Arsenal – Can They Ever Win The League?

By Tshepo Magagane

Investing / Commodities lesson!

Was having this conversation with a distressed debt investor I worked with around 09 about this.

He was linking it to investing – especially a question that he liked in interviews “X is trading at 2 but you analysis says 5”

…you buy in and sell at 4 and it continues to trade up beyond even 5!

What do you do?

With this transfer budget, can Arsenal ever get players that can get into the CL final and make the difference with some magic?

Obviously they are getting top-notch players – but are they those players you see being bid for double what they are prepared to pay?

His question being “when do you recognise that market conditions have fundamentally changed?” and “what do you do about it?”.

He is a huge Liverpool fan and I the time would forever be moaning about their lack of silverware – how many have they won since then while Arsenal is still stuck in the same position!

Lesson in Commodities:

1. From 90s to 2003

a. Bulks valued at negative value and Base Metals – majors abandoning projects across African jurisdictions

2. From 2003

a. A bulk promoter could raise USD100m in one afternoon in Mayfair

b. Promoter I worked with had managed to bring 1 small PCI asset into production and exited – had 2 learjets

c. c12 – this iron ore asset – nearly sold for the holding company to the Gulf for a partial of 10 figures – they didnt listen (co-advising mandates issues) – asset still around and has the biggest names in the sector attached to it (you could not give it away for 50m)

3. Gold from 20

a. Thor did PF at USD1,250/oz – tried to do an offtake deal – Chair (ex-boss) refused saying “this is exactly how I want it, those products will be expensive” – they produce at about 900/oz and have paid off PF

b. Thor & WAfrican should not be listed – what is the point of scrip at 2x PER or trading at cash value (they should do take-privates at 30% premia – annual cost of 6% that you pay over 5yrs)

4. What does it mean for Copper?

a. Already seeing CopperCo trading at premia to NAV – which imply that NAV models should input price of USD15-20k as LT 

b. We have seen this evolution from 10yrs back when we were talking about Intensity of Metal Use for Copper

c. Already being reflected in valuation of assets eg USD500m for 10ktpa Tier 4 project / USD2bn for Tier 2 permitting / USD4-5bn for Tier 2 producing

People like to say “Critical Minerals” – but what do you mean? The opportunities are not the same! The Strategy is not the same! The returns profile is not the same!