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Intrynsyc Q221 Report: Sideways Capital
Coming off a prodigious first quarter, the TSXV traded down and then largely sideways throughout the second quarter. Given growth’s concurrent resurgence on the big boards, we were hoping for this risk-on sentiment to trickle upwards into small caps, but this never materialized. At the time of writing, the TSXV continues to channel trade in the 900’s following the ~200 dip in late February into early March.
Intrynsyc Initiation: Imperial Helium Corp (IHC-V)
Company Overview Imperial Helium (IHC-V) is an early-stage helium exploitation, production, and refining company focused on land acquisition…
Q121 Report: Memento Mori
The fourth quarter capped off a spectacular year for the Canadian venture space. Though ravaged by an initial sell-off in the early spring, the TSXV ended the year with an annual return of 50% and a 145% increase from its March lows. In comparison, the TSX returned 3% and 55% over the same timeframe. Not only did investors regain composure quickly, they were apparently undeterred by the coronavirus after all– encouraged by a dovish Fed and waves of fiscal stimuli that continued to weaken the dollar, inflating assets. Q4 served to confirm this trend and Canadian markets responded generally positively to key news, namely Biden’s securing of the Presidency and the beginning of global COVID-19 vaccine rollout initiatives.
Kodiak Copper Corp (KDK-V): Just The Tip of The Iceberg
Kodiak Copper Corp is a Vancouver based junior exploration company focused on advancing their 100% owned MPD copper gold porphyry project located ~50km north of CMMC’s Copper Mountain mine (584 Mt at 0.23% Cu and 0.1 gpt Au) in south-central BC. KDK is backed by John Robins Discovery Group, co-founded by Chairman Chris Taylor (President and CEO of GBR), and led by Claudia Tornquist (former GM at RIO Tinto and former VP Business development at Sandstorm Gold). Kodiak also holds the 100% owned Mohave copper-molybdenum porphyry project in Arizona which is a data rich property with shallow historic drilling but untested at depth.
Q420 Report: All Around the Bonfire
The fourth quarter capped off a spectacular year for the Canadian venture space. Though ravaged by an initial sell-off in the early spring, the TSXV ended the year with an annual return of 50% and a 145% increase from its March lows. In comparison, the TSX returned 3% and 55% over the same timeframe. Not only did investors regain composure quickly, they were apparently undeterred by the coronavirus after all– encouraged by a dovish Fed and waves of fiscal stimuli that continued to weaken the dollar, inflating assets. Q4 served to confirm this trend and Canadian markets responded generally positively to key news, namely Biden’s securing of the Presidency and the beginning of global COVID-19 vaccine rollout initiatives.
NEXE Innovations – Initiation Report
NEXE Innovations is a cutting-edge developer of plant-based materials focused on replacing plastics with entirely compostable components. Initially targeting the single-use coffee market, NEXE has patented and manufactured 100% compostable products as quality alternatives to Keurig brewing systems K-Cups and Nestle’s Nespresso pods. With an addressable market estimated at US$19 billion in 2020, NEXE is forecasting their single-serve coffee segment will grow from under $500k in 2020 to $20 million in 2021 as they ramp up existing production lanes and take delivery of additional lanes delayed due to COVID-19. As the company grows, NEXE plans to leverage their materials expertise and IP to enter markets beyond of single-serve coffee. The company plans to announce an IPO in Q4 2020.
Kodiak Copper Corp. (KDK-V) – Site Visit
We recently attended a site visit to Kodiak Copper’s (KDK-V) 100% owned MPD property located in South-Central BC approximately 35 km south-east of Merritt, BC (Figure 1). KDK’s exploration upside is underpinned by four main targets; Gate, Prime, Man and Dillard. These targets exhibit similar characteristics as the Gate Zone which was discovered in January 2020 with hole MPD-19-003 returning 102 m of 0.53% Cu and 0.16 gpt Au. In our opinion, KDK offers significant exploration upside as a developing porphyry copper story with three additional porphyry centres yet to be tested.
Intrynsyc Capital – Q320 Report
Despite showing signs of deal fatigue towards its tail end, the junior mining sector in Q320 exhibited very much a continuation of the momentum we saw drive the market in Q220. The figure below demonstrates the steep increase in mining capital raised through Q320, with total financings posting 7% higher than the previous quarter. Within the span of H120, ~$1,168M in equity capital was raised across the TSXV’s mining sector in contrast with the $1,931M raised in Q320 alone, demonstrating the disproportionate investor interest this past quarter relative to the year as gold and copper reached YTD highs.
A Precursor to the Copper Movement
In our last Intrynsyc Quarterly, we mentioned that our short-term expectations for copper were improving on the account of operational disruptions in key South American producers and signs of Chinese economic recovery. To date, the potential for COVID-related halts continue to loom over key producers in the absence of a vaccine (despite some operators having temporarily averted employee walk-offs) and recent macro data from China has indicated a faster than expected recovery in manufacturing production and infrastructural spending– foreshadowed by a jump in base-metal demand over the last quarter. Assuming China and its peer economies do recover, the copper fundamentals look favourable in the long term as well. The decline of new copper discoveries in the past decade may bottleneck supply as longstanding trends such as the urbanization of developing areas, and novel proposals for massive copper intensive ‘green’ infrastructural developments in major economies sustain and create demand.
Quarterly Report – Momentum Accumulates Down the Miner Risk-Profile
Last quarter we published “A Flight to Quality”, where we took you through our gold thesis in the context of a rapidly evolving global pandemic response. There, we recommended a tactical entry into a basket of gold producers and near-development explorers. The rationale was that these companies would remain solvent until sentiment shifted back into risk, and be buoyed by a rising gold price driven by an expansionary Fed and weaker dollar.
As gold rallied, we saw momentum accumulate down the miner risk-profile: with investment in senior producers first, then the mid-tiers, then the near-development juniors and so on. As interest picked up, we participated in four early stage junior exploration financings: Blackrock Gold (TSXV: BRC), Tectonic Metals (TSXV: TECT), Pan Global Resources (TSXV: PGZ) and Portofino Resources (TSXV: POR). All things holding equal, we believe that explorers will continue to attract even more risk capital going into the new quarter. Our technology/alternatives portfolio also gained on the continuous growth of Exro Technologies (CSE: XRO) and the acquisition of Askott Entertainment (Private) by FansUnite (CSE: FANS). Please see below a more detailed review of select names in our portfolio.