Thought of the day: Fighting #commodity price tops will just result in 75% plus stockprice retracements, #cyclicality music always stops, grab a chair early to avoid serious regrets and portfolio destruction. Easy clue to follow, is 65-80% margins above cost curves are peakish.
Those #commodities that are currently near bottoming (0-20%) for the next up cycle 2H2023-2025....

#tin -65%
#ironore -66%
#nickel -60% (moving up)
#Lumber -72%
#zinc -40%
#HRCSteel -67%

Know where you are in the cycle....
1st Quartile candidates for the next cycle...
A deep recession would see industrial metals decline to costs curves or into negativity for high cost producers, this is often around 75% down from 2021 peak levels.

Note we need to take into account those with historic low inventory levels currently.
Generally zero or negative margins (supply shut down incoming) with low global inventories (lack of dumping overhang) offset with immediate recession demand destruction = #commodity bottoming 1st Quartile entry points

Demand destruction can offset low global inventories in S/T.
#ironore cycle 2H2023-2025

1st quartile $40-90/t = high probability of 4-8x gains in pre-production plays

2nd quartile $90-$140 = 2-4x returns

3rd quartile $140-$190 = 1-2x returns

4th quartile >$190 = high probability of 0-75% loss
#tin cycle 2H2023-2025

1st quartile $12k-18k = high probability of 4-8x gains

2nd quartile 18-28k = 2-4x returns

3rd quartile 28-38k = 1-2x returns

4th quartile >38k = 0-75% loss
Newcastle #thermalcoal cycle 2023

1st quartile $40-90/t = high probability of 5-10x returns from pre-production plays

2nd quartile $90-$130 = 3-6x returns

3rd quartile $130-$170 = 2-4x returns

4th quartile >$170 = high probability of 0-75% declines


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More from @BULLReturns

Jan 13
Thought of the day: When in the eye of the bear market storm, ask yourself, 4-7 yrs out, is the asset price then 8x + of today's value? Will cashflows be materially higher? Will price drivers be materially higher? Will demand be materially higher? Will negativity have flipped?
Scaling in is the best option to secure one's future returns near a cycle bottom, our 8x threshold often can go to 20x, the avg deployed return being around 14x.
The difference between -96% and -97.5% scaled in entry points washes out when up 15-20x.
Read 4 tweets
Jan 12
#AURAENERGY $AEE approaching it's 9 month high, only 15% off it's 36 month high with a massive upgrade in NPV incoming....

Sub $20lb AISC on 3mlbs of capacity with project implementation 18 months = 200% catch up relative to peer group valuations over the next 15 months.
This #uranium case study for us started back in 2018, cap low in 2019 was around $6m....

On entry we valued the opportunity at around 15x avg entry price.

This has been upgraded as further research has lead us to much higher resource levels at Tiris on lower AISC assumptions...
....also we believe the Swedish assets will have significantly higher valuation impact than applied to the original valuations.

For Tiris the nearology resource expansion will likely be material Vs the current 56mlb (5x is possible), that can push the full NPV up to A$2bn.
Read 4 tweets
Jan 10
Understanding balance sheet liquidity runways from cashflow cycle lows is key to selecting the multi baggers...

$BTU 80c to >$40 post buy backs & dividends kicking in >30x

$RIG 60c to >$15 >20x due to massive operating cashflow build up through 2026, debt duration push out etc
$BTU 2020 operating CF compared to 2023 > 15x

$RIG 2021 operating CF compared to 2026 > 6x
We purchased both at near cycle lows in 2H 2020.

We are replicating those themes in 2023 in:

#bitcoin miners

#preciousmetal stocks

Selected #cyclical low themes
Read 4 tweets
Dec 10, 2022
As several #uranium stock fall through 24 month lows, many on twitter will have turned negative on the whole thesis. Whereas a few of these will provide us line of sight for 8x returns, we would be remiss not to deploy. These will triple over 18 months & those who sold at lows...
....will reenter and believe in life changing returns again with <3x upside.

The fool and their money are easily separated in high volatility sectors where longer term (> 24 months) sitting is required.

The definition of a #uranium fool:

- engages in fomo near up leg highs

- talks about holding for dividends in a sector where capital losses > 90%

- talks about life changing returns while selling near lows

- has no idea on project matrix with < $25 AISC at the lowest caps
Read 4 tweets
Nov 29, 2022
$AEE AGM about to start, join and become enlightened. Tiris #uranium project cashflowing 2025, scaling production through 2027.
56mlb resource increase to 120mlbs at Tiris > $1.6bn NPV or $1.80 per share. WOW #Uranium $AEE #auraenergy
1600 holes drilled for expansionary resource and reserves = huge above expectation data incoming #uranium

Read 5 tweets
Nov 24, 2022
$AEE using only 20% of the old resource in the NPV (without #vanadium credits) = 600% increase in the NPV = $800m at $75 pricing Vs current cap $140m (excluding Swedish battery metals project) #uranium
$AEE ability to expand the resource at 10c per pound #uranium
$AEE 45% fixed operating costs, spread over 3-5mlbs Vs 1mlb boosts the scaling productivity materially pushing AISC lower #uranium
Read 5 tweets

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