Rupert Resources (TSX-V: RUP) - PEA Study on the way

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). It owns 100% of the new, high-quality 4Moz Ikkari discovery, permitted Pahtavaara mill with a land package that spans a 595 square kilometre area in the Central Lapland Greenstone Belt of Northern Finland. The company made a significant discovery in Northern Finland, the Ikkari discovery, featuring a 4Moz resource.

Rupert Resources has a gold asset in Finland called the Ikkari project, which has gathered a lot of attention in recent times. According to the company, the current market landscape is highly challenging for junior mining companies. Companies are trying to raise funds in order to plan for next year’s operations.

While Rupert Resources outperformed the GDXJ (VanEck Junior Gold Miners ETF) in 2021, the market has caught up with it. The GDXJ performance serves as a testament to the quality of the Ikkari project.

The resources industry has a major advantage where once discoveries are made, they cannot be taken away. The company has a 4Moz resource that is near-surface and features grades of 3.5. It has been drilling at the asset all year long in order to further increase confidence in the project. The drill results will be included in the company’s upcoming PEA (Preliminary Economic Assessment). Despite a tough market situation, the company’s fundamentals remain unchanged.

The project quality and current share prices serve as a great opportunity for investors to buy into Rupert Resources. The company is focused on completing a PEA in order to demonstrate the project’s fundamentals.

Market Landscape

Rupert Resources anticipates that when the markets sell off and there’s a gold price run, everything rises together. Despite the market landscape, the company continues to have a healthy market capitalization. The gold sector has seen fairly limited discoveries in the last 10-15 years. Peer group companies in Australia and Canada are at different stages in the cycle, some of them are a bit ahead of Rupert Resources, while some do not even have a resource yet.

The company anticipates that due to the limited number of relevant discoveries, when the market bounces back, there will be an influx of people looking to own the company’s stock. This is because the majority of the current gold producers will experience a drop in production within the next 7-9 years as a result of resource depletion, creating a significant supply gap in the sector that would need to be filled. This serves as a strong reason to consider investing in the company’s stock.

Cash Position

Rupert Resources is currently valued at $100/oz gold. As it goes through the study phases, the company is looking to take the valuation to $400/oz. It continues to create and demonstrate value. The company currently has between $35M and $40M in cash flow. This enables it to navigate the challenging market environment without significant shareholder dilution. It has the flexibility to strategize operations. Notably, the company isn’t facing the same inflation issues as most of its peers because it does not plan on raising capital or building the project at this time. While there is inflation in drilling costs, it’s all relative. The company has the option to cut back on drill operations in order to reduce the impact of rising prices.

The company has a highly-supportive group of core shareholders that have been there since the beginning. It intends to spend money the right way and continue delivering results. Market prices reflect how well a company is running the business. It would be preferable if the market went up in a uniform fashion, but that doesn’t seem to be the case.

As per the company, it is in a better position now compared to the beginning of the year. The company has confidence in its 4Moz resource. It is actively working on delivering a project PEA. Notably, the drilling cut-off for the PEA was in May. This means that the PEA is already out of date.

Currently, the company is drilling at Ikkari and looking at potential extensions. Over the last 6 months, the company has carried out Engineering Studies that have helped in gaining a better understanding of the project’s technical aspects. This affirms that the company is in a much better position than before.

Rupert Resources intends to continue functioning as an exploration company. It is looking to allocate €5M to its team on a yearly basis in order to find the next Ikkari-level discovery. It plans to function in a systematic and disciplined way. The company’s geology team is doing a much better job compared to 6-9 months ago.

The company has vastly improved its understanding of the Ikkari asset. The company has benefited tremendously by bringing in the right external people to work on the Ikkari project.

The current gold price is $1,600, down from $1,800. The gold prices haven’t seen a significant fall in Euros, especially since the company is a Finnish operator. The Canadian-Euro exchange rate has been highly-favourable for the company. This enables it to attain more value from its Canadian dollars as they are deployed in Europe.

Targets 2022 and Beyond

In a case where the company is unable to find a new area outside Ikkari, it would continue to have a massive gold resource. So far, the company has identified the Ikkari project along with satellite deposits. B2Gold is drilling the Helmi discovery, which is located 1 km away from the company’s operations. In a case where the company is unable to make new discoveries, it still has a 20+ year mine life at the Ikkari asset.

In terms of business development, the company is looking to find additional ounces over the next 10 years. It is confident that more gold will be found at depth or at the satellite deposits. The company is planning to initiate combination drilling in order to find an area without mineralization in order to develop a waste dump infrastructure. These areas are located 500m away from Ikkari. The company is yet to determine the system around Ikkari and its limits. As a result, the true potential of the deposit is yet to be realised. The company intends to publish news flow on drill results which would serve as the next big catalyst in the project’s lifecycle.

To find out more, go to the Rupert Resources website