Grizzle Commodity 1x1 Conference - Key Takeaways Part 2
3Fourteen Research, Libero Copper, Lithium Royalty Corp, Amerigo, Kobo Resources, Hilltower Resource Advisors, Blind Squirrell Macro, Quantify Funds
The Grizzle Commodity 1x1 Conference series was full of insights. A tremendous day of conversations with top market strategists and well positioned mining companies.
We’ve provided summaries of the remaining speakers segments (part 2) below along with video links. The full conference is available on the following platforms: X, YouTube, iTunes & Spotify
3Fourteen Research - Warren Pies, Cofounder & Strategist
Interview Link | 3Fourteen Website
Oil Market Analysis and Outlook for 2024–2025
Looking ahead to 2025, Pies warns of risks for oil investors due to structural changes in demand, particularly from China's slow recovery and its shift toward EVs, which reduce oil dependency. While geopolitical risks are incorporated indirectly through technical market indicators, he advises caution since most geopolitical price spikes historically fade without significant supply disruptions.
Gold's Bull Market and Challenges from Bitcoin
Warren describes gold's strong performance in 2024, surpassing $2,500, and expresses confidence it could reach $3,000 in 2025. He views the current environment as a new secular bull market for gold, driven by "pro-cyclical deficits" and global instability, which make gold essential as a "debasement asset" in balanced portfolios. However, he notes competition from Bitcoin, especially as institutional adoption of Bitcoin increases through ETFs, shifting its risk profile from speculative to a portfolio necessity. This generational and structural shift could moderate gold's performance in comparison to past bull markets. Despite this, he remains bullish, with central banks likely to continue favoring gold over Bitcoin for reserves.
Housing Market and Economic Outlook: Soft Landing Achieved?
Regarding macroeconomic trends, Warren argues that the U.S. economy has effectively achieved a "soft landing," characterized by a balance between recession and inflation concerns. Weakening housing starts, particularly if sustained below 80,000 units monthly, could signal job losses and broader economic slowdown. However, he sees potential for the Fed to ease enough to prevent deeper declines, maintaining a cautious but optimistic view for 2025.
3Fourteen Research’s ETF: Full Cycle Trend Strategy (NASDAQ:FCTE)
Warren discusses the success of 3Fourteen Research's ETF, FCTE, which employs their proprietary Full Cycle Trend Strategy. Launched recently, the fund has attracted nearly half a billion dollars in assets and focuses on quality over quantity by holding only 20 securities. The strategy involves screening the S&P 500 for the top 100 quality stocks, filtering further based on long-term uptrends with short-term pullbacks, and rebalancing monthly. This concentrated and active approach aims to outperform benchmarks, particularly in late-cycle environments where downside protection through high-quality assets is critical. Warren hints at the launch of a new asset allocation-based fund in early 2025.
Generational Shifts in Asset Preferences
Warren touches on generational differences in asset preferences, particularly regarding gold versus Bitcoin. He notes that younger investors view Bitcoin as more exciting and dynamic, while gold is often perceived as "boring." He acknowledges the cultural shift in investment strategies among younger demographics, who prioritize higher-growth assets like cryptocurrencies over traditional commodities.
