While the SP of established producers (such as Freeport McMoran) practically reflect the increases in the copper price 1:1 and with leverage - nothing happens with explorers.
The SP of an explorer primarily reflects a possible future potential. The problem is that first something of significance has to be discovered, then you go down the rocky road of development to production (or sale of the project). This can take years and requires a lot of capital.
Another problem is probably the fact that investors younger than 50 have hardly ever made money with miners. They have focussed on the things they are in contact with on a daily basis (Apple, Amazon, Nvidia etc.). AI is closer to them than an explorer at the end of the world. This also applies to fund managers.
After years of talking about the energy transition and years of reading that the price of copper is set to explode, this is now happening. However, many have been disappointed for a long time - which has led them to reduce their holdings with every rally. They simply don't understand the context - yet.
The appeal of an explorer lies in the fact that a stock market capitalization can multiply within a short period of time - usually due to a major discovery. If the right cycle is then added to this - i.e. higher commodity prices that "stay up" over a longer period of time - there can be further upward movements. I think we are just at the beginning of such a cycle.
This means that the rising prices (e.g. for CU or AU) will first reach the established producers until the SP of these companies reaches a level that is no longer exciting enough to continue investing. An indication of the development in this direction will be increased M&A activity (see BHP and Anglo).
If the prices of CU and AU continue to rise, the second and third leagues will slowly come into play. Projects will go from unattractive to profitable, an average discovery will suddenly become attractive, JVs will become more common. And..... looking at what is happening on the commodity markets, I have the feeling that the I-Phone and AI generation is slowly getting a taste for it.
Silver has just broken through USD/oz 30 (painlevel for a massive short squeeze is at 32). Gold is back to USD/oz 2400 - and I think 2500 will just be a stopover on the way to 3000. Despite a massive rise in the last few weeks, the price of CU is scratching the USD/lb 5.00 mark again (currently 4.99....no 5.03 now...).
BHP's recent takeover bid for Anglo American, which will make BHP the world's largest copper producer (if it works...), is a clear indication: mergers and acquisitions are always a precursor to an expansion of capital flow into the sector, so this is very good news indeed for all junior companies that are lucky enough to be fully funded and ready to drill or already have interesting projects in the pipeline (e.g. Kalman).
If the party on the commodity markets continues, analysts, fund managers etc. will not be able to avoid looking a little further than the next corner of the house. However, in order to "pick up" the really big movements and with the correspondingly large investment, you have to be in early. If something fundamental changes, you can't just go and invest a million A$ in HMX. You can - but then you're probably looking at an SP of 20 cents.
The "younger" investors or analysts who prefer to get their information on Twitter will also learn about the cascading effect of capital as it trickles down from established companies such as BHP through the intermediates to the juniors.
However,the biggest difference compared to the last 10 years will be the sheer volume of capital available for investment in the sector. Today, the sector is still woefully undercapitalised - everyone knows it by now - there has been very little investment - and when that changes - and it will! - the moves will be life-changing.
I don't know whether HMX will be one of the big winners, nor could I guarantee it. But I still think that the environment is optimal and will become even more optimal to realize the potential of HMX.
Until then, it will still be necessary to grit your teeth. To hope for strong results or other "changes".
Generally speaking, anyone who exits this sector now will, in my opinion, regret it very bitterly in 12-24 months.
As I write this, the prices for Au/Ag/CU are continuing to rise - the Chinese are continuing to fill their warehouses and only the - sorry to say that - stupid Europeans and Americans do not yet fully understand what is actually happening. This is a paradigm shift.
The war for "critical materials" has begun.
With this in mind. I wish all HMX (and CNB) shareholders the best of luck and hope that the party really takes off soon....and DYOR.
HMX Price at posting:
3.7¢ Sentiment: Buy Disclosure: Held
(20min delay)
