Lowell Resources Fund : LRT Monthly Update - February 2022

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MONTHLY UPDATE

Lowell Resources Funds Management Ltd. ABN 36 006 769 982 AFSL 345674	February 2022

February 2022 Performance Summary:

Lowell Resources Fund (ASX: LRT)

The Lowell Resources Fund estimated net asset value ('NAV') at the end of February 2022 was approximately $56.4m, compared to $55.6m million at the end of January 2022.

The NAV per unit finished the month of February at $1.922/unit (vs $1.896/unit at 31

January 2022), an increase of 1.4%. The traded unit price of the ASX listed LRT units at month end was $1.935/unit.

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FUND OVERVIEW

Investment	Lowell Resources Funds
Manager	Management Limited
Managed since	6 February 2004
ASX code	LRT
Income	Annual
distribution

FUND SNAPSHOT 28 February 2022

NAV per unit	$1.922
No. of Units on issue	29,351,614
Market Price (ASX)	$1.935 / unit
Estimated NAV	$56.4m
August 2021 Distribution	$0.15/unit
Market Capitalisation	$56.8m

	Lowell Resources Fund NAV vs
	ASX Junior Resources Index
3.50	(rebased to 1 at December 2019)
3.25
3.00
2.75
2.50	LRT
2.25	NAV
2.00	XSRD
1.75
1.50
1.25
1.00
0.75

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MONTHLY UPDATE
February 2022

Lowell Resources Funds Management Ltd. LRT

Fund Investment Actions - February 2022

In energy, the Fund added to its position in Canadian producer Calima Energy, and acquired stock in Mongolia-focused CSG developer TMK Energy as a result of the Fund's holding in unlisted Telmen Energy. The Fund exited its positions in FAR Limited, after a takeover bid was announced by Samuel Terry Asset Management, and in High Peak Royalties.

In gold, the Fund boosted its holdings in ASX listed Saturn Metals, Carnavale Resources and E2 Metals.

In February, the Fund added to its North American copper exposures through TSX listed Aguila Copper and Enduro Metals.

LRF COMMODITY EXPOSURE 28 FEBRUARY

2022

	Bauxite	Uranium Helium
	1%
Mineral Sands	Fertilisers	1%		2% Mining Services
1%			1%
	3%
	Cash
	7%

Nickel

8%

Gold & PGM

Battery47%

3%

O&G

9%

Base Metals

15%Silver REE

1% 1%

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MONTHLY UPDATE
February 2022

Lowell Resources Funds Management Ltd. LRT

Fund Top Holdings	LRF Portfolio Value by Project Stage
28 February 2022
	60%
Predictive Discovery (PDI.ASX) announced high	50%
grade gold intersections from follow up aircore
drilling of regional targets around its 3.6 Moz	40%
Bankan discovery, including: 12m at 10.5 g/t Au
from 5m (800W prospect), 8m at 9.9 g/t Au (N-BCK	30%
prospect) and 6m at 10.5 g/t Au from 26m (AG2
prospect).	20%
At Genesis Minerals (GMD.ASX) one of	10%
Australia's most successful gold mining managers
Raleigh Finlayson took the reins as managing	0%
director. GMD announced broad, high-grade gold
mineralisation at shallow depths in RC drilling at the
Puzzle North discovery, including: 27m @ 8.2g/t Au
from 30m, and 34m @ 13.4g/t Au from 42m.
Musgrave Minerals (MGV.ASX) continued to
release bonanza-grade gold drill results from its
100% owned Cue project in WA, including 9m at	Company	Commodity	% of Gross
110.5g/t Au from 42m, and 2.8m @ 122.2g/t Au	Investments
from 72m at its new Mosaic discovery.	Cash	Cash	4.3%
De Grey Mining (DEG.ASX) released resource
definition drilling results at the Diucon deposit,	Predictive	Gold	7.2%
which forms part of the huge Hemi discovery in the	Discovery
Pilbara of WA: 149m at 2.0 g/t Au and 152m at 2.3
g/t Au.	Genesis Minerals	Gold	6.8%
South Harz Potash (SHP.ASX) advanced its first	Musgrave	Gold	5.6%
drillhole at the Ohmgebirge potash project in	Minerals
eastern Germany. This is the first of two	De Grey
confirmatory holes which should allow completion	Gold	4.6%
Mining
of a scoping study in May 2022.

Fund Top Performer			Azure Minerals			Nickel		3.9%
		Talon			Nickel		3.8%
Melbana Energy (MAY.ASX) share price rose by		Metals
more than 200% in February, and moved into the			Melbana Energy			Gold		3.3%
top 10 holdings for the Fund. MAY announced
progress results from its Alameda-1 onshore well in
Cuba, which intersected a potential gross oil		Caravel Minerals			Copper		2.9%
column of over 400m in the secondary "N" structure
carbonate reservoir. The well is a 30:70 JV with			South Harz			Potash		2.6%
Angolan national oil company Sonangol. The well is		Potash
now drilling ahead to the primary and largest
Alameda target, before testing the N structure.
	Blue Star Helium		Helium	2.4%

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MONTHLY UPDATE
February 2022
Lowell Resources Funds Management Ltd. LRT

Performance Comparison -February 2022

Over the past 12 months, the Lowell Resources Fund's change in underlying estimated net asset value per unit (inclusive of distributions and after fees and expenses) was 30.0%, and 85.6% pa over two years. The Fund has outperformed the benchmark S&P/ASX Small Resources Index (XSRD), the ASX Resources 300 Index, and the ASX 200 Index over one, two, five and ten years.

