Jennifer's avatar
$5m follower assets
Rethinking Risk: Jurisdiction

$AFM.V $IVN.TO

Excellent article - some key quotes:

  • The need to secure new sources of metals for the energy transition amid sanctions on top producer Russia has increased the Africa risk appetite for major miners, who have few alternatives to the resource-rich continent.
  • “The reality is that the resources the world wants are typically located in difficult places,” said Steven Fox, executive chairman of New York-based political risk consultancy Veracity Worldwide.
  • The U.S. administration wants to position itself as a strong supporter of battery metals projects in sub-Saharan Africa, he said. “While Africa presents its challenges, those challenges are no more difficult than the corresponding set of challenges in Canada. It may be easier to actually bring a project to fruition in Africa, than in a place like Canada or the U.S.,” he added.
  • The United States has voiced support for new domestic mines, but projects have stalled. Rio Tinto’s Resolution copper project, for example, was halted over Native American claims on the land, and conservation issues.
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Jennifer's avatar
$5m follower assets
Africa is Copper Country
$IVN.TO

Investors often fear jurisdiction risk when considering Africa. Governments across the continent are seeking to reassure the world that it's a safe and supportive environment. Africa will be hard to ignore as the world transitions to clean energy, with its abundant resources of lithium, copper, cobalt, and manganese.

"Existing investors are doubling down, and others — like giant BHP Group — are sniffing around the region for the first time in years...there’s a growing awareness that copper and cobalt are central to the world’s shift toward renewable energy, and security of supply will become crucial in the coming decades. The global copper market is already tight and new mines are difficult to find. In cobalt, Congo is so dominant that it’s impossible to ignore."

Zambia's 'government sees copper as “the new oil” and wants to benefit from the growing demand for electrification in the way that oil-rich countries capitalized on energy booms, he said. That means growing production levels.'
I agree that copper producers should do well in the electrification of western countries to meet 2050 climate goals.

I’m looking at the $COPX to give me a broader suite of companies in the copper business.

Do you have any thoughts on the EFT vs selecting a handful of individual copper companies?
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Jennifer's avatar
$5m follower assets
Friedland’s Ivanhoe – The Metal Beast
$IVN.TO

Ivanhoe Mines offers significant upside potential for those investing in the mining space. With an excellent balance sheet, exposure to copper, zinc, nickel, gold, and the platinum-group-metals, $IVN.TO is a cash printing machine - all during what many are calling a commodity super-cycle.

For those new to investing in the mining sector, one of the key pieces of advice offered by seasoned investors is to “follow the name”. Certain individuals are revered in the industry due to their phenomenal track record. Among the most well-known is American/Canadian billionaire financier Robert Friedland. Recently inducted into the American Mining Hall of Fame for his accomplishments, Ivanhoe President Marna Cloete stated that Friedland has ‘been recognized by leaders of the international financial sector and mineral resource industries as an entrepreneurial explorer, technology innovator and company builder. He has successfully developed a portfolio of respected public and private companies whose initiatives have led to several of the world’s most significant mineral discoveries and mine developments, applications of disruptive technologies and contributions to significant economic growth in established and emerging markets in the Asia Pacific Region, Southern Africa and the Americas.’ Among his many successes, it is Ivanhoe Mines that may prove to be Friedland’s greatest legacy.

Platreef Project:

On May 9, 2022, Ivanhoe Mines announced the completion of the Platreef Project's Shaft 1
changeover to a production shaft, as well as the first blast on the 950-metre level, which marked the commencement of lateral mine development toward the high-grade Platreef platinum-group-metals, nickel, copper and gold orebody, with first production anticipated in the third quarter of 2024.

In February 2022, Ivanhoe Mines announced the outstanding results of a feasibility study for the Platreef Project confirming the viability of a new phased-development pathway to fast track Platreef into production in Q3 2024. The Feasibility Study yields an after-tax NPV8% of $1.7 billion and IRR of 18.5% at long-term consensus metal prices. At spot prices as of May 6, 2022, the after-tax NPV8% increases to $3.5 billion and the IRR increases to 27%.

