Commodities Market Insights, What is Overcrowded Now? Joe Mazumdar

追加: 2026-05-07

[00:00:00]That's what you will know in most critical minerals is the processing part is usually more important than the mining part. Endowment wise the US is much better endowed than China. Processing wise that technology they are two or three decades ahead and they're not transferring information. So when China was growing, they were absorbing all the high-end technology globally.

[00:00:42]Hello everyone and welcome to another edition of Triangle Investor Interviews.

[00:00:46]I'm your host Lucia Walovich. And before I announce my guest, just a quick reminder of a disclaimer. This interview and all my interviews are not a recommendation to buy or sell any shares, products, or services. Always do your due diligence and consult with your financial advisor. Today we are speaking with Joe Mazunda, the editor and analyst at Exploration Insights, an independent research service that analyzes mining companies and investment opportunities.

[00:01:11]Joe, it has been a while. Welcome back to the show.

[00:01:14]>> Great. Thanks for the invite. Much appreciated. Thank you for coming. Just like I said, it has been a while. A lot of things we can cover today, but let's start maybe with the big picture. Uh where do you think we are right now in the current commodities and mining cycle, early recovery, midcycle expansion or approaching a peak? Where are we now?

[00:01:37]>> Well, I mean, uh different commodities are reacting differently, let's say, to what's happening right now. Um, you know, prior to the U. Iran war, whatever you want to call it, uh, there was an underlying still, uh, push for u, uh, for securing supply chains, uh, which helped a lot of commodities out um, you know, rare earth um, or copper potentially. Um, now we're getting a little bit more into nickel uh, and other critical minerals that are turning into security minerals. So, that's one side of it.

[00:02:13]uh that I would say there was an underlying growth there uh that probably had a bit of a a fragmented demand scenario.

[00:02:24]So you can't take global demand and global supply and say okay this is how it works. No, you got to look at domestic demand and then where the sources are and if you ignore some sources, let's say China, what is actually your source and so then you need more supply than than the global picture would would would tell you which is what's happening with nickel, what's been happening uh with copper, what's definitely happening with rare earths, antimony, anything that the Chinese can um impose export uh restrictions upon and impact the global market meaning the US and Europe predominantly. So you had that underlying thing uh for some metals uh that got worse during this crisis because um the costs went up and they we haven't seen that in Q1. The Q1 production numbers and costs are coming out now. We'll see that in Q2 because a lot of these companies have not hedged for a while. Like when I worked for some of these big companies, I was involved in the hedging of of diesel for for Phelps Dodge back in the early 2000s. Um but a lot of the gold companies and that they don't hedge. Um in Pneumont we hedged for volatility and not for an ultimate price just to reduce the actual volatility of the price. So the hedging doesn't exist to that sort of degree like it did before because we had that instance when go uh oil went up to $130 per barrel uh then we got used to 60 you know uh and now it going up to 80 and 100 for some of these big open pit uh operations that are remote it will impact them. So there's one side on the cost side which will make uh prices go up uh because the cost cost will go up but the other thing is also the the acid implications on uh so um on leeching u deposits in the central African copper belt. Um another one would be on the high pressure acid leeching for nickel. Uh and a lot of that nickel is controlled by the Chinese. So now you're seeing a little bit more push for nickel in places like the US. Um so you have that uh rare earths is huge in terms of trying to get the processing not so much the mines but more of the processing side figured out more domestically in Europe and the US looking for antimony um you know even tungsten has come up uh lithium which wasn't such a big deal before especially in the US with respect to penetration but now with the fuel crisis and they're looking at $4 plus per gallon which uh I mean I'm paying over 20 cents per liter here. So, so it's much more than what they're paying, but still that frightens them.

[00:05:18]>> Yeah.

[00:05:18]>> And especially in the western part of the states, all they do is drive. I mean, that's where mostly I lived in the States, and there's not a lot of public transportation will get you anywhere.

