HCH Media, page-622

HCH have got a lot in place to become a mid-tier mining company and if you add potential upside through exploration then it’s a very attractive proposition.

Let’s get the announcement of a RECESSION out of the way and by the time that’s done (the announcement) we will be on our way out and maybe we’ll see a more responsive credit market. It’s worth noting that smaller mining stocks ‘usually’ lead the market out of a Recession and it’s ‘usually’ well in advance of a re-rating of commodity prices. HCH is well leveraged to Cu prices so it might show signs of life early on and then re-rate as Cu prices rise.

The forecasts for huge deficits in commodities by 2030 as a result of massive demand for EV’s and batteries has been well and truly overplayed, it’s simply nonsense… there’s as many articles and as much info out there to suggest something closer to a balance between supply and demand and you only have to look at what’s happening in real time such as production and investment cutbacks and crashing commodity prices. That isn’t a signal to confirm severe shortages in several years time and it’s from those in the middle of it all so it’s well worth taking note of----severe shortages create their own problems too.

HCH are close enough to production, they’ve got a Tier One resource and they’re big enough to be a meaningful operation globally to be attractive to financiers at some stage. If you’re a copper bull it should be in your portfolio… no guarantees for a 2024 improvement in copper prices though.

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Here’s a hypothetical for being a low cost producer.

Let’s say ‘demand’ forecasts are for 100 million batteries;

There’s enough lithium for 80 mil batteries so that’s great news for lithium suppliers isn’t it?--there’s a shortfall of 20% so that means production needs to increase 25% across the board to meet demand and we’ll be able to put up prices!... our share price will go ballistic as that plays out! Good news for all lithium suppliers no matter the grade or cost of production, there’s demand!

The news is even better for suppliers of nickel as there’s only enough nickel for 50 mil batteries!

“Hang on” say lithium suppliers—doesn’t this mean that we only need to supply lithium for 50 mil batteries coz that’s all that can be produced, so instead of having a shortfall of 20% we’re now in an oversupply situation of 60%--how’d that happen?!?!

It doesn’t matter as the news for copper is better again and because of a variety of reasons including lack of investment we find there’s only enough copper for 40 mil batteries! YeeHaa! $$$$’s---shit there’s no-one that’s going to restrict battery manufacture more than copper on the supply chain is there?... semi-conductors?

Here’s what’s happened; Lithium producers have gone from an initial undersupply of 20% against demand of 100 mil batteries to an oversupply of 60% because there’s only enough nickel to produce 50 mil batteries—then to an oversupply of 100% as they now have twice as much product as needed because there’s only enough copper to produce 40 mil batteries. Nickel producers have gone from an undersupply of 100% to an undersupply of 60% then to an oversupply of 20% because of the restricted amount of lithium then copper available (as a producer you’d want to be low cost to stay in the game). No wonder the share prices go to extreme levels.

Demand destruction in this case is shown up as substantially decreased demand for batteries to a level that is matched by the supply of the least available raw material. Batteries are mass produced and manufacturers run on economies of scale (say first 90% break even last 10% make a profit) and a critical shortage of supply of only one component will mean that there’s simply not enough product being manufactured to turn a profit—Severe disruption and potential disaster for many manufacturers.

There’s always going to be changes in supply and demand so being a low cost supplier is pretty handy.