Materials Analyst/Strategist, Janus Analysis

Gaius King

Materials Analyst/Strategist

Janus Analysis

Commodities

Platinum is a chemical element with symbol Pt and atomic number 78. It is a dense, malleable, ductile, highly unreactive, precious, gray-white transition metal. Its name is derived from the Spanish term platina, which is literally translated into "little silver". Platinum is a member of the platinum group of elements and group 10 of the periodic table of elements. It has six naturally occurring isotopes. It is one of the rarer elements in Earth's crust with an average abundance of approximately 5 μg/kg. It occurs in some nickel and copper ores along with some native deposits, mostly in South Africa, which accounts for 80% of the world production. Because of its scarcity in Earth's crust, only a few hundred tonnes are produced annually, and given its important uses, it is highly valuable and is a major precious metal commodity.

<ul>
<li>Global platinum demand declined ~18% in the past decade, with the consumption nadir will be reached during 2025.</li>
<li>Decline in diesel vehicle sales have plateaued, with Industrial/chemical demand to exceed autocatalyst by 2035.</li>
<li>Platinum prices to remain flat for foreseeable future, but others in the basket may climb (e.g. palladium).</li>
</ul>


Global platinum demand declined ~18% in the past decade, with the consumption nadir will be reached during 2025.
Decline in diesel vehicle sales have plateaued, with Industrial/chemical demand to exceed autocatalyst by 2035.
Platinum prices to remain flat for foreseeable future, but others in the basket may climb (e.g. palladium).


Platinum Demand to Grow from 2025 Onwards

<ul>
<li>Investment community is too bearish on Pd, a strategic metal, it has strong growth dynamics looking forward. Future supplies will be physically constrained, whether from Russia and/or South Africa.</li>
<li>Palladium (Pd) demand to grow 26% over the next decade. Production dominated by Russia and South Africa. Russian production sustainability under question</li>
<li>Virtually all global Pd production is via by-product. Significant price rises required to incentivise additional supply  </li>
</ul>


Investment community is too bearish on Pd, a strategic metal, it has strong growth dynamics looking forward. Future supplies will be physically constrained, whether from Russia and/or South Africa.
Palladium (Pd) demand to grow 26% over the next decade. Production dominated by Russia and South Africa. Russian production sustainability under question
Virtually all global Pd production is via by-product. Significant price rises required to incentivise additional supply  


Palladium Price to Double Within a Decade

Equity Bottom-Up

Fortescue Metals Group Ltd. explores for and produces iron ore. The Company conducts business worldwide.