Kamoa-Kakula Project:

Commercial copper production was declared early for Phase 2 at the Kamoa-Kakula Mining Complex, which set a new quarterly production record during the period, with 55,602 tonnes of copper in concentrate produced. Copper production from Kamoa Copper’s first two phases is projected to exceed 450,000 tonnes per year by Q2 2023.

During Q1 of 2022, Kamoa-Kakula had an operating profit of $380.5 million. Phase 3 will increase total processing capacity to more than 14 million tonnes of ore per annum, and grow annualized copper production to approximately 600,000 tonnes by the fourth quarter of 2024. This production level will elevate Kamoa-Kakula to the world’s third-largest copper mining complex, and the largest copper mining complex in Africa.
Western Foreland Project:

During Q1 of 2022, Ivanhoe commenced a regional drilling program, expected to total
approximately 95,000 metres on its Western Foreland licences, which cover approximately 2,407 square kilometres.

Kipushi Zinc Poject:

In February 2022, Ivanhoe Mines and Gécamines signed a new agreement to return the
ultra-high-grade Kipushi Zinc Mine back to commercial production. Ivanhoe Mines announced the positive findings of an independent feasibility study (sensitivity analysis at spot zinc prices of approximately $1.70/lb. (May 6, 2022), results in an after-tax NPV8% of $2.4 billion with an after-tax real IRR of 75.8%) for the planned resumption of commercial production at Kipushi based on a two-year construction timeline.
Balance Sheet:

Ivanhoe Mines has a strong balance sheet with cash and cash equivalents of $562 million as at March 31, 2022, and expects that Kamoa-Kakula’s expansion capital for Phase 2 and Phase 3 will be funded from copper sales and facilities at Kamoa.

As always, please DYODD and if I can answer any questions you may have, I am happy to do so.
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Jennifer's avatar
$5m follower assets
My Commonstock Portfolio
Still working on getting it linked up to the site, but opened a new account and bought the dip on Thursday. Dip kept dipping on Friday, but I added these names because I believe in them:
$AFM.V (tin, DRC)
$AN.V (lithium brine, Argentina)
$ATX.V (copper, Chile)
$BRW.V (lithium spodumene, Eastern Canada)
$EOG.V (oil & gas explorer, Guyana/Namibia/South Africa)
$FOXG.V (gold, Quebec)
$FPX.V (nickel, British Columbia)
$HZM.TO (nickel, Brazil)
$IVN.TO (exposure to multiple metals incl copper/nickel/zinc, DRC)
$MEG.TO (oil & gas, Alberta)
$NGEX.V (copper/gold/silver, Chile)
$ROK.V (oil & gas, Alberta & Saskatchewan)
$STEP.TO (oil field services, North America)
As always, please DYODD and know that I prefer higher risk/reward opportunities and may trade them quickly, so please ask questions, including if I sold!
Jennifer's avatar
$5m follower assets
The Case for the Copper Bull: Why Wise Investors Are Adding Now
My current copper holdings include:

$FIL.TO, $NGEX.V, $SURG.V, $IVN.TO, $TECK-B.TO, $ATX.V, and $VCU.V

Commonstock & Twitter provide a wealth of information & varied perspectives, resulting in discussions that have contributed to my growth as an individual, as well as an investor. Over the past year, I have engaged in several conversations related to the commodity sector. One of the most undecided arguments appears to be that of the copper bull vs bear. Approximately a year ago, a Twitter friend (thanks Nate!) was kind enough to share a compelling research report by the natural resource investment firm Goehring & Rozencwajg, entitled “The Problems With Copper Supply”. After reading it, I became firmly entrenched in my stance as a medium-to-long term copper bull, and since then my conviction has only grown.

