TGS Retail Investors, page-11

Leec, if it's true that copper moves in a 7 year cycle, as some analysts suggest, and this bounce in the price of the red metal over the past 4-6 weeks is the start of such a cycle, then surely hedging now would limit the upside.

I can see hedging is always useful during price spikes for a commodity that doesn't trade on fundamentals, such as gold, because you can lock in a good forward price to cover a certain percentage of production.

But I suggest that copper does trade on fundamentals and at this point there could be quite substantial price upside in the next few years, so why hedge.

Those same folk who talk of a 7 year cycle for copper suggest the previous cycle started in 2009 with prices peaking in 2011.

If this cycle is replicated in coming years the copper price peak might hit around 2019.

Translating this to the TGS SP suggests big gains are possible in coming years. A catalyst or two will be needed to spark some action. In the short term, this could include a positive production report for the current calendar quarter and/or an announcement that the debottlenecking project to boost output by around a quarter has been successfully completed on time and within budget. Or that the DRC has delivered the $13 million tax refund. Or that the cobalt study confirms outstanding profitability from a new production line. Etcetera.