Disclosure: The following represents my opinions only. I am long BKI, CDR, EQX, FM, FWZ, GOT, KNT, LBC, MMA, NICU, NSE, NXE, PTK/POET, PREM, SGML, TAO, TNZ, TRUL, TUK, and VIO (image credit to Didgeman on Pixabay)
If there’s a theme for me in 2025, it’s going to be “focus”. When I look back through the years and think of where most of my big gains have come from, a common theme always emerges. Aside from the Great Oil Re-rate that started in 2021, the big wins have always come from “alpha” ideas, not names that I buy because I like gold, or copper, or uranium, or oil, or whatever, at any given time. As long as I’m in a market that is at least “permissive” in terms of the general level of interest towards stocks, good stories tend to work… and that’s not by accident — it’s because good stories are the ones that represent good value, the building of value, or the potential for value which becomes more apparent to the broader market as business/project/sector milestones are reached. It’s very hard to generate alpha returns without some kind of edge. That edge can come in many different forms, but for me, it usually involves something forgotten, something not broadly followed, something where there’s been a material change (management or project-based), or something where I think I have an advantage due to my prior work/market experience… or some combination of all that. You get the point… if I’m panning for gold, sure, I can go where everyone else is going (market beta), but if I really want to find the good ground, I’ll need to use the experience I’ve got and think about going a little farther afield to capture excess returns (alpha). Not everything will always work out, but if you haven’t heard me say it before, one of my favourite sayings is, “You can only lose 100%”. I say this gladly because in small caps there is often an inherent asymmetry in the upside/downside balance. I might risk losing 100% to make, say, 100-1000%… so then it all comes down to odds. What do I think the odds are of me losing all my money versus making multiples of it? What is baked into the current price? How does that compare to other current or historic companies out there? Will the market care? There is no handbook for that process and to each their own, but the names that I discuss below have all in some way passed my filters. Without question, 2024 was the Year of Tenaz — and now that the crown is up for grabs again in ’25, here are some ideas to think about…
Tenaz Energy (TNZ.TO, last at $13.87)
As the reigning champ, TNZ gets to go first. TNZ is up 890% from its lows in December 2022. In 2024, Tenaz was the top performing energy stock (out of 57) on the TSX and the 6th best performing stock out of 1827 companies listed on the TSX in all sectors. Not too shabby at all. Those following the story will now have developed an appreciation for the leverage to value capture that TNZ’s tight capital structure provides. With only 27.4 million shares out, the per-share leverage to accretive transactions remains robust. And speaking of accretive transactions, with TNZ having raised $140 million through an unsecured note (bond) offering in Q4 2024, the company is “loaded for bear” when it comes to new acquisitions. The NAM/NOBV acquisition in the Dutch North Sea is still expected to close in mid-2025 (just 5-6 months from now… my, how time flies, eh?) and Dutch TTF gas prices are currently around C$22/mcf. That is not a typo. TNZ gets multiples of the North American natural gas price for its European gas and it finds itself as one of the best, if not the best, way to play European gas/energy markets. What’s next in the acquisition pipeline is anyone’s guess, but with TNZ, it’s just a matter of “when, not if”. TNZ has the people, the experience, the competitive advantage, the capital/access to capital, and the capital structure needed to continue to drive per-share value higher at it executes its acquire-optimize-develop business strategy. The NOBV assets have significant untapped potential as they currently stand and I’m confident that future acquisitions will be equally attractive/accretive. In short, there’s nothing for me to do here than sit and wait for more of the same. Giddy up.
TAG Oil (TAO.V, last at $0.145)
I have little new to say on TAO than I did in my last note, but if TNZ was the star of 2024, TAO was the dog. Abby Badwi has taken over the CEO role from Toby Pierce and the team has been concentrated in Cairo, Egypt as Abby tries to right the ship. Mr. Badwi put over $1 million of his hard-earned money into TAO’s most recent financing and the company expects to close on its tuck-in acquisition soon. That acquisition will provide some near term development/re-completion upside and will significantly boost the company’s exposure to the Abu Roash F (ARF) oil source-rock play to over half a million acres. At this stage, TAO has gone through the fire of tax loss season and has pretty much had a full reset. They have enough cash to keep the wolves away from the door for a while and no debt, so this remains a live option in my books. It’s a cheapie with a chance for 2025, so I’ll stay tuned (and long) to see how this year shakes out.
