Buy scarce resources now, says veteran investment guru Charlie Aitken

Regal Partners’ Charlie Aitken gave the investor crowd at the 23^rd Resources Rising Stars conference on the Gold Coast a right old rev up in his opening address during the week, saying the world was entering a commodity super-cycle.

“Everything from energy through to iron ore, through to copper, through to rare earths, through to soft commodities, through to wheat, through to corn, through to water,” the 33-year veteran of mining investment said.

“It is right now. You want to own scarcity. This is the time to own scarcity.”

Aitken and Regal are long time mining bulls. But for the 700 who had registered for the two-day conference at RACV Royal Pines, it was nice to have the reasons why the super-cycle was upon them reaffirmed.

“The basics of why we are bullish on mining never really change,” Aitken said.

“On the left-hand side, mine depletion, grade decline, deeper underground, population growth, urbanisation, supply underinvestment—that remains the same as it was over the last ten years.

“But in have come multiple new demand factors into the commodity space.

“That, we believe, will lead to structurally higher prices across all commodities, and eventually a re-rating of mining and resource shares from their current low pricing.

“If you think about it, mining and energy now is the intersection of AI, hyper-scalers capex, defence spending, infrastructure, electrification, decarbonisation,” Aitken said with a flourish.

He advised the crowd to go forth to the booths of the 54 companies presenting at the conference to find the next Pilbara Minerals, the next Lynas. He could have added Northern Star, Sandfire and others that got their start as juniors at the conference over the years.

On that score, punch in the names that presented last year and the median price presenter return from last year’s conference was a gain of 23.2% compared with a 1.5% gain for the ASX200, with seven companies posting gains of more than 100%.

Copper explorer Solstice (ASX:SLS), which was back presenting this year, was the star performer with a 734% price gain on the strength of the unfolding big-time potential of its Nanadie copper project in WA.

The company hosted a bunch of analysts to the project last week and their reports have been rolling in. Bell Potter came back with a $3.25 valuation of the stock. It was trading at $2.54 in Thursday’s market.

An early contender for the star performer out of this year’s conference is Kaoko Metals (ASX:KAO). The 20c shares from its May IPO are currently trading at $2.90 for a 1,350% gain. The market has got excited about the high-grade hits (assays pending) in its maiden drilling program in Namibia.

Among other pearls from Aitken, his comment on iron ore stood out. Analysts have long said the price would fall away to US$80/t but here we are at US$100/t.

Aitken noted that that BHP's view is that US$100/t might actually be a floor price for the steelmaking raw materials. “That’s proving pretty accurate at the moment,” he said.

Whether it was Aitken’s iron ore comment or not, there was a noticeable drift of the crowd to the booths of the iron juniors at the conference, Killi Resources (ASX:KLI) and Arrow Minerals (ASX:AMD).

Killi Resources:

Killi managing director Hamish Halliday followed Aitken’s lead and fired up the crowd by saying he expected the 110Mt resource at Killi’s recently acquired Lodestone magnetite project in WA’s Mid-West to quadruple in the next 12 months.

Backed by Steve Parsons and Mike Naylor from Perth’s informal Richardson Street group, which has enjoyed drill-bit led success previously at Bellevue, FireFly, Andean Silver, Sinclair and Cygnus, Killi also has former Fortescue boss Nev Power as chairman.

Mentioned here previously, Lodestone is a magnetite project with a difference.

It is of the rare coarse-grained recrystallised-type suitable for producing a premium 68-70% iron concentrate for making direct reduction pellets used in the fast-growing and environmentally-friendlier electric arc furnace (EAF) method of steel production.

Killi only acquired the project in June. The stock has risen since but it’s only now that marketing by Halliday at conferences and on road shows that the project’s potential is starting to be appreciated.

It is likely that the brokers will start releasing initiation reports on the stock soon and price targets of 60c-80c would not surprise. It is interesting stuff for a company trading at 26.5c for a market cap of $97 million.

