[36chambers]

In other 'to the moon' news, I hope you all held onto a little crypto. Trying not to sell to early this time, but interested in any opinions on timing the top...

I've long since given up trying to make sense of the movement. While the going's good, I just sell a slither every now and then and try not to think about it too much.

[petejh]

However, when we in a massive arms race against AI / big data development / global economic expansion, then even renewable resources are *massively* constrained, yet the likes of amazon etc. are gobbling up all the new solar in wind capacity with corporate power purchase agreements, this just pulls it away from other, more difficult to mitigate energy consumers.

Then there's the mineral resource required to produce the wind farms, cables, batteries, solar farms etc. None of these things are infinite...

To circle back around to this point (as energy/materials demand is one of the foundations of my investment thesis). As can be seen by current mania in Nvidia and other AI-related tech leading the US markets to all time highs there's a lot of excitement around the roll-out of AI - shades of dot-com bubble exuberance perhaps but wtf knows. What is known, is it (AI, energy transition, IoT, transport, yada yada) all requires the build of lots of physical infrastructure including energy-intensive data centres, and the means to supply them with reliable electricity. Good article from 'Datacentre' trade magazine, giving overview of global energy demand as it relates to data centres required for the progression of AI.
Quote:
As AI and other new technologies continue to be in high demand worldwide, the data centres that facilitate this growth will double their electricity consumption in just two years.

The International Energy Agency (IEA) has forecast what energy demand could look like between 2024 and 2026. It has revealed that, whilst global electricity demand rose considerably in 2023, it is set to grow at a much faster pace in the next two years.

Considering the impact on data centre sectors, industry leaders will need to consider how to keep pace with continued rising demand for AI, by boosting capacity in a way that is economically viable and sustainable.

Global electricity demand continues rising in line with AI
With AI expected to consume as much electricity as a medium-sized country, the technology could pose severe challenges to data centres, as they battle to meet growing customer needs.

Global demand for electricity grew 2.2% in 2023, according to the IEA, with countries such as The People’s Republic of China and India experiencing transformative digital growth. Over the next three years (2024-2026), the need for electricity is set to grow by an annual average of 3.4%, which the IEA puts down to economic outlooks improving in both advanced and emerging economies.

Particularly in locations like China, electricity demand will be supported by the ongoing electrification of residential and transport sectors, as well as notable expansions of the data centre sector. China has already seen huge growth in its data centre capabilities, having recently launched its first underwater data centre in order to deploy innovative cooling solutions and increase overall energy efficiencies.

The country’s data centre market is also expected to reach revenue heights of US$69bn by the end of 2023, in addition to a market volume of US$86bn by 2027, demonstrating continued data centre demand around the world.

Also experiencing mass demand for data centre electricity is the Republic of Ireland, with the nation’s data centre electricity having risen by 400%. Figures in 2023 suggested that this was due to multinational companies such as Facebook, Google and Microsoft having built data centres in the country, with more expected in the future.
https://datacentremagazine.com/data-centres/ai-boom-will-cause-data-centre-electricity-demand-to-double

This, before you start to consider more everyday activities like... heating, lighting, transport, food production and manufacturing tangible goods.

Add on the energy demand for other essential activities such as mining BTC so degenerates can yolo.. What a messed up civilisation 

It's part of the reason a very large % of my long-term pf is in tin, copper and other base metals producers and royalties (AFM, Filo, Ngex, Ecora, Altius, Adriatic). Tin essential to the semi-conductors and electronics increasingly in everything, tin supply deeply constrained. Copper essential to the electricity generation/distribution infrastructure to power it all, long-term the consensus outlook for copper supply is it's been underdeveloped.
With some old world energy stuff - coal and oil/gas (WHC and TXP) - which isn't going away any time soon while nations work out affordable and reliable energy baseload (likely nuclear imo) and steel production. I completely missed the Uranium boat, may consider getting in if it ever pulls back deeply. SMR's being increasingly talked about as means to provide baseload power required for expansion of AI's data centre infrastructure.

[petejh]

Update on a couple of things..

Adriatic. Holders will be pleased to see the Vares processing plant finally, after delays since November, successfully commenced operations 2 weeks ago. If production ramps as planned to 800k tons per year by Q4 then I'd expect price to gradually re-rate over this year, past my initial £2.15 target to between £2.50 - £3. Upside to this is if they exceed 800ktpa as suggested they want to in last year's reserve update; if silver price does something wild; if/when Adriatic announce results/resource update for their Serbian asset 'Raska' (suggested by management to be this year); plus satellite discoveries from ongoing drilling around Ruprice. Long term a good entry is anything below £2 imo.


