Battery metals could experience a new commodity cycle that even survives booms of the old



Veteran stock broker Eddie Rigg says the current resource recovery will outlast previous booms as battery metals dominate the capital investment landscape.

Speaking at the RIU Resurgence conference in Perth this week, the head of brokerage firm WA Argonaut said the current resource cycle could last for years.

Rigg’s comments came just after ABS revealed that Australian miners and explorers invested a near-record $ 982 million in exploration during the September quarter.

“At Argonaut, we are confident that this cycle is going to be much longer than previous cycles, which can be up and down a bit,” he said.

The challenges of supply, the energy transition drive the prices of raw materials

According to Rigg, a cocktail of post-pandemic stimulus, supply disruptions, rising investment costs to make discoveries, approval delays and the need for battery metals for the energy transition have been formidable. for commodity prices.

“The reasons for this and for reasons that I think most people accept is that Covid has caused a slowdown in supply response,” he said.

“It’s a big deal, we can’t get people… disrupting logistics.

“We’re also seeing that the approval process and all the various fees and challenges in the industry, especially in Australia after Juukan Gorge, trying to get things approved now, which could have taken six months will take two years or more. .

“There is also a growing sovereign risk in the world and, of course, the fields are now more often blind, so it takes a lot more to discover these fields.

“So we think this cycle is a very long cycle and is great for everyone in this room.”

Rigg says “copper is king” and believes that the investment booms driven by iron ore and coal in the 2000s, and then by gold developments in recent years, will give way over the next decade to investment. on raw materials for energy transition.

“The first decade was really driven by iron and coal, the last 10 years were really driven by gold and our point of view is that there is only one way to provide the necessary materials. to now move on to the decarbonization of the world we live in, “he said.

Electrification, a positive future for battery metals

The state of play described by Rigg has prompted base metal miners and explorers to learn about the outlook for their industry.

While Rigg sees copper as the raw material poised to benefit the most from its role in decarbonizing and electrifying everything including solar, wind, bioenergy, power transmission and vehicles electrical, metals like nickel, tin and lithium also see their light in the sun.

Venture Minerals (ASX: VMS) boss Andrew Radonijc, whose company owns the Mt Lindsay tin and tungsten project in Tasmania, said their commodity plays a role in the topic of electrification.

Tin is a key component of electronics in the form of solder, and prices have hit record highs of around US $ 40,000 / t this year due to supply disruptions.

“Working from home has just intensified the use of anything electric,” Radonijc told delegates at the RIU Resurgence conference.

“Anything with circuitry has solder in it, and solder is now 96% tin.

“Ten years ago, when tin cost around US $ 30,000 / t, it was all about converting to lead-free solder.

“Miniaturization was a threat and that’s what brought down the price of tin. But I don’t know about you, but cell phones seem to be getting bigger and bigger and we seem to be having more.

Radonijc believes that the “green industrial revolution” could push up prices.

“As we move into this green industrial revolution where we are going to electrify everything, the tin is going to keep going around,” he said.

“We’ve seen the price, it’s in electric vehicles, wind power, tin-copper solar cells, energy storage, and lithium-ion batteries as well as lead-acid batteries.

“It’s very synonymous with the future, that’s why the price is where it is today and I can only see it go up. “

Venture Minerals share price today:

Valuations soar for battery metals companies

Winsome Resources (ASX: WR1) is one of the latest beneficiaries of the battery metal fever in the stock markets.

MetalsTech’s lithium spin-off (ASX: MTC) was listed on Tuesday after an $ 18 million IPO, climbing 60% above its 20c listing price in the first two days of company trading at 32c.

General manager Chris Evans told the conference that Winsome had received requests for four times that amount, against the backdrop of a more than 300% increase in the prices of Premier Drum Metal in 2021.

Winsome has three lithium exploration projects in Quebec, Canada.

One, Sirmac-Clappier, is just down the road from Moblan, a “world class” Sayona Mining (ASX: SYA) project listed on ASX paid $ 86.5 million for 60% in September .

“It has a resource of around 12 Mt at around 1.4% lithium oxide and to establish that resource they had 17,000m of diamond drilling,” Evans noted, adding that Winsome had already completed 5,500. m of drilling on its Cancet project, where the company has an exploration target of 15-25Mt at 1-2% Li2O.

“Sayona bought 60% of their project for $ 86 million, valuing it at around $ 144 million for the full project, or around A $ 200 million.

“The fact that we quoted an EV of $ 9 million yesterday, our market cap is $ 38 million, shows the real potential of our projects.”

Rigg d’Argonaut said that a $ 10,000 investment in “new world products” in early 2021 would have generated returns of $ 17,300 today, compared to just $ 12,400 for “old products.” world “.

Winsome Resources share price today:

At Stockhead, we say it as it is. Although Venture Minerals is an advertiser for Stockhead, it did not sponsor this article.

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