Lowell Resources Fund : LRT Monthly Update - November 2021

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MONTHLY UPDATE

Lowell Resources Funds Management Ltd. ABN 36 006 769 982 AFSL 345674	November 2021

November 2021 Performance Summary:

Lowell Resources Fund (ASX: LRT)

The Lowell Resources Fund net asset value ('NAV') at the end of November 2021 was approximately $57.1m compared to $56.5 million at the end of October, representing a 1.1% increase.

The NAV per unit finished the month of November at $1.948/unit (vs $1.927/unit at 31 October 2021). The traded unit price of the ASX listed LRT units at month end was $1.80/unit.

For personal

FUND OVERVIEW

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

FUND SNAPSHOT 30 November 2021

NAV per unit	$1.948
No. of Units on issue	29,299,825
Market Price (ASX)	$1.80 / unit
Net Asset Value	$57.1m
August 2021 Distribution	$0.15/unit
Market Capitalisation	$52.7m

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

For personal use only

MONTHLY UPDATE
November 2021

Lowell Resources Funds Management Ltd. LRT

Fund Investment Actions - November 2021

In November, the Fund sold its holding in advanced WA gold explorer Apollo Consolidated into a contested takeover, which was won by Ramelius Resources. The Fund remains positioned for further consolidation in the West Australian gold sector, in November increasing exposure to Saturn Metals. The Fund also increased its holdings in Kingwest Resources, Carawine Resources, Lefroy Exploration and upcoming IPO Larvotto Resources.

In west Africa, the Fund adjusted its holdings by selling a small amount of Predictive Discovery and using proceeds for further investment in Marvel Gold, and initial stakes in African Gold and Turaco Gold. In the Americas, the Fund added to its positions in Newfoundland explorer Matador Mining and Mexico gold-silver explorer Mithril Resources, and invested in Argentina-focused E2 Metals.

With the energy crunch driving continued strong demand for fossil fuels, the Fund invested in NT/Qld focused gas producer Central Petroleum, and took an initial stake in unlisted Mongolia-focused gas player Telmen Energy, as well as O&G services group Matrix Composites & Engineering. The Fund took advantage of announced corporate discussions at Vimy Resources by exiting the remainder of its holding, but maintained uranium exposure through a new holding in Argonaut Resources. The Fund also sold out of Pure Hydrogen after its very strong share price run.

The Fund continued to switch some of its nickel exposure from Centaurus Metals, and from TSX listed Talon Metals, to Azure Minerals.

While maintaining a positive outlook for the sector, after taking profits, cash represents 10.6% of the portfolio. The Fund's focus is on exploration and early-stage evaluation, which is the best-returning part of the Lassonde Curve. In recent months the Fund has locked in profits resulting from excitement about individual discoveries or commodities. The Fund continues to invest in early-stage companies where we see opportunities to make large returns.

	Bauxite Uranium	Helium		COMMODITY EXPOSURE
	0%	1%	Mining Services
Mineral Sands	Fertilisers			2%	30 NOVEMBER 2021
1%				0%
Cash	3%
11%
Nickel
7%						Gold & PGM
Battery						46%
4%

