Outstanding? Share buybacks in junior mining
By James Kwantes
Published first at Patreon
What the hell is any junior resource company doing buying back their own shares, in what remains a very capital-constrained sector?
The normal-course issuer bid (NCIB) is a topic worth delving into. Especially since junior mining companies exist to explore for economic mineral deposits.
The answers could yield important insights about effective business models. In junior mining, there may be no greater flex than having enough excess cash to reduce the number of your own outstanding shares.
Investors should care about NCIBs because companies that have the capacity to adopt buybacks are more likely to survive the current capital drought, and because the mining industry needs deposits to replace reserves — and needs explorecos to find them.
In a landscape where ballooning share structures are the norm, balloons typically pop, taking share prices down with them. As junior resource investors, we are looking for a different type of experience.
FPX Nickel (FPX-V, FPOCF-OTC)
FPX Nickel is a strange animal: a junior mining company with a flush treasury (about $32 million); a microcap with several relationships with majors; a small company with a big-company foundation.
FPX has been deploying some of its capital by purchasing shares for cancellation.
Since the beginning of December, the company has bought more than $131,000 worth of its own stock, at prices ranging from 23-27 cents. FPX is developing the Baptiste nickel project in the Decar district of central British Columbia.
The company is active in surrounding communities and has good relationships with several First Nations, but has encountered some turbulence with the leadership of one Nation. The stock is near multi-year lows.
In addition to the NCIB, FPX has seen stock purchases and option exercises by heavily invested insiders, including company founder Peter Bradshaw (he owns 32.2M shares, or 10.2%) and investor Allyn Knoche (38.3M shares, or 12.2%).
FPX's shareholder registry tells the tale of how the company became cash-rich. First FPX landed a strategic $12-million, 9.9% investment at 50 cents a share from an unnamed (publicly listed) corporate. The fact this investment was non-material to the investing company is itself a kind of statement.
Next FPX landed a $16M investment (@ .60/share) from Outokumpu, a Finnish-based global stainless steel producer. Finally, in January 2024, Sumitomo Metal Mining put in $14.4 million at 48 cents a share for a 9.9% stake.
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The Canadian government also chipped in $725,000 (in non-dilutive funding) from its Critical Minerals Research, Development and Demonstration program.
FPX is preparing a feasibility study on its Baptiste project, which a 2023 PFS identified as a large, long-life deposit of nickel-bearing awaruite mineralization. Early indications suggest the nearby Van target could also host significant awaruite mineralization. Metallurgy shows a high-grade nickel product with few impurities, produced with low carbon intensity.
During a time of sharpened focus on critical metals, and with the B.C. government pledging streamlined permitting for infrastructure projects including critical minerals projects, FPX Nickel's time may finally be coming.
Price: 0.235
Shares out: 315 million (335M fully diluted)
Market cap: $74 million
Voyageur Mineral Explorers (VOY-CN, CPEFF-OTC)
Voyageur is a project generator with valuable royalties on ground in the Flin Flon/Snow Lake greenstone belt on the Saskatchewan-Manitoba border.
The flagship royalties are a .75/tonne royalty on ore mined at Foran Mining's (FOM-T) McIlvenna Bay copper deposit and 2% NSRs on Foran's Bigstone deposit and Balsam project, as well as the company's new Tesla discovery. All of those are in Saskatchewan.
McIlvenna Bay hosts reserves of 29.7 million tonnes grading 2.51% copper-equivalent and resources (Indicated and Inferred) of 43.1Mt at about 2% CuEq. Construction of the mine is about a third complete, according to an April 30 news release, and commercial production is expected in the first half of 2026.
Foran is run by Dan Myerson, who I wrote about in Forward-Looking: Execs Who Make a Statement, and backed by Fairfax Financial, Agnico Eagle and Pierre Lassonde.
As for Voyageur, it's a "backed by Rob" story. That's Robert Cudney and his Northfield Capital Corporation, which collectively own about 16.75 million shares, or 51.9% of the company, after Northfield recently purchased another 4.79 million shares privately.
Voyageur is a frugal operation -- CEO Fraser Laschinger was paid $75,000 in each of 2023 and 2024 -- with cash on its balance sheet. As of Feb. 28, the company had $709,855 in cash and more than $1 million in investments, most of that Foran shares.
Voyageur has spent $61,755 buying back its own stock so far this year, at prices ranging from 48 to 58 cents. Laschinger and Cudney have also been open-market buyers of stock in the past six months. Voyageur is a quiet, thin trader with a tight share structure: just 32.54M shares out.
The company also has a 1% royalty on Callinex's Pine Bay project in Manitoba's high-grade Flin Flon mining district and royalties on Hudbay's Morgan Woolsey (2%) and Cook (1%) properties, also in Manitoba.
With Foran financing and G Mining building the McIlvenna Bay mine, Voyageur's flagship royalties should be cash-flowing before long. Voyageur's other royalties and optioned properties are just the icing on the cake.
Price: 0.56
Shares out: 32.54 million (36.35M fully diluted)
Market cap: $18.22 million
Altius Minerals (ALS-T, ATUSF-OTC)
Altius started 25 years ago as a microcap project generator and has grown up to become a profitable dividend-paying base metals royalty company, with precious metals kickers and exposure to the junior exploration sector through equity stakes and its PG business.
