Rick Rule, one of the most prominent resources investors in Canada, has suddenly appeared on the Power Metal Resources PLC (AIM:POW) share register.
Or is it sudden?
It depends how you look at it.
Rule is famously a uranium bull, and Power Metal Resources has systematically been building up its uranium position in the Athabasca, in Canada, one of the most prestigious U-addresses in the world.
It’s also right in Rick Rule’s back yard and proximal to lots of major and minor players in the uranium space that he can feel comfortable with.
So, so far so good.
But there’s more to it than that.
Rule’s arrival on the Power Metal register came as part of a broader £2.7mln fundraising undertaken following the appointment of new chief executive Sean Wade.
And here we begin to get to the nub of the matter.
Wade was formerly a senior associate of Michael Rawlinson at Cazenove and Liberum, and has subsequently gathered up significant experience as an investor relations specialist in high-level roles.
In short, he’s a man who knows how to market companies, and get results.
“We marketed specifically to Rick Rule,” says Wade.
“He invested through one of his vehicles. And through his symposium in July, to which POW is acting as a sponsor, we have the opportunity to access a good number of investors from his network.”
Rule’s overall stake in Power Metal Resources amounts to more than 4.5%, so he is certainly serious about it. He also intends to help Power Metal market in the US, which might well provide some much-needed support in what is undeniably a tough market.
In a way, the Power Metal story is well suited to North America. The project generator model that Power Metal has built up over the past few years, is less familiar in the UK than it is in Canada and the US. Certainly, it would have been familiar to Rick Rule, and the diverse nature of the Power Metal portfolio would have presented no obstacle to his interest.
Yes, Rick Rule likes uranium.
But ultimately what matters is value. And Power Metal is just beginning to build up a track record in value creation. So, while building a bigger and better uranium portfolio in the Athabasca is great for the medium to long-term upside, Wade can point to more immediate gains that the company has already delivered.
First, there was the spin-out of Golden Metals in an IPO earlier this year. That’s expected to be followed by a second spin-out, First Development Resources. Golden Metal has tungsten, gold and copper in the USA, while First Development has rare earths, lithium and uranium in Australia.
Holding major stakes in listed vehicles ought to provide heft and stability to the Power Metal balance sheet as it looks to grow through further deals.
Wade’s not looking to move the company towards actual mining. Rather, the value will be derived from exploration and development of projects with subsequent deals to recognise value creation in those projects.
“It’s a corporate finance exercise in a manner of speaking,” says Wade. “We take capital and we add value to it.”
Another potential deal on the horizon is with the Molopo Farms Complex, the company’s sizeable potential nickel asset in Botswana, where Wade is looking to bring a strategic joint venture partner in to do most of the lifting.
He’s also likely to open up his rolodex and seek out new and unthought of opportunities ahead of any recovery in sector sentiment. In a way, this is the perfect time to be doing deals and getting into position, but although Wade is new in the role, some things about the Power proposition won’t change.
He’s adamant that the company will continue to focus on stable jurisdictions, and that the interests of the private investor will remain at the very centre of the company’s thinking.
“The private investor has been tremendously supportive of Power Metal,” he says.
“In order to create shareholder value it is important that we bring in new shareholders. But we’re in very good shape now and we’ve got plenty of capital, so we will be looking for our new shareholders in the secondary market.”
But what is it about Power Metal that really excites him?
One answer is that it presents an opportunity to run what is arguably the UK’s only mining incubator.
Another is the uranium, which, he says, “is going to be a very big part of the story.”
“I look at it through the eyes of our investors,” he adds.
And now, some months into the job, he very much likes what he sees.