Ten Bagger: IPOs are back in vogue – here’s where John Forwood is looking

Welcome to Ten-Bagger, where Lowell Resources Fund chief investment officer John Forwood gives us his take on a sector of the ASX resources market full of value.

This month, he looks at the emerging value in ASX and TSX-V IPOs and RTOs.

or years IPOs and RTOs were off the table, risk appetite effectively sapped from the stock market after 2021’s radical run in 2021 when 104 new resources stocks entered the local bourse.

The largest influx of new companies since the mining boom, kicked along over following couple of years by sky high lithium prices, the end of the battery metals surge sent early stage investors into hibernation, clutching tightly to cash and gold.

But a run in the gold price and interest rate cuts have brought the IPO market back to life.

So too are reverse takeovers beginning to ramp up, with projects that couldn’t get funding in a bearish 2024 and early 2025 market finally see the opportunity to launch, like Howlin’ Wolf, through the back door.

The enthusiasm for new listings has been further consolidated by strong share price performances post-listing and within shells that have announced RTOs.

It’s a phenomenon giving comfort to investors in early stage and unlisted exploration plays like Lowell Resources Fund’s (ASX:LRT) John Forwood.

“Talking about a couple in our portfolio, these are RTOs where the deal hasn’t closed, but the listed company shares have jumped up ~50% on the announcement that they’re going to acquire these projects plus or minus management and subject to shareholder approval,” he said.

Hitting the bourse

The first on Forwood’s radar is Famien Resources.

It’s notable because the team is led by Paul Roberts, the head of Predictive Discovery (ASX:PDI) when it made the world class Bankan discovery in Guinea.

Armed with $5m in fresh capital in the form of a placement and 3700km2 of prospective gold ground in the hot Cote d’Ivoire jurisdiction, its entry into Enegex (ASX:ENX) has prompted a big run in the company’s shares.

“The share price jumped from around 2c to today it’s at 3.6c on the announcement of this RTO, so the market sees something like that and goes, that’s really, really well received,” Forwood noted.

The other is Middle Island Resources (ASX:MDI). Formerly focused on the Sandstone gold district in WA and named after an inland Kalgoorlie fishing crew, the firm has brought in a team of ex-Dundee Precious Metals players and a polymetallic prospect in Serbia via its takeover of Konstantin Resources.

It comes off the back of Dundee’s US$1.25bn deal to acquire Bosnian silver and base metals miner Adriatic Metals, and with other ASX explorers like Strickland Metals (ASX:STK) enjoying success in the Balkan Tethyan Belt.

“It’s active in Serbia where we’ve been investing for a couple of years and that jumped from 1.8c to 4.4c today, so an even better result,” Forwood said.

The improved fortunes of new ASX hopefuls, either via IPOs or reverse takeovers has shown the flow of capital is trickling from the large caps into junior resources.

“Timing has been important there because the market has been continuing in a general sense to move up to junior resources over that period,” Forwood said.

IPO hopefuls

Tuesday brought two new small cap listings in PC Gold and Desert Minerals Desert Minerals (ASX:DSM), both of which were trading slightly above their IPO price on Thursday.

Another six explorers are in the official ASX IPO pipeline, with a number of others getting their ducks in a line to launch prospectuses in the coming weeks and months.

One is a Victorian gold story called Black Horse Mining, which has $3m in cornerstone investments from NSX-listed hydrogen firm Province Resources to progress its Mt Egerton project.

Another on Forwood’s radar, but not yet in the public pipeline on the ASX website is Unity Metals, which is searching for a southern extension to $3.5bn capped Emerald Resources’ (ASX:EMR) Okvau gold mine in Cambodia.

“That’s their key project. They have a couple of other projects in Cambodia and one nice (grassroots) copper project in Thailand,” Forwood said.

“I’m hearing that both those companies have good demand.”

While the ASX IPO market is reviving, Lowell also has an investment in a recent TSX-V listing called FinEx Metals which listed on the North American exchange.

FinEx owns a largely unexplored gold project in northern Finland called Ruoppa, with Lowell also taking a stake in Selkirk Copper Mines, a JV between Venerable Ventures and the Selkirk First Nation looking to return the Minto copper-gold mine in the Yukon to production.

A separate TSX-V listing for Selkirk is expected to progress after Venerable Ventures completed a C$40m private placement this month.

A 50,000m drill program and feasibility study are planned, with a 2027 restart decision in the works for the Minto mine.

The views, information, or opinions expressed in the interviews in this article are solely those of the interviewees and do not represent the views of Stockhead. Stockhead does not provide, endorse or otherwise assume responsibility for any financial product advice contained in this article.