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Sunday, June 23, 2024

3 Undervalued Small-cap Stocks With Impressive Upside Potential

Let’s highlight three individual stocks for a change of pace. All represent compelling potential and, as juniors, a low share price relative to that potential.

One is an oil services company, Enterprise Group, in western Canada. Further, there are two mining concerns; Jourdan Resources, which finds itself within the lithium area of Quebec and Tinka Resources. The latter owns an impressive silver, zinc and lead portfolio in central Peru. All are worthy of your attention. We’ll give you a flavour through highlights and links to initiate your path to an investment decision.

Enterprise Group, Inc. (TSX: E) (OTCQB: ETOLF), a consolidator of energy services (including specialized equipment rental to the energy/resource sector), emphasizes technologies that mitigate, reduce, or eliminate CO2 and Green House Gas (GHG) emissions for small local and Tier One global resource clients.

Recently, Enterprise commissioned a research report. Anyone who knows these products knows that the company has no sway over content or conclusion. The research firm, in this case, is U.S. based National Investor. The Report notes these highlights;

· 2022 revenue is up 45%

· EPS C$0.05 a share up from C$0.05 loss FY2021. (a round trip of C$.0.10).

· Owns C$ 42 million in equipment versus C$ 34 million enterprise value.

· Among Tier One clients are Suncor, Chevron, Conoco Philips Tourmaline Oil and Cenovus. Rounding out the roster are many midsize companies and more minor concerns. 

· Much of its business comes from word of mouth, and many are repeat contracts.

· Salient forecasts include a 12% rise in Capex spending (Chevron has announced 25%.

· Forecasts for an 18% oil price rise are the consensus.

“The oil and gas CAPEX market size was around USD 502 billion in 2020, and it is anticipated to reach around USD 942 billion in 2027, registering a CAGR of around 8.1% during the forecast period 2022-2027…Hence, to meet the strong global demand for crude oil and natural gas, more investment is required for exploration and production activities, which in turn promulgates the CAPEX in the oil and gas industry. (researchandmarkets.com)

Solid evidence of that growth is seen in Enterprise’s FY22 numbers, which noted a significant increase over FY21. This Fundamental Research Report also brings investors up-to-date, as does the National Investor.

One of Enterprises’s recent new clients is a Tier One company: A North American oil and gas operator, its Western Canadian property covers 50,000 sq. mi with multiple target horizons. From a 4% increase in production in 2013, the e-client delivered a 25% increase in 2022.

Finally, Enterprise is in the vanguard of reducing GHG emissions, mainly through its Evolution Power Division. From the site;

NG to Electricity microgrid replaces up to 15 diesel-fired generators per site, eliminating diesel fuel usage by up to 5,000 litres per day while seriously reducing on-site sound volumes. The transition from diesel to natural gas isn’t an alternative but an advancement. Our powerful, streamlined fleet can accommodate up to 2.4 MegaWatt projects. Our generators use compression and turbine technology with sequencing capabilities allowing us to add on as projects scale up or down. Packages are portable and fuel tolerant, relevant in oil and gas production and industry.

You aren’t paying attention if the preceding doesn’t pique your interest and convince you to look deeper.

JOURDAN RESOURCESINC. (TSXV: JOR; OTCQB: JORF; FRA: 2JR1) properties are in Quebec, Canada, primarily in the spodumene-bearing pegmatites of the La Corne Batholith, around North American Lithium’s Quebec lithium mine. 

JOR boasts three unique properties in Quebec; Vallee Lithium, Baillarge Lithium-Moly and Pressiac-La Corne Lithium. 

Jourdan CEO and President Rene Bharti commented: With Jourdan having over 13,000 hectares of land surrounding NAL’s project, the opportunity to partner with NAL and Sayona to accelerate Jourdan toward production is evident. Given that the NAL concentrator has commenced operations, Jourdan is in a short position to benefit from having access to what we expect will become Canada’s leading lithium-producing mine and concentrator. (PR Mar 07)

1.  Vallee Lithium; contiguous and in proximity to RB Energy’s Quebec Lithium Property and adjacent to North American Lithium Mine. The mineralized Spodumene Pegmatite dykes that North American Lithium is mining continue directly onto the claims of Jourdan.