<ul>
<li>COVID-19 disruption will last longer than many are forecasting</li>
<li>China property sales very weak, as is its domestic rebar utilisation</li>
<li>
<a href="https://www.smartkarma.com/entities/gold-road-resources-ltd" target="_blank" data-smartkarma-citation="entities:6698:1" rel="noopener">Gold Road Resources (GOR AU)</a> has decades of probable production in front of it</li>
<li>Forecast <a href="https://www.smartkarma.com/entities/wesfarmers-ltd" target="_blank" data-smartkarma-citation="entities:1104:1" rel="noopener">Wesfarmers Ltd (WES AU)</a> evaluating 2nd takeover bid for <a href="https://www.smartkarma.com/entities/lynas-corp-ltd" target="_blank" data-smartkarma-citation="entities:20374:1" rel="noopener">Lynas Corp Ltd (LYC AU)</a> </li>
<li>Boda could be a company maker for <a href="https://www.smartkarma.com/entities/alkane-resources-ltd" target="_blank" data-smartkarma-citation="entities:19111:1" rel="noopener">Alkane Resources (ALK AU)</a> </li>
<li>
<a href="https://www.smartkarma.com/entities/bhp-billiton-ltd-adr" target="_blank" data-smartkarma-citation="entities:5424:1" rel="noopener">Bhp Billiton Ltd (Adr) (BHP US)</a>, <a href="https://www.smartkarma.com/entities/rio-tinto-ltd" target="_blank" data-smartkarma-citation="entities:13:1" rel="noopener">Rio Tinto Ltd (RIO AU)</a>, <a href="https://www.smartkarma.com/entities/fortescue-metals-group-ltd" target="_blank" data-smartkarma-citation="entities:41:1" rel="noopener">Fortescue Metals (FMG AU)</a>, <a href="https://www.smartkarma.com/entities/yellow-cake-plc" target="_blank" data-smartkarma-citation="entities:27844:1" rel="noopener">Yellow Cake PLC (YCA LN)</a>, <a href="https://www.smartkarma.com/entities/gold-road-resources-ltd" target="_blank" data-smartkarma-citation="entities:6698:1" rel="noopener">Gold Road Resources (GOR AU)</a>, <a href="https://www.smartkarma.com/entities/lynas-corp-ltd" target="_blank" data-smartkarma-citation="entities:20374:1" rel="noopener">Lynas Corp Ltd (LYC AU)</a>, <a href="https://www.smartkarma.com/entities/syrah-resources-ltd" target="_blank" data-smartkarma-citation="entities:1978:1" rel="noopener">Syrah Resources (SYR AU)</a>, <a href="https://www.smartkarma.com/entities/walkabout-resources-ltd" target="_blank" data-smartkarma-citation="entities:16753:1" rel="noopener">Walkabout Resources (WKT AU)</a>, <a href="https://www.smartkarma.com/entities/orocobre-ltd" target="_blank" data-smartkarma-citation="entities:3572:1" rel="noopener">Orocobre Ltd (ORE AU)</a>, <a href="https://www.smartkarma.com/entities/galaxy-resources-ltd" target="_blank" data-smartkarma-citation="entities:13914:1" rel="noopener">Galaxy Resources (GXY AU)</a>, <a href="https://www.smartkarma.com/entities/alkane-resources-ltd" target="_blank" data-smartkarma-citation="entities:19111:1" rel="noopener">Alkane Resources (ALK AU)</a>, <a href="https://www.smartkarma.com/entities/spdr-gold-shares" target="_blank" data-smartkarma-citation="entities:8632:1" rel="noopener">SPDR Gold Shares (GLD US)</a>, <a href="https://www.smartkarma.com/entities/sandstorm-gold-ltd" target="_blank" data-smartkarma-citation="entities:25752:1" rel="noopener">Sandstorm Gold (SSL CN)</a>, <a href="https://www.smartkarma.com/entities/jameson-resources-ltd" target="_blank" data-smartkarma-citation="entities:1923:1" rel="noopener">Jameson Resources (JAL AU)</a>, <a href="https://www.smartkarma.com/entities/paladin-energy-ltd" target="_blank" data-smartkarma-citation="entities:10117:1" rel="noopener">Paladin Energy (PDN AU)</a>, <a href="https://www.smartkarma.com/entities/atrum-coal-nl" target="_blank" data-smartkarma-citation="entities:9553:1" rel="noopener">Atrum Coal Nl (ATU AU)</a>, <a href="https://www.smartkarma.com/entities/catalyst-metals-ltd" target="_blank" data-smartkarma-citation="entities:4293:1" rel="noopener">Catalyst Metals (CYL AU)</a>, <a href="https://www.smartkarma.com/entities/emmerson-resources-ltd" target="_blank" data-smartkarma-citation="entities:18705:1" rel="noopener">Emmerson Resources (ERM AU)</a>, <a href="https://www.smartkarma.com/entities/exore-resources-ltd" target="_blank" data-smartkarma-citation="entities:16357:1" rel="noopener">Exore Resources (ERX AU)</a>, <a href="https://www.smartkarma.com/entities/stavely-minerals-ltd" target="_blank" data-smartkarma-citation="entities:20213:1" rel="noopener">Stavely Minerals (SVY AU)</a>, <a href="https://www.smartkarma.com/entities/bellevue-gold-ltd" target="_blank" data-smartkarma-citation="entities:2297:1" rel="noopener">Bellevue Gold (BGL AU)</a>, <a href="https://www.smartkarma.com/entities/allegiance-coal-ltd" target="_blank" data-smartkarma-citation="entities:14443:1" rel="noopener">Allegiance Coal (AHQ AU)</a>, <a href="https://www.smartkarma.com/entities/breaker-resources-nl" target="_blank" data-smartkarma-citation="entities:19210:1" rel="noopener">Breaker Resources Nl (BRB AU)</a>, <a href="https://www.smartkarma.com/entities/lion-one-metals-ltd" target="_blank" data-smartkarma-citation="entities:28159:1" rel="noopener">Lion One Metals Ltd (LLO AU)</a>, <a href="https://www.smartkarma.com/entities/blackstone-minerals-ltd" target="_blank" data-smartkarma-citation="entities:28181:1" rel="noopener">Blackstone Minerals Ltd (BSX AU)</a>, <a href="https://www.smartkarma.com/entities/poseidon-nickel-ltd" target="_blank" data-smartkarma-citation="entities:12760:1" rel="noopener">Poseidon Nickel (POS AU)</a>, <a href="https://www.smartkarma.com/entities/mincor-resources-nl" target="_blank" data-smartkarma-citation="entities:6731:1" rel="noopener">Mincor Resources Nl (MCR AU)</a> </li>
</ul><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/121/872/original/Table%201.png?1583703969" class="editor-image img-responsive" data-smartkarma-image-id="121872"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/121/873/original/Table%202.png?1583703993" class="editor-image img-responsive" data-smartkarma-image-id="121873"></figure>


COVID-19 disruption will last longer than many are forecasting
China property sales very weak, as is its domestic rebar utilisation

Gold Road Resources (GOR AU) has decades of probable production in front of it
Forecast Wesfarmers Ltd (WES AU) evaluating 2nd takeover bid for Lynas Corp Ltd (LYC AU) 
Boda could be a company maker for Alkane Resources (ALK AU) 

