Mining Returns

Analysed By Tshepo Magagane

Not all metals are created equal!

Not all commodities are created equal!

Not all jurisdictions are created equal!

Not all management teams are created equal!

You need teams that understand Geology, Engineering, Social, Politics BUT most importantly Mine Finance.

Why I will keep shouting about the opportunity the Transition presents for Africa – for both investors and local countries – once in a generation catalytic opportunity!

NB: think about this, BHP has been allocating the same capital to Iron Ore and WA Copper, however, the ROIC for Iron Ore was 3x that of WA Copper – WHY? Simply over multi-year periods, they were clearing over USD200/t for Iron ore vs going forward whereby they will likely be clearing USD30-40/t…

…and you are going to see those ROIC swap around.

PS: if you are a Sovereign – for Copper – you could just easily go “800Ktpa of Copper in Zambia is going to come from Tier 2 projects and it is going to cost USD12-15bn to take those c17 projects through MRE, PFS, BFS, PF…so I am going to just do that…

…and those projects – worst case = USD5bn of CF pa and base case = USD13bn of CF pa – can you then see how those returns stack up!! “humble beginnings and big bets” – Capitec Stalking Giants

And remember what I have said “there will come a period whereby there are no entry points into Copper” – especially if you start seeing the likes of Glencore abandoning their listing (or some of them)…these strategic stakes sovereigns are taking are very powerful even at just “negative control”!