Tribeca Global Natural Resources Ltd. · ASX:TGF
Tribeca Global Natural Resources — Investor Presentation (March 2021)
61 slides from Tribeca Global Natural Resources's investor presentation, Mar 22, 2021
Slide 1: ASX announcement: Investor Update Presentation March 2021
22 March 2021 For personal use only ASX Market Announcements ASX Limited 20 Bridge Street Sydney NSW 2000 BY ELECTRONIC LODGEMENT Investor Update Presentation March 2021 Please find attached Investor Update Presentation. For any enquiries please contact TGF at TGFinvestors@tribecaip.com.au or by cal
Slide 2: 2021: The Year of the Metal Ox
For personal use only Tribeca Global Natural Resources Ltd (ASX:TGF) 2021:The Year of the Metal Ox Ben Cleary, Portfolio Manager Todd Warren, Head of Research March 2021 According to the Chinese Zodiac, the Year of the “Metal” Ox occurs once every 60 years
Slide 3: Disclaimer
Disclaimer 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 For personal use only Ltd (ABN 11 606 707 662) (“Tribeca”) under AFS License 239070 (Tribeca Investment Partners Pty Ltd).
Slide 4: Agenda
Agenda For personal use only The Makings of the Next Commodities Boom Macro Outlook for the Natural Resources Sector Current Portfolio Themes Company Overview & Investment Implementation 2 3 March 2021
Slide 5: The Makings of the Next Commodity Boom
The Makings of the Next Commodity Boom Checklist for Drivers of the New Commodity Supercycle For personal use only Increased and tolerated inflation Ultra loose monetary policies across the G20 Weakening USD Easing of trade tensions Uptick in global economic growth (Roaring ’20s) End of pandemic and
Slide 6: Positioned For The Next Resources Supercycle
Positioned For The Next Resources Supercycle For personal use only 12 February 2021 In recent months a number of investment banks have begun to highlight the potential for another resources supercycle. These types of consensus upgrades are usually the precursor to sustained outperformance for the se
Slide 7: Do You Have 25% of Your Portfolio In Commodities?
Do You Have 25% of Your Portfolio In Commodities? “Sell Hubris, Buy Humiliation” - inflation assets poised to outperform For personal use only deflation assets in the next decade “2020 marked the secular low point for inflation and interest rates; new central bank mandates, excess fiscal stimulus 18
Slide 8: An Actively Managed Approach vs Large Cap Producers
An Actively Managed Approach vs Large Cap Producers For personal use only TGF Breakdown¹ RIO Tinto Portfolio Breakdown BHP Portfolio Breakdown (as % of Gross Exposures as at February 2021) (as % of EBITDA) (as % of EBITDA) Other Coal -3%³ Other Uranium 7% 7%² 17% Base Base Metals Petroleum Metals 21
Slide 9: Performance
Performance FY Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun YTD For personal use only 2018 -0.07% -0.36% -0.71% 0.16% -0.44% -0.16% 0.25% -3.24% 0.78% -3.78% The MSCI Commodity Producers 2019 -0.52% -1.93% -0.54% 0.60% 0.79% 3.67% -7.68% -7.52% -9.48% 5.74% 0.47% -13.96% -27.95% Index fell by -15
Slide 10: YTD Performance
YTD Performance For personal use only YTD main return driver is Clean Green Energy (base and battery metals, uranium). Returns being driven by fundamental research ideas, supplemented by a pickup in ECM related events. Our core belief is that through the cycle, our actively managed, long short appro
Slide 11: Macro Outlook for the Natural Resources Sector
For personal use only Macro Outlook for the Natural Resources Sector One Photovoltaic Cell (PV) Contains: • 20 grams (0.643 troy oz) of silver • 25% of global silver production expected to be consumed by the solar industry by 2025 • Rare earths - cadmium, gallium, germanium, indium, selenium, tellur
Slide 12: Inflation Expectations Rising
Inflation Expectations Rising “Inflationary expectations were firmly entrenched on Wall Street in the early 1980’s with 30-year For personal use only government bonds yielding 14.25%. Nobody believed Paul Volcker could possibly succeed in breaking that nexus. Inflation expectations subsequently fell
Slide 13: Wide Dispersion Between Asset Prices and Real Economy Prices
Wide Dispersion Between “Asset” Prices and “Real Economy” Prices For personal use only Total Return Performance in Local Currency Since January 2009 S&P GSCI vs S&P 500 900% 10.00 800% Gulf Crisis: 9.00 1990 700% GFC Asset Prices Real Economy Prices Oil Crisis: 2008 600% 8.00 1973/74 500% 7.00 Decad
Slide 14: Correlation Between Rising Rates, Inflation Expectations and Commodities
Correlation Between Rising Rates, Inflation Expectations and Commodities Reflation Trade Likely Remains Early Innings Price Ratio Of Copper To Gold & 10-year Treasury Yield 3.0% 4 120 For personal use only Hundreds 1.15 2.5% 1.05 Copper/Gold, Jan 2000 = 100 (RHS) 10Y Yield 3 100 0.95 2.0% 0.85 1.5%
Slide 15: Commodity Price Performance During Increasing Inflation Expectations
Commodity Price Performance During Periods of Increasing Inflation Expectations For personal use only 12M Performance (avg. all periods) 350% 24M Performance (avg. all periods) 300% Since May 29 2020* 24M Performance (Feb 2009) 250% 213% 200% 145% 150% 122% 124% 100% 91% 54% 52% 47% 53% 44% 53% 45%