Libero Copper (TSXV:LBC) - Ian Harris, CEO
Interview Link | Libero Copper Website
Challenges in Funding Small and Medium-Sized Copper Projects
Ian Harris outlines the difficulties in securing funding for smaller copper projects despite a well-documented copper shortage. This stems from large mining companies prioritizing mergers and acquisitions over developing new, smaller-scale projects. The "sweet spot" for an attractive project is a scalable design that starts at 30,000 tons per day, leveraging existing designs and equipment. Such projects should have a mineable resource of around 200 million tons initially, with potential to scale to 150,000 tons per day, requiring a billion-ton resource. This modular approach reduces upfront capital risk while maintaining long-term growth potential.Valuation Bifurcation in Copper Assets
Harris highlights a bifurcation in valuations of copper assets, where "class A" assets receive significantly higher valuations per pound in the ground compared to "class B" assets. For example, some top-tier assets are valued at several cents per pound, while others languish at 0.2 cents per pound. Mocoa, one of Libero Copper’s flagship assets, stands out due to its scale and quality, with 4.6 billion pounds of copper in a 600-million-ton resource and potential to surpass one billion tons. With renewed drilling, Harris expects a re-rating of Mocoa’s valuation, supported by Libero's inclusion in the Fiore Group and Frank Giustra's strategic investment.Project Development Strategy
Harris emphasizes the importance of starting at a manageable scale (e.g., 30,000 tons per day) while demonstrating scalability to attract larger investors. The company plans to double its drilling program to expand the resource base and establish a robust project definition by the time of Colombia's next elections, aligning with broader political and market dynamics.Political and Regulatory Landscape in Colombia
Harris discusses navigating Colombia’s political and regulatory challenges under President Petro, the country’s first leftist president in 20 years. Early anti-mining rhetoric caused uncertainty, but the administration has since shown signs of pragmatism as it enters a lame-duck phase. Libero Copper has built strong local and national reputations, ranking as the highest-rated exploration company among municipalities and second nationally. Harris stresses the importance of creating political will, ensuring community ownership, and fostering national support to advance the Mocoa project.Vision for Large-Scale Copper Projects
Harris explains Libero Copper’s focus on large-scale projects, which align with market demands for fewer, bigger developments. This approach contrasts with smaller, robust projects, which he acknowledges may still succeed. Harris emphasizes Libero’s unique expertise in advancing projects from post-resource definition to construction, a capability increasingly valuable given the copper industry’s need for new production. He credits Frank Giustra's long-term vision and experience in building companies as crucial to Libero's strategy.
Lithium Royalty (TSX:LIRC) - Rob Weir, VP Corporate Development
Interview Link | Kobo Resources Website
Lithium Market Overview and Price Outlook
Rob describes the current state of the lithium market as "healing" after a challenging period marked by a sharp 85% price decline from its peak, driven by overproduction following the pandemic surge. However, the market is expected to recover, with lithium demand continuing to grow due to electric vehicles (EVs) and battery storage. He predicts a sustainable long-term price of lithium at $1,400 per ton, up from the current price of around $800 per ton. This price point is necessary to incentivize the development of new mines to meet growing demand.
Supply Cuts in the Lithium Market
The lithium market has seen steady supply cuts, particularly from producers whose operations became unprofitable at current prices. Rob estimates that between 150,000 and 200,000 tons of lithium production have been curtailed, either going into care and maintenance or being earmarked for shutdown. This is significant in the context of a 1.2 to 1.3 million ton market, signaling that supply is being reduced in response to lower prices. These supply cuts are expected to help balance the market and contribute to price recovery in the next 6 to 18 months.
Demand Drivers for Lithium
Rob confirms that the long-term demand for lithium is still primarily driven by the EV market, with battery storage emerging as an additional significant demand source, now representing 15% of the lithium market. He points to the growth of companies like BYD, which sold 500,000 new energy vehicles (NEVs) in November, up from 300,000 the previous year. With global demand projected to grow by 10% annually through 2040, the lithium market is expected to experience a significant deficit as supply struggles to keep pace with this increasing demand.
Royalty Strategy and Asset Acquisition
Lithium Royalty Corp (LRC) has followed a clear strategy of acquiring high-grade, hard-rock lithium assets in safe, low-risk jurisdictions. They focus on countries like Australia, Brazil, and Canada, while avoiding higher-risk regions like Mexico, Bolivia, and much of Africa. Since its founding, LRC has acquired 35 assets, with Brazil emerging as a particularly attractive market. The company’s technical team leverages decades of experience to assess projects early, as evidenced by their early investment in Sigma Lithium, now valued at $2.2 billion after an initial $7 million royalty investment in 2018.
