Macquarie Conference 2024: Bullish on copper and uranium

• Attractive long-term demand fundamentals, particularly for copper and uranium
• Security of supply in rare earths, uranium and lithium sectors
• The competitiveness of Australian projects (labour costs are a concern)
• The view that lithium prices have reached a bottom
• Gold prices remain high due to use in hedging strategies

• LTM sells directly into Western OEMs allowing them to match growth with demand. This allows risk reduction and offers upside protection for OEMs to secure volumes.
• LTM’s value add by converting brine to lithium hydroxide and other specialty lithium products in the US, Japan and China helps keep customers ‘sticky’.
• The ability to utilise the Direct Lithium Extraction (DLE) technology in subsequent growth projects allows flexibility in sourcing raw materials for different customers.
• LTM’s Argentina operations have not been impacted by water and royalty policies or rulings on new projects.
• Key risks to Macquarie’s forecast: Movements in lithium prices and variation in Macquarie’s assumptions related to production and costs.

Mineral Resources ( ASX: MIN)

• The haul road sell-down is an asset turnover strategy seeking to unlock cash for growth and staff retention. Analysts tip MIN being able to focus on ~30% ROE growth delivering projects 30-40% cheaper than peers if it is able to execute on this.
• The QLD move will be an indicator of MIN’s ability to extend its cost advantage.
• MIN retains an upstream focus on lithium.
• Key risks to Macquarie’s forecast: pricing movements along with timing of project ramp-ups are risks to valuation and outlook.

Base metals/copper exposure

• Focus on growing reserves and resources close to operations to add value.
• Focus on paying down debt. The Motheo expansion is tipped to support higher cash generation.
• Priority focus is on organic growth, such as Black Butte but analysts suggest if it turned to inorganic growth, SFR could look at boutique sized copper assets.
• Key risks to Macquarie’s forecast: Movements in copper and zinc prices, along with any variances in the assumptions Macquarie has made regarding production and costs.

• NST is on track for its five-year plan to grow production to 2.0Mozpa.
• Labour costs have been a challenge but the softer nickel and lithium sectors have caused some labour market softening in WA.
• Returns on certain projects can be partially underpinned via hedging, with NST’s hedge book currently totalling ~2Moz at an average price of $3,094/oz.
• Key risks to Macquarie’s forecast: Gold price movements and variation in operation costs could affect earnings. The KCGM mill expansion is important to the outlook.

• Infill drilling has been finished at CV5 and PMT is awaiting assay results. It expects a maiden resource from CV13.
• Initial studies for Corvette will focus on an open pit, with the option to add an underground.
• Corvette will be developed to combine the resource with downstream processing capabilities in order to capture downstream margins and rent in the North American EV value chain.
• Key risks to Macquarie’s forecasts: Movements in spodumene prices, along with any variances in Macquarie’s assumptions for mining inventory. It’s worth noting PMT hasn’t defined a maiden reserve for the Corvette project.

Uranium

• Exploration potential at Langer Heinrich which could see the life of the mine extended beyond 17 years.
• The balance sheet is healthy and PDN is able to manage working capital while ramping up production.
• Key risks to Macquarie’s forecast: Movements in uranium prices and timing to ramp-up production could affect outlook.

Boss Energy (ASX: BOE)

• Material upside at the Honeymoon operation (which recently saw first production). Exploration and resource conversion success could lift the production rate to the 3.3mlb pa export license levels.
• BOE is largely uncontracted, with only 2 sales agreements, leaving it open to benefit from higher contracting pieces longer term.
• Key risks to Macquarie’s forecast: Movements in uranium prices and timing to ramp-up production could affect outlook.