Tribeca Global Natural Resources Ltd. · ASX:TGF
Tribeca Global Natural Resources — Investor Presentation (November 2020)
43 slides from Tribeca Global Natural Resources's investor presentation, Nov 16, 2020
Slide 1: Investor Update Presentation November 2020
16 November 2020 For personal use only ASX Market Announcements ASX Limited 20 Bridge Street Sydney NSW 2000 BY ELECTRONIC LODGEMENT Investor Update Presentation November 2020 Please find attached Investor Update Presentation. The information contained in this document has been prepared for use in c
Slide 2: Time to Add
For personal use only Tribeca Global Natural Resources Ltd (ASX:TGF) Time to Add Ben Cleary, Portfolio Manager Todd Warren, Head of Research Investment Update November 2020 One 3-Megawatt Wind Turbine Contains: • 335 tons of steel • 4.7 tons of copper • 1,200 tons of cement • 3 tons of aluminium • 2
Slide 3: Disclaimer
Disclaimer For personal use only This presentation has been prepared for Tribeca Global Natural Resources Limited (ABN 16 627 596 418) (“TGF”) by its investment manager, Tribeca Global Resources Pty Ltd (ABN 11 606 707 662) (“Tribeca”) under AFS License 239070 (Tribeca Investment Partners Pty Ltd).
Slide 4: Overview
Overview For personal use only Corporate Update Private Credit Performance Key Tailwinds for the Natural Resources Sector Structural Green Policy Driven Demand Money Supply Driving Weaker USD and Inflation Expectations Easing Trade Tensions and Fiscal Stimulus Appendix: Investment Process and Team 2
Slide 5: Strategy Performance
Corporate Update Strategy Performance For personal use only • TGF has bought back 2.2% of its issued capital on-market (refer latest 3E filing). We see this as an attractive investment and are focused on closing the discount to NTA. • As at the last closing price, there is $0.44 per share or $27m of
Slide 6: Private Credit Update
Private Credit Update Strategy Performance For personal use only • Private credit represents 7% of the portfolio, down from >30% a year ago - this is result of loan repayments and Paringa write- Breakdown of Gross Exposure by Strategy down. • TGF remains firmly committed to the private credit strate
Slide 7: Performance
Performance Strategy Performance Key Details (as at 31 October 2020) FY Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun YTD For personal use only ASX Code TGF 2018 -0.07% -0.36% -0.71% 0.16% -0.44% -0.16% 0.25% -3.24% 0.78% -3.78% Listing Share Price $2.50 2019 -0.52% -1.93% -0.54% 0.60% 0.79% 3.67%
Slide 8: Current Investment Themes & Opportunities
For personal use only One Photovoltaic Cell (PV) Contains: • 20 grams (0.643 troy oz) of silver Current Investment Themes & Opportunities • 25% of global silver production expected to be consumed by the solar industry by 2025 • Rare earths - cadmium, gallium, germanium, indium, selenium, tellurium S
Slide 9: Key Tailwinds for Resources
Key Tailwinds for Resources For personal use only Current Portfolio Exposures by Theme (%NAV) • Structural green policy driven demand. Infrastructure & Fiscal Stimulus • Money supply driving inflation expectations, (Diversified Miners) negative yields and weaker USD. • Easing trade tensions and fisc
Slide 10: Structural Green Policy Driven Demand
Structural Green Policy Driven Demand For personal use only • The ‘Decarbonization’ theme is accelerating. There is no electrification without commodities. • Electric vehicle and renewable energy targets are being brought forward in China, Europe, Japan, Korea and the US. • The electrification story
Slide 11: Battery Metal Demand and Technology Risks
Battery Metal Demand and Technology Risks For personal use only 12 3.5 Exponential demand for key 2019 vs 2030 Copper and nickel to remain key battery metals Growth battery components, regardless of 3.0 battery technology 10 Copper 10X Copper Lithium Cobalt Manganese Nickel Aluminium 14X 2.5 8 Milli
Slide 12: Electric Vehicle and Charging Stations Key Demand Drivers
Electric Vehicle and Charging Stations Key Demand Drivers 100 Copper Content By Vehicle Type Base Case Forecast EV Penetration By Region For personal use only 45 90 40 39% 80 35 China Europe USA Row 35% ICE – Internal Combustion Engine 70 HEV – Hybrid Electric Vehicle 30 60 PHEV- Plug in Electric Ve
Slide 13: China Electric Vehicle Roadmap Targets 100% by 2035
China Electric Vehicle Roadmap Targets 100% by 2035 For personal use only ~2025 ~2030 ~2035 Passenger Fuel efficiency to be better than Fuel efficiency to be better than Fuel efficiency to be better than Vehicles 4.6L/100km (WLTC) for new 3.2L/100km (WLTC) for new PV (incl. 2.0L/100km (WLTC) for new
Slide 14: Copper Demand Growth Driven by Renewables
Copper Demand Growth Driven by Renewables Wind Capacity Additions And Cumulative Capacities Copper Intensity of Different Power Generation Methods 180 2500 For personal use only 160 Offshore (LHS) 16 2000 140 Onshore (LHS) 120 Cumulative Capacity (RHS) 1500 14 100 GW GW 80 1000 60 12 40 500 20 10 0