O&G

8%

Base Metals	Silver	REE	2
14%	1%	2%

MONTHLY UPDATE

Lowell Resources Funds Management Ltd. LRT

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		Fund Top Holdings
		Predictive Discovery (PDI.ASX) continued to
		extend the depth of its 3.6Moz NE Bankan gold
		deposit in Guinea, west Africa, with intercepts such
		as 24m at 8.8 g/t Au from 463m and 20m at 7.3 g/t
		Au from 511m.
use		De Grey Mining (DEG.ASX) announced infill
	drilling results for the proposed Brolga Stage 1 pit
		at the 9.0Moz Mallina gold project. Assays included
		127m at 2.0g/t Au and 93m at 2.2 g/t Au.
		Caravel Minerals (CVV.ASX) announced an
		upgrade of the mineral resource at its namesake
		copper deposit in the WA wheatbelt, increasing the
personal		contained copper by 53% to 1.86Mt Cu. Updated
	scoping study economics have a base case pre-tax
	NPV7 of A$1.44bn at a US$4.00/lb Cu price.
	Azure Minerals (AZS.ASX) announced the highest
		nickel and copper grades to date from drilling at its
		60% owned Andover project in the Pilbara, WA.
		Results from the VC-07 East deposit included 5.0%
		Ni over 1.5m and 4.9% Cu over 1.1m. Heritage
		approvals were received to drill a number of high
		priority regional EM anomalies.
		Talon Metals (TL.TSX) announced further high
		grade intersections at its 51%-owned Tamarack
		nickel project in Minnesota, USA. Ongoing drilling
		at the CGO West area intersected 15m at 7.4%
		Nieq and 10m at 6.9% Cueq.
For		Fund Top Performer
	Kingwest Resources (KWR.ASX) share price
		rose 76% in November. KWR has discovered
		extensive, open-ended "Kanowna Belle style" gold
		mineralization under salt lake cover at its new Sir
		Laurance prospect south of Menzies in WA. Best
		results from early stage drilling include 28m at
		1.9g/t Au and 3m at 6.5 g/t Au. Mineralisation has
		been intersected over at least 1.2km of strike and
		400m across strike.

November 2021

LRF Portfolio Value by Project Stage
30 November 2021
70%
60%
50%
40%
30%
20%
10%
0%

	Company			Commodity		% of Gross
				Investments
	Cash			Cash		10.6%
	Predictive			Gold		7.7%
	Discovery
	Musgrave			Gold		6.0%
	Minerals
	Genesis Minerals			Gold		5.5%
	De Grey			Gold		4.7%
	Mining
	Caravel Minerals			Copper		3.6%
	Azure Minerals			Nickel		3.5%
	Talon			Nickel		3.4%
	Metals
	Red Dirt Metals			Lithium		2.5%
	Blue Star Helium			Helium		2.4%
	South Harz
		Potash		2.4%
	Potash

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MONTHLY UPDATE
November 2021
Lowell Resources Funds Management Ltd. LRT

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Performance Comparison - November

2021

Over the past 12 months, the Lowell Resources Fund's change in underlying net asset value per unit

(inclusive of distributions and after fees and expenses) was 47.2%, and 87.8% pa over two years. The

Fund has outperformed the benchmark S&P/ASX Small Resources Index (XSRD), the ASX Resources

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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

47.5%

+33.9%

12.3%

15.5%

2 years p.a.

87.8% pa

+24.8% pa

7.2% pa

6.4% pa

personal

5 years p.a.

24.4% pa

+13.0% pa

13.7% pa

10.1% pa

10 years p.a.

15.2% pa

-3.1% pa

4.5% pa

10.4% pa

The LRT.ASX traded unit price at the end of November was $1.80/unit, compared to $1.76/unit at the end

of October.

Market Notes

• U.S. inflation again exceeded expectations by a wide margin, and Fed Chairman Jay Powell said it

was time to "retire" the word "transitory". The headline and core rates hit 30-year highs. U.S.

consumer prices jumped 6.2% on an annual basis in October - the highest reading since 1990,

while core CPI, which strips out food and energy costs, was up 4.6% year-over-year, marking the

largest increase since August 1991.

• US$ gold finished November at US$1,775/oz, down slightly from October, after Powell said "The

economy is very strong and inflationary pressures are high. It is therefore appropriate in my view

For

to consider wrapping up the taper of our asset purchases…perhaps a few months sooner". The

gold price had risen around U$100/oz in mid-November following the jump in inflation, before

falling back following news of Jerome Powell's second term as governor of the US Federal

Reserve. The US dollar traded at a 16-month high.

• China reported PPI in October was up 13.5% vs a year earlier (up from 10.7% in September),

representing the fastest factory gate price rise in 26 years.

