Quarterly Investor Update

RNS Number : 7601I

Gunsynd PLC

15 December 2020

 

Gunsynd Plc

Quarterly Investor Update

Gunsynd Plc ("Gunsynd" or the "Company"; AIM: GUN, AQSE: GUN) is pleased to announce the following investor update for the quarter ending 31 October 2020 regarding its current holdings in investee companies. 

Rincon Resources Pty Ltd ("Rincon")

During the quarter Rincon made significant steps forward corporately. It issued a convertible loan note ("CLN") to raise A$400,000 to assist it in executing its proposed IPO on the Australian Securities Exchange ("ASX") (subject to admission, its ticker will be ASX:RCR) intended for later this month. As announced on 5 November 2020, Gunsynd participated in the CLN through a further investment of A$100,000 (£54,700) which will convert at a 30% discount to the IPO price of Rincon.

As announced on 9 December 2020, Gunsynd understands that the expected listing date for Rincon's IPO on the ASX (which was targeted for 10 December 2020) is expected to be subject to a short delay while final ASX administrative matters are completed. The Company understands that Rincon and its advisers are working closely with ASX and confirms that a further update will be made in due course.

Eagle Mountain Mining Limited ("Eagle Mountain")

During the quarter, Gunsynd invested an additional A$256,000 (approximately £145,000) in Eagle Mountain, an ASX listed copper-gold exploration and development company (ASX: EM2).

During November 2020, Eagle Mountain announced an update detailing a new broad zone of copper mineralisation identified at Oracle Ridge. The copper mineralisation was encountered in partly assayed drill hole WT-20-05. Significant assay results included: 15.1m @ 1.72% Cu, 16.87g/t Ag, 0.38g/t Au from 313.9m including:

-  3.45m @ 1.89% Cu, 15.97g/t Ag, 0.35g/t Au from 313.9m; and 

-  8.41m @ 2.46% Cu, 25.09g/t Ag, 0.56g/t Au from 321.29m

This newly identified zone of broad copper mineralisation is more than 100m from the nearest significant assay in a sparsely drilled area. Copper sulphide mineralisation was observed in the recently drilled adjacent hole WT-20-10, with detailed logging and assays pending.

Turnaround times at the assay laboratories in Arizona are still lengthy due to COVID-19 restrictions and the large number of samples being submitted by other parties. Five to six weeks is the new "normal" for assay turnaround time, so only selected logged drill hole intervals have been submitted for assay at this time. In time, other zones within each drill hole will be assayed which may identify additional unrecognised mineralisation. It is anticipated that further assay results from priority zones will be released to the market in the coming weeks.

We understand Eagle Mountain has undertaken oriented core as part of an exploration programme at Oracle Ridge. We hope this will provide valuable information on the orientation of structures which are the typical pathways of hydrothermal fluids responsible for the high-grade skarn mineralisation. Eagle Mountain will use this information, along with other supportive data, to assist with locating the potential source of the mineralisation.

Angold Resources Limited ("Angold")

Gunsynd has been informed that the listing of Angold on the TSX-V operated by the Toronto Stock Exchange is expected to take place shortly.

On 1 October 2020 the Company announced that it had invested C$100,000 (approximately 58,000) into gold exploration company Federal Gold Corp (to be renamed Angold Resources Limited subject to completion of a reverse takeover). Gunsynd had an existing holding in ZTR Acquisition Corp (ZTR.H:APH) which is the subject of the reverse takeover by Federal Gold Corp. 

Empress Royalty Corp ("Empress") 

Empress is a precious metals royalty and streaming company focussed on the creation of financing solutions for mining companies. Empress has an existing portfolio of 13 gold royalties and is in the process of conducting due diligence for the acquisition of three near-term cash producing gold and silver investments. 

Empress successfully raised C$8,000,000 in October 2020. Proceeds of the financing are funding the three new investments mentioned above, all of which are expected to be revenue generating within 12 months.

During November 2020, Empress announced that it had completed the acquisition of a combined 1% Net Smelter Return ("NSR") royalty on production from the Pinos gold and silver project in Mexico ("Pinos") for an aggregate consideration of US$1,500,000.  The acquisition was a combination of a newly created 0.5% NSR royalty on the Pinos project from Candelaria Mining Corp ("Candelaria") (TSXV:CAND) for consideration of US$750,000 and the purchase of an additional 0.5% NSR royalty on the Project from an existing royalty holder on the same terms and conditions.  Empress' royalties create a direct real property interest in the project that shall continue in perpetuity and registered against title.