Altius's money makers are long-life royalties on potash, iron ore, base and battery metals, and renewable energy. But one of their most valuable assets is a 1.5% royalty on AngloGold Ashanti's Expanded Silicon project (Altius and AngloGold are in court to determine the precise royalty coverage).
The Silicon and Merlin deposits, both of which are covered by Altius's 1.5% royalty, host a combined 16.31 million ounces of oxide gold in all categories, as of year-end 2024.
Orogen's recent sale of its 1% NSR on Silicon-Merlin for $343 million (the $421M deal included an Orogen spinco valued at $78M) was an important mark-to-market moment for Altius. It implies a floor value of $514.5 million for Altius's 1.5% royalty.
On such a potentially company-making asset, a 1.5% NSR on Silicon-Merlin is likely worth more than 1.5X the price of a 1%. Altius's market cap has increased by about $150 million (13%) since the Orogen deal was announced. Their Silicon-Merlin royalty remains undervalued within the company's diverse portfolio of royalties and equity stakes.
Altius has never done a share rollback and has just 46.3 million shares outstanding. Its latest share buyback was on February 25, when the company purchased $52,540 worth of stock at $26.27.
Altius ended 2024 with very aggressive share buybacks, however. In November 2024, the company spent $2.3 million buying back stock, at $24.72 to $26. They ramped it up in December to $3.11 million, at $24.89 to $26. Prior to this, Altius was loading up on Orogen shares, at much lower prices.
In addition to its 1.5% Silicon-Merlin royalty, Altius has cash and public-market equity holdings of about $450 million.
Through the company's history, Altius CEO Brian Dalton has put on a master class in building per-share value. That's likely to continue this year, especially if Altius pulls off a transaction with its valuable Nevada gold royalty.
Price: 27.70
Shares out: 46.3 million (47.2M fully diluted)
Market cap: $1.28 billion
Kenorland Minerals (KLD-V, KLDCF-OTC)
Project generator Kenorland recently renewed an NCIB that it did not use in the past year. Kenorland has plenty of capacity to start buying back its own shares on dips.
As of December 31, the company had about $30.36 million in working capital, including $28.2 million in cash and equivalents. Kenorland's operator model generates enough revenue to cover its G&A expenses every year.
Kenorland shares are up about 60% in the past year, so share buybacks at these levels are probably unlikely. The company is well-positioned, however, to reduce its share structure on any weakness in the stock price.
Kenorland is currently drilling or waiting for assays on four programs:
23,000 metres of drilling at Regnault at the Frotet gold project in Quebec's Abitibi greenstone belt. Frotet is now 100% owned by Sumitomo; Kenorland is operator and has a 4% royalty;
14,363 metres has been drilled at the Papaonga target at South Uchi in Ontario, which Kenorland has optioned to private exploreco Auranova Resources (backed by Tom Obradovich and Chris Taylor). Kenorland is operator and owns a 2% royalty, a minimum 30% project interest and 19.9% of Auranova's shares;
up to 3,500 metres at the Deux Orignaux target on the Chebistuan project in Quebec, optioned to Newmont. Kenorland is operator and will retain at least 20% of the project; and
up to 4,300 metres at the Hunter project in Quebec, optioned to Centerra. Kenorland is operator and will retain a 30% share if Centerra exercises the full option.
Price: 1.39
Shares out: 77.76 million (89.4M fully diluted)
Market cap: $108.1 million
Morien Resources (MOX-V, APMCF-OTC) is a bulk commodity royalty company with royalties on the idled Donkin coal mine in Nova Scotia and the Black Point aggregate project, also in Nova Scotia. Morien has not been active lately — as of March 31, the company had $1.1 million in working capital — but since 2015 it has reduced its outstanding share count by 17%.
Price: 0.30
Shares out: 51.3 million (53.9M fully diluted)
Market cap: $15.4 million
Olive Resource Capital (OC-V, XTERF-OTC) is a small mining-focused holding company that had a net asset value of $7.5 million as of March 31. Last year Olive purchased 3.03 million of its own shares for cancellation.
Olive's largest two positions are a private real estate company and Omai Gold Mines (OMG-V), whose ticker matches its 180% one-year return. Other positions include Troilus Gold (TLG-T), Arizona Sonoran Copper (ASCU-T) and Aurion Resources (AU-V).
Olive insiders are also active in the market. Since the beginning of February, executive chairman Derek Macpherson has spent $9,690 on stock at 3 cents and director Jacob Willoughby has bought $21,450 worth of shares, also at 3 cents. Investor Dave Lotan (Aurion's chairman) went above 10% in mid-February.
Price: 0.035
Shares out: 109.2 million (114.4M fully diluted)
Market cap: $3.8 million
An oil and gas company that has been a prolific buyer of its own stock - including after fairly ferocious rallies - is Tenaz Energy (TNZ-T, ATUUF-OTC). Tenaz recently closed on the acquisition of offshore gas assets from a joint venture between Shell and ExxonMobil. Tenaz is now the second largest offshore gas producer in the Dutch North Sea.
Tenaz shares have risen 328% in the past year and are up 570% on the two-year chart.
Since April 2, the company has spent almost $800,000 buying back shares at prices ranging from $11.42 to $16.18 - a range that roughly reflects the trading range during that period.
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