Alphamin. Annual financial report out last week. All you need to know about what lies ahead is in their MD+A. If you enjoy this sort of thing then have a read and you can decipher without too much difficulty what the future brings, starting pretty much now. Can't emphasise strongly enough how good of a cash cow this company is, and is going to be for the next 10+yrs. It still flies somewhat under the radar due to location.

 - Expect to hear an announcement by end of this month that the processing plant for their second mine Mpana south has commenced processing.
- Then first tin concentrate sales from Mpana South beginning in April. This will increase production from 12m tons to 20m tons of tin concentrate per year.
- Reading between the lines of the production forecast figures for 2024 they're guiding for a rapid ramp-up to full capacity during the April quarter (interesting to compare with Adriatic's guidance of gradual ramp-up to full capacity by Q4 this year).
- Capex is all paid, the mine/plant are built - they spent ~$120m of capex on construction of Mpana south last financial year.
- Weather conditions in DRC during Q4 last year resulted in roads impassable so tin sales down by 30% for that quarter, and sales of tin down 11% for the year as a result. 
- The last 12 months average price of tin sold was 15% lower than the 2022's post-covid highs - ~$25,000 versus ~$30,000.
- They paid a huge DRC income tax bill for the stellar post-covid years of squeezed prices. they also forward-paid further DRC income taxes for financial year 2024. Meaning, this year their tax bill (on much higher profits) is going to be a $30m versus $130m in taxes paid for 2023.

Despite all this going on, they still generated handsome annual profit after taxes of $47m, and paid out $57m in dividends (from cash of $109m). Costs of production were flat year on year despite inflation.

A year of 'boring' development and high cash outflows is over and they're positioned to now reap the rewards. Notice that despite all the expense and setbacks in the last year, share price rarely dipped below 80c - the market knows this is positioned for strong growth.

I had impressive divi returns from AFM (bought at 48c) during the 2021-23 post-covid commodity squeeze. This year I'm expecting they announce perhaps a smallish (or no) divi in April during the AGM. Then from the second half of the year I expect a decade+ of sustained high profits and cash distributed to shareholders as a handsome dividend yield in the high single to low double %, relative to current share price. With sp growth back to the previous highs of mid $1's. This is from the production of 20k tons per year @ $25,000+ per ton tin, with all-in costs of production $15,000 per ton. If the tin market does what some expect and moves to an annual average above $25k then it just adds more cherries on top.

[kelvin]

Nice movement so far this week in your picks Pete 

The tin price is steadily grinding higher and taking Alphamin and MLX's share price with it. Mark Thompson is back on the twitter scene throwing huge targets around again, this time however, it's for copper.
Adriatic is up something like 4% already today but it's happily bouncing back from the recent buying opportunity.
 
Copper? It went nuts yesterday but all of Robert Friedland's banging on the table seems to have come to fruition - $4 now and probably more to come by year end.
 
Lots has been said about Filo and NGEX but I've been doing rather well with ERO, a producer rather than an explorer. Up over 30% since December and hopeful of more to come. I'll try and do a write up of it but sadly it won't be as comprehensive as Pete's are. It's now 10% of my PF, so not a small position.
American Eagle has been the other success story of late, another porphory story being uncovered by the drill. I recently doubled my position in this.

[petejh]

Update on a couple of things..

Adriatic. Holders will be pleased to see the Vares processing plant finally, after delays since November, successfully commenced operations 2 weeks ago. If production ramps as planned to 800k tons per year by Q4 then I'd expect price to gradually re-rate over this year, past my initial £2.15 target to between £2.50 - £3. Upside to this is if they exceed 800ktpa as suggested they want to in last year's reserve update; if silver price does something wild; if/when Adriatic announce results/resource update for their Serbian asset 'Raska' (suggested by management to be this year); plus satellite discoveries from ongoing drilling around Ruprice. Long term a good entry is anything below £2 imo.


Alphamin. Annual financial report out last week. All you need to know about what lies ahead is in their MD+A. If you enjoy this sort of thing then have a read and you can decipher without too much difficulty what the future brings, starting pretty much now. Can't emphasise strongly enough how good of a cash cow this company is, and is going to be for the next 10+yrs. It still flies somewhat under the radar due to location.

