufacturers that have been its traditional customers. With demand for nickel forecast to rise six-fold by 2030, Tesla is just one of the major players in the energy transition to have voiced concerns about a possible shortage in supply of the metal over the next decade, nearly all of which is expected to come from Indonesia, where there are concerns about careless disposal of nickel mining waste.
Commentators are also predicting another strong run for gold. The price of the yellow metal may have fallen back since it surged this summer as investors sought safe havens, but it is expected to rise again next year as accelerating economic growth generates inflationary pressures, prompting savers to look again at options for safeguarding their wealth. A Goldman Sachs study suggests the price of gold could rise by some 20pc, bringing it to another all-time high.
Gunsynd’s natural resources portfolio
All of which is good news for Gunsynd Plc (GUN), an AIM-listed company with a growing set of international investments in gold, nickel and copper. Led by Hamish Harris, Donald Strang and Peter Ruse, Gunsynd seeks to identify natural resources assets and companies with potential, and support them through including seed capital, convertible loans, straight equity and the management of IPOs and reverse takeovers.
The company has an interest in Rincon Resources, a gold and base metals exploration company focused on Western Australia. Rincon holds the rights to three prospective projects, the largest them at South Telfer, a 50,000-hectare field a few miles south of the Newcrest Mining Limited (ASX:NCM) Telfer mine which has produced 27 million ounces of gold over the past 45 years. Rincon is due to begin drilling at South Telfer subject to achieving final compliance with Australia’s Native Title regulations.
The company has two other prospects, the copper and gold projects at Laverton and Kiwirrkurra. Plans for a drilling programme at Laverton are moving forward, with high-resolution magnetics and trial geochemical surveys completed. Rincon is also in the process of preparing for an IPO – possibly by the end of the year – which would raise A$5m for continued exploration.
Another of Gunsynd’s copper and gold interests, Eagle Mountain (ASX: EM2), is focused on the exploration and development of advanced and greenfield projects in Arizona. Eagle’s Oracle Ridge and Silver Mountain Projects fall within the Laramide Arc that hosts the copper porphyry deposits mined by BHP, Rio Tinto, Freeport McMoRan and Hudbay. Eagle is working to begin a surface diamond drilling programme at Oracle Ridge by the end of the year.
Gunsynd also has interests in gold and copper projects in Nevada and Chile through its holding in Angold Resources Ltd (formerly known as Federal Gold Corp) and Empress Royalty Corp in which the company acquired a stake this year. Empress is a precious metals royalty and streaming company focused on the creation of financing solutions for mining companies, with a portfolio of 13 gold royalties.
Gunsynd moved into nickel exploration earlier this year when another company in which it has an interest, Malachite Resources Limited (ASX: MAR), acquired high grade nickel assets in the Solomon Islands with the potential for near term mining.
Breaking from the pack
With its holdings in gold, copper and nickel the company seems well placed to benefit from the expectation of strong economic growth next year, and the long-term shift towards a zero carbon economy. Gunsynd ha s succeeded in maintaining a busy news flow through the pandemic, consolidating its investments in Rincon and Eagle Mountain, and adding new interests. Three fundraisings undertaken through June and July brought in £1,169,000. Add in an additional £1,130,000 in November and you can work out the company is funded for the foreseeable future.
Gunsynd takes its name from the grey stallion that dominated Australian horse racing during the early 1970s, fondly remembered for ‘a tenacity when running that served to take the victory when other horses pulled up as beaten’. The prospects for natural resources would seem to be sufficiently strong to allow for more than one winner, but Gunsynd is quietly developing a portfolio positioning it to be one of them. With a market cap of £5m, and a share price that has hovered between 1p and 1.5p for the past year, Gunsynd may be a horse worth backing for commodities investors.
Listen to Gunsynd non-executive director Peter Ruse talk to Sarah Lowther about public offerings in the UK and Australia, smashing walnuts with sledgehammers and why only fools would exit early from a golden opportunity.
The author was remunerated for this article but does not hold shares in the above named company.