The potential life-changers on Tolga Kumova’s radar in 2021
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When it comes to small cap mining investment, there are few bigger names in the game than Tolga Kumova.
From humble beginnings, the tycoon has made a reputation for his ability to pick and back the right juniors, building a fortune in excess of $100 million and becoming a preeminent name among those looking to strike it big on the market.
A founding shareholder and former managing director at graphite play Syrah Resources (ASX:SYR), an early backer of market darling Bellevue Gold (ASX:BGL) and a man with a wide scope of influence across the small cap mining space, Kumova has serious runs on the board when it comes to investment decision-making.
Stockhead recently caught up with Kumova for a wide-ranging chat on what to expect in 2021, and the stocks he’s backing to make their mark in the months and years to come.
His thoughts make essential reading for those looking to strike it big on the market in the new year.
The biggest, most obvious and potentially most rewarding of all the trends expected to play out in 2021 is a looming commodities supercycle, according to Kumova.
While much of the news from the US of late has been focused on political turmoil and instability, the rhetoric from the Democrats has been all about nation-building – something Kumova said would drive considerable demand should it come to fruition.
“I don’t want to jinx it, but the amount of money Biden and the Democrats have said they’re looking to pump into the system, particularly in infrastructure in the US, is going to be incredible – especially now they’ve won the Senate,” Kumova said.
“People were asking me if I wanted Biden or Trump to win, but I want Australia to win. How do we succeed? The most positive thing for us is to be able to sell the commodities we produce offshore.
“If this guy goes and spends trillions on infrastructure, as he’s been talking about, then we’re going to see a sustained commodities boom for the next few years, and one that should create an incredible amount of investment in our base metals.”
Uranium, particularly listed companies with assets in the US, looks poised to benefit from the nation’s decision to create a strategic uranium reserve. Other metals stand to benefit too.
The electric vehicle space was all the rage a few years back but didn’t quite deliver to expectations at the time. Kumova said he saw parallels between the EV boom and the dot-com boom and bust around 1999-2000.
“Back then, we saw this massive tech boom where anything related to a computer ended up with a ridiculous valuation,” he said.
“I wouldn’t say it was quite the same for EVs from 2015 to 2017, but people were constantly talking about EV and calling it the next big thing.
“With the tech boom, around 1999-2000 all those things crashed. But come 2007, 2008, you had Google, Apple, Facebook, Twitter – all these things that had come into play.
“There really was a tech boom, it’s just that the market was about 10 years too early. I think we’ll see the same thing happen with electric vehicles.
“It may have been slower than first thought, but you just need to look at the signs around the world to know that EV is going to happen.
“Businesses involved directly in EV supply chains are going to benefit from that.”
Asked to offer up a sleeper industry, Kumova went a little leftfield – to silica sands.
The necessary component of concrete is abundant in parts of Western Australia, but supply has tightened in other parts of the world to the point where a ‘sand mining mafia’ has reportedly emerged in India.
“You’ve got this little industry emerging in WA that no one’s really paying attention to, but I think over the next couple of years we’re going to see a lot of business, particularly since you don’t really have to do much with it,” Kumova said.
“It’s DSO, and silica prices have almost doubled in the last 12 months. I think this is a market where people will wake up one day and go ‘how did I miss this?’, or ‘lucky I got on early’.”
Much of Kumova’s approach to investment is borne of getting onboard a good thing early, and it was this philosophy which guided his tips for companies to watch in 2021 in speaking with Stockhead.
“If you’re taking a risk and putting money into something, it really has to be something that’s lifechanging – otherwise why do it?,” he said.
“If someone’s putting $20,000 or $30,000 into something and the share price doubles, is that going to make much of a difference to their life? Probably not.
“But if you put $30,000 into something that goes up 50 times, and you have the courage to hold it, then it will change your life.
“These are the companies I’ve picked out specifically for this.”
Without further ado, here are Tolga’s tips potential life-changers as we enter the new year.
Kumova is on the board of A1G, which recently brought in the expertise of Peter Williams and Simon Bolster – two men with considerable track records in finding and developing African gold projects.
Credits to their name include Papillon Resources’ Fekola gold discovery in Mali – purchased by B2 Gold for $570 million in 2014; and Gryphon Minerals’ Banfora gold discovery which led to an $84 million takeover by Teranga Gold in 2016.
“They see multi-million-ounce potential on the licences we just acquired at A1G, and I believe in their ability to do what they’ve done before, again,” Kumova said.
That asset spans 1534km2 of land within Côte d’Ivoire’s underexplored Birimian greenstone belts, complementing an already-significant landholding in both Côte d’Ivoire and Mali.
Listed in Canada, BNZ was recently brought to the ASX and its flagship asset – the Eastmain gold project in Canada – has significant geological similarities to the Bellevue gold mine.
The company has around $18 million in the bank, and Kumova said Eastmain loomed as a potentially life-changing asset. It already has a resource of 376,000 ounces at 7.9 grams per tonne, which remains open in all directions.
Downhole EM has uncovered multiple conductors in the area.
“This could be a baby Bellevue in the process,” Kumova said.
“The difference is that Benz has actually locked up the entire belt locked up, where Bellevue have projects to the north and south. The geology is similar, hopefully the outcome will be similar, if not better, too.”
PUA recently picked up the Copper Hills nickel project in WA – a historically overlooked project showing early signs that it could be home to a large magmatic nickel-copper sulphide structure.
“There’s potentially a large nickel system there,” Kumova said.
