From NGE Capital Annual ReportWe bought a sizeable position in...

From NGE Capital Annual Report

We bought a sizeable position in tin producer Metals X during February 2021 following the announcement
of a deal to divest its problematic copper assets to acquirer Cyprium Metals Limited (ASX:CYM). The
sale resulted in MLX becoming a pure play tin producer. MLX and Alphamin Resources (TSXV:AFM) are
the only Western-listed pure play tin producers globally.

As at 31 December Metals X was up 194% on our average purchase price of ~19.5c, following a strong
rise in the price of tin and a devaluation of the AUD against the USD. Since our initial purchase, the tin
price increased ~59% to ~US$39,400/t as at 31 December and the AUDUSD FX rate decreased ~6% to
~0.725. We trimmed our position in December, and further in January and February of this year, in
order to de-risk the investment, lower the portfolio weighting, and lock in some gains. We currently
still hold 6.50m shares.

Tin is essential for the high-tech, low carbon economy, and is projected to be the metal most impacted
by growth of new technologies such as batteries, robotics, solar power, power storage and electric
vehicles. Tin prices were expected to increase as growth in tin demand outweighs new supply, leading
to a significant deficit from 2025 according to the International Tin Association. Tin prices reached a
record all-time high this month, as inventories have become ever scarcer. Recent price action and the
forecast shortfall in supply suggest high tin prices may persist for some time to come.

At spot tin (~US$44,300) and AUDUSD FX rate (~0.7175) MLX’s published mine plan would be valued
at ~A$1.30. In the December quarterly the company mentioned that the mine plan has now been
updated following a “robust” review of “tin price forecasts, and new development areas such as
Leatherwood along with updated metallurgical recoveries”. The mention of Leatherwood references
the company’s recent strong near- and in-mine drilling results that have the potential to increase the
mine’s defined resource. Our DCF analysis ignores any potential upside from conversion of further
resources to reserves, increases in the resource, and optionality provided by existing infrastructure to
tie in nearby tin deposits. Whilst we have reservations about the high capex Rentails development
project – tailings projects often show high NPVs but are difficult to execute – it potentially adds further
upside to the investment case.

As an additional feather in MLX’s cap, in January the company successfully spun out its nickel assets
into Nico Resources Limited (ASX:NC1) via an IPO and in-specie distribution of shares to Metals X
shareholders. We received our allocation of ~219k shares, which we subsequently sold at an average
price of ~$0.515 per share.