Looking for a basket of commodities and more? Think Gunsynd
“…Investors seeking niche opportunities in today’s turbulent market may wish to take a close look at Gunsynd’s carefully curated set of holdings in a cluster of microcaps flying below the radar of mainstream funds…”
With an array of holdings in gold, copper, lithium, nickel and tin, microcaps investment fund Gunsynd Plc (AIM:GUN) is positioned to take advantage of soaring commodity prices.
Offering seed capital, convertible loans, equity and IPO services to promising first movers, the company also has interests in markets that extend well beyond the natural resources sector, including sports gaming/wagering platforms, and premium spirits and wines.
The boutique small cap fund is led by a team with a track record of turning AIM and ASX corporate vehicles into larger companies. Executive Chairman Hamish Harris, has a background in risk management at finance houses including Nomura Group, Deutsche Bank AG and BZW plc. Executive Director Donald Strang has held senior financial and management positions in publicly listed and private enterprises in Australia, Europe and Africa, with a focus on mining and exploration. And Non-Executive Director Peter Ruse, has experience in equity funds and private wealth management, specialising in mining and minerals.
Most of the company’s natural resources interests are engaged in or on the cusp of drilling programmes with material upside:
Charger Metals
Gunsynd increased its exposure to the battery metals mega trend last year by taking a 6pc holding in Charger Metals Limited, an Australian base metals and lithium exploration company with interests in three prospects in Western Australia and the Northern Territory: 85pc and 70pc interests in the North and Nickel-Copper-Cobalt-PGE projects at Coates (65km northeast of Perth); 70pc in the Lake Johnson Lithium and Gold Project; and 70pc in the Bynoe Lithium and Gold Project.
Last month Charger announced its drilling schedule for the Coates prospect, which encompasses a mafic intrusive complex within the Jimperding Metamorphic Belt, which also hosts the 17Moz Gonneville Nickel-Copper-PGE Project owned by Chalice Mining Ltd, located 28km to the north-west. Charger is keenly anticipating the maiden drilling programme due to begin shortly, with five diamond core drill holes planned to test conductor targets for economic mineralisation: success promises to be a key catalyst for the company’s share price. The company hopes to be in the field at the Bynoe Lithium programme in the near term once the seasonal wet season finishes.
Eagle Mountain
Gunsynd has a 1pc interest in copper and gold miner Eagle Mountain (ASX:EM2), focused on the Oracle Ridge and Silver Mountain Projects in Arizona, situated within the compass of the Laramide Arc which hosts the copper porphyry deposits mined by BHP, Rio Tinto, Freeport McMoRan and Hudbay. Eagle secured AUD$16m equity financing earlier this month to continue to move towards drilling.
Eagle’s most recent JORC Mineral Resource Estimate (MRE) for Oracle Ridge, based on a 1pc copper cut-off grade, stated an updated figure of 17.0Mt grading 1.48pc copper, 15.09g/t silver and 0.17g/t gold for 251,000t of contained copper, 8.2Moz of silver and 93Koz of gold. The contained copper estimate was up 36pc from the previous MRE, with a 39pc increase in tonnes. Since the MRE cut-off date a further 60 holes have been completed beyond those covered in the estimate. A review last year of accumulated drill core, underground formations and assay data concluded the central and southern part of the Oracle Ridge mine area is prospective for additional copper-rich mineralisation. Infrastructure has been upgraded to facilitate better access to the area in anticipation of operations.
Pacific Nickel Mines
Gunsynd has an interest in another key battery metal through its holding in Pacific Nickel Mines (ASX:PNM), which has 80pc interests in two nickel projects at Kolosori Project and Jejevo – both located on Isabel Island in the Solomon Islands – with a collective JORC MRE of 21.7 million tonnes at 1.35pc nickel.
Pacific raised AUD$5.25m last October to advance both projects, and commenced second phase infill drilling at Kolosori in September, drilling 90 infill holes to confirm the prospect’s existing MRE of 5.89Mt at 1.55pc nickel at 1.2pc cut off. Assay results from the 27 holes drilled so far have been positive. An early works programme was completed last month, and earlier this month Pacific said it had received a number of proposals for Kolosori offtake agreements.
Rincon Resources
Gunsynd’s also has a 17.4pc stake in Rincon Resources (ASX:RCR), a gold and copper exploration company which listed on the Australian Stock Exchange (ASX) late last year, raising AUD$6m to drill three wholly-owned prospects in Western Australia.
The largest, South Telfer, consists of six exploration licences and two prospecting licences covering approximately 540km2 with a prospective 40km strike geology. A maiden drilling programme got underway last year at South Telfer’s Hasties Prospect, just 10km south of Newcrest Mining’s Telfer Gold Mine, which has produced 27 million ounces of gold over the past 45 years.
The first phase of the 5,000m programme, designed to confirm historical drilling results completed over 20 years ago by Newcrest, and test for extensions to known shallow copper-gold mineralisation, reported high-grades zones up to 17.4g/t gold and 5.31pc copper with mineralisation open in all directions. A second phase 5,000m Reverse Circulation (RC) and Diamond Drilling (DD) programme at Hasties began in December, with seven RC holes completed for 1,476m. The Phase 2 programme recommenced last month, with DD drilling focused on completion of an co-funded diamond hole (EIS-hole) to test the ‘Hasties Deeps’ target area one, around 300m below surface. Approximately 3,000m remains to be drilled at Hasties, including up to eight RC and two DD holes.