 - Expect to hear an announcement by end of this month that the processing plant for their second mine Mpana south has commenced processing.
- Then first tin concentrate sales from Mpana South beginning in April. This will increase production from 12m tons to 20m tons of tin concentrate per year.
- Reading between the lines of the production forecast figures for 2024 they're guiding for a rapid ramp-up to full capacity during the April quarter (interesting to compare with Adriatic's guidance of gradual ramp-up to full capacity by Q4 this year).
- Capex is all paid, the mine/plant are built - they spent ~$120m of capex on construction of Mpana south last financial year.
- Weather conditions in DRC during Q4 last year resulted in roads impassable so tin sales down by 30% for that quarter, and sales of tin down 11% for the year as a result. 
- The last 12 months average price of tin sold was 15% lower than the 2022's post-covid highs - ~$25,000 versus ~$30,000.
- They paid a huge DRC income tax bill for the stellar post-covid years of squeezed prices. they also forward-paid further DRC income taxes for financial year 2024. Meaning, this year their tax bill (on much higher profits) is going to be a $30m versus $130m in taxes paid for 2023.

Despite all this going on, they still generated handsome annual profit after taxes of $47m, and paid out $57m in dividends (from cash of $109m). Costs of production were flat year on year despite inflation.

A year of 'boring' development and high cash outflows is over and they're positioned to now reap the rewards. Notice that despite all the expense and setbacks in the last year, share price rarely dipped below 80c - the market knows this is positioned for strong growth.

I had impressive divi returns from AFM (bought at 48c) during the 2021-23 post-covid commodity squeeze. This year I'm expecting they announce perhaps a smallish (or no) divi in April during the AGM. Then from the second half of the year I expect a decade+ of sustained high profits and cash distributed to shareholders as a handsome dividend yield in the high single to low double %, relative to current share price. With sp growth back to the previous highs of mid $1's. This is from the production of 20k tons per year @ $25,000+ per ton tin, with all-in costs of production $15,000 per ton. If the tin market does what some expect and moves to an annual average above $25k then it just adds more cherries on top.

Alphamin, Adriatic and Ngex breaking out. I hope people are still holding and benefitting. Many other commods stocks showing strength.

Adriatic are still in the starting blocks of the re-rate towards 1xNPV, following commencing production last month. Expect somewhere in the low £3's by end of year if the reported 2024 Q3 production figure ends up in line with guidance. The current silver price ($28/oz) is providing a strong tailwind (but risks creating short-term parabolic exuberance). But even at $24-25 silver Adriatic is a world-leading low cost producer with huge free cash flows ahead of them - any processing ramp-up quibbles that come out in the wash between now and end of year notwithstanding. I'm in ADT for the long term* - my entry was £1.65-75 and I could take the gains here and be happy, but this is a company worth sticking with as there aren't that many come that come along with this conjunction of circumstances/timing/good management/good asset. There'll be increases in the resource size for Vares, hopefully new discoveries at on or two of the satellite deposits, a resource update for the promising Raska deposit in Serbia, and longer term the company want to acquire other European development assets using cash flow from Vares. The tailwinds are behind them at an unusual time in history to be opening Europe's first major silver/zinc/lead/copper/gold mine in a long time. ADT is a blatant growth story.

Alphamin same. Tin price is ripping and Alphamin's Mpana South mine is coming on line this month right as tin price moons to $30k/ton on tight supply/demand. Expecting a sp of $1.40-50 where it'll hit resistance. May get silly if tin price continues to squeeze, but I'd prefer if tin held steady at $30k/ton now. My valuation in a previous post shows where free cash flow is headed at $25k tin. There are some nice short term gains to be had for those who bought earlier this year or last autumn and want to exit in the low $1s to escape the DRC chaos potential. But I'm in this for the long term* - the annual dividend return for me over the next 10-15 years from my 45-55c entry with a large chunk of my pf will be worth an annual salary alone, whatever the share price does.

Ngex is getting drawn closer to $10 like it's a magnet. No idea what happens beyond that. It can't break $20 as the market cap would be too high for exploration phase. Ngex won't be producing anytime soon - this is a 'first peak of the lassonde curve' situation. If you've experienced that sort of stock before you'll know that it's fantastic while it lasts, but it won't last forever and the reality of boring years of development, fund raising and permitting will set in at some point - my advice is pick your exit wisely and be grateful for the gains, don't be a sad long term holder rueing the opportunity cost (looking at you, long-term GGP holders). I'll likely exit some or all if it gets to $10, my entry was $5.08 and that's good enough for me.
(*Filo is a bit different despite still being an explorer the same as Ngex. For too many reasons to go into now but the main one being it's a once in a generation scale - like a Grasberg in the Andes. Ngex likely not of this scale but would be happy to be proved wrong).

I won't be chasing anything here - not just the three above, anything. Market is exuberant. The time to buy commods was the last few years and I nailed it - many of them mentioned on this thread.

* 'long-term' = I keep the right the change my mind at any time - this year the US election is the biggest factor in my thinking, whilst watching for the yield curve to *eventually* uninvert, along with the rest of the market trying to time a temporary partial exit from stocks..