	Total Portfolio			LRT Change in			S&P/ASX Small		ASX Resources	ASX 200 Index
	Performance to 30			NAV per unit incl			Resources Index
						300 Index
	November 2021			distributions			(XSRD)
	12 months			30.0%			+22.4%		12.7%	10.2%
	2 years p.a.			85.6% pa			+31.5% pa		22.5% pa	8.3% pa
	5 years p.a.			20.1% pa			+13.0% pa		15.9% pa	8.5% pa
	10 years p.a.			12.8% pa			-3.3% pa		5.3% pa	9.6% pa

The LRT.ASX traded unit price at the end of February was $1.935/unit, compared to $1.75/unit at the end of January.

Market Notes

• Equity markets were volatile in January, with the S&P 500 falling by more than 9% at one point against 1st January levels. Overall the index was down nearly 3% in February.
• US real interest rates climbed back to pre-Covid levels, unemployment in the US dropped to a pre- pandemic 3.9% low, and the December US consumer price index rose 7% from a year earlier, the fastest pace since June 1982. Statements from the US Fed re the likelihood of interest rate hikes in 2022 pushed the yield on the 10-year bond over 2.0%, before falling back at month's end due to the Ukrainian conflict.
• The US$ gold price reached US$1,976/oz when Russia attacked Ukraine, its highest level since September 2020. Gold ETF's saw strong inflows. The Bank of Russia said it would start purchasing gold again in the domestic market, just under two years after it ended a 6 year period of gold buying. The move came after the central bank and several of the country's commercial banks were sanctioned in response to Russia's invasion of Ukraine. The Bank of Russia spent six years doubling its holdings to become the biggest sovereign buyer of the previous decade.
• Western government sanctions against Russia have specifically excluded Russian exports of oil and gas and aluminium, but a number of global banks and producers such as BP and Shell began "self-sanctioning" by announcing exits from their Russian operations. UK Prime Minister Boris Johnson said that the West must end its reliance on Russian oil and gas.

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MONTHLY UPDATE
February 2022

Lowell Resources Funds Management Ltd. LRT

• In the U.S. oil producers are ramping up supplies to take advantage of higher prices. Production from America's Permian Basin rose to a record for a third month in a row in January, topping 5 million barrels a day. Western energy majors are on course to buy back shares at near-record levels this year as soaring oil and gas prices, and reduced capital investment, enable them to boost returns for investors. The seven super majors - including BP, Shell, ExxonMobil and Chevron - are expected to return $US38 billion ($53 billion) to shareholders through buybacks this year.
• In Germany, the Greens Party accepted a pledge to increase capacity for coal and gas reserves - as well as President Olaf Scholz's plan to build two liquid natural gas terminals to bring in LNG from Qatar and the US. The plan's aim is to try to reduce Germany's energy dependence on Russia, which provides it with 55% of its imported gas.
• Aluminium hit an all-time high on the day Russia began the armed conflict in Ukraine, amid energy shortages and supply concerns. Russian-supplied aluminium accounts for around 10% of total U.S. imports. Aluminium prices have risen more than 55% in the past year as demand has been spurred by the reopening of economies. The global market was in a 1.9 Mt deficit last year. Rusal is the world's 2nd largest aluminium producer ex-China at 70Mtpa.
• LME copper stocks fell 10% since January, tightening available metal into the market as problems with the Las Bambas mine in Peru continued. Global inventories fell for the 4th consecutive year, to a wafer thin 3 days of consumption. The diminishing stockpiles are primarily a result of ongoing China demand, with 2021 refined imports at 3.3mt, up from 2019.
• In 2022, diversified metal producer Nornickel said that the copper market is expected to be in a mild deficit of 82kt as global consumption grows on the back of further post-COVID global economic recovery and increasing investments in renewable energy and transport electrification. The company estimated that the number of planned probable copper mining developments is too small to meet the upcoming demand. That could shift the market into a sizeable deficit if no new projects are started in the next 2-3 years.
• Chile's constituent assembly began discussions for a new Constitution. Parliamentarians are looking to replace Pinochet's market-focused constitution with a more socialist-based model. Potential alterations include nationalising the mining sector, increased protection for indigenous territories and radically changing the country's water rights laws. A nationwide referendum is planned for September.
• China called a special "reminder and caution meeting" of iron ore market players, as Chinese authorities again tried to talk down the price. Singapore iron-ore futures tumbled 12% to a four-week low of $US131.15/t, after rising $US83.10 to $US157.25 in the previous three months.
• North America's largest uranium miner Cameco Corp said it wouldn't increase production to chase what one executive called "mythical" market demand. Instead, Cameco is advocating "indefinite supply discipline" by limiting production at two of its key Canadian uranium operations starting in 2024. It will reduce Cigar Lake production by 25% by 2024 as it endorsed deficit forecasts in the coming years.
• France reaffirmed its commitment to nuclear power following President Emmanuel Macron's announcement of plans to construct up to 14 new nuclear reactors. State-backed EDF will be responsible for the construction of at least 6 new reactors by 2050, with an option for another 8. The lives of all existing French nuclear plants will be extended where safe to do so. Germany is set to follow the trend into alternative and renewable energies and has already signalled that it might consider keeping its nuclear plants online.

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