Slide 15: EVs & Renewables to Drive Nuclear Electricity Demand
EVs & Renewables to Drive Nuclear Electricity Demand Investment Process For personal use only Electric Vehicles: only as clean as your electricity! • 25,500g CO2/100km using a petrol engine Volvo Sedan • 17,500g CO2/100km in Queensland (Coal) • 9,500g CO2/100km in Germany (Renewables) • 8,752g CO2/1
Slide 16: Nuclear Energy Stability and Energy Density
Nuclear Energy Stability and Energy Density For personal use only USA Capacity Factors for Utility Generation Solar • Nuclear is the only source of base load electricity that can compliment renewables as a low-carbon Wind emission source of electricity. • Uranium will increasingly take the place of
Slide 17: Global ESG Fund Flow Momentum Benefiting Natural Resources
Global ESG Fund Flow Momentum Benefiting Natural Resources For personal use only • Environmental, Social and Governance (ESG) focused fund flows have posted their 10th month of positive flows YTD. • The natural resources sector has benefitted and should increasingly benefit going forward. • Current
Slide 18: Case Study: Freeport-McMoRan
Case Study: Freeport-McMoRan • Largest listed global copper producer with best organic growth. Copper Sales For personal use only 4.5 • Low cost of production drives strong EBITDA and FCF generation. 4.0 • Best de-leveraging story since Fortescue (FMG). 3.5 • Potential for significant dividend growt
Slide 19: Copper Price History Comparisons
Copper Price History Comparisons Early stage Price Response of a major in Mid-2000s rally? to Accelerating Demand Copper Price Recovery Following 2008 GFC Copper Price Recovery Following COVID-19 Market Bottom For personal use only Metric tons $/Ib $/Ib $/Ib 1,500,000 4.75 4.75 4.75 1,400,000 4.50 2
Slide 20: Money Supply Driving Weaker USD and Inflation Expectations
Money Supply Driving Weaker USD and Inflation Expectations For personal use only • Covid-19 has resulted in record monetary stimulus in 2020. • The Federal Reserve and ECB have reiterated their “All-In” approach to negative yields. • There is a clear historical correlation between increasing money s
Slide 21: Extraordinary Central Bank Stimulus Drives Record Negative Yielding Debt
Extraordinary Central Bank Stimulus Drives Record Negative Yielding Debt • The U.S. Fed has committed to a disproportionate amount of stimulus, as the U.S. national debt has surpassed $27tr. • Central banks have bought more debt than governments can throw at them, resulting in a record amount of sub
Slide 22: Negative Yields Driving USD Weakness, Base Metals Strength
Negative Yields Driving USD Weakness, Base Metals Strength For personal use only US Real Yields vs USD USD vs Industrial Metals 1 1300 127.5 -91 1280 122.5 -93 0.5 1260 117.5 -95 1240 0 112.5 -97 1220 107.5 -0.5 -99 1200 102.5 Bloomberg Industrial Metals Index (L1) -101 1180 Bloomberg USD Index (L1)
Slide 23: Increased Money Supply Supportive for Commodities
Increased Money Supply Supportive for Commodities For personal use only US RECESSIONS AS DEFINED BY THE NBER CRB SPDT INDEX (Y/Y%, LS) US M2/INDUSTRIAL PRODUCTION (Y/Y%, ADVANCED, RS) 60 40 40 30 20 20 0 10 -20 0 -40 -10 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Sour
Slide 24: Comparing QE Periods
Comparing QE Periods • Commodity prices rallied for more than 2 years after the first QE from 1Q2009 to 1Q2011 For personal use only • Commodity prices have begun to rally from the March 2020 lows when current QE was announced. • Currently in ‘Policy Transmission Phase’ for Commodities more broadly
Slide 25: Gold Has Historically Done Well in Inflationary Periods
Gold Has Historically Done Well in Inflationary Periods For personal use only 150% 70% Gold YoY return (last 50 years) Gold YoY Return (last 50 years) 60% Poly. (Gold YoY return) S&P 500 YoY Return 50% 100% 40% 30% YoY return 20% 50% 10% 0% 0% -10% -20% -30% Much lower Lower Moderate Moderate Higher
Slide 26: Potential for Portfolio Rotation into Gold
Potential for Portfolio Rotation into Gold For personal use only 8% Private client precious metals ETF holdings 6% 4% 2% 0% • Berkshire Hathaway Inc. bought 1.2% • US pension funds are re-allocating • Private client precious metals ETF (US$565m) of Barrick Gold, the world’s funds to initiate exposur
Slide 27: Gold Equity Valuations Remain Undemanding
Gold Equity Valuations Remain Undemanding The YTD ratio of inflows into physical precious metal exchange traded funds (ETFs) is approximately 35x that of inflows into precious For personal use only metal equities ETFs. In our view, this is particularly bullish for the outlook for precious metals equ
Slide 28: Case Study: Northern Star / Saracen MergeCo
Case Study: Northern Star / Saracen MergeCo • Strong production growth positions MergeCo as a globally significant senior gold Combined Production Profile (koz) For personal use only producer 2200 +44% • Trades at a ~20% discount to other senior gold producers despite having assets 2000 only in Tier
