This document summarizes a presentation about making money in resources given by John Deniz, co-founder of Paragon Funds Management. It discusses how different resource sub-sectors like lithium, zinc, and copper are experiencing diverging fortunes based on their supply and demand dynamics. It highlights three resource stocks - ORE, RWD, and RER - that offer attractive risk/reward opportunities due to their projects and proximity to production. The presentation aims to show investors opportunities in resources despite recent volatility in the sector.
Altona Mining Presentation, Investor Roadshow November 2013Symposium
Altona Mining (ASX:AOH) investor presentation at Symposium's Investor Roadshow in Sydney and Melbourne, November 2013. Presentation was given by Altona Mining's Managing Director, Alistair Cowden.
MIDAS SHARES TIPS: Gold miner set to shine despite the panic over pricesclauyendry
The sharp fall in the gold price has spooked investors. Shares in mining groups have tumbled and questions have been raised about whether gold firms are past their sell-by date.
Altona Mining Presentation, Investor Roadshow November 2013Symposium
Altona Mining (ASX:AOH) investor presentation at Symposium's Investor Roadshow in Sydney and Melbourne, November 2013. Presentation was given by Altona Mining's Managing Director, Alistair Cowden.
MIDAS SHARES TIPS: Gold miner set to shine despite the panic over pricesclauyendry
The sharp fall in the gold price has spooked investors. Shares in mining groups have tumbled and questions have been raised about whether gold firms are past their sell-by date.
The Iron Hub: Alderon Resource (TSXv: ADV) Sees Massive Kami ProductionResource Clips
Something big is happening in Labrador and, according to Alderon Resource (TSXv: ADV) Executive Chairman Mark Morabito, it's part of the most underreported story in mining. ResourceClips feature (September 28, 2011)
The following presentation was given by Joel Schneyer, Managing Director at Headwaters MB at the Rocky Mountains Mineral Law Foundation- Mining Law Short Course in Westminster, CO
Chris Helweg:
Last year, for the fifth year in a row, the silver market
recorded another deficit; this time of 26.0 Moz (810 t).
Mine supply fell for the second consecutive year by 4%
in 2017, following 13 consecutive annual increases prior
to 2016. This was a result of years of Capex reductions
in combination with supply disruptions, particularly in
the Americas. With scrap supply contracting by 1% in
combination with net-hedging of 1.4 Moz (44 t), total silver
supply fell by 2% to just under one billion ounces.
Suppliers of Carbon Bushing, Carbon Crucibles, Graphite Electrodes, Gold And Silver Carbon, Induction Foundry Materials, Injector Wax 4, Gold Melting Muffle Furnace, Silver Casting Plant And Sparessilver & gold casting carbon and graphite crucible. In addition, we also provide after sale services to our esteemed clients across the globe.
Glencore / Syrah Resources (graphite, vanadium) - Research Note Simon Moores
10 July 2014: A brief on Glencore and Syrah Resources (vanadium, graphite) following the rumours that Glencore is about to make an approach to purchase the exploration company.
The lithium ion battery supply chain in an energy storage revolution.
The Benchmark World Tour 2016 was a series from free seminars on this subject with a focus on raw material demand of graphite, lithium, and cobalt.
Presentation on flake graphite industry at GMP Securities day in London, June 2014
Focuses on the future of the industry in tradition markets like steel refractories and new demand such as Tesla Motors' Gigafactory
Richard Clark, Senior Technical Specialist at Morgan is at the 2016 International Lithium & Graphite Conference in Shenzhen today to discuss the exponential growth of the lithium-ion battery market and its impact on global graphite supply.
Tesla Motors, Panasonic J-V for Gigafactory - Simon Moores Research NoteSimon Moores
A Research note on the partnership between Tesla Motors and Panasonic to build the world's largest lithium-ion battery plant in the US. Looks at the position of each company and the raw materials required (graphite, lithium,cobalt).
The Iron Hub: Alderon Resource (TSXv: ADV) Sees Massive Kami ProductionResource Clips
Something big is happening in Labrador and, according to Alderon Resource (TSXv: ADV) Executive Chairman Mark Morabito, it's part of the most underreported story in mining. ResourceClips feature (September 28, 2011)
The following presentation was given by Joel Schneyer, Managing Director at Headwaters MB at the Rocky Mountains Mineral Law Foundation- Mining Law Short Course in Westminster, CO
Chris Helweg:
Last year, for the fifth year in a row, the silver market
recorded another deficit; this time of 26.0 Moz (810 t).
Mine supply fell for the second consecutive year by 4%
in 2017, following 13 consecutive annual increases prior
to 2016. This was a result of years of Capex reductions
in combination with supply disruptions, particularly in
the Americas. With scrap supply contracting by 1% in
combination with net-hedging of 1.4 Moz (44 t), total silver
supply fell by 2% to just under one billion ounces.
Suppliers of Carbon Bushing, Carbon Crucibles, Graphite Electrodes, Gold And Silver Carbon, Induction Foundry Materials, Injector Wax 4, Gold Melting Muffle Furnace, Silver Casting Plant And Sparessilver & gold casting carbon and graphite crucible. In addition, we also provide after sale services to our esteemed clients across the globe.
Glencore / Syrah Resources (graphite, vanadium) - Research Note Simon Moores
10 July 2014: A brief on Glencore and Syrah Resources (vanadium, graphite) following the rumours that Glencore is about to make an approach to purchase the exploration company.
The lithium ion battery supply chain in an energy storage revolution.
The Benchmark World Tour 2016 was a series from free seminars on this subject with a focus on raw material demand of graphite, lithium, and cobalt.
