Cycle Bottom Profile picture
Sep 24 5 tweets 3 min read
The typical #Commodity or #goldstock graph that tends to interest us if backed up with fundamentals, we would expect 1H 2023 this could bottom at 2c down 50% from current levels (-95%+ from cycle peak), offering 20x returns over the following 48 months. Image
For fundamentals we would like to see 4-7c of potential annual cashflow 3 years out to back our 20x return.
This is how to create wealth, deployment of capital near a cycle bottom can grow by 10-20x over the following 48 months.

Get in step and alignment with the upcoming cycle bottom - this is the best guidance we can give any investor

The highest beta is getting destroyed (-95%) through the peak of Fed rates and the USD, this potentially is a once in 15-20 year opportunity to make easy returns.

We are accummulating assets where home runs will be made on the next 20-50% falls.

#Bitcoin miners
This is so simple, but so hard for many...

We are buying $1 for less than 7c

We are harnessing the emotion of fear to our advantage

We are buying into only extremely negative expectations

We will be the kid in the lolly store come 1H 2023

We know the time horizon required

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More from @BULLReturns

Sep 26
The march towards corrective action and optimization, through 1Q 2023 +20% volumes, driving down cash costs below $175/t.

Optimized levels 4Q 2023: 125kt per month run rate at sub $135/t

$AHQ has broken down into our accummulation zone #coal

$40m at 9c = 2023/2024 cashflow $100m, 0.4x

$27m at 6c = 0.26x

*$5-25m dilution is still possible, higher end if Marco funding facility isn't executed.

Tenas DFS very low AISC and capex start up, in 2025
At 6-7c $AHQ becomes a potential asymmetric trade, downside 50% upside 10-15x

The outcome required would be over $50-70 cash margin on 1.5-1.8m/t of production = $75-126m cashflow

Difficult outcome when the thermal #coal spot falls below $180.
Read 4 tweets
Sep 24
#commodities #uranium

To get in alignment with the incoming bottom, likely 1H 2023 (the pivot on monetary tightening and peak USD), several spots will decline by 30% & high beta related equities by up to 60%. Be prudent in ones scale in, we are using future return as a guide.
History indicates 90-95% stock decliners within #commodity sectors often offer interesting recovery returns of 15-20x (all being even), expect this to play out in many cases through 1H 2023.

Where are our bids?
A) where we can obverse Cap/CF <0.5x 3 yrs out
B) Cap < 5% of NPVs
How to use future returns as a scale in guide?

For us we are looking for 8x plus returns over 48 months, so to achieve this an ideal buy in is <5% of NPV and/or <0.5x Cap/CF 3yrs out

These often present themselves near cycle bottoms....

Read 6 tweets
Sep 23
.....hence the 1H 2023 incoming bottoming of markets
If you want to get your up and down #uranium cycle legs correct, this is probably more important than anyone else it dictates the market cycle.
What #uranium specialists lack knowledge on, that generalists are focused on.....
Read 4 tweets
Sep 23
$AHQ bid at 10.5c was hit this morning, multiple lower bids remain, outcome vision:
21c Dec 2022 +100%....overhang depleted + implementation of optimization plan
31.5c 2Q 2023 +200%....1Q results showing positive trend
42c 4Q 2023 +300%....3Q results indicate $25m cf run rate
Based on the above projectory, valuations are as follows:

2023 Cap/CF 0.7x

2024 Cap/CF 0.6x

2025 Cap/CF 0.5x

2024 Cap/CF 0.4x

Assumptions: falling spots offset by rising volumes
Often when short term expectations have been destroyed, like with $AHQ, the pendulum shifts to the far side of only negative outcomes.

Perhaps review the Tenas DFS and where the project sits on the cost curve and the capex start up, likely a project many wished they had.

Read 4 tweets
Sep 21
Material up legs are scale down opportunities #uranium
Material down legs (-65% plus) are scale in opportunities (excluding the cycle top).

Demand is increasing by say 3% per year, supply can turn on 10-20% in 2024-2026 assuming $65 plus sustained spot.

$85 likely +15-25% supply

$105 likely +20-30% supply

In most #commodity markets supply is stimulated materially over 9-18 months at 65% plus cash margins.

For #uranium we see this to be no different, using sub $35/lb cash costs for compelling projects, over $100/Ib will stimulate a massive wave of fundable projects within 24m.
Read 4 tweets
Sep 18
Understanding con note conversion overhang is key to understanding the picture. Also optimization of a start up isn't an overnight affair, 6 months for mitigation of labour and machine maintenance. $AHQ

$50m buys 4 potential mines, Over 2bn NPV and 1bn/t resource.
It's the sitting that matters in turnarounds, not exiting post the horse bolting -80%.....

This has potential as an M&A target.

Smart money uses the con note selling as the mechanism to accummulate cheaply.

Stupid money exits post -80% decline

Smart money reviews the thesis and assesses the turnaround ability and future cashflow post optimization

2023 CF +A$50-100m Vs 50m cap

Plenty of buyers at 11c.
Read 4 tweets

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