Slide 29: Easing Trade Tensions and Fiscal Stimulus
Easing Trade Tensions and Fiscal Stimulus For personal use only • The Global Economic Wave has turned positive post- Covid and historically cyclicals and the natural resources sector are among the most levered. • Potential positive impact of improvement in Sino-US relations. • Fiscal stimulus has pa
Slide 30: The Global Economic Wave Has Turned, Drives Equities, Cyclicals Most Exposed
The Global Economic Wave Has Turned, Drives Equities, Cyclicals Most Exposed Global Wave Components of the Global Wave For personal use only 65 Components Type 60 Global industrial confidence Output 55 Global wave Global consumer confidence Demand 50 45 Global capacity utilisation Investment 40 Glob
Slide 31: Trade War's Significant Impact on Sentiment
Trade War’s Significant Impact on Sentiment For personal use only Copper Shorts - Trade Wars • The ramp up of trade war rhetoric and 40,000 tariffs between the U.S. and China had Record ever copper short position 35,000 an immediate effect on sentiment such as short interest in copper and oil LME sh
Slide 32: A Major Uplift in Infrastructure Spending Required
A Major Uplift in Infrastructure Spending Required For personal use only 50% Average Recommended Uplift in Annual Infrastructure Percentage of Metal Consumption in Infrastructure & Urban Spending (excluding ‘green’ investment Development and Power & Electricity 65% 90% 60.9% 60% 57.8% 80% 78.0% 55%
Slide 33: The Powderkeg: Potential to Break Out of an 18-Year Downtrend
The Powderkeg: Potential to Break Out of an 18-Year Downtrend For personal use only Bloomberg Commodity Index and 36 Month Moving Average Bloomberg Commodity Index Rate of Change 250 (36 month moving average) 2.0% 200 1.5% 1.0% 150 0.5% 0.0% 100 -0.5% -1.0% 50 -1.5% 36mth m.a BCOM 0 -2.0% Source: Bl
Slide 34: Case Study: Teck Resources
Case Study: Teck Resources • Tier 1 assets in stable jurisdictions (steelmaking coal, zinc, copper) provide For personal use only leverage to infrastructure spending. • Increasing exposure to decarbonisation theme (copper) and potential to enhance ESG credentials by divesting energy assets. • Strong
Slide 35: Appendix: Investment Process & Team
For personal use only Appendix: Investment Process & Team
Slide 36: Investment Universe
Investment Universe For personal use only Energy Energy Metals & Mining Soft Commodities Oil & Gas Base Metals Crops Uranium Bulks Agriculture Hydrogen Specialty Metals Aquaculture Renewables Precious Metals Fertilizer * Also includes services and infrastructure related to each of the above sectors
Slide 37: Strategy Features
Strategy Features For personal use only Actively Managed Constrained Leverage Actively managed, specialized long <200% Low gross positioning to achieve short strategy. Variable Net Gross superior risk adjusted returns with Exposure low correlation to major asset Exposure classes. High Conviction Glo
Slide 38: Investment Process
Investment Process Investment Process For personal use only Commodity Ranking Macro Overlay Fundamental Research Investment Idea Generation Implementation • Global commodity demand • Analysis of investor • Sector and stock specific • Investments expressed • High conviction, detailed and supply model
Slide 39: Stock Selection Philosophy
Stock Selection Philosophy For personal use only Investing in the best assets • Commodities with the highest economic Fixed rent potential and assets that are resilient through the cycle Only Assets Cannot be Changed Best management ✓ Ownership can change • Culture and capabilities that enable best
Slide 40: ESG Approach
ESG Approach In addition to rigorous financial analysis of companies, investments are also assessed through the lens of Environmental, Social and For personal use only Governance (ESG) factors. Companies that do not score highly from an ESG perspective are excluded from investment. A hands-on approa
Slide 41: Investment Implementation
Investment Implementation Investment Process Long Short Relative Value Special Situations For personal use only Trade Types • Long Only or Short Only • Same Sector Relative Value Pairs • Placements, M&A, IPO • Structural Themes • Long Short Company vs Commodity • Corporate Activity, Restructuring, •
Slide 42: Tribeca Global Natural Resources Team
Tribeca Global Natural Resources Team For personal use only Investment Team Operations and Finance Ben Cleary Todd Warren Haydn Smith Guy Keller James Howes Kevin Nam Ken Liu Portfolio Manager Head of Research Head of Credit Head of Commodity Trading Chief Operating Officer Operations Manager Compli
Slide 43: Investor Relations
For personal use only Investor Relations Email: TGFinvestors@tribecaip.com.au Web: https://tribecaip.com/lic Singapore Tribeca Investment Partners Pte Ltd #16-01 Singapore Land Tower 50 Raffles Place, Singapore 048623 Tel: +65 6320 7711 Sydney Tribeca Investment Partners Pty Ltd Level 23, 1 O’Connel
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