First Tin Limited (formerly Anglo Saxony Mining Limited)
Last year Gunsynd took a £125,000 stake in Anglo Saxony Mining Limited (ASM), a development and exploration company with a licence to establish sustainable tin production and processing at the Tellerhäuser Mine in Saxony, Germany. The mine is furnished with an extensive infrastructure from past investment and exploration expenditure, with 150,000m of tunnels and other underground development, approximately 140,000m of historical drilling and 3,000m of channel sampling. Surging demand for copper has sparked a corresponding interest in tin, which is often used as a copper alloy.
Gunsynd invested a further £75,000 when ASM joined the LSE last month, rebranding as First Tin (LSE:1SN), raising £20m. The company is currently working to secure final permitting.
Oyster Oil and Gas Limited
Gunsynd has a foothold in the energy sector, with a holding worth some £130,000 in Oyster Oil and Gas, focused on Block 1101 off the north west of Madagascar, where the Ampasindava and Ambilobe basins have mapped prospects of a respective 6bn and 4.5bn barrels. Drilling and coring of two wells in 2014 confirmed prospects for a light oil play. Data continues to be accumulated in advance of a final decision to go ahead with drilling.
Rogue Baron
Away from natural resources Gunsynd’s has a significant holding in something quite different, a 24pc stake in Rogue Baron (AQSE:SHNJ) (OTCQB:SHNJF), an emerging premium spirit and wine brand. Admitted to the Aquis Stock Exchange and OTCQB Venture Market last year, Rogue Baron has made significant progress with its flagship brand, Shinju Japanese Whisky, which is being rolled out across the US, where it is now available to some two-thirds of the retail market. The company is aiming to sell more than 10,000 cases this year. The brand’s launch in the UK market has focused on Shinju’s first vintage offering, an 8-year old ‘black pearl’ expression. The whisky is also being sold in Spain.
Rogue Baron aspires to emulate the BrewDog model, which has built a $2bn brand and a network of 100 pubs and restaurants. Last year Shinju was voted best whisky at the 2021 Sante’ International Spirit Competition, took a Silver Medal at the 2021 Fifty Best World Whisky awards, and won gold at the John Barleycorn awards.
Low6
Gunsynd has invested £265,000 in Low6, developer of a white label betting platform which sport franchises can adapt for their own brand. Low6 draws on gamification principles to appeal to younger generations. The app, versions of which have now been rolled out to some 80,000 users, offers a ‘pooled sports betting experience’, allowing users to compare the outcome of their bets with each other.
Low6 customises the platform on behalf of clients with US software company YinzCam, which makes mobile sports and events apps for teams, leagues, events and venues in the US, Canada, Spain and Australia. The partners have developed customised apps for Rangers, Manchester United and Arsenal fan channels hosted on YouTube and Instagram. Users can compete with each other – not just the bookie – to predict the outcome of match events, including the number of goals, assists, shots on goal, and corners.
Over the past year Low6 has gained new partners across the US, including the NBA Detroit Pistons, the NFL Cincinnati Bengals, the NFL Jacksonville Jaguars and the PGA TOUR. The company won the 2020 Virtual and Fantasy Sports Operator and 2021 Rising Star prizes awarded by digital industry group EGR. Low6 raised $5m earlier this year to fund continued growth, and is planning to list on the TSX Venture Exchange following a reverse takeover of British Columbian corporation 735.
Oscillate plc
Last year Gunsynd took a 4.5pc stake worth £200,000 in Oscillate (AQSE:MUSH), an investment company scouting opportunities in the medical cannabis and mental health sectors, with particular interests in treatments for drug-resistant depression, anxiety, addiction and Post-Traumatic Stress Disorder.
Looking ahead
Gunsynd’s interim results for the six months ended 31 January 2022, published earlier this month, reported a loss for the period of £310,000, against a profit of £1,032,000 for the equivalent period a year ago. Net assets stood at £5,993,000, up from £4,848,000 for the previous year, and cash was about the same, £1,082,000, up from £1m. The company’s share price has drifted down from 2.12p last May to around 0.75p at the time of writing, taking its market cap to £3.37m.
The most likely catalysts for Gunsynd’s value remain its cluster of natural resource holdings, which now have a clear orientation to the energy transition mega trend. In his Chairman’s Report Mr Harris said the company expected small cap natural resource shares to begin to pick up to reflect the ongoing surge in commodity prices. Noting that ‘at the junior resource company level in the UK there is clearly a disconnect between commodity and share prices’ he believed ‘history tells us that at some stage reversion to mean will occur i.e. either share prices go up or commodity prices will fall. We believe the former is more likely than the latter.’
Developments at any of the company’s natural resource holdings could spark Gunsynd’s share price. Prospective investors should keep an eye on work at Pacific Nickel Mines, First Tin and Rincon, but the company is watching the maiden drilling programme at Charger Metals’ Coates project particularly closely. Gunsynd’s stake in Rogue Baron and Low6 offer diversification. Investors seeking niche opportunities in today’s turbulent market may wish to take a close look at Gunsynd’s carefully curated set of holdings in a cluster of microcaps flying below the radar of mainstream funds.
