We’re back (for now)

It’s been two and a half years since I last wrote a blog post. I began writing “The Resource Speculator” in November 2023 and ended it in haste in March 2024.

Am I bringing it back? Definitely not in its prior form - which was writing frequent paid content. But we will see where it goes.

Why? A couple of reasons. For one I found the writing piece made me become more critical and think through things more deeply. I found that sharing and documenting thoughts via a blog/journal allowed me to quickly look back and reference ideas, data and thought processes. This helped me to learn what worked and what didn’t and enabled me to hone my investment process. Whilst I only did it for ~4mths I feel the writing and documenting made me a better investor.

The second reason is to use the blog as a sounding board. I don’t manage others money, I’ve never worked in the investment industry and I don’t have a bunch of investment managers to sound ideas off of. I used to post a bunch of thoughts on Twitter as a way of getting thought provoking feedback but have grown far less interested in that platform as a stock research tool. This is primarily due to having to wade through copious amounts of AI written slop whilst trying to avoid (often unsuccessfully) getting roped into political chat which is not a great help to the investment process. The platform is now filled with folks just looking to dunk on others “calls” after the fact rather than engaging in discussion on the thought process and ideas behind that “call”. Put simply - there is far too much noise there now.. but that’s a rant that no one asked for.

What am I going to write about? Probably much of the same as I did previously which you can find in the archives posts - which is topics focused on investment ideas in the resources sector (with a heavy ASX bias).

I’m sure I’ll share in a post one day on my investment philosophy and why I target certain areas of the market - but as a start I’m generally looking for opportunities in companies that are somewhat liquid, have something tangible (ie no pre discovery plays and very few discovery plays) and are generally hated / “value” plays. My bandwidth is certainly restricted given my time and experiences so I try to stick to my lane.

The writings will be sloppy but there’ll be little to no AI. I’m a basic math guy not an English guy so please no spelling and grammar nazi’s…. As a reminder - this is just ramblings not investment advice, so please DYODD and seek advice.

The one thing I ask for is feedback - correct me when I make an error (not spelling or grammar), tell me when it’s a shit idea or confirm my biases… but any feedback is better than none.

For now - having just re-read the prior blogs notes in the archive… a few observations on those notes 2.5 years later..

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Observations 2.5yrs on…

I grouped my blog posts up in the archive by categories so will try to group the observations the same…

Major Miners/Thematics/Things that caught my eye

A few observations here

1. You don’t need to be playing in the penny dreadfuls to make multiples on your money in this sector

Caterpillar - the 100-year old, US$400 BILLION dollar company is up over 3x in the past couple of years.

I picked up and highlighted on the blog that CAT were a doing huge numbers as a “picks & shovels” play on data centres. Its performance since is jaw dropping.

2. Concentration > Diversification

When I started out in the resources sector ~15years ago the big multiples went to the diversified miners with a spread of Assets in various commodities and jurisdictions. This to me made some sense as the more diverse your earnings the lower the risk/volatility.

This has now completely flipped on its head and miners are concentrating their risk and earnings to chase a higher multiple that investors now pay for clean exposure to major themes (namely copper and critical minerals in Western jurisdictions). We’ve seen Anglo completely gut its portfolio over the past year in the wake of investor feedback, Vale create a “Base Metals” division that looks ripe for spin out… and in just the past week we have seen further news of BHP coal Asset sales (see here) whilst South32 announced the sale of its Aluminium business (see here) following exits from both coal and nickel.

3. Copper is still the prize as structural supply issues persist

As mentioned in the blog and something I’ve spoken about ad nauseum for the past few years it the positive backdrop in copper is a lot to do with structural supply issues at major copper miners like Codelco. This hasn’t changed with 1Q26 I believe was the lowest quarterly production this century.

4. BESS demand is growing exponentially

I highlighted that given the make up of Western grids and the nature of global investment into intermittent energy supply that energy storage demand has to rise and rise materially. And at current - batteries sure beat the alternatives such as pump storage hydro.

Turnarounds

I posted a deep dive of two turnaround stories I liked at the start of 2024 - Metro Mining (MMI.AX) and Aurelia Metals (AMI.AX). Both have performed well in the 2.5years following with Metro up ~4.5x (~82% CAGR) and Aurelia up ~3x (~50% CAGR). I continue to hold the latter.