Tuktu Resources (TUK.V, last at $0.095)
TUK is my penny oil speculation for 2025. Last I heard, the plan was to drill a horizontal follow-up to the vertical proof-of-concept test from last year that flowed some 400 bopd with no initial apparent decline from a Mississippian reservoir. The company raised $10 million with relative ease in Q4 2024 and is ready to hit this play with the truth stick (i.e., the drill bit). I would refer people to TAO when thinking about what could go wrong here, but I have to say that TUK’s vertical test data reads better than TAO’s at this stage and TUK’s drilling is expected to be less challenging technically. How the horizontal well goes is anyone’s guess, but indications are positive for speculators like me. In a success case, TUK could prove out a material oil discovery here in time and could be worth multiples of the current share price regardless of what the broader market is doing. If this play is what it looks like it is, it will/could prove to be highly economic and would make an easy tuck-in for a domestic producer looking for a nice, high-return light oil development project. I’m hoping to see the first horizontal well spud in February which will be here before you know it, so don’t touch that dial…
Condor Energies (CDR.TO, last at $1.89)
Condor is one of my weirdest stories, but it has also been one of my best performers as I’ve been long good size since before the company finalized its gas production enhancement deal in Uzbekistan in 2023. The company last reported production of 11,350 boepd of gas in mid-December and was meeting or exceeding all of its targets in terms of production enhancement at its Uzbek gas fields. Initial low-cost plans to increase gas production continue to yield very positive results and the company has a lot of running room to expand production with a modest capital spend. Additionally, the success already being demonstrated may set the stage for CDR to take on additional fields for optimization. This is a unique situation given the extent of the low-hanging fruit in these state-owned fields. The market will see the first-ever reserves report on the Uzbek assets early in 2025 and I think it could turn a few heads. We’ll see soon enough.
Meanwhile, on the LNG front, CDR is emerging as a regional player in Kazakh domestic LNG, which is a highly attractive diesel substitute in the country. CDR has received two feedgas allocations from the government of Kazakhstan to support its LNG initiatives and the company plans to expand on that over time. The modular onshore LNG plants are each expected to have quick paybacks and generate strong free cash flow. Condor plans to build 7-8 of these plants over time. Condor expects to start construction of the first plant this year. For now Condor’s focus is on supplying LNG to the soon-to-be-upgraded Kazakh locomotive fleet, which is a nice piece of business for a player like CDR. This one isn’t for everyone, but if you like Central Asian energy investing, you need to know Condor. Management is capable and has a lot of experience/invested time in the region, so I like this as a vehicle to play the energy market in this part of the world. CDR raised nearly $20 million at $1.90 in Q4 2024 to accelerate its development plans, so with the stock at $1.89, no one has missed anything yet. With patience (think 1-3 years), I think this could multi-bag if things keep going the way they are going in terms of the execution of the business plan.
Midnight Sun Mining (MMA.V, last at $0.65)
Since my last note, MMA jumped higher on formal resolution of its Kazhiba licence renewals in Zambia and remains one of my favourite “alpha” stories in copper. In the simplest terms, MMA’s project will enhance the economics of First Quantum’s (FM.TO, last at $19.11) Kansanshi copper mine in any market, at any copper price, full stop. MMA should start talking about results from its oxide drill program soon and may begin to highlight the very significant exploration upside on its lands as well. In time, a First Quantum buyout of MMA would be a win-win for all involved. FM holders would see their copper production costs at Kansanshi drop and their exploration potential would blossom with MMA in their stable. After MMA’s near-mine oxides are drilled out at Kazhiba, someone is going to model a low-cost, blast-shovel-and-truck-to-Kansanshi operation and they’re going to get NAV numbers far in excess of the current share price… or at least that’s what I think, which is why I’m long. FM will see this as a stack of money waiting to be picked up, so for me this is also about “when, not if”. I guess we’ll see. 2025 should be a big year for proving out the thesis here.
Libero Copper (LBC.V, last at $0.365)
LBC CEO Ian Harris put out a real chest-thumper of a press release a few days ago talking about Libero’s Macoa copper project in Colombia and how he planned to drive it towards the critical billion-tonne mark. Given that Macoa already weighs in at over 600 million tonnes he’s probably not stretching too far, believe it or not. There are 7 or 8 undrilled porphyry centres near Macoa that can easily help him get to that target tonnage and LBC remains way, way off the radar of just about everyone. As a result, LBC is a real dark horse contender for 2025. I think it represents some of the cheapest copper exposure out there and it is in the midst of a 14,000-metre drill program that could turn some heads if it returns thicknesses and grades similar to past historical holes. Part of the project was once within a forest reserve for a nearby hydroelectric project, but was moved out of the reserve in 2024. I like what the company is doing in terms of community engagement/involvement and its scale makes it worthy of note to just about any real global copper player given the discounted price relative to just about anything else out there. 2025 could be wild for this one.
New Status Energy (NSE.V, last at $0.455)
This is my second go-around with NSE, and this time I’m playing because of abundant news/rumours/industry commentary regarding the potential for NSE to capture a material oil development project in Ecuador. I have a soft spot for Ecuador having worked there around 20 years ago and I’m familiar with the assets being discussed in the media. Ecuador has had the curse of a horribly inefficient state oil company (PetroEcuador) running the country’s best oilfields for decades, with marginal results at best. At this stage NSE is wildly speculative, but should the market/industry chatter prove to be true, NSE could be one of the more exciting international energy juniors in 2025. I was around for the formation of Petro Rubiales in the mid-2000’s and I found that story to be unbelievable/unlikely in the early days — much as I do now with NSE today — but if NSE can pry a jewel out of PetroEcuador’s crown, it’ll be something to behold indeed… so stay tuned here.
