Close menu




October 13th, 2022 | 11:01 CEST

Geely, Kodiak Copper, Aston Martin Lagonda - Copper with the next chance

  • Mining
  • Copper
  • Electromobility
  • climatechange
Photo credits: pixabay.com

If investors had followed the sensitive early economic indicator, they would have been spared a loss of almost 25% in the DAX alone. Because already at the beginning of March, the copper price showed the first signs of fatigue after climbing to a new all-time high of USD 10,813.36 per ton. Almost half a year later, the red metal is not only trading more than 20% lower, but the recession has already arrived globally. However, despite the economic downturn, global demand for the red metal far exceeds supply. Due to the upgrading of renewable energies, the gap is likely to widen even further in the next few years, which argues for a rising base price in the long term.

time to read: 5 minutes | Author: Stefan Feulner
ISIN: KODIAK COPPER CORP. | CA50012K1066 , ASTON MARTIN LAG.GLB.HLDG | GB00BN7CG237 , GEELY AUTO.H.ADR/20 HD-02 | US36847Q1031

Table of contents:


    Copper is essential for achieving climate goals

    The Ukraine conflict accelerated the transformation from fossil fuels to renewables. But even before that, the goals of the Paris climate agreement to achieve net zero emissions by 2050 were more than ambitious. These are to be accomplished through the construction and use of electric cars, batteries for energy storage, and solar and wind energy. However, in order to implement this to the required extent, it requires enormous quantities of copper. In this context, demand already exceeded supply in 2019 for the scarce metal, which is characterized by its good electrical conductivity and low reactivity. It is therefore used for inverters, transistors and as a conductive material in cables.

    According to the report "The Future of Copper. Will the looming supply gap short-circuit the energy transition?" by financial services provider S&P Global, global copper demand is expected to almost double to 50 million tons per year by 2035 and then remain at roughly this high level until 2050. According to the experts, this means greater copper consumption than in the period between 1900 and 2021.

    The high demand, however, is matched by a very limited supply. Anglo American CEO Duncan Graham Wanblad said in an interview that he "can't see where all the copper needed for the electrification of mobility and the economy is going to come from at the moment." In addition, he said, the market underestimates how long it can take to bring a new copper mine into production. According to the International Energy Agency, it takes an average of 16 years to build a copper mine before it goes into operation.

    Kodiak Copper - Well positioned

    In addition to copper producers, the primary beneficiaries of this boom in demand over the next few years will be exploration companies such as Kodiak Copper. Following the sharp drop in the base price of the Canadian company, there is a promising opportunity for disproportionate price gains. Smaller companies react disproportionately to a longer-lasting trend, both in one direction and the other. For example, since the high in September 2020, when the stock was trading at CAD 3.23, the price of the Canadian company has lost more than 83% to a price now of CAD 0.57. Today, the stock market value of the promising junior stands at CAD 31.68 million.

    Contrary to the correcting stock market price, the Company's development continues to go according to plan. The Canadians, who are part of the Discovery Group, own the copper-gold porphyry project MPD in the south-central part of the Canadian province of British Columbia. It is a promising property which should benefit significantly from the increasing copper demand in the coming years. MPD has all the characteristics of a large, multi-center porphyry system. Kodiak has discovered high-grade mineralization within a broad mineralized envelope at the Gate Zone, and MPD hosts several other targets with similar discovery potential.

    For this year, the largest fully funded drilling program in the Company's history is underway for 25,000m, with 33 holes already drilled for 21,300m. The focus to date has been on the Gate Zone and adjacent targets, which have similar characteristics. The newly reported copper-gold-silver intercepts filled a 170m gap at the south end of Gate. In addition, drilling to test geophysical anomalies northeast of Gate identified a 400m long parallel mineralized trend in the nearby Prime Zone.

    Kodiak Copper CEO and President Claudia Tornquist commented, "The Gate Zone continues to deliver impressive drill intercepts that extend the extent of mineralization, which now extends 1km north-south to a depth of 900m. We also began testing geophysical targets with coincident copper-in-soil signatures in the wider vicinity of the Gate Zone, and we are pleased to report that we have been able to delineate a parallel mineralized trend at the Prime Zone. This new mineralized trend crystalizes further size potential and validates our model of a large multi-centric porphyry system at MPD. The Company has now expanded its exploration efforts to other high-priority areas such as Dillard and Man. We look forward to this next promising phase of work which should lead to more discoveries like Gate and Prime across the 147 sq km MPD Project area."

    Geely, Aston Martin Lagonda - Interesting constellation

    According to the German Copper Institute, an electric vehicle contains almost three times as much copper as a vehicle with an internal combustion engine. Half of this copper is found in the accumulator. There is also a high demand for copper in the generation of electricity from renewable energies and the infrastructure required to charge electric vehicles. With the exponential increase in new registrations of electric vehicles, the demand for the red metal is naturally growing. In 2021 alone, the number of new registrations and the market share of battery-powered vehicles more than doubled. Sales growth was led by the People's Republic of China, which accounted for more than half, with 3.3 million vehicles.

    Alongside BYD, Tesla and SAIC-GM-Wuling, electric car company Geely Automobile is No. 4 in the Asian market. The Daimler partner delivered 130,528 vehicles in September 2022, YOY growth of 26%. In terms of pure electric cars, Geely increased its sales by 322% compared to September 2021.

