Tribeca Global Natural Resources Ltd. · ASX:TGF
Tribeca Global Natural Resources — Investor Presentation (May 2021)
63 slides from Tribeca Global Natural Resources's investor presentation, May 24, 2021
Slide 1: ASX announcement cover letter: Investor Update Presentation May 2021
24 May 2021 For personal use only ASX Market Announcements ASX Limited 20 Bridge Street Sydney NSW 2000 BY ELECTRONIC LODGEMENT Investor Update Presentation May 2021 Please find attached Investor Update Presentation. For any enquiries please contact TGF at TGFinvestors@tribecaip.com.au or by calling
Slide 2: Tribeca Global Natural Resources Ltd Investment Update
For personal use only Tribeca Global Natural Resources Ltd (ASX:TGF) Investment Update Ben Cleary, Portfolio Manager Todd Warren, Head of Research May 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 Tribeca Global Natural Resources Overview The Makings of the Next Commodities Boom Key Portfolio Themes Appendix: Investment Process Overview 3 May 2021
Slide 5: Tribeca Global Natural Resources
Tribeca Global Natural Resources For personal use only Asia-Pacific based¹, boutique asset manager with assets under management of $3bn². 23-year history of delivering investment outcomes to sophisticated, institutional clients. Recognized resources sector specialists - large investment team with de
Slide 6: 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 7: Investment Universe
Investment Universe A flexible approach allows focus on the best risk-reward opportunities as well as the ability to invest across the value chain For personal use only Energy Energy Metals & Mining Soft Commodities Oil & Gas Base Metals Crops Uranium Bulks Agriculture Hydrogen Specialty Metals Aqua
Slide 8: 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 9: Sources of Alpha
Sources of Alpha For personal use only Flexibility within the mandate to take advantage of different types of trades across the natural resources complex, depending on best risk-reward and market environment. Weighting of different types of trades will vary depending on prevailing market structure a
Slide 10: Tribeca Global Natural Resources Ltd performance and key details
Tribeca Global Natural Resources Ltd (ASX:TGF) FY Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun YTD For personal use only 2018-19 -0.07% -0.36% -0.71% 0.16% -0.44% -0.16% 0.25% -3.24% 0.78% -3.78% 2019-20 -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% 2020-
Slide 11: YTD Performance Review
YTD Performance Review YTD returns have been driven by long positions while Majority of returns came from equities where we see better risk adjusted For personal use only contribution from shorts has been flat. returns on offer versus listed credit and commodities. The short book has generated posit
Slide 12: An Actively Managed Approach vs Large Cap Producers
An Actively Managed Approach vs Large Cap Producers For personal use only Portfolio Breakdown RIO Tinto Portfolio Breakdown BHP Portfolio Breakdown (% of Gross Exposures as at April 2021) (as % of EBITDA) (as % of EBITDA) Other Other 7%² Coal -3%³ Uranium 7% 14% Base Soft Petroleum Commodities Metal
Slide 13: 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 14: 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 15: 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 deflation assets in For personal use only the next decade 18,000 16,000 14,000 Deflation Assets 12,000 Inflation Assets 10,000 “2020 marked the secular low point for inflation and
Slide 16: Institutional and Retail Materially Under-Allocated to Resources
Institutional and Retail Materially Under-Allocated to Resources For personal use only Natural Resources 5.5% Implied commodity allocation by non-bank investors globally Real Assets 1.0% 10.0% Real Estate 0.9% Private Equity Venture Capital 21.5% 0.8% 0.7% Post-Lehman Leveraged Buyouts 16.5% 0.6% He
Slide 17: Valuations Remain Near Historical Lows: Entry Multiples Matter!