“They’re drilling now. It’s a big system, a big target, and management is wasting no time.
“We should know pretty soon what that looks like.”
The project was picked up through the acquisition of Greenrock Metals in December.
Bouncing back from some disappointing results out of Novo Astro in Brazil, MEI picked up the brownfields Palm Springs asset in WA where it has intersected exciting gold zones close to surface with mineralisation open to the north and south.
The company was recently backed in a $4 million capital raising by Kumova, as well as legendary resources investor Keith Briggs and retail mogul Gerry Harvey.
Palm Springs shows exciting potential for investors in its own right, and the company continues to back itself in in Brazil, where it identified a substantial IP anomaly at the Jurena copper-gold project in December.
“Palm Springs is exciting and underpins the whole thing, but if this Brazil asset comes off it could change your life,” Kumova said.
Comprising 1100km2 just 50km outside of Kalgoorlie is the Queen Lapage gold project, where surprisingly little exploration has previously been carried out.
Through 3D seismic surveying, RGL has identified a structure with good magnetic features beneath a salt lake, and will be drilling the project this quarter.
“If it does come in, we could be talking about another De Grey-type asset,” Kumova said.
“Even if it doesn’t, you’ve still got 1100km2 50km out of Kalgoorlie – it’s just a beaut of a project.”
The owner of the producing Century zinc mine in Queensland, NCZ could stand to benefit from a potential commodity super cycle.
“Last quarter NCZ made around $13 million when zinc was averaging $1.10 per pound,” Kumova said.
“It’s up around $1.25 this quarter or thereabouts. I suspect, if management delivers on what they’ve put forward, that the numbers could get quite compelling.”
MXR is currently drilling the highly prospective S5 target at its Wattle Dam gold deposit in WA, with results expected soon.
Another 5000m of drilling is planned for that project, but for Kumova, the real interest is in a nickel target identified to the east which sits between two known nickel deposits.
The largest electromagnetic plate identified during ground and downhole EM came in at 800m by 300m.
Fixed loop electromagnetic surveying is planned over the area this month.
“If you hit nickel in WA right now, at any kind of grade, on an 800m structure like they’re talking about – it could get pretty exciting really quickly,” he said.
Firefly will be looking to give its recently acquired Yalgoo gold project in WA’s Murchison region a mineral resource update in the next six months.
The project has returned compelling intersections during recent drilling, including one hit of 1m at 73.3g/t gold and 22m at 5.36g/t reported in December.
In the background, it has a 1200m2 strategic copper-gold landholding in the Paterson province, immediately next door to Rio Tinto’s Paterson asset.
Drilling is expected here in April, with a large target identified.
“Having this monster opportunity is really exciting,” Kumova said.
“If there’s a sniff of something there, you can probably expect the majors to come from everywhere for it.”
Firefly is also in the process of demerging its Oakover manganese project into a separate listed company called Firebird Metals, with an IPO planned for Q1 of this year.
The IPO is being carried out at a $10 million valuation – pocket change when compared with the $210 million valuation of the similarly-styled Butcherbird deposit held by Element 25 (ASX:E25) as it draws nearer to production this year.
Playing back into the silica sands conversation is Perpetual Resources, which is sitting on the Beharra, Eneabba & Eneabba North and Sargon silica sands projects in WA.
A PFS on Belharra is planned for this quarter.
“The comparison is VRX Silica, which has a $200 million market cap now,” Kumova said.
“PEC is probably about six months behind VRX in terms of its work, and its project is actually an extension of their deposit that goes into PEC’s licence, which means it’s almost identical in terms of how it looks from an economics perspective.
“The demand for sand, the sand price, and the amount of people reaching out for offtake in WA is incredible – I think this is a sector and project that could really surprise.”
Alderan is currently in an exploration partnership with Rio Tinto (ASX:RIO) on the Frisco copper-gold-zinc-silver project in Utah.
The company currently holds 30% of the project, where 30 holes are planned to be drilled in the new year. Kumova said the level of activity planned on the project was a promising sign for AL8 shareholders.
“They’re looking for porphyrys, and you don’t just go and drill 30 holes for no reason – I don’t care if you’re Rio or not,” he said.
“It could be really interesting. AL8 owns 30%, but 30% of something relevant to Rio has the potential to be very relevant to AL8 shareholders.”
Alderan is concurrently drilling at the promising Detroit gold project in the Drum Mountains in Utah.
Having recently changed its name from European Cobalt, Aston completed the acquisition of the Edleston gold project in Canada in September in serious elephant country.
The company has carried out geophysics and worked out its targeting and is currently waiting for permitting to get on the ground.
“Those are big targets, they could be lifechanging – if it hits, it’s going to make a difference,” Kumova said.
Currently carrying out exploration activities in Botswana, SI6 recently identified a series of new, strong chargeability anomalies at its Maibele nickel, copper, cobalt, PGE and silver project.
A number of copper-gold and nickel-copper-PGE targets were generated from the campaign, and follow-up geophysics and percussion drilling are planned for the current quarter.
Uranium stocks (ASX: AGE, GTR, VAL, SUP)
“What I look for is targets that can potentially be leveraged to the uranium play, particularly in the US,” Kumova said.
“The way their politicians are talking about it, there’s going to be a lot more of a focus in North America on uranium. That’s why I’ve chosen these specifically.
“We’ve been waiting a while, but every day that goes past we’re probably getting closer to a uranium price spike taking place.”