AUZ are on a charge in Brazil pushing hard in to the battery metals market at a time when the market has shown ripples and then cracks in its meteoric rise.
Dutifully I've read the forecasts - from 2024 to 2033 the battery metals market is forecasting a CAGR of 8.35%. All good except for two things.
One, what if the wheels fall off the EV market...oh wait, don't mention the trucks at this point!
And two, a sage global CEO of one of the largest mining consulting firms told me, quietly (fortunately), after I had just delivered the global operating plan..."I can guarantee you one thing about forecasts, they're always wrong."
So to my point. As AUZ charge for yet another BM geological play to add to their portfolio, why don't they use some of their cash to bring in an early cash generator in a market that is in no way connected to battery metals and by doing so spreading their risk and mitigating their risk. Spreading by of course bringing alternative market forces into their corporate fortune and mitigating by choosing a company that has in country experience, in spades.
There are two companies in Brazil that I know of that could provide that risk reduction at a cost AUZ might be able to afford or leverage with their cash (Au$4.64m cash US$2.88 currently). Tucano Gold and Pilar Gold. Either would be a good play for AUZ with significant cash flow within a year possibly six months.
I attended a webinar recently for Tucano Gold. In addition to their significant gold deposits, they have an iron ore business that could potentially spin out $1bn in revenues based on the 54m unprocessed tailings they have currently at 20% Fe - those numbers are by their estimates, hugely conservative with samples returning 40-60%.
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