• Japan reported wholesale inflation hit a forty year high.

• Benchmark 10-year US bond yields fell over the month finishing at 1.44% pa (down from 1.55%),

and real US interest rates dropped back below negative 1.0%.

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For personal use only

MONTHLY UPDATE
November 2021

Lowell Resources Funds Management Ltd. LRT

• Joe Biden's US$1.2trn infrastructure bill was passed, including $US73 billion for electric grid and power structures, $US66 billion for rail, $US65 billion for broadband and $US55 billion for water infrastructure.
• Oil prices fell around 20% in November. In response to US gasoline prices hitting a 7-year high, the US government announced it would release 50 million barrels from its strategic reserves in concert with China, Japan, India, South Korea and the UK. Nevertheless, this was less than anticipated and had little effect. However, the spread of the Omicron covid variant, and Powell's comments on accelerating tapering of bond purchases at month's end, did crunch the oil price, with the NYMEX oil price falling over $20/bbl from 'Black Friday'.
• U.S. oil production remains about 12% below February 2020 levels, according to US Department of Energy data. That's equivalent to the U.S. Gulf of Mexico's entire output. US crude inventories fell below the five year minimum for the time of year. However, US shale oil production is set to hit record levels of 5mmbbl/day and Deloitte estimated that shale producers were making more money than at any time since the shale "revolution" began.
• Henry Hub, the US natural gas benchmark, traded at just under $5 per mmbtu, more than double the price at the beginning of the year.
• UK natural gas prices increased ~17% in one trading session after Germany's energy regulator suspended approval of the Nord Stream 2 Natural gas pipeline from Russia. European gas stores could drop to zero if cold weather during the northern winter boosts demand. Nuclear reactors in France, an exporter of electricity, have limited availability due to pandemic-related maintenance delays. German inflation surged to 6%, the highest level since 1992, with the main driver being energy prices. Spanish inflation also hit a near 3-decade high.
• In Australia Incitec Pivot announced it will close the Gibson Island fertiliser plant in Queensland in 2023, saying it could not find a new gas contract at acceptable rates. Prices for ammonia, a key input into ammonium nitrate fertiliser, hit a record high in the US, while the CEO of European fertilizer producer Yara said that the cost to produce ammonia had increased 10-fold over the past year.
• Copper stocks at warehouses tracked by the London Metal Exchange remained historically low. Goldman Sachs predicted visible copper stockpiles could be depleted by February. China's copper premium spiked to the highest in at least six years as base metals extended their rebound on constrained supply and depleted inventories. The premium paid by buyers looking to get hold of copper in China jumped to US$345 per tonne mid-month. The spike came after inventories on the Shanghai Futures Exchange fell to the lowest level since 2009.
• China's economy was impacted by the energy crisis and responses to the property development. Chinese regulators told banks to issue more loans to property companies. Iron ore prices received a shot in the arm and rose back over US$100/t following China's expectations of a re-start of 16 idled pig iron blast furnaces. Steel production curbs, to help cut emissions ahead of the Winter Olympics in February, and a slowdown in the property sector, were the main causes behind the iron ore price halving in recent times. On the supply side, the three main producers Vale, Rio Tinto and BHP have all downgraded their 2021 iron ore production estimates this quarter.
• The Baltic Dry Exchange index more than halved from its peak in October and Pacific container rates fell. In China, after a runup since April, dry bulk freight rates have fallen steeply on the back of easing China port congestion, falling Chinese steel production and sharp drop in iron ore, thermal coal as well as other raw commodity prices. Major US retailers said they had imported most of their holiday supplies. However, there were still 71 container ships waiting to dock off California (pre-pandemic offshore waiting was rare).
• China imposed mandatory quarantines on cargo crews of up to 49 days. China has also banned crew changes for foreign seafaring crews in China. The International Chamber of Shipping said the new

regulations would have a cumulative impact on the supply chain and cause further disruptions.

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