Investment Criteria and Competitive Advantage
LRC’s investment criteria focus on high-grade lithium assets with strong potential for growth. Rob mentions that their technical team, with decades of experience in the industry, is able to assess the long-term potential of projects even before full resources are understood. A key example is their early investment in Sigma Lithium, where they bought a $7 million royalty at a $105 million market cap, and today the company’s market cap is $2.2 billion. Their deep technical expertise and a clear understanding of the lithium market have been crucial in acquiring competitive assets at attractive valuations.
Shareholder Structure and Investment Approach
LRC’s major shareholders include Riverstone (27% ownership) and Waratah Capital, a group of high-net-worth individuals and family offices. These investors are highly patient and committed to the long-term growth of the company, with a focus on compounding capital as the lithium market develops.
Key Catalysts for Lithium Royalty Corp
Rob identifies several key catalysts for LIRC in the short to medium term. These include projects in South America such as Mariana (operated by Ganfeng) and Tres Cebradas (operated by Zijin), which are expected to begin producing lithium in the near term. Additionally, the company has invested in Atlas Lithium’s Das Neves project, which is also set to produce soon. A standout opportunity is the Adina project in Canada, where LIRC is set to benefit from the purchase of the Renard mine and related infrastructure out of bankruptcy. This asset alone could contribute $300 million in cash flow over 17 years.
Lithium Market Analogies and Future Outlook
Rob compares the lithium market to the iron ore market, suggesting that lithium may follow a similar cycle of overproduction followed by price stabilization and consistent demand growth. With demand expected to grow at a compounded annual rate of 10%, lithium could reach 2-3 million tons of production in the near future. Rob emphasizes that lithium's price is at a level where the focus among battery makers is on increasing production capacity, rather than replacing lithium with other materials in batteries. As such, lithium is poised to become a stable, high-return commodity similar to copper, benefiting from its critical role in future technologies.
Amerigo (TSX:ARG) - Aurora Davidson, CEO
Interview Link | Amerigo Website
Chile’s Copper Industry Challenges and Outlook
Aurora highlights Chile’s position as the world’s largest copper producer, accounting for 27% of mined copper globally, well ahead of DRC and Peru. Despite a structural decline in output since its peak in 2018, Aurora is confident Chile will remain the dominant player. Challenges include aging mines with lower grades and deeper operations, as well as bureaucratic and regulatory delays that hinder new projects.
India as an Emerging Copper Demand Hub
Aurora shifts focus to India as a rising copper consumer, drawing comparisons to China’s historic growth. China’s installed copper capacity per capita grew from 45 pounds per person two decades ago to 260 pounds today, with further growth expected. In contrast, India currently stands at just 15 pounds per person but has doubled its copper consumption in the past two years. With the same 1.4 billion population as China, India represents a significant opportunity for future copper demand, which will be critical as it modernizes its infrastructure and economy.
Amerigo’s Unique Business Model
Aurora outlines Amerigo’s distinctive approach to copper production, extracting 60–65 million pounds of copper annually from waste material at Codelco’s El Teniente mine. This output is comparable to a mid-sized copper mine, but without the typical mining risks. Amerigo uses renewable energy and has low water intensity, making its process one of the greenest in the industry. The company prioritizes returning capital to shareholders, offering a dividend yield of over 9%, supported by 15 consecutive quarterly dividends. Surplus cash exceeding $25 million USD is used for additional distributions, including performance dividends and share buybacks.
Capital Discipline and Debt Management
Aurora emphasizes Amerigo’s commitment to financial discipline, having reduced its debt from $100 million USD to $11.5 million by the end of 2024. The company aims to be debt-free by 2025, focusing on returning cash to shareholders rather than pursuing unnecessary growth. Aurora positions zero debt as the optimal state for a mature company like Amerigo, enabling greater flexibility and shareholder value through dividends and buybacks.
Broader Industry Insights
Aurora challenges the mining industry’s traditional growth-centric mindset, arguing that production growth doesn’t always translate to higher returns for shareholders. She advocates for capital discipline and cash flow distribution, emphasizing the value of dividends as a hallmark of mature, financially stable companies. Amerigo’s approach reflects this philosophy, offering a reliable, Swiss clock-like operational model that prioritizes shareholder returns over speculative growth.