[00:05:28]Uh, so driving is a really a lot part of what everybody does every day. And they drive a lot of vehicles that get 50 miles a gallon. Uh so yeah their costs have gone up quite a bit. So we have that uh happening in the underlying and then the uncertainty of geopolitical crisis usually is ephemeral to precious metals. It happens and then a week later that impact is gone. But since we go from crisis to crisis there's a little bit of you never hardly ever get pulled back. But then the tariff induced inflation that we really haven't seen as much as we thought we would see because some of it has never been imposed. Uh that um has basically uh you know implied that real rates will go up. They're not coming down. And and it's the real rate trend that uh that impacts gold prices. And so a lot of the gold equity, gold ETFs will be driven by what the US investor thinks about real rates. And if they think real rates are flat to going up, they'll sell gold. Right now, we have a new US federal chairman comes in that apparently is going to be more accommodative. And so we may see, you know, the rates not go up, uh, maybe stay flat or down. So if you have a flat to down real rate scenario with continuous geopolitical crisis that'll be good for precious metals.

[00:07:02]>> That's an excellent overview. Joe, uh that said, which commodity trade is most crowded right now to what do you think?

[00:07:12]>> I mean, gold has obviously built up over the last uh let's say year or so because every channel you watch uh they're talking about gold on your YouTube feed.

[00:07:22]they're talking about selling gold. U so gold is in everybody's face. Um silver has come on the back of it. Uh but now you know people are talking about uranium a lot more uh than before because now we're talking about these smaller nuclear reactors that can go uh and supply power to places that are more dependent on natural gas uh and and fuel oils. Um, so uranium is getting uh picked up. Rare earth crowded in terms of people are talking about it a lot uh but not crowded in terms of people that actually know what they're doing uh in terms of companies.

[00:08:01]Um so there's a big gap in terms of the technology capac technical capacity of companies to actually do the downstream the mining in a lot of these ionic absorption clay deposit which is the majority of the deposits that the Chinese produce that get them their rare earths especially the heavy rare earths like your disposium and turbium versus your neodymium and padium uh that comes from these ionic absorption clays.

[00:08:28]They're easy to mine. Uh, no blasting required, free digging. The problem is getting them not only to a mixed um rare earth carbonate, which is easy, gets harder as you turn it to an oxide, gets harder as you turn it into an alloy.

[00:08:45]That's the part that's more important than the mining part. And that's what you will know in most critical minerals is the processing part is usually more important than the mining part.

[00:08:55]Endowment wise, the US is much better endowed than China. Processing wise, that technology, they are two or three decades ahead and they're not transferring information. So when China was growing, they were absorbing all the high-end technology globally whether was was from the Japanese, the Koreans, the Germans, the US, whomever. And obviously they have no patent regulations. They absorb it all. But they not only they haven't stayed static. Now they're the most advanced. The best electrical vehicles are theirs. Uh you know uh you know their concern is more about chip technology that the US wants to hold back but then they'll holding back the raw materials for the chips. Um so that is something that's uh continually happening. And so that's been a good thing for the US in terms of mining, for us in terms of investors because it's contracted the permitting timelines. And so now we see more M&A in the US than before because now people can get a clear line of sight to uh permitting and some of them are getting acquired before permits. They just see that they're on the road and they're not worried about an NGO coming in. they're not worried that the federal government is going to retract that permit or something like that. Under this current administration, uh that's not happening, you know. Um and even like in Minnesota, they had a ban, a federal ban. They've removed that. I don't know if that's going to change anything from the state point of view and all these minds will come back but it is reflective of their uh ambitions with respect to building a domestic industry which is a big boon for the local industry in the US.

[00:10:47]>> Yes. Yes. I want to return to gold and you mentioned uranium. Uh uh my question with gold, why are the the gold equity still underperforming even with with almost $5,000 gold? I I personally have some stocks in the portfolio that are at the levels when the when gold was I don't know $3,000 2500. Why is that?

