Paul Johnson

Tungsten, germanium, oil, biofuels, tailings. Plenty of ground covered in this one.

Paul Johnson joins Out of the GRND for a wide-ranging conversation on the junior resource sector and four companies worth a closer look. Paul is the founder and former CEO of Power Metal Resources, and has spent many years working across AIM-listed mining and exploration businesses.

The conversation starts with his read on the current market and where sentiment sits in critical minerals, before moving into specifics.

Companies discussed:

Guardian Metal Resources and the Pilot Mountain tungsten project, sitting at the intersection of US supply chain policy and critical minerals demand.

Rockfire Resources and the Molaoi project, with germanium and zinc giving the story two angles.

80 Mile and a genuinely diversified setup covering the Greenland oil partnership at Jameson, the Disko project, and biofuels in Italy.

Panther Metals and Winston Tailings, a low-cost, near-surface story that doesn't get the attention it probably deserves.

Honourable mentions along the way for Conroy Gold and Natural Resources, Arkle Resources and First Development Resources.

Whether you agree with Paul's view or not, there's enough here to sharpen your thinking on the sector.

Have a listen.

Transcript

SPEAKER_01 0:00

Well, I think the uh the the normal phrase is that past performance is not a guide to the future. But I think in our junior resource sector and commodities, it probably is quite a good guide. We've seen a cyclical business in the mining space for a very long time. And in the last five years, since 2021, have seen a real pullback that's lasted, I think, probably the longest in history in terms of the space. So if history teaches us anything, and I guess as investors, we really ought to be students of history, and that's that the sector comes around, it's generally led by strong commodity prices. Often gold is the leading commodity that tells us how the sector is about to move, but also things like the industrial metals, copper, and to a certain extent, the some of the specialty can give us an indication on the future. So I think the junior resource investor has to look back on the past, has to see that we've had quite a tough time over many years. Optimism is quite low. It's not perhaps on the floor. I think we've already been past that point because earlier on this year in January, in particular, we had quite a run uh across the space, and we've seen a few shares performing quite well of late. Guardian Metal probably is one of the best in terms of the uh UK market. So I think we're on the cusp of of what is possibly, um, in my view, going to be the best and biggest junior resource uplift in history.

SPEAKER_00 1:32

Great. You said generally when the upterm starts that gold is the main indicator of that and the gold prices. Which resources are you looking at to make the biggest returns though?

SPEAKER_01 1:43

Uh I think in my personal investing life and in my corporate life running companies, I found that if you can place yourself in companies that have the commodities in focus that are perhaps not the hot commodities of the day, that's the best way to make the returns. And I'll go back to Guardian Metal. When I acquired the pilot mounted tungsten project in Nevada, USA for power metal, which was then spun out as Guardian uh metal resources or golden metal resources, as it was called in its early days, as a listed company. Then there wasn't that much love, and tungsten was $300 per NCU. It's now 10 bagged in the space of a couple of years. That uh commodity itself, and the criticality of tungsten is there for all to see. But at the time we acquired those projects, that was less so, albeit you could see it in the tea leaves that something was big was about to happen with tungsten. So I've always tried to focus on those uh commodities and companies that are perhaps a little unloved, but with a great amount of potential.

SPEAKER_00 2:53

You say that Guardian Metal is unloved, it's got nearly a half a billion GPP market cap, which isn't which isn't terrible. What what after you acquired the major tungsten project there? Talk a bit about that project, what makes it so special, and what do you think are the key value drivers moving upwards from a half a billion dollars in market value?

SPEAKER_01 3:16

Well, I think uh when we acquired that with power metal, mainly for shares with a little bit of cash back in 2021, uh it was circa one and a half million pounds we paid for it. Uh I visited that project previously as a director of Thor Mining in 2016, I think. And what struck me in that site visit was the immensity of the project. The fact that there were, I think, four main areas where tungsten mineralization and some copper had been discovered. But it was a question of what lied in between and what the expansion potential was of the project. So it was pretty obvious that there was size and scale there, quite similar to what you have with Rockfire's uh Malayoi project in uh Greece, uh, which as yet hasn't really seen much of an uplift in market cap. And when uh Guardian Metal, Golden Metal, as it was called on listing, came to market, it had been a bit of a dogfight to raise the capital for the IPO to list that company. And it came on with with you know a relatively modest market cap, certainly not the half a billion pounds GBP it is today. And it's got to that level quite deservedly. And the size and scale of the assets with Pilot Mountain project and their later acquisition Temperate project, making them the number one really tungsten homeland uh resource uh supplier in the United States, is quite it's quite deserved that they've achieved that market cap and potentially could go a lot higher.

