Rupert Resources (RUP) - Higher Grades Equate to Long Annuity Stream

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 kilometres in the Central Lapland Greenstone Belt of Northern Finland.

The Ikkari discovery in central Finland is Rupert Resources’ flagship asset. It features a 4Moz resource with an average grade of 2.5g. The company is currently looking to carry out aggressive exploration at the property. It currently has 6 drill digs employed. 

The company seeks to demonstrate the grades of the 4Moz resource. It is looking to infill drill for this 4Moz resource. The company’s resource was published when drilling was at 36,000m. Since then, the company has crossed 50,000m in drilling. The latest holes drilled by the company feature over 100m of 3.5g, along with narrow 40m zones with much higher grades. The company also found more than 15 intercepts with over 10g in one hole. Notably, all these intercepts are based in a continuous zone.

Drill Operations

Rupert Resources is looking to further improve the volume and quality of the ounces that have already been drilled. The company is currently drilling the extensions to Ikkari. 9 months ago, the company was drilling the east part of the deposit. As the company continued to drill additional holes, it found that the resource hangs together. This led to the conclusion that the resource extends to the extremes of the deposit. 

In a recent press release, the company also published details on the Heinä central deposit, one of the satellite deposits featuring copper-gold hits. The company currently has 4 drill rigs employed at Ikkari, while the additional 2 rigs are being utilised for new exploration. It is looking to discover the next Ikkari through this exploration program. Notably, Around this time last year, the company had only 2 drill rigs employed at Ikkari. Currently, it is focused on extensive exploration and making new discoveries to ensure investors are rewarded for the invested dollars. 

Rupert Resources believes that its asset has a significant upside as the project is located in a Greenfield exploration belt. The company’s land package has now been expanded to a 700 square kilometre area. It plans to step up its exploration and utilise the knowledge base built up over the past 4 years to discover the next Ikkari and demonstrate the potential of the asset. 

The company was able to demonstrate exploration discoveries with $9/oz spent, $180/oz valued, leading to a 20 times return on invested shareholder capital. 

Capital Allocation

Rupert Resources is looking to invest additional capital in Ikkari to increase the asset’s value. The company is looking to de-risk the project through a planned PEA (Preliminary Economic Assessment). The company seeks to drill additional holes into the asset to demonstrate the potential for scale. This would further improve the asset’s returns profile.

According to Rupert Resources, operating at this asset is significantly easier than most gold mines. The company is looking to create additional value and growth that would be layered on top of the original program at Ikkari. 

Notably, it took the company 2 years to find the Ikkari deposit. The first holes were drilled in 2019 and the discovery was made in March 2020. By May 2021, the company cut-off the resource drilling. Presently, the company has a large portfolio of targets including Heinä Central that features a copper-gold target. At Heinä South, the company currently has 2 rigs operating. In 2022, the company plans to step up its drilling and exploration. It intends to get as much work done as possible over the next 6 months to demonstrate the current and future potential of the asset. 

Planned Dividends

Once Rupert Resources enters production, it intends to pay dividends to its investors. The company is looking to pay a significantly higher yield that is well above the standard yields that businesses usually pay. Eventually, the company intends to turn Ikkari into a long-term annuity stream that pays shareholders. 

The company’s Ikkari discovery is a long-life, generating asset in the resources space. Notably, the average profit margin for a gold asset is 10%. The company anticipates that this asset will have an above-average profit margin, between a 20%-30% range. The company is looking to pay 10% of the generated revenue to the shareholders, leading to the generation of a yield stream. 

Rupert Resources Seeks to develop assets to provide an exceptional return profile, leading to a yield that can fund the company’s growth through exploration while also giving back to the investors and shareholders for the risk taken and money invested.

ESG Component

According to Rupert Resources, the shareholder base has evolved over the years. The company is looking to attract new people to invest in the sector. One way to achieve this is through strong financial metrics. The company’s project has a robust ESG (Environmental, Social, and Governance) component. The company believes that discovering average assets isn’t sufficient as the cost of doing business continues to increase. 

Since the company’s operations have a major impact on communities, it has had a strong focus on investing time and money in meaningful pursuits from the start. The company has taken strong measures to explain the operations and exploration work from a sustainability and ESG side of the business. It places a strong emphasis on having a positive impact on the region it operates. This philosophy of transparency and having a positive impact is built into the company and its culture from the start. The company is looking to work with people who share the same mindset. 

‍To find out more, go to the Rupert Resources website