[00:11:11]Well, I mean, part of it depends what you're investing in because what has done better over when gold has gone up, like if you see Numont's Q1, you know, versus their last Q, uh, I think gold, the recognized gold price had gone up about 66%.

[00:11:27]Uh, and they produced more ounces because they had in their back rearview mirror acquired New Crest. And so the problem with these companies, the big mega companies, is they can never show resource reserve growth. Um, and even though that they incrementally, they've increased their reserve and resource prices by about $300 an ounce on average, but the reserves for a lot of the megas have not changed. It's actually some of them have declined.

[00:11:57]Why? because it's hard to show a material impact uh on uh and find these deposits. It actually and so they've been divesting off all their noncore which has been seated to intermediates and new companies and basically focused in on merging and bringing in more because now in terms of valuations they're they are the most highly valued in terms of ounces and so anything they acquire is accretive. But the problem with a lot of the smaller companies is they still have financing issues.

[00:12:30]The critical mineral guys, especially if you're US-based, has less financing issue than, let's say, a gold company, you know, outside of the US or somewhere else. Um because these guys are getting access to low cost of capital. And then when you see um you know some of these companies that have underground deposits and that you they're not necessarily gold, they're base metal, but they're blowing out their capital. Um you saw that with um uh the K mine and Arizona Metals. They put out a PA that was actually negative or flat.

[00:13:04]>> Uh and actually they use the wrong discount rate. I mean I don't much believe in these discount rates, but most of the discount rates on precious is 5%. For base metals it's eight.

[00:13:13]That's a base metal mine with precious metal credits, but they used 5% and even with the 5% they didn't get anything in terms of return uh in terms of NPV at 5%. Uh 8% it would have been worse. Their IRRa is very low and their payback on a whatever a 10 year mind life is almost six to seven years. Uh and why? Because their capital has blown up. And so for companies that are building the capital intensity is showing up in in companies, especially with the underground like you see what happened with uh Hermosa. Uh they've blown out their capital structure as well. That's a bigger company. So that's something they could potentially absorb. Uh but that's still a concern for investors. So if you have a development asset that's infrastructurally challenged, there might be still people that are sort of sitting back because they're making more money on the Agnikos and the Newmonts and even the barracks, the Kin Rosses and the Anglo Golds and they're liquid. You can trade them and also shareholder return bases. You got share buybacks and you got dividends. So all that money is coming back to you. The best performing companies in 2025 had some of the best shareholder returns.

[00:14:28]Um, and that's driving the generalists to come in. Uh, so when we're sitting here in the mid tiers or lower, they're underperforming them by a long shot because what's coming in and you're seeing the YouTube videos, you're seeing CNN and all these other guys talk about gold. But when they're talking about gold, they're not talking about your company. They're talking about the Numonts, the barracks, the Kin Rosses, the whatever. Uh, because that's where the liquidity is. Uh, and those guys recognized that early. liquidity was a big deal to attract the generalists and then the next stage was stable dividend and then the share buybacks which at Nico in the last couple years is just getting into um so offering that as opposed to saying oh I'm going to take this new cash flow and invested in building a project and blow my capital structure out that's not enticing for the generalist the resource equity guy he wants resource growth he's looking at reserve growth growth. That's not what the generalist is looking the generalist is looking for cash flow.

[00:15:31]>> That's correct.

[00:15:32]>> Yeah. And and so they they're doing the best. And then when you look at from a balance sheet, they have the best balance sheets.

