Daily Brief Energy/Materials: Northern Star Resources, ENEOS Holdings, BHP Group Ltd, Riken Technos, Crude Oil, Auric Mining, PBT Land and Minerals and more

• Northern Star Resources (NST AU) announced two major downgrades this year, hampered by old hardware, leading to a ~19% single-day share price fall on the second cut.
• NST made some concessions, mollifying activist Elliott (and the market). For now. I discussed this situation in Stay The Course As Northern Star (NST AU) Extends Olive Branch To Elliott.
• NST announced this morning that three days prior my note it received, and (has now) summarily rejected a cash/scrip Offer from Gold Fields (GFI SJ), or a A$27/share implied price.

• Context: This Insight follows up on previously highlighted relative value opportunities, using a statistical methodology based on mean-reversion to identify opportunities in paired securities.
• Highlights: In Japan, currently three pair trade opportunities persist across three sectors.
• Why read: Statistical analysis offers a unique perspective on relative value. Gain insights into actionable statistical pair trade opportunities and monitor performance of previously highlighted pairs.

• The copper price has stagnated for four months, struggling to maintain new highs, and recently slumped on reports that the U.S. maybe wavering on implementing more tariffs of the metal
• BHP’s price implies very aggressive copper price targets which we view as insufficiently incorporating the risks of a weakening AI-boom, low to no additional US tariffs and broader economic cyclicality 
• There is still significant downside not just to our valuation, which sits at a pre-AI-boom-inventory-imbalance-driven-parabolic-copper-surge level, but even to a moderate midpoint between our conservative outlook and the market price 

• Market Leadership in Specialty Compounding & Functional Films: RIKEN TECHNOS CORPORATION (4220 JP) holds an entrenched global niche position in synthetic resin compounding (polyvinyl chloride and thermoplastic elastomers) and specialty extruded/calendered films, serving high-specification transportation, healthcare, electronics, and construction end-markets with manufacturing operations across Japan, the United States, Thailand, and Indonesia.
• Operational Mix Shift Driving Superior Cash Conversion: Despite moderate top-line volume growth (3-year revenue CAGR of 2.08%), product mix optimization toward high-margin elastomer compounds and precision films has expanded gross margins to 22.43% and EBITDA margins to 15.09% in recent quarters, underpinning a 3-year EPS CAGR of 28.70% and Free Cash Flow of ¥8.56B in FY2026.
• Proactive Capital Allocation and Accelerating Shareholder Returns: Management’s focused asset rationalization (such as consolidating film production from Gunma to Saitama) combined with aggressive capital return policies—reflected in a 5-year dividend CAGR of 31.40% (3.5% yield), a surge to ¥76.0/share in FY2026, and active multi-billion yen share repurchases—provides strong downside support and structural ROE expansion.

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• It would appear that our scenario in terms of a U.S.-Iran deal remains intact, i.e. “we will believe it when we see it.”    
• President Trump has apparently rejected Iran’s “seven day” timeline for what essentially appears to be an effective reiteration of the original MOU, strongly supported  by the IRGC.              
• President Trump also suggested, as anticipated, that a “re-escalation” of military strikes is possible, but his timeline, at least at this point, is after the midterms, but we shall see.             

• Auric Mining Limited (ASX:AWJ) is a junior gold producer and developer that owns a portfolio of gold assets around the Kalgoorlie and Norseman regions of Western Australia (WA).
• It has made two key acquisitions in the Union Jack project (adds ounce) and purchased second-hand processing equipment and infrastructure (locks in costs and timelines).
• Following the acquisitions, AWJ has proforma net cash of ~$30m as of September 2026, which we think continues to support further exploration, tolling opportunities, asset acquisitions, and still potentially provide a material contribution towards funding Burbanks.

• Structural Conversion Unlocks Sub-Scale Assets: Converting Permian Basin Royalty Trust’s legacy Waddell Ranch Net Profits Interest (NPI) to a cost-free ~15% effective royalty interest directly addresses the recurring “excess cost positions” that led to zero payouts from that asset in recent quarters (including June, July, August, and September 2026).
• Extreme Operator Concentration as a Strategic Double-Edged Sword: The combined platform’s 91% operational concentration with Blackbeard Operating (BBO) ensures unparalleled alignment on development pace and surface access. However, it subjects New PBT to substantial counterparty risk and leaves its capital expenditure cycle entirely captive to a single private equity-backed operator’s priorities.
• Valuation and Capital Allocation Pivot: The transaction establishes a pro forma C-corporation (Up-C structure) valued at $2.2 billion with $154.5 million in pro forma annualized Q1 2026 Adjusted EBITDA. By shifting from a pass-through trust model to a corporate structure, New PBT can selectively retain cash to pursue bolt-on acreage acquisitions at target hurdle rates of 15% to 20% IRR, breaking the traditional trust reinvestment bottleneck.