I still find this one of my better hunting grounds to find multi baggers and this Rick Rule quote epitomizes the reason to be interested in these opportunities

“The biggest gains don’t come from companies going from good to great. They come from companies going from terrible to merely less terrible.”

The truth is these types of plays suit my style of investing in the resource sector. I’m no geologist nor do I have all that much interest in rocks.. but I understand the basics of mineral economics, understand a balance sheet, am a spreadsheet modelling nerd and like to think I have a good bullshit detector. I’m also a sucker for pain and like to go against the crowd… and I value liquidity and >12month hold for tax purposes (pre the recent CGT changes) so these things suit my style but you need to question if they suit yours. There are many ways to make money in the sector and you need to find what works for you.

As per the initial archive article these things often end in disaster. There were two other opportunities I mentioned I was keeping an eye on in early 2024 - Amplitude Energy and Bowen Coking Coal. Well - the first did a 3x before basically coming back to break even whilst the latter entered administration mid last year which would have earned you a cool 100% loss if you held.

In more recent times post the blog - Mineral Resources and EQR Resources have been great turnaround stories over the past year which I may share details on at a later date… and I’m holding a rather spicy one at the moment which could go either way and which I’m sure I will write about at some point.

Special Sits / Catalyst Plays

This space has to be one of my favourite hunting grounds along with turnarounds. A recap on the ideas shared:

• Orecorp got the takeout by Perseus;

• Origin escaped the claws of a Brookfield and EIG takeover but ended up striking a sweetheart deal with the NSW government to keep their coal plant alive and the share price ran much further than the bid price;

• The Trump administration cleared the permitting path and took an equity stake in Trilogy which saw it up as much as 20x(!) at one stage versus when the idea was shared;

• First Quantum manoeuvred its way through balance sheet stress and rode the copper wave to a 4x post the closure of Cobre Panama and is now arguably close to negotiating a restart with the government which could provide even further upside;

• Red Hill minerals paid out over A$2/sh of fully franked dividends as Mineral Resources brought online the Onslow iron ore project which RHI is now receiving royalties from;

• Adriatic got bought out by Dundee Mining post production despite a extremely bumping commissioning process;

These were all great returning investments depending on the timing of purchases/sales but they don’t all work out and we missed big on Carnarvon Energy where the majority owner of the project they hold a stake in further delayed FID for their project. Lesson learned there but truth be told many of these deals relied on other parties to make them work and there is always a large element in risk involved - you just need to weigh it up with the potential return.

Coal

Coal has been another happy hunting ground of mine over the years and I wrote about it extensively in the prior version of this blog… but there’s no hiding the fact it has been a brutal place to have been allocated to over the past couple of years. What do I put that down to? The big behemoth in China has not only been ramping domestic production (and Mongolia the same) but China’s demand has also cooled - especially in the steel space. When China sneezes etc etc.

Prices haven’t exactly been dire but margins have been low to negative for most Western miners. In normal times you may see some supply rationalisation but all that cash built up in the prior bull market has buffered balance sheets and allowed for a prolonged cycle. No one has thrown the towel in (yet).

The major themes are still playing out

• Sector consolidation continues - Yancoal/Kestrel, GM3/Tahmoor, Dhilmar/Anglo all recent deals in the past couple of months and BMA appears up for sale according to news earlier this week;

• Geological deterioration / cost inflation is happening at a rate far above CPI;

• Coal quality matters and price bifurcation is becoming far more evident.

It was interesting to me to open up the first blog post (6 November 2023) and seeing margins in 2Q23 were around US$70/t for most names on a US$243/t PLV price. This is basically the same PLV price as 2Q26 - so it will be interesting to compare notes 3 years later once the miners report over the coming weeks. My guess are that margins are far lower given the last two points but we will see.

Final thought

I’m using this platform now as my primary online tool to both source and share investment ideas… and as a record keeping tool for my own benefit. Feel free to follow along - all I ask is that if you have any feedback or intel on any of the topics shared (or your own ideas that may suit my investment style) I’d love to hear it. Remember - they are just thoughts/ideas and certainly not investment advice.