Valuations Remain Near Historical Lows: Entry Multiples Matter! For personal use only Miner’s Valuations at Bottom of Historic Range of Last 2 Decades Energy Sector Has De-rated vs S&P Over The Last 5 Years Average EV/EBITDA Multiples (Anglo, BHP, Rio, Vale) 12.0x 160% 11.0x Oil Index P/CFPS SPX Ind
Slide 18: Breaking Out of a 10-Year Slump
Breaking Out of a 10-Year Slump For personal use only 10-year rolling returns from commodities now positive for first time since 2014 BofA Bull & Bear Indicator 20% 15% 10% 5% 0% -5% Commodities rolling 10-yr annualized returns, % -10% 1925 1933 1941 1949 1957 1965 1973 1981 1989 1997 2005 2013 2021
Slide 19: 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
Slide 20: Lack of Exploration Spend Leading to a Reserve Crisis
Lack of Exploration Spend Leading to a Reserve Crisis “ For personal use only “ A dearth of exploration has seen average mine life across the gold mining sector fall from 20 years to closer to 10 years…..the prospect of a serious reserve crisis is looming.” Mark Bristow, President & CEO Exploration
Slide 21: Real Economy Inflation Emerging
Real Economy Inflation Emerging “ For personal use only Stanley Druckenmiller – “It’s simply impossible to ignore the big surges in the prices of different commodities as the global recovery rolls on – iron ore and copper of course, but also timber, oil and even some soft commodities. Corn is up 50%
Slide 22: Inflation: From Wall Street to Kalgoorlie
Inflation: From Wall Street to Kalgoorlie For personal use only Labour costs going up because of availability: Covid related but also skills based. Western Australia School of Mining – enrollments down 70% in past 5 years. Chris Ellison – biggest contractor in Western Australia “concerned about peop
Slide 23: Mining Sector Awash with Cash
Mining Sector Awash with Cash For personal use only • Karratha: Australia’s biggest iron ore mine, LNG project, and ammonia and salt plants • Most profitable 2km² of real estate in the world (more than Mayfair or Midtown). • Karratha Tavern beer sales Karratha and tap vs bottle ratio are at record h
Slide 24: Tightening Labor Market and Cost Inflation
Tightening Labor Market and Cost Inflation Mining equities outperformed the market in 75% of the periods For personal use only Mining costs have closely tracked commodity basket performance where unit costs increased YoY 700 Mining Equity Outperformance vs. Market 700 500 Mining Cost Index 600 600 C
Slide 25: Commodity Price Performance During Periods of 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 1 April 2020-30 April 2021 24M Performance (Feb 2009) 250% 213% 200% 145% 150% 122% 124% 105% 100% 87% 91% 64% 5
Slide 26: 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 27: Historical Asset Class Performance vs Inflation Environment and Expectations
Historical Asset Class Performance vs Inflation Environment and Expectations Low & Falling Low & Rising Currently transitioning For personal use only Cons Staples 0.2 from a low inflation MSCI EM 9.5 Healthcare 0 World Defensives -1.4 environment to one IT 8.5 Utilities Materials 8.2 Communication S
Slide 28: 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 250 12 Year UP Cycle 12 Year DOWN Cycle 230 140 GFC 2008 Shale Oversupply 210 120 Financial Demand Market share/ geopolitical con
Slide 29: Additional Tailwinds: Most Commodities Already 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 30: Key Portfolio Themes
For personal use only One Photovoltaic Cell (PV) Contains: • 20 grams (0.643 troy oz) of silver Key Portfolio Themes • 25% of global silver production expected to be consumed by the solar industry by 2025 • Rare earths - cadmium, gallium, germanium, indium, selenium, tellurium Source: Tribeca Resear
Slide 31: 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 32: Structural Green Policy Driven Demand
Structural Green Policy Driven Demand The ‘Decarbonization’ theme is accelerating. There is no electrification For personal use only 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 33: China's Green Capex Boom: How to neutralize 10bn Tonnes of Carbon
China’s Green Capex Boom: How to neutralize 10bn Tonnes of Carbon For personal use only Carbon emission reduction required by 2060 to reach carbon neutrality in China (bn tonnes) 12 0.7 10 0.8 1.1 8 1.4 1.0 6 1.0 4 2 3.9 0 Others Construction Metals Minerals Power Transport Petrochemical Non-Metal S
Slide 34: China's Net-Zero Carbon Targets
China’s Net-Zero Carbon Targets For personal use only We expect ongoing cost reductions for electricity generation from renewables China‘s Renewable Capacity Since 2010 600 25% 500 Wind and solar capacity (GW) % of total Capacity 20% 400 15% 300 10% 200 100 5% 0 0% 2010 2011 2012 2013 2014 2015 2016
Slide 35: Net-Zero Carbon Target's Impact on Major Commodities
Net-Zero Carbon Target’s Impact on Major Commodities For personal use only Long term demand and supply deficits as a result of decarbonization policies. EVs need four times as much copper as a Copper standard internal combustion engine. Wind and solar will also add incremental copper demand, while n
Slide 36: 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 37: 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 38: 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 39: 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 40: Copper Deficits Deepening
Copper Deficits Deepening For personal use only “If copper were to go to $10 tomorrow, "We see a significant deficit, possibly “The price of copper needs to rise it would take us seven, eight years to in the region of 10 million tonnes of 50% to encourage enough new supply get new production to the