Slide 16: 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 17: Historical Asset Class Performance vs Inflation Environment
Historical Asset Class Performance vs Inflation Environment and Expectations Low & Falling Low & Rising For personal use only Cons Staples 0.2 MSCI EM 9.5 Healthcare 0 IT 8.5 World Defensives -1.4 Utilities Materials 8.2 -1.6 Communication Services -2.5 Cons Discretionary 5.6 S&P 500 -2.6 World Cycl
Slide 18: The Powderkeg: Breaking Out of a Long-Term Bear Market
The Powderkeg: Breaking Out of a Long-Term Bear Market For personal use only The Last Oil Supercycle And Its Drivers Bloomberg Commodity Index and 36 Month Moving Average 12 Year UP Cycle 12 Year DOWN Cycle 250 140 GFC 2008 Shale Oversupply 36mth m.a BCOM 120 Financial Demand Market share/ geopoliti
Slide 19: Rally from 2020 Lows Still Has Material Upside
Rally from 2020 Lows Still Has Material Upside For personal use only Commodity prices rallied for more than 2 years after the first QE from 1Q2009 to 1Q2011 Commodity prices have begun to rally from the March 2020 lows when current QE was announced. Commodity Performance 2009-11 Performance Since 2Q
Slide 20: Additional Tailwinds: Commodities Already in Supply Deficit
Additional Tailwinds: Most Commodities Already in Demand Supply Deficit For personal use only Bullish Thermal Coal Uranium Iron Ore Lithium Potential for short term constraint Steel Nickel Copper Manganese Cobalt Aluminum Zinc Alumina Met Coal Bauxite Bearish Potential for long term shortage Source:
Slide 21: 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 22: Key Tailwinds for Resources
Key Tailwinds for Resources For personal use only Current Portfolio Exposures by Theme (%NAV) Structural green policy driven demand. Money supply driving inflation expectations, Infrastructure & Fiscal Stimulus (Diversified Miners) negative yields and weaker USD. Easing trade tensions and fiscal sti
Slide 23: 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 is go
Slide 24: 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 25: Metals Tesla Needs to Build 20M Cars a Year by 2030
Metals Tesla Needs to Build 20M Cars a Year by 2030 Of course, this is just Tesla. Let’s not forget the efforts of other automakers and the demand for grid batteries. For personal use only Tesla Production @ 20m Material Required (t) Production 2019 (t) % of Production Graphite 1,028,775 1,100,000 9
Slide 26: 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 27: 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 28: Copper Deficits Deepening
Copper Deficits Deepening For personal use only “If copper were to go to $10 "We see a significant deficit, “Our modelling indicates that tomorrow, it would take us possibly in the region of 10 annual average mine supply seven, eight years to get new million tonnes of additional growth in several ke
Slide 29: 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 30: Nuclear Energy Stability and Energy Density
Nuclear Energy Stability and Energy Density For personal use only Nuclear is the only source of base load USA Capacity Factors for Utility Generation electricity that can compliment renewables as a low-carbon emission source of electricity. Solar Uranium will increasingly take the place of fossil fu
Slide 31: Uranium: The Non-Weather Dependent Power Source
Uranium: The Non-‘Weather Dependent’ Power Source For personal use only “As we make the grid clean, it will be a challenge to keep it reliable because you can have lots of cases where there's not much sun or wind, so we have to innovate to be able to store energy or use a weather- independent green
Slide 32: 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 supply
Slide 33: 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 34: Yields Are Good for Gold, Current Selloff Provides Opportunities
Yields Are Good for Gold, Current Selloff Provides Opportunities For personal use only Monthly Gold Prices (1977-2021) Monthly T-Bond Prices (1977-2021) 2200 200 Gold collapses while bonds rise/yields drop 2000 180 Bonds peak early 2016, 1800 yields rise, while gold bottoms begins its advance. 160 1
Slide 35: 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 36: 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 partisan
Slide 37: 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 38: Ex-China Commodity Consumption Recovering
EX-China Commodity Consumption Recovering For personal use only Ex-China which accounts for 30% of global iron ore market is also recovering. Seaborne imports of Iron Ore for Japan, South Korea, Western Europe Japan South Korea Western Europe 6 Million tonnes 3 0 37 March 2021
Slide 39: A Major Uplift in Infrastructure Spending Required
A Major Uplift in Infrastructure Spending Required For personal use only G4+ China government cyclically Adj primary balance (% of GDP) 0 -2 -4 -6.5 -4.0 -6 -5.1 -8 -10 -12 -10.1 -10.9 US federal government headline fiscal balance (% of GDP) 0 -5 -4.5 -10 -8.5 -10.2 -15 -20 -15.2 -20 -25 Note: That
Slide 40: 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 41: Fund Overview & Investment Implementation
