Cabot Small-Cap Confidential Issue: May 1, 2025

The Big Idea

If tariff uncertainty makes buying any stock a bit of a speculation right now, why not just go all in on a speculative stock?

That’s what we’re doing this month.

With gold hitting record highs and the considerable unknowns resulting from the Trump administration’s policies, we’re steering clear of “all that mess.”

I’ve tracked down a micro-cap Canadian company that’s sitting on what could be major gold, silver and copper discoveries in Peru.

The geology of the area suggests the results will be good. Maybe very good.

And the best part? Drilling is set to begin within just a few weeks.

This is one of those stocks that can act well almost regardless of what the broad market does. Assuming that the price of gold remains strong and that drilling results are good, of course.

My biggest near-term concern is that it’s extremely small. The market cap is only $125 million and the stock only trades about $130,000 worth of shares daily through the U.S. OTC market.

That means you’ll need to be patient and build up a position gradually. Otherwise, we’ll send the current share price soaring well above its current level near $1.00.

Ultimately, if drilling results are good enough and the company executes its exploration plan, then the stock could be worth multiples of what it’s worth now. So buying for $0.90, $1.00 or $1.20 might not matter a heck of a lot.

But that’s if things go well. They might not. So average into this speculative opportunity.

The Company

Hannan Metals (HAN.V, HANNF) is an exploration-stage company pursuing large gold, silver and copper targets in Peru and Chile. It has a market cap of around $125 million.

The company has a sizeable land position in Peru through its Valiente and San Martin JV projects. Potential for drilling in these areas, which should start in May, is the driver of most of the current excitement around the stock.

The company’s large land positions have attracted some of the largest players in the industry and led to equity and joint ventures with two of them.

The first is Teck Resources Limited (TECK), which acquired around 9% of Hannan in 2022 through a C$2.57 million private placement.

The second is the Japan Organization for Metals and Energy Security (JOGMEC), an arm of the Japanese government that is tasked with sourcing future industrial metals. JOGMEC has the option to earn up to a 75% interest in mining concessions in the San Martin JV Project in northern Peru.

Hannan is one of few junior miners to hold as much land as it does in Peru, a significant producer of gold, silver and copper dominated by some of the world’s largest exploration and mining companies.

Boots on the Ground Exploration Projects

Valiente Project, Central Eastern Peru (100% Hannan)

The Valiente Project represents a potential new metal-rich province of Peru. It is located 300 km (186 miles) south of San Martin.

Hannan has multiple copper-gold drill targets at Valiente that it plans to explore over the next five years.

Valiente targets copper and gold in rocks formed millions of years ago, in a specific area of volcanic rock that was created by the movement of tectonic plates. In mining terms, this type of target is called a Miocene-age porphyry copper-gold deposit in a back-arc setting.

Hannan holds 920 square km (571 square miles) at Valiente with 99 granted mining concessions. The company has identified seven mineralized systems over a 140 x 50 km (87 x 31 miles) area through exploration efforts in 2024 and 2025. It plans to begin with the Belen Prospect.

Belen Prospect: Vista Alegre, Ricardo Herrara & Sortilegio

Most of the exploration work has been done at the Belen prospect, which includes the Vista Alegre, Ricardo Herrera and Sortilegio targets.

Hannan received DIA (environmental approval) in November 2024 and an Authorization for Exploration Activities permit from the Ministry of Mines (MINEM) in February 2025. This has set the company up to start its first drill program at Belen – 40 drill platforms across 702 hectares (1,735 acres). It is currently mobilizing drills to the site while awaiting archaeological monitoring and forestry permits.

The plan is for drilling to begin by the end of May, first at Vista Alegre (gold, 12 drill platforms), then at Ricardo Herrara (copper-gold, 14 drill platforms) and Sortilegio (copper-gold, 13 drill platforms).

The results of these drill programs are very likely to move the stock in the coming months.

Previsto Prospect

Hannan has also been advancing its 100% owned Previsto Prospect (20 km to the north of Belen), which appears to have monster potential.

