Daily Brief Energy/Materials: Fermi, Nippon Steel Corporation, Tokai Carbon, Crude Oil, Santos Ltd, Wheaton Precious Metals, Omai Gold Mines, Pharos Energy, Rio2 and more

• Fermi set terms for its IPO on Wednesday afternoon and will offer 25 million shares at $18-$22 and to debut on Wednesday, 10/1.
• One of Fermi’s founders is former energy sector director, Rick Perry.
• The underwriters have reserved for sale at the initial public offering price up to 5% of the shares of common stock for sale through a directed share program.

• POSCO Holdings (005490 KS) is looking to raise up to US$169m via selling some of its stake in Nippon Steel Corporation (5401 JP).
• This deal represents 1.5 days of ADV representing around 0.7% of shares outstanding.
• In this note, we will talk about the placement and run the deal through our ECM framework.

• Tokai has sold its lossmaking German electrode unit, cut global electrode capacity by 25%, and acquired Bridgestone’s 180ktpa Thai carbon black plant — actions that remove EBIT drag 
• These moves could lift FY27 EPS from ~¥92 (base case) to ¥125–130 (+35–40%), with margins rising toward 9–10% versus 5.5% in FY24. Q1 FY25 already (OPM 8.9%).
• Shares remain flat at ~¥1,000 (0.8× P/B, 19.6× FY25E P/E falling to 8.8× FY28E), leaving room for re-rating if Tokai delivers sustained >8% margins over the next 2–3 quarters.

• Crude oil futures steadied Wednesday, consolidating the previous session’s gains as investors eyed threats to oil supplies, including Russian diesel after the last spate of refinery attacks.
• Front-month Nov25 ICE Brent futures were trading at $67.90/b (1030 BST) versus Tuesday’s settle of $67.63/b, while Nov25 NYMEX WTI was at  $63.55/b against a previous close of $63.41/b.
• Benchmarks have largely been rangebound in September with markets torn between supply disruptions and concerns over a Q4 supply glut as OPEC+ continues its unwinding program.

• Following another unsuccessful bid for Santos, analysts review the company’s outlook with a focus on valuation and dividend support.
• -Santos’ takeover bid scuppered for the third time -Share price premium eases, focus returns to company fundamentals -Analysts review valuation and dividend support -Macquarie sees “extraordinary value” for long-term investors

On 10 September, Wheaton (WPM) announced that it had committed to contribute to Carcetti Capital’s financing of its acquisition of the Hemlo mine from Barrick in the form of a US$400m gold stream (c 39% of Carcetti’s total funding requirement). At the current gold price of US$3,650/oz, we calculate a 9.2% pre-tax internal rate of return (IRR) to Wheaton from its investment in Hemlo. At Edison’s more conservative, longer-term gold prices, we forecast that Hemlo will contribute an average of 0.9c/share to Wheaton’s EPS per annum, over the official 14-year life of the mine, and that it will contribute an average of 7.2c to Wheaton’s operational cash flow per share. At the same time, we have increased our Q325 EPS estimate by 4.4% and our FY25 EPS estimate by 5.7% to reflect recent strength in precious metals prices. Note that, at these levels, our FY26 EPS estimate rises from the US$1.44/share shown below to US$3.15/share.

• What you need to know: • Drill results continue to roll in following Omai’s recently reported large updated MRE on the 100% owned Omai Gold Project in Guyana.
• • Today’s assay results came after the cutoff date for the MRE; however will be included in the upcoming PEA.
• • OMG plans to report an updated PEA in Q4/25 on the new resource and include the Gilt Creek deposit (which was not included in the 2024 PEA).

• • 1H25 production of 5,642 boe/d and net cash of US$22.6 mm at the end of June had been reported previously.
• • 1H25 operating cashflow was US$16.1 mm, exceeding our forecast of US$13.4 mm, driven by stable output at TGT—Pharos’ most profitable asset.
• • The FY25 production guidance range has been narrowed from 5.0-6.2 mboe/d to 5.2-6.0 mboe/d.

• What you need to know: • Rio2 announced two MOUs for the potential supply of desalinated water to the Fenix Gold Mine.
• The two studies will evaluate the potential expansion of the two companies’ desalination facilities through operating plants and constructing a pipeline from their distribution facilities.
• • This would allow Fenix to move forward with its expansion plan, where annual production scales from 82Koz per year to over 300Koz.