For personal use only Fund Overview & Investment Implementation One Photovoltaic Cell (PV) Contains: • 20 grams (0.643 troy oz) of silver • 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 42: Tribeca Overview
Tribeca Overview For personal use only Founded in 1998, Tribeca Investment Partners is an Asia Pacific headquartered asset manager investing over A$2.4bn¹ on behalf of 23 Year a range of clients including pension funds, endowments, foundations, financial institutions and high net worth investors. 14
Slide 43: Tribeca Global Natural Resources Team
Tribeca Global Natural Resources Team Investment Team Operations and Finance For personal use only 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 44: Strategy Features
Strategy Features For personal use only Actively Managed Constrained Leverage Actively managed, specialized long <200% Low gross positioning to short strategy. Variable Net achieve superior risk adjusted Gross Exposure returns with low correlation to Exposure major asset classes. High Conviction Glo
Slide 45: 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 46: Investing Across the Value Chain
Investing Across the Value Chain A flexible, long short, mandate and deep knowledge of value chains from project to end-user allows for the capture of different For personal use only payoff profiles at different points in the cycle. Metals and Mining Value Chain Example Exploration & Engineering Tra
Slide 47: 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 modelling. posi
Slide 48: Stock Selection Philosophy
Stock Selection Philosophy For personal use only Investing in the best assets Commodities with the highest Fixed economic 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 ✖ Attribu
Slide 49: 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 50: 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 Corporate Activity, Restructuring, Best Risk Adjusted Expo
Slide 51: Portfolio Construction Framework
Portfolio Construction Framework For personal use only Trade type, market cap and position sizing Trade Type, Market Cap and Position Sizing Typology are all fundamentally linked Long Short Relative Value Special Situations Weighting to different trade type will vary >$5bn Mkt Cap depending on marke
Slide 52: Current Trade Examples
For personal use only Current Trade Examples 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 tons of rare earth elements Source: Tribeca Investment Partners
Slide 53: Hudbay Minerals
Hudbay Minerals Long Short Relative Value Special Situations Market >$5b Cap 5%-8% 5%-8% 5%-8% Diversified exposure to base metals (copper, zinc) with precious For personal use only Market Cap $3b-$5b metal kicker in mining-friendly jurisdictions (Canada, Peru, US) 3%-5% 3%-5% 3%-5% EBITDA and FCF g
Slide 54: Energy Fuels
Special Long Short Relative Value Situations Energy Fuels Market >$5b Cap 5%-10% 5%-10% 5%-10% Market Cap A unique US-listed exposure to ‘critical minerals’ required for a green $3b-$5b For personal use only decarbonised future, with very difficult-to-replicate licensed and 3%-5% 3%-5% 3%-5% Market
Slide 55: Teck Resources
Special Teck Resources Long Short Relative Value Situations Market >$5b Cap 5%-10% 5%-10% 5%-10% Engaged with Teck Resources in April 2020 Market Cap $3b-$5b For personal use only Tribeca Key Proposals Outcome Comment 3%-5% 3%-5% 3%-5% Market Cap <$3b Stronger oil/coal market will Divest/distribute
Slide 56: Teck Resources: Sequential Improvement in ESG Score
Teck Resources: Sequential Improvement in ESG Score For personal use only 55 March 2021
Slide 57: BHP
BHP Engaged with the company in May 2017 For personal use only Tribeca Key Proposals Outcome Divest US onshore oil assets Sold in 2018 for US$10.5bn Return capital to shareholders Dividend raised several times, along with special in 2018 Review Board of Directors and New CEO, CFO and Chairman senior
Slide 58: BHP
Special Long Short Relative Value BHP Situations Market >$5b Cap 5%-10% 5%-10% 5%-10% Market Cap $3b-$5b For personal use only Singapore marketing business has been re-organised to be 3%-5% 3%-5% 3%-5% 100% under BHP Ltd, hence removing any potential lost tax Market Cap <$3b efficiencies. 0.5%-3% 0.
Slide 59: Northern Star
Special Long Short Relative Value Northern Star Situations Market >$5b Cap 5%-10% 5%-10% 5%-10% Strong production growth positions MergeCo as a globally significant senior Market Cap $1b-$5b For personal use only gold producer 3%-5% 3% - 5% 3%-5% Trades at a ~20% discount to other senior gold produc
Slide 60: Equity Capital Markets (ECM) Opportunities
Special Long Short Relative Value Equity Capital Markets (ECM) Opportunities Situations Market >$5b Cap 5%-10% 5%-10% 5%-10% 6 Asset Name Broker 1 Week 1 Month Market Cap Months $3b-$5b For personal use only RESOLUTE MINING LTD PLACEMENT CGAUR -3% -7% 21% OIL SEARCH LIMITED Placement MACQ 19% 35% 40
Slide 61: Investor Relations
For personal use only Investor Relations Email: TGFinvestors@tribecaip.com.au Web: www.tribecaip.com 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’Connell Street
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