Channel sampling (collecting rock samples from a groove cut into rock) activities in 2024 and 2025 have indicated very significant gold (see star and gold dots in image below; Au is gold, Ag is Silver, Cu is copper) and copper potential that appears to get better and better as more samples come in.

The current plan is to better define a drill program at Previsto to begin (roughly) in mid-2026.

The San Martin Copper-Silver JV Project, Northern Peru

San Martin was discovered in 2019, and Hannan was granted DIA for 40 drill platforms in January 2024. It is currently waiting for authorization to initiate activities, which it expects by the end of June.

Once that comes in, the company expects to begin drilling within roughly three months, implying it could be go time before the end of September.

At San Martin, Hannan is exploring a large area where significant copper and silver can be found within layers of rock that were formed in ancient valleys and sea/lake beds. In mining terms, it is called a “basin-scale high-grade sediment-hosted copper-silver system.” San Martin extends over an area roughly 200 x 100 km (124 x 62 miles).

Hannan formed a JV with JOGMEC in 2020 to explore San Martin. JOGMEC has the option to earn an initial 51% interest by funding $8 million in project expenditures by March 31, 2027. That interest can go up by 16% (to 67%) by achieving either a prefeasibility study or funding another $12 million of the project (i.e., $20 million in total). JOGMEC can increase its interest by another 8% (to 75%) by achieving a feasibility study or funding an additional $15 million of the project (i.e., $35 million in total).

Cerro Rolando Project, Chile (100% Hannan)

At the Cerro Rolando Project, Hannan is preparing a small, shallow drill program using three drill platforms and at least one 100m deep hole. We’ll be hearing more about this down the road. The current focus is Peru.

Growth Initiatives

Begin Drilling at Belen Prospect: Hannan has the necessary permits in place and is currently mobilizing drilling equipment to drill at Ricardo Herrara, Vista Alegre and Sortilegio. Drilling should begin in May. Positive assay results could move the stock.

Begin Drilling at San Martin: This could begin by the end of September. Again, drilling results will matter a lot.

Exploration: Hannan has a ton of land in Peru and Chile yet to explore. And current exploration targets could be larger than previously expected.

Media Attention: The reality is that, when it comes to speculative investments, sometimes the potential of a good story is more important than known facts. Hannan has ramped up its efforts to get its story out there (Resource Stock Digest is paid for advertising and marketing activities), and the resulting attention should keep the stock acting well, provided the story continues to have enough juice to squeeze out.

Business Model

Hannan Metals is an exploration-stage mining company with a seemingly rational game plan to drill what appear to be extremely attractive gold, silver and copper targets in Peru and Chile.

The Bottom Line

As of February 28, 2025, Hannan had $1.95 million in cash. In March, the company raised an additional $1.56 million by accelerating the expiry date of warrants, implying it ended March with a little less than $3.5 million in the bank.

Given the cash the company has and the JV with JOGMEC to fund San Martin, management thinks Hannan has enough cash to execute its drill program for the next twelve months.

However, there is little doubt that Hannan will raise money through equity raises in the future. It is a long way away from generating revenue through mining operations. The last equity raise was in June 2024 when Hannan raised $3.7 million by selling 10.6 million units (one share of stock and half a warrant).

It is also likely the company will form additional partnerships to secure funding for exploration and development activities pending upcoming drilling results, hopefully at favorable terms.

Risk

• Drilling Results: Hannan needs good drilling results to keep the stock marching higher.
• Operational Delays: Permits, mobilizing equipment, weather, drill pad construction, etc., all represent potential challenges that could delay progress and add costs.
• Financing: Hannan will likely raise capital through dilutive equity financings. The stock should absorb these just fine, provided that drilling results and newsflow remain positive. If it doesn’t, the stock could suffer and potentially get crushed.
• Political Conflict: At the moment, things appear to be going smoothly in Peru and Chile, but this can change.
• Speculative Stock: This is a speculative mining stock with no operations, no production, not a lot of cash in the bank and exposure to a plethora of operational, financing, reputational and market-related risks. It could all work out, or not. We buy these types of stocks to scratch the speculative itch with money we can afford to lose. Invest accordingly.

