Investors reflect on commodity values amid supercycle predictions
March 19, 2024Maximus Resources has joined other resource plays to put its portfolio in front of Australian east coast investors focused on the upcoming potential of more price-spiking commodity supercycles.
The Western Australian Goldfields-based company has highlighted the value in its gold and lithium-heavy portfolio on Australia’s east coast this morning, with Maximus Managing Director Tim Wither talking through strengths in the company’s gold-and-lithium portfolio at the inaugural MiningNews Select Sydney event.
The early-morning presentation followed a panel discussion from a series of experts on taking a macro-metals perspective when navigating commodity supercycles.
Among the experts was Argonaut Executive Chairman and ECM Head Eddie Rigg, AMEC Operations General Manager Kate Dickson, and ANZ Senior Commodity Strategist Daniel Hynes.
But what are commodity supercycles?
Commodity supercycles are experienced when metals bust out of their pricing patterns, experiencing high or even low prices that exceed their long-term trends.
Historically, metals that can be used as standards to back up currencies amid inflationary concerns and other risks – gold and silver – go up in the positive trends of supercycles. Other commodities tend to uptrend too – going up together.
Supercycles typically last about nine to 24 years, with at least six having been experienced by markets since 1791.
What are the economic factors?
Some say markets are not only going into a commodity supercycle pattern but are experiencing a supersqueeze as world macroecomic factors put pressure on demand for commodities.
Among these pressures are the war in Ukraine, changing dynamics in China, the de-globalisation of markets, the importance of energy and critical minerals security to Western nation defence strategies, climate policies and supercycle dynamics.
When have we experienced supercycles?
In the past 25 years, gold experienced a supercycle between 2001 and 2011, going from $US250 an ounce to more than $US1800.
Two other commodity supercycles have been experienced in the past 15 years.
The first was in the lead-up to the Global Financial Crisis, in 2006 to 2008 – hitting supercycle status when oil was about $120-130 – and another began during the COVID-19 pandemic, with one pundit saying it started in 2000, while another calls it a 2022 thing.
Among the modern commodities for a supercycle are uranium, oil, copper, silver, and battery metals like lithium.
Are we going through a gold supercycle?
Another commodity Maximus has in droves – gold – is being talked about lately in supercycle terms.
Sprott has predicted gold may be poised to go higher in 2024.
Gold now sits at $2156/oz ($3289/oz), with the average price paid in 2021 for gold in reserves during company acquisitions being $US436/oz ($665/oz), busting out of a 10-year long-term trend of US$187/oz ($285/oz) for the second year in a row.
What commodities does Maximus offer?
Maximus has 335,000oz of gold, giving the company a solid foundation to build upon as it explores and upgrades resources in its gold portfolio, and works towards a first resource for its Korean-backed lithium assets.
The company currently has a market capitalisation of $10.3 million, with its enterprise value sitting at $8.2 million or $24/oz gold.
With the price paid for gold-in-ground going up since 2020, there is potential upside for shareholders in Maximus’ current enterprise value.
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