I’ve covered plenty of mining companies here, and the reality is that the TSX has some of the best miners available for investors looking to gain exposure to this sector. Among the companies I thought would be worth diving into is Talon Metals (TSX: TLO), a company focused on mining critical battery metals such as nickel and cobalt in its key project in Minnesota.
The company has seen recent operating momentum and recent operating results, which suggest to me that this is a company that’s worth exploring.
So, with that in mind, let’s dive into whether Talon Metals is a buy, sell, or hold as we kick off a brand new month.
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Let’s dive into the numbers
One of the things I like most about covering companies in sectors such as mining is finding those with the right underlying business models. And while most investors may rightly be interested mostly in precious metals miners, I’d argue that the growth opportunity in the battery minerals space is just about as exciting, at least on a long-term time horizon.
Talon Metals’s underlying business of mining nickel and cobalt out of its core Tamarack project is intriguing, but the company has been producing net losses of late. The company’s 2024 numbers showed a loss of $2.3 million, about on par with where the company was in 2023. That said, its more recent results have been positive, with some investors growing optimistic that Talon Metals could not only generate revenue (and earnings) in short order, but that this is a company that could really springboard forward, given its support from the federal and state governments.
In a bid to build out its existing project, the company has about $10 million in cash on hand to do so. That means a likely capital raise is on the horizon, assuming cash flow needs continue at their current pace.
Is Talon Metals a buy, sell, or hold?
I think there is plenty of uncertainty investors need to take into consideration with an earlier-stage company like Talon Metals. On the one hand, investing early provides investors with plenty of upside if this mine does take off in as profitable a way as many expect. On the other hand, it’s possible that Talon Metals could go the way of so many mining companies, in not having deep enough pockets to ultimately break ground and deliver revenue.
Trading right around $0.30 at the time of writing, I’d certainly put Talon Metals in the higher-risk bucket. What this means is that those with fully diversified small-cap portfolios can consider this stock as an option to include in such a speculative fund. That said, I’d limit the amount any investor puts into such a name, given the above-average risk profile of such an offering.
Do I think Talon Metals has the sort of upside potential many penny stock investors are after? Yes. Do I think this stock will take off tomorrow? Probably not. In other words, I think this is a company investors can be patient with and own for the long term in a heavily diversified basket of such bets, but I wouldn’t light my hair on fire to make such an investment right now.