Short-term bears are likely correct in their views, given the current fundamentals relating to copper prices; however, in my opinion this creates significant near-term buying opportunities. As this April 25 Reuters article (https://www.reuters.com/markets/europe/bears-tip-toe-back-into-copper-market-demand-fears-grow-2022-04-25/) states, “supply concerns haven't gone away. Far from it…The hits to mine supply undoubtedly spell future trouble for copper, but right here and now it's the outlook for demand that is concentrating minds.” By the year 2025, supply is expected to fall off a cliff, and demand has a multitude of reasons to explode higher.

Depletion, Discoveries, Demand

Goehring & Rozencwajg’s research determined that by the late 1990s ‘the introduction of new large-scale copper mines slowed dramatically while depletion in the existing, aging mine base slowly began to accelerate.’ G&R modelled 115 mines representing 80% of global mine supply outside of China and found that after years of steadily rising, copper head grades had started to quietly decline. Their research strongly suggests that supply growth, minimal since 2016, will continue to disappoint. “Between 2000 and 2020, high copper prices allowed companies to grow their reserve basis even in the face of limited new copper discoveries. Because of increasing depletion issues, the lack of new world class mines coming online, and geological constraints embedded in copper porphyry deposits, our research tells us that copper supply will show little growth this decade. Strong demand is about to collide with severe copper supply problems. “

G&R expects copper prices to potentially peak near $15 per pound by the latter part of this decade.

Recommended Reading: “The Problems With Copper Supply”. The report is available for free download on their website (info.gorozen.com).

Goldman Sachs Calls Copper the New Oil

In early April of this year, Goldman Sachs claimed copper is “sleepwalking towards a stockout”. Goldman flagged a “scarcity episode” by the end of the year as global stocks shrunk to just over 200,000 tonnes – scarcely enough to cover three days of global consumption, pointing to “an extreme fundamental turn” for the metal. For the first time in a decade, exchange stocks declined “instead of rising during what is this metal’s main seasonal surplus phase.” Upping its three, six, and 12 month price targets, GS now expects a new record high within three months.

Mining.com reported that Erik Heimlich, head of base metals supply at CRU, stated global industry needs to invest more than $100B to build mines to reduce a potential 4.7M-ton annual supply deficit by 2030. The world would need to build eight projects the size of BHP's Escondida in Chile, the world's largest copper mine, over the next eight years. Heimlich questioned the ability to do so, given the historically low completion rates of such large-scale projects. "A large share of the greenfield possible projects in 2012 remain under-developed, so there are questions about the ability to respond to the supply gap in an efficient and timely manner," Heimlich told the 2022 CRU World Copper Conference held in Santiago, Chile.

Copper miner Teck Resources said in a recent investor presentation that copper demand from the electrification of everything is going to grow by 26 percent annually through the rest of the decade, which for revenue growth in the tech sector doesn't sound huge, but in commodities, 26 percent annual demand is massive.


In a YouTube video posted in May, 2021, GS’s Nick Snowdon discusses a surge in green capex, combined with the lack of copper mining projects, and how it will lead to a multi-year bull market in copper.


Dr. Copper’s Diagnosis: Inflation

In March of 2021, Global X offered some insight into what was driving the copper rally at the time. If anything, the case presented by author Rohan Reddy has only strengthened. Reddy notes that copper prices are positively correlated to inflation, and its historically one of the best performing assets during inflationary periods. When investors believed rates were going to increase, copper prices historically led the way. In fact, according to The Visual Capitalist (“Why Investors Go to Copper As An Inflation Hedge,” 3/06/2018.) the price of copper has risen 18% for every 1% annual rise in consumer prices since 1992.


But…China?!?

A frequent discussion point used in the bear argument is that of China’s slowing growth. Though it’s impossible to deny this could have a significant impact on copper demand, there are many reasons to believe that it won’t. In late April, China’s President Xi Jinping committed to boosting infrastructure construction in Beijing’s latest bid to rescue economic growth. Xi stated that “All-out efforts must be made to spur infrastructure spending,” as “infrastructure was a pillar of economic and social development.” Even if China’s growth recedes, one factor often ignored in the debate is the incredible growth of ASEAN nations.