Presentation on flake graphite industry at GMP Securities day in London, June 2014
Focuses on the future of the industry in tradition markets like steel refractories and new demand such as Tesla Motors' Gigafactory
Richard Clark, Senior Technical Specialist at Morgan is at the 2016 International Lithium & Graphite Conference in Shenzhen today to discuss the exponential growth of the lithium-ion battery market and its impact on global graphite supply.
Tesla Motors, Panasonic J-V for Gigafactory - Simon Moores Research NoteSimon Moores
A Research note on the partnership between Tesla Motors and Panasonic to build the world's largest lithium-ion battery plant in the US. Looks at the position of each company and the raw materials required (graphite, lithium,cobalt).
South American Silver Corporate Presentationsoamsilver
South American Silver Corp. is a growth focused mineral exploration company creating value through the exploration and development of the Malku Khota Silver-Indium project in Bolivia, one of the world's largest undeveloped Silver and Indium deposits, and the large-scale Escalones Copper-Gold project in Chile.
Central petroleum investor presentation July 2015Symposium
Central Petroleum's Managing Director, Richard Cottee, told investors in Sydney and Melbourne that CTP have laid the groundwork and are now ready to create shareholder value
New Zulu (ASX: NZW) presentation to investors in Sydney and Melbourne July 2015Symposium
New Zulu founder and Managing Director, Alex Hartman, presented to investors in Sydney and Melbourne on the 14th and 15th July and there was a great deal of excitement about the latest news and developments
2015 Broken Hill Resources Investment Symposium - Geological Survey of New So...Symposium
"Broken Hill 1:250000 metallogenic special and revised metamorphic facies-isograd maps".
Dr Joel Fitzherbert, Senior Geoscientist, Geological Survey of New South Wales
2015 Broken Hill Resources Investment Symposium - South Australian Departmen...Symposium
South Australian Department for State Development , Ted Tyne, Executive Director.
Investor presentation at 2015 Broken Hill Resources Investment symposium.
1. 1
Making Money in Resources
Presented by
John Deniz
Co-Founder of Paragon Funds Management
&
Fund Manager of the Paragon Fund
2. 2
Making Money in Resources
+ With Resources making up 30% of the
Australian market, there is obviously more to
the sector than Iron Ore and the Big Australian.
+ I have lost count how many times I have heard -
“Resources bull market is over / is dead and
buried / is in a structural bear market”…
+ Instead I’ll highlight the diverging fortunes of
several sub-sectors and discuss 3 opportunities
for investors today.
3. 3
My background:
+ Last 11 years in financial markets, with a predominant focus in
Resources:
+ 2012 to present: Paragon > co-founded Paragon Funds Management and
established the Paragon Fund in March 2013.
+ The Paragon Fund is an Australian equities Long / Short fund, focusing
on core competencies in Resources and Industrials.
+ Since inception, the Fund has returned 20%+ net CAGR, half coming
from Resources, despite the sector being down -16%.
+ 2014 AsiaHedge “New Fund of the Year” across Asia-Pac - Finalist.
+ 2009 to 2012 : Eye Management, a global Resources absolute return fund
+ Over this period the Australian Long / Short equities component of the
fund returned 30% net CAGR (tripled the market).
4. 4
Diverging fortunes of Resources sub-sectors -
Supply-side dynamics dominate
+ Whilst demand is an important factor, the biggest driver for Resource
markets is supply.
+ Bull markets are typically undersupplied with inventory levels in or
approaching sustained deficits.
+ On the flipside, bear markets are typically oversupplied with
inventory levels in sustained surpluses.
+ The respective performance of Iron Ore, Coal & Oil (down >50% off
recent highs) vs Lithium & Zinc (strengthening prices) captures the
divergent supply side dynamics very clearly.
+ Iron Ore, Coal – oversupplied, surplus markets - poor fundamentals.
+ Lithium, Zinc - balanced to deficit markets - strong fundamentals.
5. 5
Making money in Resources
+ Despite the volatility over the last two years, profitable stock picks across the
Resources spectrum and across the Resource S-curve have been achieved.
+ What we have made money in:
+ US Shale Gas revolution (LNG)
+ Electric Vehicles revolution (Lithium – ORE, Graphite – SYR, KNL)
+ Resource Discovery & Delineation (TON)
+ Pre-production plays (POS)
+ What have we avoided / shorted:
+ Bulks commodities - Iron Ore, Metallurgical & Thermal Coal
+ Mining Services, Oil & Gas and Gold up until 2015
+ Materially overpriced stocks with asymmetric risk:reward to the downside
6. 6
Resources sub-sectors we like
+ Lithium – Strong long term fundamentals, negligible new supply outside
ORE’s Olaroz.
+ Zinc – Moving into multi-year deficits and a major bull-market cycle from
CY16-19.
+ Sulfate of Potash – Unrivalled fundamentals and price strength. Limited
new supply candidates.
+ Copper – Balanced markets likely to enter into deficits again from CY16.
7. 7
Resources stocks we like
+ ORE – world-class Olaroz Lithium-brine project ramping up production to
17.5ktpa, with medium-term low capex expansion capacity to 30ktpa+.
+ RWD - delineating and derisking a likely world-class Sulfate of Potash
brine resource at its Lake Disappointment project in WA.
+ RER – Kalongwe the lowest capex and opex Copper project on the ASX
that’s potentially <12 months away from production.
All three stocks offer attractive risk/rewards to the upside.
Paragon has an interest in all of the above.
8. 8
Questions?
p. +61 3 9663 4415 m. 0412 395 004 e. j.deniz@paragonfunds.com.au
Paragon Funds Management Ltd, Suite 2, Level 2, 1 Little Collins Street, Melbourne VIC 3000
Paragon, its directors and employees do not accept any liability for results of any actions taken or not taken on the basis of information in this
presentation. This presentation does not constitute advice and is not intended for public use or distribution.