February Report

Market concerns regarding the potential negative impacts of AI weighed on software-related companies. The Fund has exposure to only two such companies: cardiac CT scan reading company Artrya, which fell 3.7%, and advertising fraud prevention software company Adveritas, which declined 17%. In our view, both businesses are clear beneficiaries of AI adoption, making the market reaction somewhat perplexing.

IperionX and Metallium fell 8.5% and 10.5% respectively, again on little news. We believe both companies remain very well positioned to benefit from the reshoring of critical minerals supply chains to the United States and expect the recent weakness to prove temporary.

Metallium continues commissioning its new Texas plant, with full production from its gold-rich e-waste line expected in Q4 this year. Several operational milestones are expected to be achieved in the interim. We also anticipate further progress across its gallium and germanium recovery initiatives over the course of the year. A recent interview with CEO Michael Walshe discussing the company’s strategy can be found here: Metallium Ltd. (ASX:MTM) – Turning E-Waste Into Nr Term Cash Flowing Gold-Equivalent Ounces.

Brazilian Rare Earths rose 41% following the announcement of two important processing breakthroughs. First, the company can more than double the grade of its ore using a simple, low-cost sorting process, increasing total rare earth oxide (TREO) grades from 12.7% to approximately 27%. Second, metallurgical testing demonstrated that 97% of the contained TREO can be extracted using a relatively low-temperature 150°C acid cure process. We look forward to the upcoming scoping study (mine plan), expected mid-year, which should provide greater clarity on what appear to be highly attractive project economics.

Clarity Pharmaceuticals rose 17% after releasing abstract data ahead of the presentation of its Co-PSMA trial at the European Association of Urology conference (13–16 March). The trial compares Clarity’s copper-64 PSMA diagnostic with the gallium-68 tracer used by Telix in the post-prostatectomy setting, where patients are monitored for PSA recurrence to determine whether further treatment, such as radiotherapy, is required.

The abstract showed that 64Cu-SAR-bisPSMA detected lesions in 78% of patients (39/50), compared with 36% (18/50) using 68Ga-PSMA-11. Importantly, the more sensitive imaging resulted in treatment plan changes in 22 of 50 patients, or 44% of cases. Discussions with clinicians suggest that a change rate of 20–30% would already be considered clinically meaningful.

Further details on the nature of these treatment changes are expected to be discussed at the conference in March.

We estimate the prostate cancer diagnostic market could reach approximately USD $3 billion by 2029. We believe Clarity could reasonably capture 10–20% market share, which alone supports the company’s current market capitalisation of approximately AUD $1.3 billion. The company’s prostate cancer therapeutic program provides additional upside.

Further data will be generated by two Phase 3 studies, both of which are expected to be fully recruited this year. FDA approval could occur between mid-2027 and early-2028.