When commodity markets are sluggish, mining shares are inclined to fall out of favour. Traders retreat, costs drop, and even one of the best names can get unfairly punished. However for affected person traders, these down intervals generally is a golden alternative to load up on future winners, particularly these with world-class belongings and lengthy runways for development. One such firm is Ivanhoe Mines (Tsx: ivn). It’s my decide for the subsequent commodity bull market, and right here’s why.
Important minerals
First off, this isn’t your common mining inventory. Ivanhoe Mines is creating a few of the most useful copper, nickel, and platinum belongings on the planet, all positioned within the Central African Copperbelt, one of many richest mineral areas on the planet. The flagship Kamoa-Kakula copper mission is already in business manufacturing and set a 2024 file of 437,061 tonnes of copper in focus. These underscore its speedy ramp-up. Actually, in its most up-to-date first-quarter (Q1) 2025 earningsIvanhoe reported near-record quarterly manufacturing of 133,120 tonnes of copper focus, nearing a file April.
These sorts of positive aspects matter. Why? As a result of copper is important for every thing from electrical autos (EVs) to energy grids, world demand is anticipated to soar within the coming decade. Provide, nonetheless, stays constrained. There haven’t been sufficient new discoveries or developments to maintain tempo. That units up a doubtlessly large supply-demand hole that Ivanhoe is well-positioned to fill.
But it surely’s not simply the dimensions of Ivanhoe’s operations that impresses; it’s the margins. The Kamoa-Kakula mine is likely one of the highest-grade copper operations on earth, with money prices of simply US$1.69 per pound within the newest quarter. Meaning the corporate can keep worthwhile even when copper costs fall, and thrive in the event that they rise. And with copper buying and selling round US$4.50 per pound, there’s loads of room for sturdy money circulate.
Extra to return
Ivanhoe can also be constructing for the long run. Development of its Kamoa-Kakula part three concentrator is now full. The corporate expects to spice up output to over 600,000 tonnes of copper yearly, inserting it among the many prime 5 producers globally. That type of scale doesn’t come low cost, however Ivanhoe is sitting on over US$717 million in money and continues to draw funding assist.
There’s additionally the Platreef mission in South Africa, a monster deposit of nickel, copper, and platinum group metals. Ivanhoe expects preliminary manufacturing from that web site in 2025. As soon as on-line, Platreef might be one other high-margin development driver. Nickel and platinum are important for battery tech and hydrogen vitality, two developments poised to develop because the world transitions to cleaner vitality.
After all, investing in African mining comes with dangers. Political uncertainty, infrastructure challenges, and regulatory hurdles all must be factored in. However Ivanhoe’s administration workforce has deep expertise within the area, and thus far, the TSX inventory has maintained sturdy relationships with native governments. As manufacturing ramps and extra cash is available in, Ivanhoe ought to achieve much more stability and leverage.
Backside line
Copper has lengthy been known as “Dr. Copper” for its capability to diagnose financial well being. And if we’re heading into a brand new world development cycle, copper demand will doubtless surge. Whereas many miners wrestle to scale or management prices, Ivanhoe Mines has already constructed a world-class operation with extra development on the horizon.
The market could also be sleeping on it now. However when commodities take off once more, Ivanhoe has all of the substances to shine. That’s why it’s my prime commodity play for the subsequent bull market.