    The acquisition of a 7.6% stake in British luxury sports car maker Aston Martin Lagonda caused a stir. In addition, Geely was joined by Saudi Arabia's Public Investment Fund and previous shareholder Mercedes-Benz. Geely already owns the British sports car maker Lotus and wants to transform the tradition-rich brand into a pure e-manufacturer. What plans Geely is pursuing with the Aston Martin investment has not yet been announced. In the announcement, Daniel Donghui Li, CEO of Geely Holding Group, only states that they want to "explore potential opportunities for cooperation with Aston Martin."

    From a chart perspective, after the sell-off and a loss of almost 73% since the all-time high in January 2021, the share price is on the broad support line at USD 10.18, which has been defended several times so far. Another successful test would see short-term potential to the downtrend formed since January 2021 at USD 15.84.


    Copper again lived up to its reputation as an economic indicator this year, correcting by more than 20% since the highs. In the long term, the demand for the red metal is enormous due to climate change. Beneficiaries should be copper producers as well as exploration companies like Kodiak Copper. Geely could see a stronger recovery rally in the short term.


    Conflict of interest

    Pursuant to §85 of the German Securities Trading Act (WpHG), we point out that Apaton Finance GmbH as well as partners, authors or employees of Apaton Finance GmbH (hereinafter referred to as "Relevant Persons") may hold shares or other financial instruments of the aforementioned companies in the future or may bet on rising or falling prices and thus a conflict of interest may arise in the future. The Relevant Persons reserve the right to buy or sell shares or other financial instruments of the Company at any time (hereinafter each a "Transaction"). Transactions may, under certain circumstances, influence the respective price of the shares or other financial instruments of the Company.

    In addition, Apaton Finance GmbH is active in the context of the preparation and publication of the reporting in paid contractual relationships.

    For this reason, there is a concrete conflict of interest.

    The above information on existing conflicts of interest applies to all types and forms of publication used by Apaton Finance GmbH for publications on companies.

    Risk notice

    Apaton Finance GmbH offers editors, agencies and companies the opportunity to publish commentaries, interviews, summaries, news and the like on news.financial. These contents are exclusively for the information of the readers and do not represent any call to action or recommendations, neither explicitly nor implicitly they are to be understood as an assurance of possible price developments. The contents do not replace individual expert investment advice and do not constitute an offer to sell the discussed share(s) or other financial instruments, nor an invitation to buy or sell such.

    The content is expressly not a financial analysis, but a journalistic or advertising text. Readers or users who make investment decisions or carry out transactions on the basis of the information provided here do so entirely at their own risk. No contractual relationship is established between Apaton Finance GmbH and its readers or the users of its offers, as our information only refers to the company and not to the investment decision of the reader or user.

    The acquisition of financial instruments involves high risks, which can lead to the total loss of the invested capital. The information published by Apaton Finance GmbH and its authors is based on careful research. Nevertheless, no liability is assumed for financial losses or a content-related guarantee for the topicality, correctness, appropriateness and completeness of the content provided here. Please also note our Terms of use.


    Der Autor

    Stefan Feulner

    The native Franconian has more than 20 years of stock exchange experience and a broadly diversified network.
    He is passionate about analyzing a wide variety of business models and investigating new trends.

    About the author



    Related comments:

    Commented by Stefan Feulner on April 15th, 2024 | 06:45 CEST

    First Majestic Silver, Desert Gold, Albemarle - Escalation paves the way

    • Mining
    • Gold
    • Silver
    • chemicals
    • Lithium

    The events at the weekend, during which Iran carried out a massive airstrike on Israel for the first time, are likely to have escalated the already troubled geopolitics to a new level. It is not yet known whether Israel is planning a counter-attack. Precious metals gold and silver are once again likely to benefit from the uncertainties following the rather weak close to the week. The yellow precious metal could recapture the USD 2,400 per ounce mark, which could also boost the shares of producers and gold exploration companies.

    Read

    Commented by André Will-Laudien on April 15th, 2024 | 06:30 CEST

    Threat to Europe, Demand for Defense Persists! Rheinmetall, Almonty Industries, Renk and Hensoldt

    • Mining
    • Tungsten
    • armaments
    • Defense

    Europe is gearing up, as since February 24, 2022, peace has become a thing of the past. Europe lived in harmony for a whole 77 years, with the exception of the warlike dissolution of Yugoslavia as a regional conflict. Today's world resembles the situation in the 1970s and 1980s, as the Iron Curtain is re-establishing itself as a political border. The old world order that has prevailed since the end of the Cold War has been shattered by Russia's invasion of Ukraine. Consequently, NATO has regained a new role; after years of disarmament, it has now become a sought-after defense alliance. The accession of Finland and Sweden now strengthens the alliance towards the east. What now looms large is rapid rearmament! Where can investors still participate?

    Read

    Commented by Fabian Lorenz on April 11th, 2024 | 07:30 CEST

    Panic at AIXTRON and NEL! Is Kraken Energy an AI beneficiary?

    • Mining
    • Uranium
    • nuclear
    • renewableenergies
    • AI

    AIXTRON shares lost more than 5% yesterday. In addition to the price slide on the NASDAQ, a negative analyst comment added to the negative sentiment. Both the rating and target price of the AIXTRON share were significantly reduced. The same applies to Nel. The hydrogen specialist's recovery attempt was mercilessly stifled, and the share lost over 15%. The lack of incoming orders, in particular, is making analysts nervous. In contrast, Kraken Energy could soon be seen as an AI beneficiary. After all, Elon Musk is not the only one warning of an energy crisis and calling for the expansion of nuclear energy. Voices are getting louder that the computing power required for artificial intelligence will cause energy consumption to explode. In order to prevent a blackout, many countries are turning to nuclear power.

    Read