Slide 41: No Major Projects Developed Since the 1980s
No Major Projects Developed Since the 1980s For personal use only Recoverable Copper Reserves 2018 Copper Production Million metric tons 0 10 20 30 40 Thousand metric tons 0 200 400 600 800 1000 1200 1400 EsCondida - 1981 EsCondida - 1981 Collahuasi - 1880 Grasberg Complex - 1988 KGHM Polish Copper
Slide 42: Nickel: Battery Driven Demand
Nickel: Battery Driven Demand For personal use only The nickel industry is transitioning from 2,000 1,923 traditional stainless steel ingredient to 1,800 battery feedstock over the course of the 2000-20 2020-30F decade. 1,600 1,400 This rapid change will drive structural 1,278 deficits similar to th
Slide 43: Lithium
Lithium For personal use only Lithium Supply Demand 2500000 Supply Demand Similar to nickel and copper, we see 2000000 lithium being in demand supply deficit Tonnes LCE 1500000 over the next decade. 1000000 500000 Strong electric sales in China and 0 Europe have continued in 2021 and are driving dem
Slide 44: Rare Earths
Rare Earths For personal use only Modern vehicles can use > 140 small electric motors, many of which utilize Increasing strategic importance permanent magnets. EV and HEV models use an Strong demand growth expected with even greater number of small magnet rare earths to increase 5x by electric motor
Slide 45: Nuclear Energy Stability and Energy Density
Nuclear Energy Stability and Energy Density For personal use only Nuclear is the only source of base load A 1GW Nuclear Power Plant electricity that can compliment renewables as a (93% capacity factor) low-carbon emission source of electricity. Uranium will increasingly take the place of fossil fuel
Slide 46: Uranium: Same Movie, Different Actors
Uranium: Same Movie, Different Actors Regulatory support from all sides while inventories Uranium Spot Price Comparison For personal use only 160 decline and price yet to break out 140 120 2004-2007 2019-2022(estimate) 100 80 China 5 Year Plan: Recently reiterated nuclear 60 as part of LT energy mix
Slide 47: 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 48: Nuclear Energy and Hydrogen Are Paired
Nuclear Energy and Hydrogen Are Paired Nuclear reactors can solve the missing “green” electricity equation For personal use only Electrolysis plant powered by low carbon, base load nuclear electricity provides the electricity generator another source of revenue. Potential benefits to local residents
Slide 49: 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. There is a clear historical correlation between increasing money supply and natural resources. The USD is breaking out of decade long uptrend which will also benefit th
Slide 50: Gold Equity Valuations Remain Undemanding
Gold Equity Valuations Remain Undemanding The 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 equitie
Slide 51: Gold Reserves and Grades in Decline
Gold Reserves and Grades in Decline For personal use only Large Cap Total Gold Reserves & Average Grade 500 2.20 461 Gold Reserves (mm oz) Gold Grade (g/tn) 439 453 450 407 35% 2.00 400 377 384 357 345 350 1.80 315 291 295 294 300 267 264 1.60 250 1.37 1.28 1.40 200 1.29 1.23 1.19 1.16 1.17 150 1.14
Slide 52: Bitcoin vs Gold?
Bitcoin vs Gold? For personal use only Cumulative Flows into all Bitcoin Funds and Gold ETF holdings ($bn) 11 Gold ETFs (RHS) All Bitcoin Funds 110 10 9 90 8 7 70 6 5 50 4 3 30 2 1 10 0 -1 -10 Jan 19 May 19 Sep 19 Jan 20 May 20 Sep 20 Jan 21 May 21 Source: Bloomberg Finance LP., J.P. Morgan 51 May 2
Slide 53: Easing Trade Tensions and Fiscal Stimulus
Easing Trade Tensions and Fiscal Stimulus For personal use only Despite recent tapering of Chinese credit growth, China’s economy is expanding rapidly and the natural resources sector are among the most levered to this. Potential positive impact of improvement in Sino-US relations. Fiscal stimulus h
Slide 54: Chinese Activity Continues to Support Steel/Iron Ore
Chinese Activity Continues to Support Steel/Iron Ore For personal use only April Chinese steel production hit a record high. Billet and rebar prices up >15% in April mt Chinese Steel Production 2000-2020 % 3m ann 100 40 90 China steel production original 30 80 China steel production, X13 seasonally
Slide 55: 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 54 May 2021
Slide 56: A Major Uplift in Infrastructure Spending Required
A Major Uplift in Infrastructure Spending Required Memphis Bridge –May 2021 For personal use only 50% Average Recommended Uplift in Annual Infrastructure Spending 65% 60.9% (excluding ‘green’ investment 60% 57.8% 55% 48.7% 50% 44.1% 45% 40% 35% 32.0% 30% 25% 20% Average Source: UN, Bernstein analysi
Slide 57: Appendix: Investment Process Overview
For personal use only Appendix: Investment Process Overview 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 Sourc
Slide 58: 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. positioning across key
Slide 59: 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 60: 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 61: ESG Approach
ESG Approach As an active investment manager, Tribeca believes any factor that may have a material impact on a company’s performance and the industry it operates in For personal use only needs to be considered. In addition to rigorous fundamental and qualitative analysis of companies, investments ar
Slide 62: 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 63: Investor Relations
For personal use only Investor Relations Email: TGFinvestors@tribecaip.com Web: www.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’Connell Stree
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