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Andrew Davidson, CEO, Royal Helium Limited

Andrew Davidson
CEO | Royal Helium Limited
224, 4th Avenue South, S7K 5M5 Saskatoon (CAN)

davidson@royalheliumltd.com

+1 (306) 281-9104

Royal Helium CEO Andrew Davidson on NASA, SpaceX and the path to dynamic growth


Craig Taylor, CEO, Defense Metals

Craig Taylor
CEO | Defense Metals
605-815 Hornby St., V6Z 1T9 Vancouver (CAN)

craig@defensemetals.com

+1 (778) 994 8072

Milestones, ESG as an USP and the new openness of policy toward rare earths outside China - Defense Metals provides backgrounds


Alex Kent, Managing Director, Aspermont Limited

Alex Kent
Managing Director | Aspermont Limited
613 - 619 Wellington Street, WA, 6000 Perth (AUS)

Corporate@aspermont.com

+61 8 6263 9100

Aspermont shows the success of digitalization - Alex Kent has an agenda


11. February 2021 | 12:32 CET

Kodiak Copper, Freeport-McMoRan, Millennial Lithium: The copper rally continues!

  • Copper
Photo credits: Kodiak Copper Corp.

The whole world revolves around e-mobility, alternatively hydrogen, and everything is to be paid with cryptocurrencies in the future. That is the stock market at the turn of the year in one sentence. Wherever these topics are mentioned, prices go through the roof. Elon Musk can even turn bad Tesla numbers into a price increase with appropriate music, and tweeting the latest findings makes some people a few million heavier overnight. The copper market is a key control variable for technological developments in drives and storage media. We can't get around this commodity in the real world because it is in very short supply on the planet. So it shouldn't be surprising if the hype here goes on and on.

time to read: 4 minutes by André Will-Laudien


Nick Mather, CEO, SolGold PLC
"[...] We knew the world was rapidly electrifying and urbanising and needing significant amounts of copper to do so. [...]" Nick Mather, CEO, SolGold PLC

Full interview

 

Author

André Will-Laudien

Born in Munich, he first studied economics and graduated in business administration at the Ludwig-Maximilians-University in 1995. As he was involved with the stock market at a very early stage, he now has more than 30 years of experience in the capital markets.

About the author


Kodiak Copper - copper supply in the making

When you consider that the global supply of copper is currently managed from about 10 major mines and 20 far smaller ones, it becomes clear that a medium-term supply of the coveted raw material can only come from new developments. An e-vehicle requires 4 times the amount of copper used in a conventional vehicle, and around 70% of the world's copper is used in electronic applications. Global demand will be about 1.6 million metric tons (MT) in 2025, compared to 0.6 million MT in 2020, representing a 160% increase in demand in 5 years - that's exponential!

The MPD project of Canadian explorer Kodiak Copper, an exciting player from British Columbia, stands out. The 100% owned project, which includes the recently discovered Gate Zone, is close to well-known mines such as Copper Mountain, Highland Valley, and New Afton. Public access has been completed for years with infrastructure that inspires. A copper major can start shipping directly after investing in the production facility. Of course, we are talking about investments in the range of several USD 100 million.

The Kodiak Copper portfolio is complemented by a property in Arizona, located in a very mine-friendly environment. The porphyry drilling in British Columbia went quite to management's liking. The good results also prompted Teck Resources to acquire a stake of just under 10% for a total of CAD 8 million. With a full treasury of more than CAD 14 million, the Company can now move forward in 2021, with plans for more than 30,000 meters of further testing and assaying.

Kodiak Copper shares have been trending sideways at the CAD 1.50 line for several weeks; presumably, the market is waiting for fresh news. We expect news soon, and with the successful setup, it shouldn't be bad. To buy - as long as the potential is not yet open in front of us, with new drilling results, the CAD 2.00 should be approached.

Freeport-McMoRan - Copper is the new gold

One of the copper standard stocks is Freeport-McMoRan, a commodity stock from Phoenix. The stock has had a great run, with a 5-year return of a whopping 398%. Due to strong copper prices, Freeport-McMoRan was able to reduce almost all of its debt. The dividend was just reinstated; it is now USD 0.075 per quarter, which is a 50% increase over the dividend before it was discontinued last year. With expected growth over the next few years, the quarterly dividend could return to USD 0.25, which was the payout before the oil market collapse that nearly bankrupted Freeport-McMoRan.