That call is based on the potential for a 3.5-5mtpa project that leverages off existing road-port-power infrastructure in the Mid-West, and low capex intensity, to capture a A$60 a tonne margin for up to A$300m in annual free cash flow.

Arrow Minerals (ASX:AMD):

Bustling David Flanagan is back in the Pilbara iron ore scene.

That means something because between 2004-2016 Flanagan took Atlas Iron from a $9 million company to as much as $4.5 billion by growing a 15mtpa Pilbara iron ore production base.

It was innovative stuff too, with Atlas avoiding the prohibitive cost of having to build rail lines by trucking the iron ore to Port Hedland for export.

When iron ore prices crashed to below $US40/t in 2015, Atlas had a debt problem. Flanagan sorted that out and feeling exhausted, he left the company he had originally founded as a gold explorer.

It was eventually taken over for $390 million by Gina Rinehart, leaving Flanagan to do other things, including becoming managing director in early 2024 of the company that sees him back in the Pilbara – Arrow.

He first took Arrow off to Guinea in West Africa, picking up an iron project to the north of the giant Simandou iron ore project owned by Rio Tinto and a bunch of Chinese interests and later added a large-scale bauxite project to the portfolio, also in Guinea.

Guinea has been going through a process of vetting exploration permits in the country. Arrow got caught up in that process and was suspended from ASX trading until May.

Since then, the bauxite project has been back with the company and it is hoped the same happens with the Simandou North project before long.

Arrow’s modest market cap of $22m at 1.3c a share says the market remains uncertain over what will come from the projects. But either one could force a re-rate.

In the meantime, Flanagan has added the Yarraloola copper-gold project and the adjacent Yarraloola iron ore project in the Pilbara to the portfolio. Like the interests in Guinea, either one could force a market re-rate.

Given Flanagan’s history at Atlas Iron, there is a certain piquancy to the Yarraloola iron ore addition (it’s 30% owned by the free-carried gold explorer Leeuwin Metals).

It’s very early days at the project. It is a large-scale outcropping body at which rock chip sampling has pointed to the potential for Robe River-type iron ore grading 50-60%.

The real beauty though is that it sits only 45km from the new multi-user Mardie port, 80km southwest of Karratha

Potentially at least, any development at Yarraloola could have the lowest logistics cost of any iron ore project in the Pilbara.

Think of a 3-4mtpa operation – there’s a long way to go before that sort of potential is confirmed – and Arrow with its $22m market looks interesting on the Pilbara iron ore project alone.

That was reflected in the crowd hitting up the ever happy to oblige Flanagan at Arrow’s both at the RRS conference on what could come from his return to Pilbara iron ore, and Arrow’s other projects.

Newsflow will be as strong as its gets for a $22m company in the lead up to Christmas.

Planned drilling at both of the Pilbara projects, and a scoping study on the bauxite opportunity in Guinea says as much.

TinOne Resources:

It is hard to believe that against the backdrop of Charlie Aitken’s scarcity-led super-cycle in commodities that it is still possible to find a listed junior explorer with a $1 million market cap.

Apart from anything else, that’s way less than the shell value of a listed company of any description.

But they do exist. Just ask the ever-canny Rob Curtis, the Melbourne-based geologist (Rio/Oxiana) come resources private equity investment manager (EMR Capital), and Kangaroos AFL tragic.

Never one to miss the opportunity to scout for stock and project mining opportunities at mining conferences, Curtis bobbed up at the RRS conference wearing a bigger than usual smile.

He reported that he had just been handed the keys to TinOne Resources, a little thing listed on Canada’s TSX Venture Exchange under the code TORC. It has tin and tungsten interests in Tasmania, apparently.

More to the point is its market cap was a little more than C$1m. Curtis has just become chief executive, an appointment that was significant enough in the history of TinOne for the stock to pop 10% higher to C0.6c a share for a market cap of C$1.2 million.

Taking on executive duties is best done on the ground floor.

The gig follows on from Curtis becoming the non-executive chair at the WA gold explorer Corazon and a non-executive director at Guyana gold explorer Altair.