Kobo Resources (TSXV:KRI) - Paul Sarjeant, COO
Interview Link | Kobo Resources Website
Overview of Kobo Resources and Key Assets
Kobo Resources operates in Côte d’Ivoire, West Africa, focusing on the Kossou Gold Project. This flagship asset is located just 10 kilometers from Perseus’s Yaoure gold mine and has shown significant promise since discovery. Early exploration in the Road Cut Zone yielded an 18-meter intercept at 4.6 grams per tonne, signaling high potential. Since forming the company in 2016, Kobo has concentrated its efforts on developing this project, alongside a few additional concessions.
Strategic Investment from Mota and Gil
In July, Kobo secured $3.5 million from Mota-Engil, a European conglomerate with deep expertise in mining and infrastructure. This investment was part of a broader $7.5 million financing round. Mota-Engil, which employs over 50,000 people and has operated in Africa for 78 years, brings both capital and operational resources. Their subsidiary, Luso Global Mining, is already a contractor on multiple Côte d’Ivoire mine sites. This partnership reduces Kobo’s exploration costs and provides access to equipment like diamond drills, ensuring efficient project advancement.
Côte d’Ivoire as a Mining Jurisdiction
Côte d’Ivoire stands out in West Africa for its stability and mining-friendly environment. Unlike politically volatile neighbors like Mali and Burkina Faso, Côte d’Ivoire boasts a stable government, growing at 6–7% GDP annually, with a supportive regulatory framework. Mining is a national priority, expected to become the second-largest contributor to GDP. Kobo leveraged this stability to initiate drilling within three months of going public in 2023, highlighting the country’s streamlined permitting process and infrastructure advantages.
Comparison to Neighboring Mines
The Kossou Gold Project benefits from its proximity to Perseus’s Yaoure mine, which produces 275,000 ounces annually with reserves of 2.2 million ounces. However, Yaoure’s production is expected to drop to 110,000 ounces annually after 2029 due to depletion of its open-pit reserves. Kobo’s position allows it to pursue headframe exploration near surface-level deposits, a rarity in North America. The proximity to Yaoure offers a potential acquirer or Kobo is open to independently developing the deposit into a mine as well with the help of Mota-Engil.
Côte d’Ivoire’s Untapped Potential
Potential in Côte d’Ivoire is immense, with 35% of the region’s gold-rich Birimian formation but only a fraction of Ghana’s 130 million ounces of historical gold production. Côte d’Ivoire’s gold output has tripled from 22 tons in 2014 to 62 tons in 2023, driven by a new mining code introduced in 2015. The number of operating mines is expected to grow to 10 by 2024, accompanied by over a dozen development projects.
Kossou Gold Project Drilling Progress
Kobo’s 10,000-meter drill program, set to conclude by mid-January, has consistently intersected gold. The Jagger Zone has shown a 600–700 meter strike length with promising grades, including an 8-meter intercept at 3.8 grams per tonne from 175 meters below the surface. Drilling also extended mineralization 250 meters south and remains open to the north. Additional targets include the Kadie Zone and Road Cut Zone, where early results are promising. The company plans to advance to resource definition drilling by early 2025.
Strategic Advantages and Future Plans
Kobo’s partnership with Mota-Engil offers funding of up to $20 million annually if needed, positioning the company to independently develop its assets. The strategic proximity to Perseus’s mine and the growing interest in Côte d’Ivoire’s untapped potential create multiple growth pathways. Kobo aims to define a robust resource estimate in 2025 while expanding exploration across its concessions.
Hilltower Resource Advisors - Tracy Shuchart, CEO/Founder
Interview Link | Hilltower Website
Silver Market Dynamics and Industrial Demand
Tracy highlights the silver market’s unique positioning as both a precious metal and an industrial commodity. While silver prices have risen to $30, its beta relative to gold has been less pronounced in 2024. She attributes this to silver’s lag in catching up to gold bull runs, a historical pattern. Industrial applications account for over 45% of silver demand, with another 25% used in medical technologies, leaving only 27% as a store of value. Key growth areas include solar panels, electronics, water purification, and nuclear applications. The U.S. alone requires 265.3 million tons annually, contributing to a fourth consecutive year of supply deficit.