Historical records indicate over 800,000 ounces of gold have been produced from the Pinos district.  Candelaria currently has Indicated resource of 175,697 tonnes at a grade of 4.7  grams per tonne of gold equivalent estimated to contain 26,358 ounces of gold equivalent and the Inferred resource a further 529,267 tonnes at a grade of 4.6 grams per tonne gold equivalent estimated to contain 56,146 ounces of gold equivalent.  The 2018 Preliminary Economic Assessment ("PEA") plans for average yearly production of ~12,700 ounces gold equivalent for a life of mine of seven years with potential for growth, at both depth and along strike, and it is estimated that 80% of the district has yet to be explored.

The Board of Empress has indicated it is actively working with the Toronto Stock Exchange regarding the listing of Empress on the TSX-V which is well progressed and is expected shortly.

Rogue Baron Limited ("Rogue Baron")

In spite of the many challenges COVID-19 has presented in 2020, Rogue Baron's flagship brand, Shinju Japanese Whisky ("Shinju"), continues to grow at a rapid pace despite the unprecedented headwinds facing the hospitality sector in particular.

Shinju, which was launched at the end of 2018, sold circa 1,000 cases in 2019. In the first half of 2020, even with customer accounts shut down for nearly two months, sales of Shinju were up 57% on the same period in the prior year. Shortly after customer accounts began reopening, Rogue Baron sold through its entire remaining stock of circa 250 cases in a matter of weeks. Even with COVID-19 related lockdowns, Rogue Baron had, by the end of September, sold the same number of cases as in the whole of 2019.  This was despite on-premises sales being decimated across the USA and not being totally offset by a rise in off-premises sales.  Industry issues were not just limited to sales: bottlers and distillers also shut in many cases causing supply issues.  These issues also affected Shinju.  After completely selling out of Shinju by September, Rogue Baron's latest production run of one container (circa 1,000 cases of six bottles) was completed on 6 December 2020.  We have been informed that pre-orders for this entire container have been made in the USA prior to the container arriving on American soil.  Rogue Baron is now in the process of ordering additional bottles and placing another order with its distillery. This growth is happening despite many key states in the USA, such as California, being in a strict lockdown. 

Shinju had previously received a large boost in publicity by being mentioned in the industry magazine   www.liquor.com   article "The 10 best Japanese Whiskies to drink in 2020".  To be mentioned alongside such well known and highly regarded brands as Yamazaki 12-year-old and Hakushu 12-year is a considerable achievement for a new brand with comparatively small sales to such behemoths from Suntory.

https://www.liquor.com/best-japanese-whiskies-5078590

In November 2020, Rogue Baron hired Speakeasy Wine & Spirits ("Speakeasy"), which is a brand consultancy company with a speciality in helping specifically chosen brands expand distribution across the USA.  Shinju was sold in six USA states in 2020; Washington DC, Maryland, New York, New Jersey, Florida, and California. Starting in Q1 2021, Shinju is expected to be selling into an additional six: Connecticut, Arizona, Texas, Illinois, Colorado, and Nevada, including some of the larger accounts in Las Vegas.  These twelve states account for over 47% of the USA population.

Rogue Baron has already had indicative interest via the Speakeasy distribution network (and not including its current distribution network) in between 400 and 600 cases of the subsequent container to be delivered in early 2021. 

Shinju has also just been added to two of the largest Direct-to-Consumer outlets in the USA, ReserveBar and Drizly, which will make Shinju available to consumers in 35 USA States. The relaxing of liquor regulations due to COVID-19 has now made Direct-to-Consumer liquor sales more popular than ever. Rabobank estimates that USA online alcohol sales reached USD 2.6bn in 2019, growing by 22% year on year. Shinju plans to take advantage of this growth. 