Vior Inc (VIO.V, last at $0.25)
No real change since my prior commentary here, but the Coles Notes version of VIO is that the company is seeking extensions at depth and on trend with the Belleterre Mine Trend in Quebec, which had historical production of 750,000 ounces of gold from ore grading ~10 g/t from veins at shallow depths. Initial drilling has proven that the system is still present 500 metres below known past-producing veins and with some 60,000 fully-funded metres being drilled in the ongoing program, there are a lot more results to come. The management team from Osisko Mining (which was recently bought by Goldfields for over $2 billion) parachuted in to take the reigns in December of 2024, and VIO is still unknown to most. This is a bet on management as much as geology at this stage, but the $60 million market cap is modest relative to the “mining chops” that come with this new team. They wouldn’t get involved if they didn’t think this could be a material piece of business. With a little bit of luck with the drill bit, some marketing, and increased market awareness, VIO seems like an easy re-rate to me, so I’m long.
Black Iron (BKI.TO, last at $0.13)
This one is a pure speculation on the Ukraine war ending and the inevitable rebuilding of the country. I’ve known about BKI for years, but it has been untouchable in the context of the ongoing war with Russia… then, on November 7, 2024, the day after Trump was declared as the winner of the US election, mining giant Anglo American plunked down US$4 million (US$2.6 million of that immediately) in exchange for offtake and royalty rights on BKI’s high-grade Shymanivske iron ore project in Ukraine. Hmmmmmm. The project is in a known prolific iron ore belt and impresses on all metrics. Before the war, commodities juggernaut Cargill had arranged an offtake on this project, so with both Cargill and Anglo showing interest over the past several years, I’m just following the cool kids here. My level of due diligence is low and I have yet to meet or speak to management, but my spidey senses tell me that I should pay attention to BKI today as a potential way to have exposure to investing in Ukraine in peacetime. BKI still needs to renew its permits on the project, and Anglo’s cash will help them do just that. Early, early, early days, but for 13c you get what you pay for…
There’s a lot I haven’t covered, but just because I haven’t mentioned it doesn’t necessarily mean I’m still not long or don’t like it. Poet Technologies (PTK.V, last at C$9.74, POET.US, last at US$6.75) has been a technology rockstar for me and while I’ve trimmed some, I remain long as an AI/data centre play. Next, despite record-high gold prices in Q4 2024, I took a tax loss on Newmont (NEM.US, last at US$38.11), once again proving that “dabbling” in beta bets is one of my weakest strategies. I’m still long Goliath (GOT.V, last at $1.11) and haven’t made any money on it this time around, but I’m expecting a lot of assays in early 2025 from this one so maybe I just haven’t made any money “yet”. Equinox Gold (EQX.TO, last at $7.53) and K92 Mining (KNT.TO, last at $8.85) remain my go-to “bigger” gold names, mostly because both trade at discounts to their peers but provide better growth profiles than most. Fireweed Metals (FWZ.V, last at $1.50) is just about at a 52-week high and continues to do well for patient investors who like methodical (and Lundin-backed) value building when it comes to its giant zinc and tungsten deposits in the Yukon and Northwest Territories. And, even if it isn’t red-hot at the moment, nuclear is still staring the world in the face as THE ready-to-go solution to providing virtually carbon free energy. I just own Nexgen (NXE.TO, last at $10.75) there as it is the best deposit in the best jurisdiction and it should be getting key permits in 2025, at which point I think a takeout will be inevitable given its large scale and low projected production costs. Speaking of things that used to be red-hot — if you’re still holding a candle for lithium, Sigma Lithium (SGML.V, last at $17.44) stands out to me as the best large-scale independent producer in the sector, so if anything is going to get taken out, I think SGML is as good a bet as any. I’ll keep a $15 stop loss on SGML as I’m just trying to bottom-fish on a sector that has seen so much pain over the last 18 months or so despite the ramp up in EV adoption, particularly in China. And thinking of lithium leads me to nickel, where I still hold a candle for Magna Mining (NICU.V, last at $1.53) and Premium Resources (PREM.V, last at $0.39), with the former doing much better than the latter (PREM seems to be entering bottom-fishing territory here, but I have no sense of urgency).
And lastly, even though I’m not much for “sector bets”, I have to say that the weed stocks could all have a “yuge” move if the U.S. moves towards federal acceptance of cannabis under Trump. You would think that Elon Musk and the Department of Government Efficiency would see how silly it is to have alcohol as legal while cannabis is illegal, and if that logjam clears, the weed stocks will all re-rate big time. My pick in the cannabis sector, based solely on the numbers and overall reputation of the company is Trulieve (TRUL.C, last at $8.19), but you could throw a dart in the sector and still win if the US government moves in the “right” direction here.
It may seem like I’m all over the place sometimes, but I do try to concentrate on the names that I think can generate market-beating returns. The thing is, you need a stable of names to draw from and that stable tends to get bigger over time if you’ve got even a half-decent memory. Eventually, a handful of the names will have the right combination of both price and timing to make them into worthwhile “bets”, but they are always still bets — and the odds, well, are still subjective evaluations, not statistical guarantees. As always, I hope that folks are able to use these notes as jumping off points in their own due diligence processes… I just try to provide a little focus where I think it may be warranted…
Happy hunting.