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#All About the Narrative
Added a week ago

I would not classify myself as an investor who is focussed on explorers; taking a punt on digging up buried treasure seems a bit crass. However, as explained in a previous straw (still on Strawman but now two years ‘stale’) a younger me had some history with this stock, so it has been on my radar since it listed. 

I wrote a couple of straws on Antipa Minerals and added it to my Strawman portfolio at 1.5cps in October 2018. Doing a bit of due diligence and taking a fake position that doesn’t punish the hip pocket (but might hurt the ego) is a valuable thing. Articulating the reasons why you think something will have a greater value in the future than it does today is an important discipline.

At the time, my rough thesis was:

  • Antipa had lots of land in a province being described as under-explored ‘elephant’ country
  • The Paterson province has thrown up some long-life projects (Telfer began mining in 1977)
  • Antipa seemed to have first mover advantage in the region and the gorillas, including Rio Tinto and FMG, were securing large tenements of the Paterson in a rush in 2018
  • Rio Tinto had enough interest in the Antipa tenements to enter into a JV for the Northern section of their holdings
  • The combination of Rio JV and closeness to the depleting Telfer mine was more strategically interesting than your average explorer

In the two and a half years since taking my Strawman position, the rough thesis has to an early degree begun playing out:

  • Rio Tinto announced a major exploration find (Winu) on their land adjacent to the JV
  • Newcrest announced a JV with Antipa on their tenements to the South that surround Telfer
  • IGO announced a JV with Antipa on their tenements to the West
  • Some early exploration success at their 100% owned tenements early in 2021 has been likened to the nearby Haverion find (JV between Newcrest and Greatland Gold)

The market wasn’t ignorant to these outcomes and following some positive share prices movements earlier this year the company raised capital leaving it with a cash balance of ~$31 million and an appetite for drilling out their 100% owned tenements. Since taking my initial Strawman position the market cap of Antipa has risen from ~$35 million to more like ~$150 million (although you could arguably subtract $31 million cash from this).

As far as explorers go Antipa is not really a minnow any more. So, what is left for those punters who, unlike me, enjoy the search for buried treasure? I think the following is worth reflecting on:

  • While a market cap of ~$150 million is not micro, consider it in context; the combined market cap of the three miners that are keen enough in its tenements to free-carry exploration through JV’s is ~$150 billion
  • We are likely to see about $50 million in drilling either underway or occur in the coming 12 months with Rio budgeting $24.5 million for drilling in the JV ground in 2021, both Newcrest and IGO needing to spend some millions each to maintain JV status and commitments from Antipa to drill out their 100% owned tenements in the second half of 2021
  • Newcrest, with the hungry Telfer mill in the South, has been maintaining a strategic ~10% interest in Antipa and Rio, with an announced Winu mill coming online in 2025 will need to ensure its investment has plenty of feed

In 2018 I put a price forecast up of ~12c without a lot of technical analysis. I’m more of a narrative investor! I updated this a year or so later with a price forecast of ~24c, still without any form of technical analysis. The narrative is all important in this one; happy to stick with ~24c and watch how the next 12 months plays out.

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#Business Model/Strategy
Added 8 months ago

First straw here. Not a gold exploration spec lover but I am in on this. Initially purchased when Rio announced their Winu find and it was awfully close to Antipa's tenements. Antipa is now in the position of having three joint ventures - Rio Tinto, Newcrest and IGO minerals. This gives them around $150 m for exploration of the other prospective ore bodies in their wholly owned areas.

There have been some good drill results released recently from one JV but where this really has the potential is finding a sizeable economic mineral deposit on their wholly owned ground. This would put a rocket under the share price. No rockets if one of the JV come up with a good find though I suspect there will be decent gains if this occurs. 

So far management have been transparent with the release of information in a timely manner. They have clearly articulated that the JV are to fund exploration on their own ground with the intention of becoming a producer. That may include using existing processing at Telfer or at Winu if that is developed (and it seems to be pushing ahead).

I hold for the LT on this. 

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