SPEAKER_00 4:58

Looking at the uh the out of the ground company review, I think the biggest prize driver is the Pilot Mountain drilling and resource growth that's ongoing. As someone who's been involved in that from a very early stage, what are your ambitions for that project?

SPEAKER_01 5:14

Well, uh it depends who you speak to in our industry as to whether they prefer drilling and resource expansion or the quality of the known resource to be improved, moving up the categories you know that that are used to define comfort or denote confidence, or whether they prefer projects to go into production. I've always been a fan of scale, building up a resource as much as you can to demonstrate size and scale. Ideally, of course, you want projects to move into production when the commodity price is high, but it is a whole new skill set. And so I think with Guardian Metal, what you have is apart from a very high-quality management team, and that has been the case from the off, in fairness, led by Oliver Freeson, who is quite a remarkable individual. And I worked with him quite extensively for a number of years until stepping down from power metal. But I also think that management team has been changed and further improved. The company is now effectively listed in the US and in the London market. It's had quite significant amounts of capital coming into it over the last, is it now, three years since the listing approximately. And uh, you're really starting to see quite a major upside as the strategic nature of their uh projects becomes more and more apparent because it's quite simple. Tungsten is an absolutely critical metal. It's something the US Geological Survey have been picking up for quite some time, and something which is readily apparent as China shut down its tungsten supply to the world, and as people have become more and more reticent about suppliers of these critical metals from what are deemed to be geopolitically unsafe jurisdictions. So I think it has all to play for, and it will be interesting to see how the business moved on. But to be quite frank, Mike, to see that company go from the initial acquisition back in 2021 all the way up to where it is today is a remarkable success story.

SPEAKER_00 7:21

Yes. You can't downplay strategic resources, how important they how important they are in terms of governments and nation states planning their defence. I want to talk about rockfire because Rocfire is currently sat on a germanium, both zinc and germanium project. What's the value of that potentially for Europe?

SPEAKER_01 7:42

Okay, so germanium is obviously uh effectively a byproduct, you could call it that, of this silver-led uh zinc project that uh Rockfire has in Greece. It's it's in the southeastern Peloponnese. And I actually went there and uh went through the town of Malayoai in the summer last year to uh just wanted to see what the town was like. It's quite a big uh investment for me, and I wanted to really assess if this town had the capability, interest, or was likely to support the development of quite a large critical metals project. And it's an industrialized town, it's got all the infrastructure requirements of road, power, water, and so on. It evidently has the workforce. And given that the project was handed over to Rockfire uh by the Greek government, it seems to have quite strong geopolitical support. And the license arrangement behind this is quite unusual in that it's a long-term, I forget the term and I don't want to get it wrong, but mining exploitation, exploration license all in one.

SPEAKER_00 8:49

Yeah, and exploitation.

SPEAKER_01 8:50

Yeah. Yeah, so it runs for a long time. Now it's I think at the moment, under the jaw compliant resource, they have 19 million ounces of silver. If you run that at $75 silver, you can start to see the size of scale of the inch in-situ resource. If you look at the zinc equivalent, which is wrapping up all the commodities as if they are zinc and giving them a relative value, then you're looking at well, at probably five billion dollars of in-situ value at the moment. And that excludes the germanium, which is yet to have inclusion as one of the short compliant resources, but is what they're hoping for with the current drilling. The commodities in question are seem to my mind to have great upside potential. The project itself has quite significant potential for growth in terms of the size of the uh the footprints of the deposit. And also, I think generally these types of projects tend to lie under the radar for quite some time until suddenly the market value increases for whatever reason, and then every man and his dog are trying to buy shares, and we've seen that with Guardian over the last few years, where the valuation actually dipped on listing from 8p to 5.5p and then shot up to over three pounds. So I'm hoping that that will be the same for rockfire. I think it's a very strategic project for Europe. Europe, as with much of the West, has been quite slow on understanding the need for critical metals. They were very much against metals mining and exploration for a long period of time. But now they appear to be developing furiously their mandates for mining and exploration to secure their supplies of critical metals, which quite frankly, they simply don't have at the moment.

SPEAKER_00 10:43

What would you expect to see from the European Union when they're trying to upgrade and support this business?

