Trading day running commentary, page-3359

New letter out from Massif capital today (find their letter on seekingalpha).

NEW POSITIONS

Centaurus Metals (CTTZF)

Our latest addition to the portfolio, CTTZF, is an Australia-listed mining exploration company focused on developing a nickel sulfide project in Brazil. Initial geological results and mine construction plans suggest that the project is one of the world's most significant high-grade, undeveloped nickel mines. It is on track to be an efficient 20,000 ton per year producer by the end of 2024. They have a good team in place and their asset is in an excellent jurisdiction. If we cut current nickel prices in half, add a 20% increase to estimated build costs, and value the business at only 80% of the asset's net asset value, we think CTTZF is worth about A$3.5 per share, a ~150% increase from the current price.

In the fullness of time, it is not unrealistic to believe CTTZF trades north of A$7 per share if nickel prices remain elevated.

There are two critical elements to CTTZF:

• The quality of their resource. This is our downside protection. This is, in part, how we think about the margin of safety. We feel confident that the quality of the resource suggests it is likely the mine will be built. Many things can go side ways with the market, commodity prices, management execution, and currencies. But CTTZF has a hard asset on their balance sheet that we believe can be monetized in a value-accretive way. This is far from our base case scenario, but it is very helpful for contextualizing some floor price of security you may purchase.

• Timing. CTTZF is in a narrow part of its development lifecycle that we have had great success investing in. We believe CTTZF is closer to free cash flow than the market is pricing in. It's not a rare occurrence in mining firms, but it is not frequent either. The market is somewhere between 6 months and two years behind where the mine is in development. We feel we have positive asymmetry here and believe we can measure it.