FEL Morning Comment – Power Metal Resources (POW.L)

Silver-Peak Option Exercised.

@FirstEquityLtd

Yesterday afternoon Power Metal Resources (POW.L) announced it had exercised its option over the Silver Peak Project in British Columbia, Canada for a 30% earn-in interest after completing a due diligence exploration programme.

The project covers part of the historic Eureka Victoria Silver Mine, which was originally discovered in the late 1800s and was last in production in 1981. More recently in 2011, underground sampling returned a grade of 8,889 g/t silver along strike of the Victoria vein.

The Eureka and Victoria vein systems have never been formally assessed or drill tested at either depth or along strike. A systematic phased exploration campaign is planned to test the resource potential of these vein systems. To earn a 30% stake, Power Metal will be required to spend C$250K on project exploration over the next 12-months, of which C$25K has already been spent during the option period.

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FEL Comment & Recommendation.

Power Metal now joins a very small band of AIM listed companies with exposure to silver focused projects, a commodity viewed as a safe-haven alternative to gold, along with having important industrial applications. To note, silver has outperformed gold by some way since the start of the year (+53% silver, +30% gold).

We believe investors have yet to price in the importance and potential upside of this new project to Power Metals portfolio of exploration and development projects. Since the option over Silver Peak was first revealed just under a month ago to the market, Power Metal shares have surprisingly only traded sideways.

We would expect much more in terms of exploration led news flow to emanate from Silver Peak in the coming months before the weather window closes in, for this part of Canada. Along with Power Metals’ two impending drill programmes in Botswana and Tanzania over large scale nickel targets, further progress anticipated on the Victoria Goldfields JV in Australia and a strong Group financial position (£1.6m cash and listed investments as at 4 Sept 2020) we continue to rate the shares as a ‘Buy’.

@FirstEquityLtd Independent broker offering services to Institutional & Private Clients, -Public & Private companies requiring Corporate Broking (#AIM) and Advisory Services.

*First Equity Limited acts as Joint Broker to Power Metal Resources plc.

DISCLAIMER
This is a non-independent marketing communication under the FCA Conduct of Business Rules. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of dissemination of the investment research. First Equity Limited (FEL) has procedures in place to manage any conflicts which might arise in the production of investment research, including Chinese Wall procedures. The views expressed in this marketing communication are those of FEL’s Analyst. They are based on information believed to be reliable but no warranty or representation, express or implied, is made about the accuracy or completenesws of this information, which may be subject to change without notice. Any opinion given reflects the analyst’s judgement as at the date of this document’s publication. Any or all statements about the future may turn out to be incorrect. This marketing communication is designed for information purposes only and does not constitute a personal recommendation, offer or invitation to buy or sell any investment referred to within it. Investors should form their own conclusions and/or seek their own advice to determine whether any particular transaction is suitable for them in the light of their investment objectives, the benefits and risks associated with the transaction and all other relevant circumstances.

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First Equity Limited clients and staff members may be shareholders in Power Metal Resources plc.


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