Comparison Between Silver and Gold
Unlike gold, which is primarily a store of value with jewelry applications, silver is irreplaceable in its industrial roles. Tracy emphasizes that silver has no viable substitutes in many technologies, including electronics and medical implants. She predicts that junior silver miners will benefit if silver sustains its current levels, given their sensitivity to price movements and operational costs.
Energy Markets and Opportunities in Nuclear
Tracy discusses silver’s role in renewable energy technologies, including its expanding demand in nuclear applications. She notes a policy shift in the U.S. favoring nuclear energy, with pro-nuclear cabinet appointees and states like Texas advancing nuclear mining leases. Tracy also links silver demand to broader energy trends, such as the global push for renewable energy, where nuclear and solar play significant roles.
Oil Market Outlook
Oil markets in 2024 were lackluster, with low open interest and reduced volatility. Tracy views this stability as beneficial, allowing producers to maintain profitability at $70–90 per barrel. She points out that U.S. production increases are largely driven by condensates, not crude oil, and doubts shale’s ability to deliver growth comparable to past years. Tracy advises investing in dividend-paying oil companies, emphasizing consistent returns over speculative bets.
Top Investment Picks for 2025
Tracy identifies three key areas for investment heading into 2025:
Midstream U.S. Gas: Infrastructure projects for natural gas exports, storage, and pipeline management are poised for growth.
Junior Uranium Miners: Increasing nuclear adoption in North America, especially in Texas and Canada’s Athabasca region, positions these companies for outperformance.
Platinum Group Metals (PGMs): Tracy favors platinum over palladium, anticipating strong demand driven by industrial and renewable energy applications.
She also mentions a continued interest in copper, reflecting its importance in electrification and infrastructure.
Silver’s Role in Emerging Technologies
Tracy details silver’s critical applications in emerging technologies, including battery advancements by Samsung and medical breakthroughs in body implants. These uses, combined with traditional industrial demand, reinforce silver’s unique position in the commodity market. Despite its growing significance, silver remains underappreciated, leaving room for price increases as awareness builds.
Broad Market Trends and El Salvador’s Gold Mining Resurgence
Tracy mentions El Salvador’s lifting of its gold mining ban, a potential opportunity for Canadian miners who had significant operations in the country before the ban. This development could attract new investments and projects, especially from Canadian mining companies with established expertise.
Blind Squirrell Macro - Rupert Mitchell, Author
Interview Link | Blind Squirrell Macro Newsletter
Insights on the Chinese Economy and Commodity Cycles
Rupert explores the evolution of Chinese commodity consumption, starting from the early 2000s, characterized by steel production and infrastructure projects, through to the post-2008 financial crisis stimulus. He predicts a shift in China’s economic stimulus focus, transitioning from infrastructure investment to boosting domestic consumption. For instance, China's electrification efforts have significantly impacted crude oil demand by increasing the penetration of EVs and LNG trucks. However, Rupert notes confidence in global energy demand, driven by underdeveloped regions like India and Sub-Saharan Africa, where per capita crude consumption remains a fraction of Western levels.
The Role of India in Replacing Chinese Demand
While some analysts have considered India a potential replacement for Chinese demand in commodities, Rupert expresses skepticism. He criticizes Indian equities as overvalued, citing a speculative surge due to asset allocators pivoting away from China. He points out structural issues in India, such as its reliance on energy imports, which complicates its growth prospects. This skepticism is contrasted with optimism for China's evolving export markets and its increasing dominance in sectors like EVs, exemplified by BYD's launch of a hybrid truck with 1,000 km of range for less than $50,000.