Freeport-McMoRan's projected EBITDA of USD 11 billion for 2021, assuming stable copper prices, could be even greater if demand increases. This high cash flow will allow the Company to deploy funds for further mine developments to cope with rising demand. The London Metal Exchange complains about physical inventories being too low if the forward price continues to go through the roof.

At the current entry point, Freeport-McMoRan stock certainly looks to have done very well already, and overall we fundamentally estimate growth of about 10% per annum (CAGR) over the next 5 years. However, as the economy is likely to pick up another gear after the pandemic, an investment makes long-term sense after a minor correction in the chart.

Millennial Lithium - Lithium remains one of the Metals for 2021

The entire lithium stock sector has moved up tremendously in recent months. Since Elon Musk's Battery Day in September 2020, there has been no stopping white gold stocks. The share of Millennial Lithium even reached a new 11-year high of EUR 3.24 in January. Many other lithium stocks also knew almost only one way recently: up. The lithium price recently climbed to USD 65,000 and is thus as high as it was last in mid-2019.

The demand for lithium will remain high because investments in e-mobility will accelerate again under Biden's government. At least, that's what a comparative study published in the journal Nature Energy on the series production of lithium-ion batteries and alternative technologies by a team of battery researchers led by WWU Münster suggests. What has been buried in drawers for years is now coming to light. The oil lobby blocked battery cell production for long periods, and now the oil multinationals are even investing in battery metals themselves - the signs of the times are tangible. They are urging us to throw old habits overboard. Relying permanently on increasing oil sales volumes has been a discontinued model for 3 years. Global demand is falling, currently only slightly, but it is falling!

If we look at the future demand for energy storage, it will undoubtedly take a few more years until enough Gigafactories are built to meet the future demand. For the year 2030, global production of rechargeable batteries will increase from today's 750 gigawatt-hours (GWh) per year to 1,500 GWh. Despite all the euphoria, lithium stocks remain a speculative investment. Orocobre and SQM are the best-known representatives, a smaller value but thus also a thoroughly promising player is Millennial Lithium. The market capitalization already reaches EUR 232 million - production on the 12,619sqm Pastos Grandes project is expected to start in 2 years. It is exciting to see where we will see the share then.


Author

André Will-Laudien

Born in Munich, he first studied economics and graduated in business administration at the Ludwig-Maximilians-University in 1995. As he was involved with the stock market at a very early stage, he now has more than 30 years of experience in the capital markets.

About the author



Conflict of interest & risk note

In accordance with §34b WpHG we would like to point out that Apaton Finance GmbH as well as partners, authors or employees of Apaton Finance GmbH may hold long or short positions in the aforementioned companies and that there may therefore be a conflict of interest. Apaton Finance GmbH may have a paid contractual relationship with the company, which is reported on in the context of the Apaton Finance GmbH Internet offer as well as in the social media, on partner sites or in e-mail messages. Further details can be found in our Conflict of Interest & Risk Disclosure.


Related comments:

04. March 2021 | 09:30 CET | by Carsten Mainitz

BYD, Kodiak Copper, RWE - Quick profits: Use consolidation to enter!

  • Copper

The need for a secure supply of energy that is available at all times is growing as digitization and electrification advance. Many building blocks have to fit together before an electric motor can run. Raw materials such as copper are at the very beginning of the value chain. This industrial metal has excellent conductivity and is therefore linked to various facets of electromobility and power generation. Position yourself correctly ahead of the next growth spurt!

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26. February 2021 | 08:33 CET | by Carsten Mainitz

Varta, Nevada Copper, Xiaomi - Electromobility & Innovation: Power duo for rising share prices!

  • Copper

The electromobility sector is said to have bright prospects. Closely linked to this is the question of intelligent and efficient forms of energy storage. Innovations are often the deciding factor in leaving competitors behind and generating higher margins and profits. One should not forget the "ingredients" for success, these being raw materials such as copper. We present three power stocks for your portfolio.

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16. February 2021 | 12:53 CET | by André Will-Laudien

Nevada Copper, BYD, Varta: Now it's getting hot!

  • Copper

According to 2020 research from IDTechEx, the introduction of electric traction motors in road vehicles will lead to a significant increase in copper demand over the next 10 years. The study, commissioned by the International Copper Association (ICA), shows that by 2030, more than 250,000 tons of copper per year will be used as part of the windings in on-road electric traction motors. The current increase in copper demand follows the development of the global automotive market. Pure battery-electric cars are expected to gain the most market share at the expense of internal combustion engines and hybrid vehicles. Copper investments, therefore, remain the first choice!

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