There\u2019s an age-old theme that by the time you\u2019ve heard about it, you\u2019ve probably missed the boat.<\/p>\n
One of the tricks to investing is picking those so-called \u2018unfashionable\u2019 commodities, the unassuming sectors of the market that might be waiting to pop off.<\/p>\n
That was the philosophy Chris Judd, G.O.A.T and founder of Melbourne-based investment company Cerutty Macro Fund<\/a>, highlighted to investors and resources executives last week at the inaugural Resources Rising Stars Gather Round conference in Adelaide.<\/p>\n \u201cWe\u2019re top-down investors at Cerutty, we like investing in commodities that are attractive from supply-demand fundamentals when liquidity conditions are right,\u201d Judd said.<\/p>\n \u201cWe also like to invest in commodities or businesses that are on page 17 of The Australian Financial Review today, on their way to Page 1.<\/p>\n \u201cWe don\u2019t really like it when we come out with an investment idea at a dinner party, and everyone nods and agrees that it is a smart thing to do,\u201d he said.<\/p>\n \u201cThe commodity that we like the most at the minute is one that doesn\u2019t get spoken about a lot, but it is used in a lot of new-age products which are really popular in the news \u2013 and that\u2019s tin.\u201d<\/p>\n \u00a0<\/p>\n Although it is used in virtually every item of consumer electronics from robotics to microchips, GPUs and even EVs, tin often slips under the radar.<\/p>\n Around half of its global supply goes into solder for electronic circuit boards, a market where it has outpaced lead to become the dominant raw material.<\/p>\n Tin acts as both a glue and conductor between individual electronic components but it is only a tiny fraction of the raw material cost of most consumer items, making demand relatively inelastic.<\/p>\n There\u2019s about five to eight grams in a washing machine, about 25-50c of tin in a $500 item.<\/p>\n Other items like tin cans have a thin layer of tin bearing anti-microbial properties worth just 1.8c which has not been bettered since the Napoleonic Wars, and new-build electric cars have about one and a half kilos of tin in them compared to older models with about 300 grams.<\/p>\n Unlike nickel prices which are down or lithium prices which are trending sideways, Judd says the tin sector is going through a silent bull run.<\/p>\n \u201cTin is on a tear and not a lot of people are speaking about it but it\u2019s similar to what we saw with gold until recently so we\u2019re bullish on it,\u201d he said.<\/p>\n \u201cWe like it for several reasons, tin is only a small price of the overall product that it\u2019s in, so manufacturers aren\u2019t incentivised to manufacture it out of the supply chain, a similar dynamic you see with uranium.<\/p>\n \u201cOnce you\u2019ve done the huge CAPEX of the power plant bill, the cost of uranium is somewhat immaterial,\u201d Judd said.<\/p>\n \u201cWe see a similar dynamic with tin and in terms of where supply comes from, refined production is dominated out of China but the actual tin mines \u2013 whilst in China \u2013 are also in Myanmar and Indonesia.<\/p>\n \u201cA couple of these countries \u2013 Indonesia and Myanmar specifically \u2013 have had significant supply issues around environmental concerns recently and I think there\u2019s a potential risk that supply won\u2019t meet a growing demand.\u201d<\/p>\n \u00a0<\/p>\n After striking a $60m deal with Cyprium Metals (ASX:CYM)<\/a> in 2021 to sell its Nifty project in WA, MLX agreed to sell its nickel assets to NICO Resources three months later to focus its attention developing its tin portfolio.<\/p>\n MLX has a 50% equity interest in the Renison Bell mine, Australia\u2019s only producer of tin as a major product.<\/p>\n According to Geoscience Australia, ~67% of the Australia\u2019s tin ore reserves come from the Renison Bell mine on Tasmania\u2019s west coast.<\/p>\n Minor amounts of by-product tin are also produced from pegmatite deposits such as Greenbushes in Western Australia while the remaining reserves belong to the Cleveland, Kara and Mount Lindsay deposits in Tasmania and the Taronga deposit in New South Wales.<\/p>\n Renison produced 2,714 tonnes of tin-in-concentrate during the December 2023 quarter The company updated its life of mine highlighting a 10+ year mine life from 2024 with an annual production average of 10,191t of recovered tin metal in concentrate with the bulk of ore mined coming from the high-grade Area 5 and Leatherwood ore bodies.<\/p>\n MLX finished the quarter with $143m cash in the bank.<\/p>\n \u00a0<\/p>\n Canadian tin producer Alphamin produces ~4% of the world\u2019s tin from its Mpama North mine in the Democratic Republic of Congo, where it produced a record 12,568 tonnes of the metal in 2023.<\/p>\n Mpama North has a tin grade of 4.5%, four times higher than most other operating tin mines.<\/p>\n The company is also developing its Mpama South project, which will increase annual tin production by 60% once it\u2019s up and running in April.<\/p>\n It hopes to increase tin output further by adding more mines in close proximity \u00a0to the current production and from within its licenced footprint.<\/p>\n \u00a0<\/p>\n\n \ufeff<\/span><\/span><\/span> The post Resources Rising Stars: Cerutty\u2019s Chris Judd explains top-down investment strategy, makes strong case for tin<\/a> appeared first on Stockhead<\/a>.<\/p>","protected":false},"excerpt":{"rendered":"What\u2019s the deal with tin?<\/h2>\n
Judd\u2019s top tin picks?<\/h2>\n
Metals X (ASX:MLX)<\/a><\/h2>\n
\nwith MLX entering into a new offtake agreement with Yunnan Tin Group (YTG) for 2024.<\/p>\nAlphamin Resources (TSXV:AFM) <\/strong><\/h2>\n
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