Investment Sentiment Towards Chinese Equities
Rupert highlights the prevailing sentiment that Chinese equities are "untouchable" in the West, driven by a significant outflow of liquidity from China to other emerging markets since early 2022. However, he argues that domestic and alternative sources, such as recycled Petro Yuan and increased domestic account openings, could drive a recovery in Chinese equities without relying on Western institutional flows. The Chinese government’s focus on transitioning wealth from real estate to financial assets, such as equities, could further support this recovery.
The Lithium Market Outlook
He notes a resurgence in market discipline, with some projects entering care and maintenance, potentially leading to a supply-demand imbalance. He forecasts lithium prices to stabilize in the range of $25,000–$30,000 per ton by the end of the decade. Rupert emphasizes the importance of Western lithium supply chains, citing investments in companies like Albemarle and SQM, which dominate high-quality production outside of China. He also predicts hybrid vehicle technology will play a significant role in shaping the lithium and platinum group metals markets.
Emerging Market Dynamics and Macro Observations
Rupert discusses broader emerging market trends, highlighting a shift in ETF allocations from China to non-China emerging markets. He underscores the importance of capital allocation strategies in China, including dividends and buybacks by major companies like Alibaba and Tencent. This shift aims to create a wealth effect to stimulate consumption. Additionally, Rupert mentions that reforms to China’s Hukou system could significantly enhance consumption patterns by reducing financial insecurity for non-urban residents.
Quantify Funds (NYSE:BTGD) - David Dziekanski, Founder
Interview Link | Quantify Funds Website
Macro Outlook for Gold and Bitcoin
David outlines a bullish long-term view for both gold and Bitcoin, citing their scarcity as a key driver of value. Bitcoin’s annual mining rate is under 1%, and gold’s is under 2%, while fiat currencies are being printed at significantly higher rates. In the short term, Bitcoin acts as a higher beta equity, and gold behaves as a higher beta bond. He positions them as a "better 60-40" portfolio alternative to traditional stocks and bonds.
The Value of Owning Both Bitcoin & Gold
David highlights the diversification benefit of owning both Gold and Bitcoin. For instance, during crypto winters, Bitcoin faced drawdowns of 83% and 79%, while gold only declined 1.8% and 4.7%, respectively. This correlation pattern underscores the value of pairing these assets, as they can balance each other during extreme market conditions.
Stacked Bitcoin and Gold ETF (BTGD)
David discusses the new leveraged ETF (BTGD), offering simultaneous exposure to Bitcoin and gold in a 50-50 mix with 2x leverage. For every $1 invested, investors gain $1 exposure to each asset. The ETF uses futures contracts to minimize financing costs and avoids the decay associated with traditional leveraged ETFs. The fund’s active management rebalances allocations within a drift range of 5–7%, optimizing costs and maintaining balance.
Benefits of the ETF
The ETF simplifies portfolio decisions by combining Bitcoin and gold into a single product, eliminating the need for manual rebalancing. This strategy caters to institutional investors and advisors seeking capital-efficient leverage. For example, advisors with 2% allocations to gold could allocate 1% to BTGD, maintaining similar exposure while freeing up portfolio space for equities or other investments.
Capital Efficiency and Tax Advantages
BTGD allows investors to consolidate gold and Bitcoin exposure without reducing equity allocations. This is particularly beneficial for tax-advantaged accounts, enabling tax-efficient portfolio adjustments. By holding BTGD, Bitcoin investors can gain "free" exposure to gold without decreasing their cryptocurrency holdings.
Market Implications and Future Products
David emphasizes the innovation of stacked ETFs, noting that the category is only 2–3 years old but has significant growth potential. Quantify Funds aims to expand this lineup with other leveraged products, providing tools for efficient portfolio construction. While new products cannot yet be disclosed, the company plans to capitalize on this growing market trend.
Gold as a Better Bond Alternative
David notes that gold’s correlation with treasuries has risen, suggesting it functions as a more scarce and efficient bond substitute. This trend enhances gold’s role in diversified portfolios, especially as global investors seek assets with intrinsic value amid economic uncertainty.