[00:15:41]>> Uh in terms of net debt, they're very negative. And and when I I I do this halfyear sort of review, and I did one on 2025, a full year several weeks ago, and you could see this net debt sort of uh graphic where I I plot them on a net debt. The worst was Equinox, an intermediate that's got growth, but they've taken on a lot of debt on to realize that growth. And some of it was high cost. They've got they recognize less gold price because they've streamed a lot before to get these things into production. And now recently they're selling non-core assets which they've sold to the Chinese in Brazil. They sold something for a billion. The beauty of that 90% of that was cash. So $900 million in get rid of a lot of long-term debt. And so now in Q1 their financing costs will be a smaller proportion of their revenue because when I looked at the percentage of financing exploration and GNA they were the highest and it was driven by financing cost. So that's the problem with the intermediates but I can tell you Londinine gold did excellent single asset producer why 60% of their free cash flow goes back to shareholders and dividends you know >> but that's Lundines. Yeah, but I mean Aerys mining did well as well uh because they were just generating cash flow. And this is Col this is Colombia and Ecuador. Two two jurisdictions that you wouldn't think would do well. Uh but they did do well. Um so it's not only about jurisdiction. It it's it's about the free cash flow and then getting it back to people.

[00:17:19]>> Yes. And some sometimes strong name behind the company.

[00:17:22]>> Oh yeah.

[00:17:23]>> Yep. Yeah. I mean that generates the liquidity, right? Uh uh so you if you have those names and that's why people are so keen on that slide that says you know who owns you. Uh and that used to be institutional like oh I'm 50% institutional equity but you see some of these institutional equity you know when they were pulling their money out that was 15% and you see this big drop in your share price. Then you see this high netw worth individual that's in it for the long term and that's you know generates a bit of stability for the next guy up that says oh they'll back you. So when times are tough and it's hard to get money they'll bring you at least 5 to 10 million.

[00:18:00]>> Agreed 100%.

[00:18:01]>> Yeah >> Joe uranium uranium fundamentals look strong the price is going up uh spot price is at high 80s longterm is mid 90s. What's what is still the biggest risk with uranium play if you see any risk actually?

[00:18:19]>> Well, I always see risk. That's easy to see. Um the the problem with a a lot of the uranium projects that uh in Saskatchewan, let's say, is is the uh capital costs uh because probably a lot of the producers chemical uh don't believe the capital numbers. uh because they've already been uh you know building projects that have run over capital and and think that you know why should I overpay for something let them build it knock their head up and and then I'll buy them later you know when their share price collapses so that'll sit back until these guys can raise their own money and then West Africa your nishair and that the geopolitical risk will not make anybody go in there unless it's the Chinese to build anything there and they will build it and but it'll go to China. Uh, and you know, Australia, you know, will they continue their policy where they don't have the Chinese coming? And that's the problem with Saskatchewan. I mean, if we had I'm not advocating for it. I'm just saying if we had um let the Chinese in right now, a lot of these projects would get built because it they would fund them. Uh but we don't want the Chinese building Iranian projects in in our country and the Australians don't want that probably either. But they have the capital. Now we have this bifurcation with the US that the US aren't investing in Canadian assets. We're we're doing that. So that's the problem with Canada.

[00:19:51]And then the other problem is the signal by Kamako that they see the value and rightfully so, especially with the Ukraine uh war is it's in the downstream.

[00:20:03]So it's actually f filling in the gap for the Russians in Europe uh uh for uranium and that's where they went and I think they they've obviously done very well. Their market cap is is doing quite well. Uh so they realized something and then something else happened uh which uh you know generated uh you know made that move even better uh and it's really the downstream that adds a lot of u value immediately uh because they probably have a lot of access to uranium u and they were worried before when people were anti- uranium with the Japanese u uh incident and uh you know the the contracts being nullified and stuff like that that um they saw a window with the downstream and applying their technology in that. Um so in terms depending what you're um uh investing in whether it's exploration, development or production uh just like a lot of the critical minerals it you know a lot of the values in the downstream it's all in the downstream because um you know over the last 20 or 30 years most of the technology on the processing side has been built up by the Chinese and uh the western society has been more of a services society and so we we don't really know how to do that anymore and we're trying to figure it out really quickly and so the companies that could seed themselves in these positions to help uh they'll do very well and are doing very well.

[00:21:34]>> Yeah. Can we apply that with copper as well? Copper has had a huge run. Are we now pricing in too much optimism? What do you think?

