AVB - the year ahead

Now the holiday season is drawing to a close, thought it worth putting some thoughts together on the year ahead.

Macro

Firstly, whether it is EV’s, renewables, supply issues(low grades, ageing mines, lack of investment in recent years, strikes at mines of major producers, scrap being removed from the system etc), copper is entering 2018 in a sweet spot that should see copper prices rise over 2018/19. Anyone with a reasonable knowledge of copper and the supply/demand dynamics can see the potential upside from here. There is a stack of research out there if you want to look. Really well connected and researched analysts like Paul Gait are worth looking up and reading.

So too is Reuters mining journalist Andy Home who actually does thorough and detailed research before putting pen to paper. Here’s his latest article just in the past 24 hours https://www.reuters.com/article/chi...uption-threat-in-2018-andy-home-idUSL8N1P53TN

And another that should gladden the hearts and minds of investors just this morning:

https://www.bloomberg.com/news/arti...-commodities-in-full-bloom-amid-2018-rotation

Also, there is not one CEO of a major mining company that hasn’t come out publicly in recent months and talked about the opportunity for major producers over coming years. I can’t find the article late last year where BHP’s CEO was quoted in an article but not too hard to search. Here are some snippets:

“How will BHP benefit in a rally in commodity prices and growing excitement about the demand for batteries for electric vehicles? For BHP CEO Andrew Mackenzie, booming demand for renewable energy and electric vehicles will translate into a need for lots of copper — and BHP controls Escondida in Chile, the world’s largest copper mine, has others in its portfolio and it is actively searching for still more deposits. He is happy to leave to others the more exotic metals, such as cobalt and lithium, that have been in demand of late.

BHP’s chosen commodities such as copper are, in short, either difficult to find in abundance or difficult to extract.

He believes that China’s One Belt, One Road infrastructure initiative, intended to build trading links and infrastructure westwards through Asia, will be transformative: “I think the Belt and Road is astounding and it would be even more so if it were part of a meeting between East and West in a way that benefited both.”

Much more reading out there of course so will leave it to others to DYOR.

AVB’s opportunity

Frankly, it is time for AVB to move from ‘potential to proven’ – starting now. I’ve stated many times that in late 2014, AVB began life as a proper mining company rather than a pump and dump play thing for an entrepreneurs and traders. As was mentioned at the last AGM, I am eternally grateful for former Chair Colin Jones and Tony Polglase taking the reins of the company fully in September 2014 and allowing investors the opportunity to be a part of a fledgling copper company. They got AVB through the worst of the downturn that lingered for years. Now, it is Tony’s opportunity to show that not only can he start a proper mining company, navigate the tough times, build a plant and operate a mine, he now needs to show he can grow the company.  

We all know the ‘potential’ story, AN further upside, more satellite deposits being drilled, a vast amount of exploration holdings and drilling to take place,  PB/Canaa West, Centro and another possible bigger and better Canaa West type deal if we can believe the company’s presentations to investors from mid to late last year. So despite the steady as she goes and get set for the next copper cycle mantra of 2017, the MD knows it is time to bring it home over the next two years. I’ve looked at all sorts of peer comparisons and opportunities and I can’t find one that is as well positioned in the junior end of the market with exposure to copper and a potential cash cow series of gold deposits. So undoubted potential to grow the company and value for shareholders is there.

So the ball is now in Tony’s court (and his fellow Directors). Potential to proven mid tier. The time is now.

Best of luck to investors.