Tribeca Global Natural Resources Ltd. · ASX:TGF
Tribeca Global Natural Resources — Investor Presentation (February 2021)
51 slides from Tribeca Global Natural Resources's investor presentation, Feb 24, 2021
Slide 1: Investor Update Presentation February 2021
24 February 2021 For personal use only ASX Market Announcements ASX Limited 20 Bridge Street Sydney NSW 2000 BY ELECTRONIC LODGEMENT Investor Update Presentation February 2021 Please find attached Investor Update Presentation – Positioned For The Next Commodities Supercycle. The information containe
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 February 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: Overview
Overview For personal use only Performance Review Macro Outlook for the Natural Resources Sector Structural Green Policy Driven Demand Money Supply Driving Weaker USD and Inflation Expectations Easing Trade Tensions and Fiscal Stimulus Investment Implementation 2 3 February 2021
Slide 5: Buyback and discount to NTA update
Corporate Update For personal use only TGF has bought back 2.4% of its issued capital on-market (refer latest 3E filing) at an average price of $1.17. We continue to see this as an attractive investment and are focused on continuing to close the discount to NTA. The discount to NTA has been narrowin
Slide 6: 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% 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% The MSCI Commodity Producers 2020 4.52% -0.19%
Slide 7: YTD Performance
YTD Performance For personal use only YTD main return driver is Clean Green Energy (base and battery metals, uranium) in addition to precious metals. Returns being driven by fundamental research ideas, supplemented by a pickup in ECM related events. Our core belief is that through the cycle, our act
Slide 8: 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 9: TGF Portfolio Exposures vs Diversified Miners
TGF Portfolio Exposures vs Diversified Miners For personal use only TGF Breakdown¹ RIO Tinto Portfolio Breakdown BHP Portfolio Breakdown (as % of Gross Exposures as at 19 February 2021) (as % of EBITDA) (as % of EBITDA) Other Coal -3%³ Other Uranium 7% 7%² 17% Base Base Metals Petroleum Metals 21% 9
Slide 10: Macro Outlook For Natural Resources Sector
For personal use only One Photovoltaic Cell (PV) Contains: • 20 grams (0.643 troy oz) of silver Macro Outlook For Natural Resources Sector • 25% of global silver production expected to be consumed by the solar industry by 2025 • Rare earths - cadmium, gallium, germanium, indium, selenium, tellurium
Slide 11: 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 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 1.15 2.5% 1.05 Copper/Gold, Jan 2000 = 100 (RHS) 10Y Yield 3 100 0.95 2.0% 0.85 1.5% 2 80 0.75
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 in Demand 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 Current Investment Themes & Opportunities One uranium fuel pellet (~10grams) contains as much energy as: • 1 ton of coal • 577 litres of oil • 17,000 cubic feet of natural gas Source: Nuclear Energy Institute
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: 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 29: Nuclear Energy Stability and Energy Density
Nuclear Energy Stability and Energy Density For personal use only USA Capacity Factors for Utility Generation Nuclear is the only source of base load electricity that can compliment renewables as a Solar low-carbon emission source of electricity. Uranium will increasingly take the place of fossil fu
Slide 30: 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 31: 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 32: 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 33: 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 34: 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 35: 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 36: 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 35 February 2021
Slide 37: 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 38: 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 39: Current Investment Themes & Opportunities
For personal use only One 3-Megawatt Wind Turbine Contains: Current Investment Themes & Opportunities • 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 40: Strategy Features
Strategy Features For personal use only Actively Managed Constrained Leverage Actively managed, specialized long <200% Low gross positioning to short strategy with variable net Variable Net Gross achieve superior risk adjusted exposure. Exposures are adjusted in Exposure returns with low correlation
Slide 41: Strategy Implementation
Strategy Implementation Fundamental 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 Exposures Commodity Spin
Slide 42: Hudbay Minerals
Hudbay Minerals Trade Type Fundamental Diversified exposure to base metals (copper, zinc) with precious For personal use only Theme Clean Green Energy metal kicker in mining-friendly jurisdictions (Canada, Peru, US) Risk Profile Mid Cap Growth EBITDA and FCF growth in 2021 and 2022 as higher grade P
Slide 43: Energy Fuels
Energy Fuels A unique US-listed exposure to ‘critical minerals’ required for a green Trade Type Fundamental For personal use only decarbonised future, with very difficult-to-replicate licensed and Theme Clean Green Energy installed infrastructure in the US Risk Profile Mid Cap Growth Largest produce
Slide 44: Teck Resources
Teck Resources Engaged with Teck Resources in April 2020 Trade Type Special Situations For personal use only Theme ESG Re-rating Tribeca Key Proposals Outcome Comment Risk Profile Large Cap Value Stronger oil/coal market will Divest/distribute oil sands and coal businesses No change help with market
Slide 45: Teck Resources: Sequential Improvement in ESG Score
Teck Resources: Sequential Improvement in ESG Score For personal use only 44 February 2021
Slide 46: 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 47: BHP
BHP For personal use only Trade Type Relative Value Singapore marketing business has been re-organised to be 100% Theme DLC Collapse under BHP Ltd, hence removing any potential lost tax efficiencies. Risk Profile Large Cap Value BHP has written down the value of its NSW Energy Coal business DLC Spre
Slide 48: Northern Star
Northern Star Strong production growth positions MergeCo as a globally significant Trade Type Fundamental For personal use only senior gold producer Theme Inflation Trades at a ~20% discount to other senior gold producers despite having Risk Profile Large Cap Value assets only in Tier 1 countries su
Slide 49: Equity Capital Markets (ECM) Opportunities
Equity Capital Markets (ECM) Opportunities 6 Asset Name Broker 1 Week 1 Month Months Trade Type Special Situations For personal use only RESOLUTE MINING LTD PLACEMENT CGAUR -3% -7% 21% OIL SEARCH LIMITED Placement MACQ 19% 35% 40% Theme ECM DACIAN GOLD LIMITED Placement MACQ 23% 52% 37% DE GREY MINI
Slide 50: Tribeca Global Natural Resources Team
Tribeca Global Natural Resources Team For personal use only Investment Team Operations and Finance Tribeca has one of the largest specialist natural resources investment teams globally with senior team members having Ben Cleary Todd Warren Haydn Smith James Howes Anu Kaarla David Bridge 20+ years on
Slide 51: 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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