With respect to the tequila market, American basketball player Lebron James has become the latest star to join the agave spirits sector through an investment in Lobos 1707 Tequila and mezcal.  Lobos 1707 Tequila Extra Añejo is priced at US$149.99 per 750ml.  This gives an indication of the premium prices which can be charged for quality tequila.  He joins the likes of Justin Timberlake, George Clooney, Chris North, P Diddy, AC/DC and Carlos Santana to have invested in or promoted products in the tequila and mezcal space.  We believe this, alongside the strong growth in the tequila sub category in the last few years, bodes well for the future growth of the category and confirms that tequila is moving from a student shot drink to a premium (and even super premium) sipping drink.  This trend is welcome given the intended launch of Rogue Baron's Copa Imperial extra anejo tequila in the second half of 2021.

Peterhouse Capital has been appointed as corporate adviser and broker for the proposed admission to trading on the Aquis Stock Exchange Growth Market of Rogue Baron.  The admission document is in the final stages of drafting and should be submitted by the end of next week to Aquis with admission to Aquis targeted for Q1 2021.

Sunshine Minerals Limited ("Sunshine")

On 21 August 2020, the Company announced that Malachite Resources Limited, which is listed on the ASX (renamed Pacific Nickel Mines Limited; ASX:PNM "Pacific Nickel") , made an announcement regarding the acquisition of the 85% of Sunshine Minerals Limited (a private company incorporated in the Solomon Islands) it did not already own (the "Transaction"). Pacific Nickel had previously acquired a 15% shareholding in Sunshine. 

In the announcement of 21 August 2020, Gunsynd stated it would, subject to completion of the Transaction, receive 1,262,967 Upfront Consideration Shares in Pacific Nickel and, subject to further conditions, 1,641,856 Deferred Consideration Shares. Gunsynd has now received a holding statement for the Upfront Consideration Shares. These Upfront Consideration Shares are subject to an escrow period which applies from completion until the earlier of: (a) the date 12 months from completion; or (b) the date 10 business days after the Mines Department grants Sunshine Nickel Limited a mining lease for PL 01-18. 

Kolosori Nickel Limited ("Kolosori")

As announced on 26 October 2020, Gunynd has conditionally sold its stake in Kolosori to Malachite Resources Limited (renamed Pacific Nickel) and will subject to completion of the Transaction, receive 682,790 Upfront Consideration Shares in Pacific Nickel and, subject to further conditions, 1,137,984 Deferred Consideration Shares in Pacific Nickel.  Conditional on issue, these shares will be subject to escrow.

Oyster Oil and Gas Limited ("Oyster")

The situation with respect to the Gunsynd investment in Oyster remains unchanged from that stated in the announcement made on 30 October 2020. 

Summary

Not content with the damage foisted upon the private sector at the beginning of the year governments have  decided to double down on their initial efforts regardless of the damage they will cause both health wise and economically.  Despite the impending economic malaise caused by repeated lockdowns, markets and liquidity have both remained healthy in the last few months. Gunsynd has taken advantage of a period of market liquidity to raise money (at a substantial premium to where it was raised in June and July), dispose of assets such as Bunker Hill  and Kolosori, increase its exposure to Rincon, Eagle Mountain and Angold and make a new investment in Empress whilst still maintaining a healthy cash reserve to allow the Company to make further investments in current or new assets as the case may be.

We hope soon to be able to provide updates on the IPOs of four of our investee companies: Rincon, Angold, Empress and Rogue Baron. 

Forward Looking Statements  

This announcement contains forward-looking statements relating to expected or anticipated future events and anticipated results that are forward-looking in nature and, as a result, are subject to certain risks and uncertainties, such as general economic, market and business conditions, competition for qualified staff, the regulatory process and actions, technical issues, new legislation, uncertainties resulting from potential delays or changes in plans, uncertainties resulting from working in a new political jurisdiction, uncertainties regarding the results of exploration, uncertainties regarding the timing and granting of prospecting rights, uncertainties regarding the Company's or any third party's ability to execute and implement future plans, and the occurrence of unexpected events. Actual results achieved may vary from the information provided herein as a result of numerous known and unknown risks and uncertainties and other factors

This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.

The Directors of Gunsynd accept responsibility for this announcement.

For further information please contact:

Gunsynd plc Hamish Harris/Peter Ruse	[phone]
Cairn Financial Advisers LLP James Caithie / Liam Murray	[phone]
Peterhouse Capital Limited Lucy Williams	[phone]

 

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