Co.'s News Includes Positive Drill Results in Botswana

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Premium Resources Ltd. (PREM:TSX.V) released highlight stepout drill results from its permitted, underground Selebi Mines copper-nickel-cobalt project in Botswana, comprised of the Selebi Main and Selebi North deposits, noted a Jan. 27 news release.

Two standout intercepts were encountered outside of the mineral resource envelope of the past-producing Selebi North underground (SNUG) mine. They were:

• 14.2 meters (14.2m) of 5.14% copper equivalent (Cu eq), from hole SNUG-24-172 placed in the South Limb
• 14.4m of 3.99% Cu eq, from hole SNUG-24-144 placed downdip of the N2 Limb

These intersections extend the known Selebi North mineralization at depth and outside of the known resource, where it remains open, and the grades exceed that of the existing resource, which is 3.25% Cu eq, wrote Dr. Stefan Ioannou, Cormark Securities analyst, in a Feb. 3 research report.

Next, the company plans to follow up these results with more drilling. Low cost drilling with the companies owned drill rigs, One rig will test the 100m downplunge of the South Limb beyond the area tested with SNUG-24-172. A second rig will test between the N2 and N3 Limbs at depth to follow up on SNUG-24-144.

In other news, Premium Resources upsized its recently announced private placement led by Frank Giustra to CA$44 million (CA$44M) from CA$36M due to strong demand, it announced on Feb. 20. Units of the company are being sold for CA$0.30 apiece for this equity raise.

With it so far, Premium gained a new group of strategic investors, it noted in a Feb. 19 release. They are Frank Giustra and his Fiore Group, Andrew Bowering, Michael Murphy, and Mathew August.

The refinancing is expected to close in early March, at which time Morgan Lekstrom, backed by Frank and Andy, will become Premium Resources' chief executive officer and director. His diverse background includes successfully building NexGold Mining Corp. (NEXG.V:TSXV; NXGCF:OTCQX; TRC1.F:FRA), holding senior technical roles at Freeport-McMoRan Inc.'s (FCX:NYSE) Grasberg project in Indonesia and Rio Tinto Plc's (RIO:NYSE; RIO:ASX; RIO:LSE; RTPPF:OTCPK) Oyu Tolgoi project in Mongolia, supporting the redevelopment of an underground mine in Ghana and serving as engineering manager for Sabina Gold & Silver Corp. (SBB:TSX; RXC:FSE; SGSVF:OTCPK).

In another recent development, Premium Resources converted its CA$20.9M term loan with its lender and largest shareholder EdgePoint Investment Group Inc. when the latter's affiliate Cymbria agreed to exchange it for 69.6 million (69.6M) units at CA$0.30 per unit.

These recent financial moves were "necessary steps to 'right the ship' corporately," Ioannou wrote in a Feb. 19 research report. "The stage is now set to return focus to Botswana."

Assets "Significantly Undervalued"

In the African Tier 1 jurisdiction, specifically the Phikwe region, Premium Resources is working toward revitalizing the mining industry by advancing not only the Selebi Mines but also the Selkirk project, previously producing copper-nickel-cobalt-platinum group elements mine, according to its February Investor Presentation. Both projects have NI 43-101 mineral resources prepared last year, both are permitted, and both have ample infrastructure.

The Canadian mining company's set of assets "is significantly undervalued compared to industry peers," Giustra said in the Feb. 19 release. "The team's vision, which highlights exciting near-term catalysts, resonated strongly with me. Its prime location in Africa is set to capture the interest of larger companies and strategic investors alike. The forthcoming execution plan represents a promise of immediate value."

The global mineral resource of the Selebi Mines is 27,700,000 tons (27.7 Mt) of 3.25% Cu eq, containing a copper-to-nickel ratio of 1.55:1. The mineral estimate, however, does not include results of 73 drilled holes over 33,000m, some of which "stepped out significantly beyond the resource's wireframe," Ioannou reported.

As for Selkirk, it is a high-tonnage, low-cost, open-pit deposit whose current resource estimate stands at 44.2 Mt of 0.81% Cu eq, a ratio of 1:1:1copper, nickel, and platinum group elements as secondary minerals).

Compelling Market Fundamentals

Copper today plays a major role in the clean energy transition, artificial intelligence, and data centers, as well as developing companies' urbanization and industrialization, Sprott wrote in a January Special Report. This is in addition to its traditional applications in electric power generation and transmission, construction, electronics, and factory equipment. Accordingly, the metal is categorized as critical in numerous geographies, including the U.S., the European Union, Canada, India, China, and Japan.