[00:21:43]Well, copper's in that, you know, uh, with the Gulf War and that, uh, you know, the idea of electrification is helping copper. And then with these capex blowouts is hindering more production.

[00:21:59]Um, peritting timelines are still long, but they're not as long as the US. And so more intermediates and majors are looking at Arizona specifically in terms of revamping that because now the federal government's not going to be the burden that it was before in terms of permitting and building projects. Uh and so um the problem with copper is is the same as it's always been. It's hard to build the projects, hard to fund them, the capital cost overruns uh and the timeline to get it into production. And then the other part is the processing part. 40 to 50% of that processing capacity is still in China. So even if you you know have a copper deposit, uh, you know, if it's not cathode, which is very few rare projects, uh, it's going to be a concentrate. So where's that concentrate go? And then if you invoke this tariff on Canadian copper of 25 to whatever percent, who's going to want to send that copper concentrate to Canada to refine and then bring back and then you have to pay 25% more to get it?

[00:23:08]Uh so they've really kind of screwed up the entire supply chain uh in terms of how it would work. I mean, you know, if the US created a North America sort of base and then used Canadian processing capacity, Mexican capacity, integrated uh the supply chain, they'd be very I mean, they'd be they'd be doing very well right now. Uh but they're not because now Canada is looking more to Europe. Uh the Mexicans are looking to anywhere. Um and uh the the uh the US is a little bit more isolated. Uh so we're not doing the supply chain uh any favors right now with what's happening right now.

[00:23:57]>> That's a good point. Again, uh Joe, you mentioned uh as an example of a good US jurisdiction for copper Arizona. I want to hear your take on other jurisdiction in the in the states. What about Idaho?

[00:24:10]What about Nevada?

[00:24:13]>> Nevada is excellent. I I I say Arizona's picking up Arizona in terms of copper, but Nevada is the best state in terms of uh doing anything mining related because a lot of their tax base comes from the miners. They know where their money comes from. Uh you know, as people see what's funding the new road, uh um the new rec center, the bridge, uh then they want that those projects, you know. Um and that's always been the case in Nevada.

[00:24:44]uh it'll be a bigger part of the equation in in in Arizona. You know, nobody is anti- oil in Texas, you know. Uh and I don't think there's going to be anybody anti- copper in Arizona. Uh there's nobody anti- gold in Nevada. If you go up to Idaho when they don't make a lot of money from these projects as we build projects like uh Stib Knight uh you know maybe Liberty goals uh Black Pine u you know they'll see more revenue coming from uh from those sources and look for more projects. The problem is still environmentally there's some areas uh that people don't want developed and that may never change under any government you know uh and that I think is the same case for the Boundary Waters in Minnesota. I think Minnesota is still a good place and getting better for mining but maybe not so much closer to the Great Lakes. That's less of an issue in Michigan. It's almost like a non-issue in Michigan. Uh and I've been to both states and I've seen projects in both. Um, Michigan is much easier to develop and permit than Minnesota.

[00:25:53]>> Um, Idaho getting better, but then you have to look, you know, trees, no trees, you know, acid development, blah blah blah, big open pit underground. Um, you know, when you get those places that are a little bit more, uh, let's say sensitive, uh, then you have to be a little bit more sensitive. uh like I don't think the federal government, the new US administration, uh that's changed anything about the Pebble project.

[00:26:21]That's still problematic and that'll be problematic forever. So when you're investing, you got to look to see, oh, you know, the US administration is so much better. Everything's going to get permit. I'm going to invest in this one.

[00:26:33]U some of them won't change. Obviously the most leveraged stock for the US administration coming in was Trilogy Metals and their Arctic project. That one, you know, has done very well because they got the road permit back. U you know the the feasibility study uh going to permitting the actual mine. U it'll take a take still take a long time to get into production and still it'll only ever produce concentrate that has to go somewhere. Uh but it's done very well.