Bhp Billiton Ltd (Adr) (BHP US), Rio Tinto Ltd (RIO AU), Fortescue Metals (FMG AU), Yellow Cake PLC (YCA LN), Gold Road Resources (GOR AU), Lynas Corp Ltd (LYC AU), Syrah Resources (SYR AU), Walkabout Resources (WKT AU), Orocobre Ltd (ORE AU), Galaxy Resources (GXY AU), Alkane Resources (ALK AU), SPDR Gold Shares (GLD US), Sandstorm Gold (SSL CN), Jameson Resources (JAL AU), Paladin Energy (PDN AU), Atrum Coal Nl (ATU AU), Catalyst Metals (CYL AU), Emmerson Resources (ERM AU), Exore Resources (ERX AU), Stavely Minerals (SVY AU), Bellevue Gold (BGL AU), Allegiance Coal (AHQ AU), Breaker Resources Nl (BRB AU), Lion One Metals Ltd (LLO AU), Blackstone Minerals Ltd (BSX AU), Poseidon Nickel (POS AU), Mincor Resources Nl (MCR AU) 


New J. Hutton – Exploration Report (Weeks Ending 08/03/20) Abridged

Yellow Cake operates in the uranium sector, primarily focused on buying and holding physical uranium oxide concentrate (U3O8) to provide investors with exposure to the uranium spot price. The company also engages in uranium-related commercial activities to realize value from its holdings. It was established in 2018 and is headquartered in Jersey.

<ul>
<li>
<a href="https://www.smartkarma.com/entities/27844" target="_blank" data-smartkarma-citation="entities:27844:1" rel="noopener">Yellow Cake PLC (YCA LN)</a> is a pure play on the uranium price</li>
<li>Spot Price $24.65/lb U3O8 down 15% in the past year</li>
<li>L.T. Price remains ~$32.50/lb U3O8
</li>
<li>Trading at ~9% discount to NPV</li>
<li>Forecast global uranium demand to decline 30% by 2050</li>
<li>1-year Target Price £1.91 ps NPV4% assuming $22.5/lb U3O8
</li>
<li>3-year Target Price £1.59 ps NPV4% assuming $21/lb U3O8</li>
</ul>



Yellow Cake PLC (YCA LN) is a pure play on the uranium price
Spot Price $24.65/lb U3O8 down 15% in the past year
L.T. Price remains ~$32.50/lb U3O8

Trading at ~9% discount to NPV
Forecast global uranium demand to decline 30% by 2050
1-year Target Price £1.91 ps NPV4% assuming $22.5/lb U3O8

3-year Target Price £1.59 ps NPV4% assuming $21/lb U3O8


<ul>
<li>Primary supplies covered 83% of 2018 demand, secondary the remaining 17%</li>
<li>Primary production reduced by 7,100/t pa by producer cuts</li>
<li>Forecast that Primary and Secondary supplies sufficient to meet 100% of 2020 demand</li>
<li>Global nuclear generation to fall from 2675.4 to 1897.4TWh over next 30-years</li>
<li>
<a href="https://www.smartkarma.com/entities/nac-kazatomprom-jsc" target="_blank" data-smartkarma-citation="entities:27845:1" rel="noopener">NAC Kazatomprom JSC (KAP LI)</a> will increasingly dominate global primary supply</li>
<li>US$24.60/lb U3O8 (Spot price ) implies 76% to 87% of producers covering "operating costs"</li>
<li>Substantial inventories exist on current marginal demand, sufficient for 300 years</li>
<li>Expect long-term prices to stabilise at ~US$16-19/lb U3O8</li>
<li>Carbon-free economy impossible without wide-spread re-adoption of nuclear power</li>
</ul>


Primary supplies covered 83% of 2018 demand, secondary the remaining 17%
Primary production reduced by 7,100/t pa by producer cuts
Forecast that Primary and Secondary supplies sufficient to meet 100% of 2020 demand
Global nuclear generation to fall from 2675.4 to 1897.4TWh over next 30-years

NAC Kazatomprom JSC (KAP LI) will increasingly dominate global primary supply
US$24.60/lb U3O8 (Spot price ) implies 76% to 87% of producers covering "operating costs"
Substantial inventories exist on current marginal demand, sufficient for 300 years
Expect long-term prices to stabilise at ~US$16-19/lb U3O8
Carbon-free economy impossible without wide-spread re-adoption of nuclear power


Primary & Secondary Supply Sufficient to Sate Global Uranium Demand for the Foreseeable Future

Over two decades experience in resources; including mining operations, corporate finance and as a resource analyst. Followed numerous market sectors, conducting fundamental demand and supply analysis, detailed financial modelling incorporating real-world business complexity. Encompassing cashflow and DCF valuations, growth and supply factors, with sensitivities.

The ability to marry big picture ideas with in-depth analysis resulted in between 2004 and 2014, an after-tax (including all taxes/losses) of >50% CAGR over that period.