"Copper is a cornerstone of the world's surging energy demand, which we believe positions it strategically for a dynamic 2025," noted Sprott.

According to Crux Investor on Feb. 24, electrification and sustainable energy will drive significant demand for the red metal over the long term. Copper consumption from energy transition sectors is forecasted to expand at a 10.7% compound annual growth rate (CAGR). The electric vehicle sector alone is projected to see a 14.3% CAGR.

BHP Billiton Ltd. (BHP:NYSE; BHPLF:OTCPK), the world's largest mining company, expects that by 2050, the energy transition will comprise 23% of the total copper demand, up from 7% now, reported Richard Mills, in his Feb. 8 Ahead of the Herd edition. Demand from the digital sector (AI, data centers, and 5G) will account for 6% versus 1% today. Demand from the transportation sector is expected to reach 20% by 2040 from about 11% in 2021 due to electric vehicles.

Cormark Securities analyst Dr. Stefan Ioannou has a Buy rating on Premium Resources and a target price, implying a potential return of 194%.

Indeed, the value of the copper market is projected to grow through 2030, according to Research and Markets, at a 5.4% CAGR, reaching US$368.8 billion (US$368.8B) from US$269B in 2024.

While copper demand continues ascending, new supply of the metal continues to be hindered by numerous factors, these experts say, such as production disruptions, declining ore grades, long project lead times, regulatory hurdles, capital requirements, depletion, strikes and protests, wars, and resource nationalism.

Just recently, on Feb. 26, Chile's copper mines stopped when a transmission failure disabled the grid, Markets.com reported, causing a spike in the copper price to US$4.62 per pound (US$4.62/lb). Were this outage to persist for a long period, it could slash the copper supply and thereby boost the copper price further.

On the other hand, what could pull down the copper price over time is new tariffs on the metal imposed by the Trump Administration on other countries, noted Markets.com. Citi expects this to happen, specifically a 25% tariff, by Q4/25, as reported by Reuters on Feb. 26.

The Economy Forecast Agency, however, projects annual increases in the copper price at least through 2028. Its forecasts for the end of 2025, 2026, 2027 and 2028 are US$4.62/lb, US$5.61/lb, US$6.42/lb and US$7.33/lb, respectively.

Due to the various ongoing supply-side constraints, the copper market likely will experience a growing deficit, purported the Crux Investor article. It continued: "This creates a compelling investment thesis for copper, with investors able to gain exposure through exchange-traded funds, mining stocks and futures contracts."

The Catalysts: Project Progress

Given the potential for resource expansion at the Selebi Mines, more drilling is Premium Resources' priority over the coming months, noted Cormark's Ioannou. These efforts are to include drilling at Selebi Main to further bolster and grow the overall project resource. Also, the company said, untested borehole electromagnetic plates between and below the Selebi North and Selebi Main deposits offer further upside potential.

"Exploration upside remains a (the) cornerstone of our investment thesis, fueled in part by the postulated Selebi Main-Selebi North connectivity at depth," commented Ioannou.

Also, the company is working toward a prefeasibility study of the Selebi Mines, where production could start by H1/28.

Stock Offers 194% Upside

Ioannou has a Buy rating on Premium Resources and a target price, implying a potential return of 194%.

"PREM offers exposure to historic high(er)-grade nickel sulfide mines/resources of scale — an 'asset class' coveted by the greater market in the wake of the electric vehicle revolution," the analyst wrote on Feb. 19. "The company's geophysical prowess has recognized untapped deposit extensions, setting the stage for compelling drilling that stands to garner 'corporate' attention."

Paradigm Capital Analyst Jeff Woolley also covers Premium Resources.

Ownership and Share Structure

According to Refinitiv, 15 strategic entities hold 11.56% of Premium Resources, four institutions own 13.58%, and the rest is a combination of high net worth, family offices, and retail.

The Top 3 shareholders are EdgePoint Investment Group Inc. with 12.83%, Keith Morrison with 3.93%  

Post money, Edgepoint will own 22.6% of the company. Edgepoint is a $40 billion dollar fund from Toronto, Canada

Premium Resources has 185.71M outstanding shares and 164.23M free float traded shares. Its market cap is CA$65M. Its 52-week trading range is CA$0.315−1.44 per share.