August Report

The Fund rose 2.8% in August. Critical minerals companies were generally strong during the month after President Trump met mining executives at the White House on 7 August and announced a series of funding packages. Several of our major holdings also reported significant positive developments.

Gold and critical minerals processing company Metallium rose 31% after reporting that it had received permits for chlorine use at its Texas campus, allowing further testing of its reactors. The lack of permits had caused several months of delays, but we expect the plant to be operational early next year. Two further announcements were also significant.

On 10 August, the company announced two board appointments, and its shares rose 12% on the day. Josh Hawes joined as an independent non-executive director, bringing 15 years of experience across critical minerals, commodities and strategic finance. From 2021 to 2023, he served as chief strategy officer at USA Rare Earth, now a core pillar of the US government’s rare earth and magnet production strategy and valued at USD5.8 billion.

Kellie Benda also joined as an independent non-executive director with immediate effect. A former investment banker and lawyer, her current positions on the Foreign Investment Review Board and the National Reconstruction Fund Corporation are directly relevant to a company seeking government capital on both sides of the Pacific.

Finally, the company announced a commercial relationship with ASX-listed Environmental Clean Technologies to commercialise a class of nanomaterials known as MXenes. These materials have several potential applications, including as coatings for aircraft and drones to reduce their radar signatures, as well as in superconductors and battery electrodes.

Brazilian Rare Earths rose 14% after releasing a scoping study for its Monte Alto deposit, highlighting world-leading grades of 11.3% TREO (total rare earth oxides). This is more than double the grades of major Western rare earth producers Lynas and MP Materials and should make Monte Alto one of the world’s lowest-cost producers.

The project’s NPV of USD7.9 billion compares favourably with the company’s current market value of USD690 million. Mining companies generally trade at approximately 30% of NPV at the scoping-study stage, implying substantial potential upside in the share price. The cut-off date for the scoping study was February 2026. The company has since released further positive drilling results from Monte Alto, which should increase the project’s NPV in future studies.

IperionX rose 3% after announcing that it would redomicile under a Texas-incorporated parent company. We view this positively, as it is likely to assist the company in securing further funding from the US government. On that point we note the US government announced USD450mln of funding for US company Elmet to build a tungsten supply chain. We believe future government grants for reshoring the titanium supply chain are also likely.

The company also announced the appointment of Michael Loparco as an independent non-executive director. Loparco brings 25 years of experience across advanced manufacturing, industrial automation and global supply chains. He was chief executive of automation technology company Symbotic, which has a market capitalisation of USD26 billion, and led it through its US listing in 2022. Before that, he spent more than two decades at Jabil, one of the world’s largest outsourced electronics manufacturers.

Stem-cell producer Mesoblast rose 15% after reporting its full-year results and completing recruitment for its Phase 3 back-pain study, which is expected to report results in mid-2027. The company is currently approved and generating sales in a small but high-value rare indication called graft-versus-host disease (GVHD). However, we expect back pain and heart disease to represent much larger, multibillion-dollar opportunities that could transform the company over the coming years.

On the negative side, our biotechnology holdings were generally weak, largely as a result of capital raisings.

Australian pancreatic cancer radiotherapy company OncoSil fell 15% and related options fell 41% despite the company receiving the most significant regulatory approval in its history.

In mid-August, the FDA granted a Humanitarian Device Exemption for unresectable, non-metastatic distal cholangiocarcinoma. OncoSil is the first and only FDA-approved Class III device for this indication, which has an estimated addressable market of AUD80 million.

In September, we exercised some of our options as part of a broader AUD5.6 million capital raising that was also supported by Regal and Australian Ethical.

We continue to expect German government funding for a larger study, which would also allow German hospitals to be reimbursed for using the company’s product, providing a further potential catalyst.

The market value of the company is just AUD35mln which we believe greatly undervalues the business given it is now approved in both the US and Europe.

Australian radiotherapy developer Radiopharm Theranostics fell 29% after raising AUD11.9 million in a capital raising in which we participated. The company expects to meet with the FDA on 1 October to discuss the design of a Phase 3 trial for its lead product, RAD101, a radiodiagnostic for metastatic brain cancer.

We expect the company to out-license this asset in the coming months, providing funding for its four therapeutic products. Telix recently gained approval for a product called Pixclara in glioblastoma, a smaller indication with an estimated USD240 million market, compared with the potential USD600 million market for metastatic brain cancer. Telix also plans to conduct a Phase 3 trial in metastatic brain cancer.

The two products have different targeting mechanisms, and it remains unclear which is superior, but we believe there is room in the market for two participants. Radiopharm is 15% owned by Lantheus, a major competitor to Telix. Lantheus is in the process of being acquired by private equity-backed Curium, which may, in turn, become a potential acquirer of Radiopharm.

Australian biotech Imugene fell 20% after raising AUD11 million in a capital raising in which we participated. The company has recently generated encouraging early data in several rare blood cancers, including mantle cell lymphoma and follicular lymphoma. This included two complete responses among five patients treated, all of whom had failed multiple prior lines of therapy.

We expect further data over the coming months which, if positive, should position the company well for a licensing deal. Its current market value is just AUD25 million.