Chile’s state-owned copper producer Codelco aims to quadruple sales in Southeast Asia by 2023. They intend to make a more aggressive push into the Indian market, betting on these markets’ higher consumption growth potential in comparison with China. Southeast Asia and India are expected to have the highest growth in copper consumption over the next 20 years, Carlos Alvarado, a vice-president for Codelco, was reported as saying.

In a 2020 report published by the Minerals Council of Australia, their research stated that ASEAN nations are equivalent to Australia’s second largest trading partner when calculating total two-way trade. ASEAN nations had a combined GDP of US$2.8 trillion – larger than India – and its collective economy has grown by almost 50 per cent over the past decade. ASEAN is forecast to overtake the EU and Japan to become the 4th largest economy in the world by 2050, behind China, India, and the United States.

  • ASEAN imports of minerals and basic metals are growing rapidly. Over the last five years, its top 10 mining and basic metal manufactures imports have almost doubled
  • Import growth has been faster in aggregate than for China, India, and Japan, and was faster than for the rest of the world minus ASEAN.
  • Demand for metals like steel increases dramatically as economies reach per capita incomes of US$5000-10,000; some ASEAN countries are just above this while others are not too far below it
  • Demand for metals like copper and nickel may not peak until per capita incomes are well in excess of US$20,000 per year.

CONCLUSION

A crucial metal required for electrification and the energy transition, copper demand is estimated to double by 2030. A lack of investment in exploration and the development of new mines, as well as declining grades at existing ones, all but guarantee copper is heading for a supply crisis. A long-term bull market is underway, and many investors don’t understand the complex issues affecting supply. As G&R stated in their excellent research report, “Strong demand is about to collide with severe copper supply problems. Copper prices are heading much, much higher. With copper prices off their 52wH of $5.01/lb and forecast to go much higher in the medium-to-long term, investors are presented with an excellent buying opportunity.

It’s important I reiterate that the junior mining sector is highly volatile and involves greater risk than more established mining companies. For this reason, I monitor my holdings very closely and am prepared to sell on any changes in sentiment or anticipated drill results. In the months ahead, I will detail what strategies have served me well, and what has not. Every day is a learning experience, and I’m always grateful to those that share their knowledge with me. Your success as an investor will greatly improve when you are open to the benefits of learning from others around you. If you're new to the commodity space and have questions about terminology or the mining sector, please ask me questions in the comments! If I don't know the answer to something, I will do my best to find it.
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Great post, hadn't considered investing in commodities other than "precious metals", maybe it's time to explore options.
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Jennifer's avatar
$5m follower assets
Video: From Bankruptcy to $50 Million - Confessions of a Stock Operator
$IVN.TO #copper #gold #zinc

"If you want to make money in the markets, buy the best in class stocks in beaten down, abused, hated, cyclical sectors. When the pendulum swings back, which it always does, you stand to make a fortune."

Carson Seabolt was a commercial fisherman who clawed out of bankruptcy to build a $50 million fortune in the stock market before age 40.

A fearless investor and entrepreneur, Carson makes concentrated bets on the highest-risk companies. The results have been extraordinary, such as:

Co-founding K92 Mining, a $2 billion gold producer from an initial $2 million investment

Raising $43 million from billionaire @chamath Palihapitiya, one of the world’s most recognized investors, for a biotech company Carson is involved in, from a cold email

Befriending and betting big on billionaire mining legend Robert Friedland, who helped Carson double his fortune

On Carson’s outrageous Instagram channel, he shares a stream of consciousness about life and markets that is like a Kardashian version of CNBC.

Today is Carson’s 42nd birthday. On this day 8 years ago he received the call that changed his life. Now, he shares his incredible life story for the first time.

CEO.CA proudly presents “Bankruptcy to $50 Million: Confessions of a Stock Operator,” streaming now on YouTube.

Grab your popcorn and enjoy this BIG story, worthy of the biggest screen in your house. Because BIG is how Carson does everything.

Enjoy the film? Please like, comment and share. Thanks for watching!

Tommy Humphreys, CEO.CA Founder
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