Something for Everyone

“Prepare for a decade of Dr. Copper on steroids,” analysts including Max Layton and Tracy Liao wrote in a July 2017 Citigroup note.

Citigroup Commodities Strategy | July 2018
3Q 2018 Commodities Market Outlook
https://www.citivelocity.com/rendit...QmdXNlcl9pZD0xLTdNQ1EtMjMxJnVzZXJfdHlwZT1DUk0

The 3Q 2018 Citigroup Commodities report (including authored by Max Layton [Managing Director] and Tracy Liao [Strategist], mentioned above) became available to the public recently, some relevant extracts as they apply to HAV's JORC mineral resources follow:

Metals:
o Copper prices are expected to rise sharply over the medium term, as demand growth outstrips supply growth, in part reflecting strong demand from the autos sector (including EVs related infrastructure). Current price levels of US$6,200/t for copper are likely to prove cheap.
o I hope Mr Gupta is paying attention to the table on page 70:

• Bull Case (20%): In our bull case we see US$8,000/t copper by year end on on the back of major outages of both scrap and mine supply, a major easing in trade tensions, and a major easing in Chinese and Fed policies.
• Bear Case (20%): In our bear case LME prices fall to US$5,500/t as a trade war results in a major slowing in global growth, supply growth is delivered without significant disruption, Chinese growth slows down materially owing to the crackdown on off balance sheet lending, and the dollar rallies on a stronger than expected tightening in US policy.

Bulks:
o The main theme of 2018 is all about impurities, as products with high impurities are being penalised.
o However, stricter regulations on blast furnace emissions are set to drive alumina and silica discounts wider, triggering a major premium of the low-alumina # Brazil Blend fine (1.5% alumina) against the high-alumina (2.3% alumina) Pilbara fine.
o Iron ore prices should trade within a narrow range of US$62-68/t during 3Q’18, and are likely to break above the US$70/t level during 4Q’18 when the Chinese winter steel curtailment measure takes effect.

Cobalt:
o Cobalt prices have dropped by more than 20% to US$70,000/t since March, reflecting concerns about the China outlook.
o We believe the ongoing price weakness is a buying opportunity given EV sales and battery capacity expansions are expected to drive strong demand growth between 2018-20. Supply risks also remain elevated.

Gold:
o Bull Case: We assign only a 20% bull case probability that gold could scale US$1,400/oz during 1Q’19 versus 30% previously. Given the current FX regime, our base case outlook is for moderating gold prices in a US$1,250-1,325 range over the next year. A sharp US$ unwind or a major macro event would be required to push trading above US$1,350/oz. Our equity colleagues remain constructive for benchmark indexes and do not assess a high risk of drawdown.
o Bear Case: We assign a 20% probability that gold could trade down to US$1,200/oz by end-2018 and below that level during 2019, up slightly from a 10% weighting last quarter. This is conditional on further US$ strength.

# Maldorky has very low-alumina (0.47%) impurity in its Fe concentrate. See extract from 12 May 2016 Maldorky Iron Ore Project presentation, below:



Cheers

These are only my random (something for everyone) thoughts and it does not constitute investment advice. Before acting on any information you read and before making any financial or investment decisions, you should always consult your advisor(s) or other relevant professional experts.

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