2. The property encompasses the southern part of Mont Vidéo and frames the north and east of Lac Legendre. It consists of 48 cells designated on a map covering surveyed intra-municipal lots covering 1997 hectares.

3.  Jourdan and Sayona plan to undertake the most extensive lithium drill program in Quebec, set to start in May 2023.

1.  Baillarge Lithium-MolyThe Baillargé-Est in Abitibi, in the township of La Corne on Map 32 C 05 (NTS). It consists of 35 claims and is positioned 38 kilometres north of Val d’Or and about 30 kilometres southwest of the village of Barraute. The property also covers about three-quarters of Lake Baillargé. The area thus formed is 1299 hectares.

2.  It has been the subject of 14 surveys, including sampling results of 2.48% Li2O or 1.15% Li over 2.30m.

3. The property is at a preliminary stage of its exploration. Much work remains to be done before producing a substantial evaluation.

1.  Preissac-Lacorne Property consists of a set of 161 mining claims which covers surveyed intra-municipal lots and is composed of three distinct blocks informally named here: the main Preissac-La Corne block, the Duval Lithium block and the La Motte block. 

2. The total surface area of the area is 7173 hectares.

3. The Preissac‐La Corne sector is crossed by numerous pegmatites and aplites, which seem to have been placed in the fractures and joints. They consist of albite, potassium feldspar, quartz, muscovite, garnet, beryl, spodumene, molybdenite and colombo-tantalite. The property is still at an early stage of exploration.

Lithium demand is not retreating anytime soon, so pick a proxy to participate. While there are a few junior mining choices, JOR offers land placement, well-financed partners and the added kicker of participating in the more advanced (with aggressive development plans) mine it surrounds. (Jourdan owns the one in red on the map above).

Tinka Resources Limited (“Tinka” or the “Company”) (TSXV & BVL: TK) (OTCQB: TKRFF) owns an impressive portfolio of Silver, Zinc and Lead mining assets in central Peru. Let’s look at the Company’s main property, the Ayawilca Zink-Silver Project.

While a proxy for the growth of Zinc, the Company finds itself right in the middle of a unique mining growth situation favouring new and extensive industrial metals supply. The global zinc demand for renewable energy technologies is forecast to continuously increase during the next decade, from 109,300 metric tons in 2020 to 364,000 in 2030. Interestingly and not broadly advertised, Solar energy is expected to account for the largest share of this zinc consumption, with a forecast volume of 162,000 metric tons in 2030.

Tinka is smack dab in the middle of the action within Peru’s central global Zinc area. The projected stats are impressive, and the potential is a very compelling opportunity. A list of inferred resources in the Ayawilca sort as; 

• Zinc – 3.0 billion pounds in the Indicated resource category and 5.7 billion pounds inferred.

• Silver – 10.3 million ounces in the Indicated resource category and 30.7 million ounces inferred.

• Lead – 87 million pounds in the Indicated resource category and 370 million pounds inferred.

Tinka’s president and CEO, Dr. Graham Carman, stated: “The ultra-high-grade zinc intercept in A22-202 is a potential game changer for the Ayawilca project. The interval of 10.4m grading 42% zinc consists of almost pure zinc sulphide mineralization, while part of this interval grading ~50% zinc reflects the zinc concentrate grade accepted by smelters. Importantly, the mineralization is relatively shallow (~140m depth) and comes from an area of the resource that could be accessed early in a mine plan.” (The Assay)

The Ayawilca Zinc zone is 100% owned by Tinka and is one of the most significant zinc-silver resources a junior owns.

Management believes this property could be one of the ten largest global zinc producers.

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