Rupert Resources (RUP) - Attractive But Defensible Gold Developer

Rupert Resources Ltd. is a Canadian gold mining company focused on the exploration and production of base and precious metals. The company's flagship asset is the Rupert Lapland Project in Finland. The company's other assets include Red Lake in Ontario, Surf Inlet in British Columbia, and the Hirsikangas deposit in Central Finland.

Matt Gordon caught up with James Withall, CEO, Rupert Resources. James has over 2 decades of experience in mining. He previously served as a Managing Partner and Fund Manager at Baker Steel Capital Managers. James was awarded 2 gold medals by Sauren Fund Resource in 2016 for excellent fund management in the "Equity Goldmines" category. He has worked as a geologist for over 7 years in Western Australia for multiple gold mining companies, in exploration, project, and mine geologist roles. His educational credentials include a degree in Applied Geology from Leicester University, and a Master's in Mineral Project Appraisal from Imperial College, London. 

Company Overview

Rupert Resources was founded in 1981 and is headquartered in Toronto, Canada. Northern Aspect Resources Ltd. is the company's subsidiary. The company is listed on the Toronto Stock Exchange (TSX-V: RUP) and the OTC Markets (OTCQX: RUPRF). The company owns 100% of the new, high-quality 3.95Moz Ikkari discovery, permitted Pahtavaara mill with a land package of 595 square kilometers in the Central Lapland Greenstone Belt of Northern Finland. 

Rupert Resources' main focus is on the Ikkari discovery and its group of Lapland projects based in Northern Finland. The company announced a 4Moz resource in September 2021 and continues to advance the project. 

The Gold Market

The gold market has observed an increase in M&A (Mergers and Acquisitions) activity in recent times. This includes Kinross Gold Corp's acquisition of Great Bear Resources Ltd. for an upfront payment of $1.4Bn. This acquisition enabled Kinross to gain access to Canadian assets. Based on the gold price movement in the market over the past 2 years, it is evident that bigger companies are accumulating cash reserves that are expected to further increase M&A activity. 

2021 also saw the merger between Kirkland Lake Gold and Agnico Eagle, leading to the inception of Agnico Eagle Mines Ltd. The two companies are known for some of the highest margin assets in the business. Agnico Eagle Mines Ltd. has a big, consolidated land package in Ontario and it recently acquired a very high-grade, high-quality asset in Victoria Goldfields. 

The M&A has brought the company among the top 3 gold producers with the highest margins. Although each of its assets is roughly 0.5Moz in size, they feature very high grades at depth. The recent M&A activity in the gold market demonstrates that majors are looking to gain access to Canadian assets. 

Agnico Eagle is a 15% shareholder in Rupert Resources. There have been discussions about whether the former would offload these assets following the merger. According to Rupert Resources, its core assets continue to retain strategy-based interest from Agnico. 

As per recent interviews, it is evident that Agnico eagle is committed to Rupert Resources' Finland projects. Notably, the Kittila mine, its largest gold asset by reserves and has a significant exploration potential. This asset has a 20-30 year mine life and is located in a key jurisdiction. 

Rupert Resources anticipates that 2022 will be uncertain for financial markets, and as a result, holding gold in a portfolio would be the ideal strategy. The company predicts that gold will continue to perform well in the market and has the potential to outperform other currencies as well. 

The ongoing pandemic along with the issues with Asia's real estate market will cause further disruptions. This would curate a positive environment for gold, both as a currency, and an asset, with expectations of reaching a new high in 2022. 

Given the ongoing high-inflation environment, gold will serve as a strong hedge against inflation and will continue to outperform. This would have a direct impact on the attractiveness of gold equity companies, some of which are currently trading 25% lower on the year.

Ongoing Operations

The Rupert Resources' Ikkari gold discovery is a multi-million-ounce asset in northern Finland. The company continues to demonstrate the potential of its assets while focusing on ways to optimize the return on shareholders' capital. 

The company plans on running the various aspects of its operations effectively while also seeking new discoveries. The Ikkari discovery was a milestone for the company which enabled a lock-in of value. 

Currently, the company is carrying out resource drilling at the Ikkari asset to improve the overall asset quality. The company has spent between $5M-$7M on generative exploration. It is looking to gain optimum value by drilling possible targets to demonstrate the asset's potential. Additionally, the company is advancing towards a PEA (Preliminary Economic Assessment) as a way to de-risk the asset and further generate value. 

The combination of these strategies will enable the company to minimize potential downturns due to the Lassonde Curve downswing. The company is bullish on the exploration upside on its licensed land package. In fact, the company has tripled its licenses in the region in the past few years. The company understands that background M&A activity is part of the overall process. It continues to gain a deeper insight into the region through efficient drill operations. 

Targets 2021 and Beyond

In 2022, Rupert Resources is looking to improve the quality of the Ikkari asset through infill drilling. The company is yet to find the limits of the deposit, hence it is looking to upgrade the inferred resource into indicated. This will result in a significant value add-on for ounces that have already been discovered. It currently has 6 drill rigs employed in Finland. 

The company plans to continue generative exploration at Ikkari. One of the most promising targets is the extensions to the asset. This part of the operation will comprise the majority of the spending, offering the highest leverage for the company's business. Rupert Resources anticipates that spending $5/oz-$10/oz on exploration can turn into $170/oz in metrics, offering a substantial return on capital. 

The company has carried out generative exploration on the Ikkari satellite deposits, namely  Heinä Central, and Heinä South. These deposits are a fraction of a 20km long belt which has a significant exploration potential.

To find out more, go to the Rupert Resources website