Recession-Proof Assets: Which 'Breakout Performer' Rallies Next? | Terrence Lynch
Speakers
Terrence Lynch
— CEO, Power Metallic Mines Inc.
Summary
Terrence Lynch, CEO of Power Metallic Mines, speaks with David Lin at the Beaver Creek Precious Metals Summit about why he believes the precious metals bull market is still early because generalist investors have not arrived. He details his company's nickel-copper-PGE discovery in northern Quebec, its growth plan and catalysts such as a New York listing and a nickel powder business. He also lays out bullish views on copper, platinum and palladium, oil and gas, and critical-minerals miners under US Fortress America policy.
- Lynch says the metals bull market is early because generalist investors are still absent and mining funds have led the move.
- Power Metallic's stock rose from about $0.20 to $1.43 as its Quebec orthomagmatic nickel-copper-PGE discovery grew; he sees potential to double or triple versus peers.
- The company is funded with $40M+ for a 100,000m drill program and expects a New York listing in October as a re-rating catalyst.
- A CVMR feasibility study envisions upgrading nickel concentrate into nickel powder, which sells at a large premium to nickel metal, with possible DOD and DOE off-take support.
- He sees copper prices going north as electrification and AI power demand outstrip supply and argues the usual recession signal may not apply.
- He calls platinum and palladium the most undervalued commodities and potential breakout performers given deficits and shrinking Russian and South African supply.
- He expects an oil and gas renaissance and is very bullish on critical-minerals miners given US policy support and above-market off-takes.
Ideas
Precious metals bull market still early.
He argues the precious metals bull market is still in very early days because the generalist investor has not entered the sector yet - flows so far have come from mining-focused funds and investors while the divergence between tech stocks and commodity stocks has never been higher. He was struck that ten generalist investors in New York recently took a meeting with a mining company for the first time in years and believes that interest is just the start, and he still sees great values in the sector even after gold's strong run and silver's smaller move.
Nickel powder premium lifts Power Metallic.
Power Metallic Mines (formerly Power Nickel) made an orthomagmatic nickel-copper-PGE discovery at its Nisk project in northern Quebec that has taken the stock from about $0.20 to $1.43, which he attributes to executing on the drill bit, and he sees significantly more upside. Only 20 such deposits exist in history and all became major mines; the current 300,000-500,000 contained tonnes looks likely to grow past 1 million tonnes as more nickel is found; and he thinks the shares can double or triple from here versus peers. Supporting points: 15 billionaires including Robert Friedland, Rob McEwen and Gina Rinehart funded the company because it was cheap versus peers with asymmetric exploration upside; management has skin in the game; Quebec permitting comes back in weeks; the 100,000m drill program is fully funded with $40M+ in the bank and is now drilling A-targets after the land package was tripled; a New York listing in October is expected to drive a US-investor re-rating; roughly $500M capex with about half expected to be covered by government critical-minerals tax credits; production possible in 4-5 years with payback around a year and potential ~100% IRR; and the deposit carries what he calls the second-best PGE discovery on the planet as a freebie.
Electrification drives copper prices higher.
He sees electrification as the primary driver of copper demand over the next 20 years, with China's construction boom handing off to India and AI data centers set to account for roughly 15% of world power demand (maybe more), requiring a massive buildout of power distribution and infrastructure for which copper is the backbone. He argues the usual Dr. Economy recession signal may not work this time because the energy demands are so large, and with supply set to get tight, copper prices are going to go north.
Oil and gas having a renaissance.
He rejects the idea that oil and gas is doomed, arguing it is having a renaissance because the world is realizing it needs all forms of energy for electrification and because the notion of 50% EVs on the road by 2035 is not happening.
PGMs most undervalued, potential breakout performers.
Platinum and palladium have run demand deficits for the past three years, with prices held down mainly by Russia flooding the market to finance the war; with Russian supply dwindling and South African mines shutting, prices have started to respond (palladium jumped about 50% at one point this year). He notes PGMs were historically priced at or around gold, calls them the most undervalued commodity out there, cites analysts calling them a coming breakout performer, sees catalytic converter demand persisting plus hydrogen and cheaper-than-gold precious metal buying, and says his company gets the second-best PGE discovery on the planet as a freebie inside its copper deposit.
US critical-minerals push bullish for miners.
He describes a Fortress America critical-minerals policy push in which the US secures domestic supply chains instead of depending on China, which dominates processing; Canada and Mexico are expected to be pillars of that fortress and the US also needs African supply. He argues America moves fast once focused, using executive orders and DOD and DOE support, and that the government will support miners through off-take agreements at above-market prices - which he calls much more constructive than direct equity stakes - making him very bullish on critical-minerals miners.
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Speakers: Terrence Lynch · Tickers: GLD, SILVER, GDX, PNPN, PNPNF, COPPER, WTI, UNG, PPLT, PALL, REMX