Competition

There are a lot of gold, copper and silver miners out there, but they’re not really “competitors” in the traditional sense of the word. Competition is more likely to be a factor when trying to attract funding, talent, shareholder attention, etc.

The Stock

Trading Volume: HAN.V trades an average of 130,000 shares daily on Canada’s TSX Venture Exchange, and HANNF trades an average of 102,000 shares daily through the U.S. OTC market. WE ABSOLUTELY WILL MOVE THIS STOCK. Use limit orders and average in.

Historical Price: HANNF was a penny stock trading well below $0.25 until late-March 2024, when the company began talking up its permit for San Martin and, more broadly, getting the Hannan Metals story out through various media channels. Like a lot of speculative microcaps, shares of HANNF have been “spikey,” with a lot of buying volume following press releases with positive news and positive media coverage. Shares first broke above $0.50 in December 2024, then $0.75 in February 2025. A big drawdown later in the month pulled HANNF down below $0.60, but it was on the move higher again in March and first crossed above $1.00 on April 14. The stock has traded between $0.87 and $1.11 in the three weeks since.

Valuation: Exploration and early-stage mining stocks are speculative. While Enterprise Value/Gold Equivalent Ounce (EV/GEO) multiples can give some idea of whether one of these stocks is “cheap” or “expensive,” the method is crude, at best. And with Hannan being so early-stage, there really is no valuation method that’s meaningful. It’s all building excitement about the exploration plan, executing to reasonable expectations and getting good drilling results.

Short-Term Buy Range: It’s very difficult to say what the buy range will be here, but provided there is no material, stock-moving news in the next week or two, shares “should” trade in the $0.95 to $1.20 range. It is entirely possible our group could push the stock up by 20% or more if market orders are used and significant positions are taken quickly. Be patient and average in, preferably below $1.20. BUY

The Next Event: Drilling should begin at Balen in May.

Current Recommendations

Glossary

Buy means accumulate shares at or around the current price.
Hold means just that; hold what you have. Don’t buy, or sell, shares.
Sell means the original reasons for buying the stock no longer apply, and I recommend exiting the position.
Sell a Half means it’s time to take partial profits. Sell half (or whatever portion feels right to you) to lock in a gain, and hold on to the rest until another ratings change is issued.

Disclosure: Tyler Laundon owns shares in one or more of the stocks mentioned. He will only buy shares after he has shared his recommendation with Cabot Small-Cap Confidential members and will follow his rating guidelines.

Please note that, unless otherwise credited, all images in this Issue are sourced from Hannan’s latest Investor Presentation, which can be found here.

The next Cabot Small-Cap Confidential issue is scheduled for June 5, 2025.

Copyright © 2025. All rights reserved. Copying or electronic transmission of this information without permission is a violation of copyright law. For the protection of our subscribers, copyright violations will result in immediate termination of all subscriptions without refund. Disclosures: Cabot Wealth Network exists to serve you, our readers. We derive 100% of our revenue, or close to it, from selling subscriptions to our publications. Neither Cabot Wealth Network nor our employees are compensated in any way by the companies whose stocks we recommend or providers of associated financial services. Employees of Cabot Wealth Network may own some of the stocks recommended by our advisory services. Disclaimer: Sources of information are believed to be reliable but they are not guaranteed to be complete or error-free. Recommendations, opinions or suggestions are given with the understanding that subscribers acting on information assume all risks involved. Buy/Sell Recommendations: are made in regular issues, updates, or alerts by email and on the private subscriber website. Subscribers agree to adhere to all terms and conditions which can be found on CabotWealth.com and are subject to change. Violations will result in termination of all subscriptions without refund in addition to any civil and criminal penalties available under the law.