SPEAKER_01 10:50

Oh, I think they lead the way governments in the West with grants and support for projects now with with Malayoi. It's that project came out of effectively the Greek government to the company under their defined process locally. So it's a great sign that it has the geopolitical environment it needs to succeed. I think you'll see uh there already are initiatives underway in Europe to support these projects. There will be a lot more. You'll start to see some of these companies now firing up with announcements, these listed companies saying that they've received a grant for this and a grant for that. And then generally in the background, they the weight of regulation with regard to the exploration, project development and mining, regulatory requirements and permit processes will start to ease because that ultimately is the biggest thing. If you want these metals out of the ground and in the factories and the warehouses, you need to support the production as opposed to just the exploration for the next stage discoveries. So I think there'll be a combination of different things start to happen, and bit by bit we'll see the valuations of European explorers start to rise commensurate with the support geopolitically and the fact that Europe is a host for a whole range of very, very, very significant metal deposits uh within its borders.

SPEAKER_00 12:13

I think geopolitics is something we're going to come back to time and time again because it plays an ever more increasing role. If we move on and talk about 80 mile, where what do you say about 80 mile? Because if we talk about geopolitics, that one is at the epicenter.

SPEAKER_01 12:28

80 mile has got uh project operations, but in fairness, it has probably one of the best tickers I've ever seen with 80m. I started buying that show and it was 0.25p quite some time ago, probably around Q4 2024. And that company has uh its main interest in Greenland, where it's drilling. Well, it has a partner that's funding drilling for oil at the Jameson project. It has uh the disco project, which is you know a very, very significant kind of base and other metal uh opportunity. Uh, there's titanium uh in the mix in Greenland. And now we know Greenland has been the focus of a lot of interest from the United States and President Trump. It's uh shone the spotlight on the country from a resource perspective. It hasn't yet really massively kicked the valuations of these companies higher, but it has had an impact. And I suspect there's more of that to come. 80 Mile has a unique situation because it set out in 2024 to make sure it got funding from third parties to support its operation. So it wasn't raising money to do this work itself, and it's been successful because 70 million dollars approximately is going into Jameson for oil drills later this year. It's raised another significant uh sum of exploration funding through another third party for its disco project that was announced recently. And then to cap it all off, you've got uh you know an interesting biofuels opportunity in Italy, I think, with 80 Mar, that could be throwing off uh you know tens of millions of uh euros of profit every year if all goes according to plans. So uh as a business, it's quite unique. I think it's currently valued around 45 million quid. I don't know, somewhere in that cord, maybe a little more, which seems to be quite remarkably low just on the fact that their Greenland oil drill campaigns funded by uh Greenland Energy, listed on Nasdaq, uh are going to happen later this year. So it's it's one where I could sit here and say it's market cap a bit like Guardian is $500 million or pounds, and I wouldn't really have too much of an issue with it. It's not, it's uh less than £50 million, and on that basis, it makes it absolutely investable to my mind.

SPEAKER_00 15:05

You mentioned that the company's well funded. What what difference does that make for a director or a manager in that company?

SPEAKER_01 15:12

Well, you you've gotta be honest here. Managers are human beings, they have bills to pay, they have lives to lead, they want security, and uh for the most part, in our space, which is junior resource exploration, they're not too concerned where the money comes from to pay their bills, uh their salaries, and so on, as long as it keeps coming in. There is, and there has been for some time, a fundamental mismatch between uh director objectives and shareholder objectives. Sometimes you can close that with cleverly structured uh share-based equity schemes. You can have key performance indicators paying out bonuses, but they're quite limited, some of these things, to really link in the uh the effort of the director with the share price. And also it's a cyclical market, Max, so you can't you know guarantee that directors can be working relentlessly and see their share price fall. And I've had plenty of experience over you know the time when I was involved with running companies to see the biggest effort periods of the management team not being reflected in the market share price. But I have realized one thing, or maybe more than one thing, but that if you keep going, you keep pushing, eventually the market recognizes the work that you do. It can be quite some time. And so I would say for a director running a company that has all of its ventures, material ventures funded by third parties, they are in an exceptionally strong and peaceful position.

SPEAKER_00 16:54

Talking of strong companies in strong positions, we spoke to Darren Hazelwood of Panther Metals the other day. What's your take on Panther Metals?

SPEAKER_01 17:04

Oh, well, I I've been involved in the formation or a restructuring, refinancing of, I don't know, in in the UK, 25 or so companies over the years, 20 to 25 companies. Uh it's quite rare that you get a CEO emerge of the commitment focus and drive of Mr. Hazelwood. And uh I've known Darren for quite some time, and his commitment to that business and the stress he's had to endure over the years in the difficult periods, particularly over the last five years, and yet still keep going, tells you all you need to know about whether or not he is supportable, and he definitely is. I think with portfolio of projects, their management team, and with Darren as the lead, then that uh company should be on every investor's radar or monitor, and probably within their portfolios too. It's certainly within mine.

