Junior mining stocks, broadly speaking, are an asset class of extremes, where investors often overvalue companies whose operations are very good but not great, and undervalue companies whose advancements simply go unacknowledged.
Among these two extremes, the former is best served by near-term short-sellers, who look to profit from a company’s expected downfall, while the latter represents a long-term active investor’s best chance at capitalizing on volatility to earn market-beating returns.
Consider two examples in the undervalued category, FPX Nickel (TSXV:FPX) and Orestone Mining (TSXV:ORS), each of which sat down with Stockhouse for an interview over the past week.
FPX Nickel
We start things off with FPX Nickel, a junior mining stock whose Baptiste nickel project in British Columbia is projected to be in the top 10 largest in the world in terms of annual output. A 2022 mineral resource estimate details 3,828 kilotons of nickel indicated and 720 kilotons inferred, which comes to over US$70 billion in the ground based on the US$15,494 price per ton at the time of writing.
The company ushered the project into pre-feasibility in 2023, substantiating average production of 59,100 tons of nickel per year over a 29-year mine life, the potential for low costs (US$3.70 per pound of nickel) and low-carbon emissions (2.4 tons CO2 per ton of nickel), and the ability to yield a product suitable to the needs of both the steel and EV industries.
FPX Nickel is currently focused on engineering studies and baseline environmental data collection to advance Baptiste into the environmental assessment process in the second half of 2025.
With nickel demand set to grow by a factor of 3.7x by 2050 (slide 4), the company is optimally aligned to leverage this momentum as it progresses towards production.
Investors broadly disagree, holding the stock at a loss of 30.88 per cent year-over-year and a gain of only 11.90 per cent since 2020.
Watch out for Lyndsay Malchuk’s interview with FPX Nickel’s president and chief executive officer (CEO), Martin Turenne, on Monday, February 24.
Orestone Mining
Another junior mining stock underperforming its potential is Orestone Mining, whose portfolio provides exposure to primarily gold and copper, as well as silver and molybdenum, spread across projects in Canada and Argentina. Here’s a breakdown:
- The flagship Captain gold and copper project in north-central British Columbia hosts a large porphyry system backed by drilling and geophysical survey data.
- The Francisca property in Salta Province, Argentina, is prospective for open-pit oxide gold. It features two gold zones, each boasting a surface expression of 400-450 metres in strike length and 50-100 metres in width. A large changeability anomaly indicates a potentially larger intrusive body at depth.
- The Las Burras copper and gold property in Argentina hosts an 800 metre by 1,000 metre mineralized zone, with a strong chargeability anomaly over a strike of 3,000 metres and width of 1,500 metres still to be fully explored.
Supported by extensive exploration data suggesting these properties remain untapped, and guided by a management team that has identified, acquired, developed and/or produced 14 gold and silver deposits and mines, it stands to reason that Orestone investors should be optimistic about harvesting value through exploration moving forward, especially as the copper price hovers near a 20-year high of over US$4.50 per pound driven by the energy transition, while gold trades at an all-time-high of US$2,949 per ounce because of increasing geopolitical tension.
This optimism hasn’t materialized in recent years, saddling investors with a 65 per cent loss since 2020, offering the chance for a contrarian allocation as the company focuses on defining a gold deposit at Francisca.
David Hottman, Orestone’s chairman and CEO, spoke with Lyndsay Malchuk about the company’s up to 85 per cent option on the Francisca property. Watch the interview here.
Join the discussion: Find out what everybody’s saying about these junior gold and nickel stocks on the FPX Nickel Corp. and Orestone Mining Corp. Bullboards and check out Stockhouse’s stock forums and message boards.
This is sponsored content issued on behalf of FPX Nickel Corp. and Orestone Mining Corp., please see full disclaimer here.
(Top photo of drill core from the Captain property: Orestone Mining)