SPEAKER_00 18:07

When you look online at Telegram groups or you look on social media, most companies will attract a certain amount of negativity. That's something that Panther doesn't seem to have. The retail investors are engaged, are positive, are understanding of setbacks, and are calculating when there's a really positive outcome with a piece of news or something like that. How do you think that the company has crafted that environment?

SPEAKER_01 18:37

Oh, it's uh it's always the uh it's always the same way. And that's the just sheer determination and drive to actually make the business work. And I know what that entails, and I know the effort that that takes to actually do that. This market is unforgiving, brutal. When you need to raise money to keep things running, it's often very difficult to do. So it takes a piece out of you when you're in that process. When you have to push these exploration projects forward and you have a belief but not a defined knowledge of what the potential mineralization is, when whether it's a commercial uh opportunity or not, you know, it's a very, very difficult environment in which to live and work. So I think people recognize that. And let's be honest about it. The majority of people who are moving the share price in these junior companies are not the institutions, they're not the city uh, you know, ladies and gentlemen who buy big amounts in financing, they are the ordinary people, ordinary investors who are working hard just to turn their uh modest amount of savings into something that's more material and more significant. So I think if you can catch the eye of the, shall we say, ordinary investor, then you stand a very decent chance of seeing your uh company valuation rise as a result?

SPEAKER_00 20:05

They have a really interesting proposition with the Winston Tailings project. High grades of gold, silver, uh gallium, zinc, copper, and more. Sat basically at a lake ready to be uh ready to be extracted. The market traditionally does not find tailings projects exciting or compelling. What's different about this project?

SPEAKER_01 20:27

Oh well, it's it's like any tailings projects. It's uh that the much of the time, I've tried myself over the years, people don't really seem to switch on to tailings because they're looking for the big discoveries, they're looking for the high perceived high grade, they're looking for the shock uh value, and that's precisely what tailings generally don't tend to provide. Uh, and it's uh you know, it's quite a methodical process as Panther is going through to really strengthen up the know-how knowledge about uh tailings deposit, if you can call it that, uh uh, and to then move that forward into a uh commercial process. But it's the most surefire way of turning a lump of ground into a profitable outcome. And what Darren's uh impressed me with over the years is that he has a dual approach of saying, look, I want to make the big discoveries, I want to make the big wins, but I also want to build a proper commercial business. And that's been my bugbear with these companies over the years. So by pushing forward an economic tailings deposit and by actually carrying on with other exploration of business developments, he's got that perfect mix that should do uh well for the company as the months and years go by.

SPEAKER_00 21:45

Great. One final question. We've we've covered a number of companies here. Are there any more companies on your radar that you think a retail investor should consider?

SPEAKER_01 21:55

Uh well, uh back in 2009 when things were quite blue. Week on my portfolio front. I went down the route of finding around 10 companies that had real opportunities. So diversification is an important thing. I would say today that's even more the case. The regulatory risk, the financing risk, the commodity risk, the corporate PLC risk of these organizations is so high you never want to have all your eggs in one basket. I think across the spectrum of companies that are on the market, there are a myriad of opportunities that could deliver quite outsized returns. And I think it's down to individual investors to tell themselves what commodities are they interested in, what jurisdictions are they willing to suffer, how much patience they have, and you know, are they willing to invest this money and can they hold it? Don't overrisk and don't go too heavy. But I I've always been a lover of Conroy Gold. I mean, there's a lot of lovers of Conroy Gold. It's been on the market for quite some time, but it does hold what I think is perhaps one of the best strategic gold deposits that I've ever seen, with 60 miles, I think, of gold trend in Ireland and Northern Ireland. 517,000 ounces of drought compliant gold. They published a conceptual study a few years ago pointing to 15 to 20 million ounces of potential gold in the system. And they've really stepped up their operations with more drilling in recent years that I will think will start to throw out some quite uh tremendous opportunities. But literally, you can pick and choose. The valuations at the moment across the sector are quite uh acutely low. There's no fat in most of these companies. And I think many of them will do well. Alcohol resources is a particularly interesting one with their movement into uranium. I'm a fan of first development resources. I know it's had a bit of a troubled start since coming on the market last year, July last year, but is doing some interesting exploration work. An old favorite for me, because I used to be on the board, is Thought Energy, which is based in uh South Australian operations helium hydrogen, which might be of interest for investors looking for that kind of exposure. But I literally on my monitor, there's probably 50 shares in the UK market that could be investable right now.