[00:27:07]You know, uh resolution, if that ever gets off the ground, that'll produce a lot of copper. Uh but it still has to be processed. So, what I'd like to see is who is building the new smelters, you know, um and and and that's the problem that it's always been is that like during the Biden administration, they they they got the idea that that, you know, you needed more processing capacity and they were looking at that, but then the problem is that they weren't permitting any mines. So, who the heck was going to feed that that plant?

[00:27:39]>> Uh so, yeah. So I think now they have a a little bit better idea and now they have this project vault which is a a10 billion dollar uh sort of system where it's just like having an oil reserve but you got multiple critical and I would say more security minerals that people are saying okay end user you have to pay into this and then you guys get to decide you know uh whether you get access to it and if you get access to it you have to pay into it. such that I can guarantee a minimum price for some of these projects because a lot of the critical mineral projects is not the funding.

[00:28:18]They can still get cheap money from the US government in all the different forms that it comes in. Uh the problem is that the market price is too low for some of these projects or is just borderline. Um >> yeah, let's stop on that. Are subsidies enough to make these projects investable or they need more? Well, they do need more in terms that they make them >> they make the capital structure amanable to building it, but they don't make they don't change the economics of it because that 20-year mine life is still looking at market prices. And if you have overp production from Indonesia from nickel, uh if you have, you know, more copper coming from somewhere else, which I don't think is the case, um that's still going to determine the global price. And that's what you are going to get. Uh but your cost because of environmental how you got to process it, your emissions controls, all this other stuff uh makes your costs higher. But you got to be guaranteed that you can at least make 10 to 15% on it, which is the same that happened with power. Power for the longest time, when you built a power plant, you had to have a guarantee that you would make 15%. And so the first 5 10 years whatever people had to pay whatever that rate was. So these guys are guaranteed that they can make money.

[00:29:41]That's the same thing that this but the only issue that I have is just to find out what actually gets produced. Is that mixed rare earth carbonate? Is it oxide?

[00:29:52]Is it alloy? Or is it all of them? Is it cathode or is it concentrate? I don't think it could ever be concentrate but I don't know. Um, so what do you get that minimum price for? What's the product? I think it'll end up being dictated by the end user.

[00:30:08]Like it'll be the the car manufacturer, um, whatever. Whoever is buying that will be the one that'll dictate, okay, but it has to be cathode or it has to be alloy. Uh, you know, they'll dictate what goes into that inventory. That'll go back to the minor processor to say, "Okay, we can guarantee you that." And then they'll argue about the price. They say, "Okay, that's good. That incentivizes me to build it. Not so much for the capital structure. I don't need your money. I'm getting it from the government." But it guarantees me that long-term I will make money. Uh >> yeah. Uh Joe, final question. Uh where where where is the biggest disconnect between the commodity price and equity valuations? Where do you see that currently?

[00:30:57]I mean I I would say like like commodities like nickel uh which hasn't moved that much. I mean it's it's picked up a bit. uh you can you can see you know that if EVs do take off and the penetration does come up in the states and is growing in Europe uh because people are looking at gas prices u gasoline prices uh they you know that might generate I mean I I think Europe I mean the penetration in Europe for EVs is much better obviously than than the US and Canada but it could grow and this Gulf crisis would incentivize people but then also So another thing to think about is that as we were looking at electrification and all that uh we the the Saudis and the Middle East was thinking about oh hey we will transition from a carbon based economy to this you know carbonneutral economy where we will do all your processing and we will be your u source of critical minerals that has died, you know. Uh so now Europe, US, and everybody else has to look at where they're going to process it cuz it doesn't make any sense to send your commodity to the Middle East, have that risk, uh and then, you know, uh not getting it back. Uh so I don't think that's going to happen. So that might accelerate people to think cleareyed about processing and start to do it closer to home.

[00:32:30]>> Well said. Um Joe, how can people reach out to you?

[00:32:35]>> Uh it's uh contact us at explorationinsights.com.

[00:32:39]Uh we have a website. There's a lot of free material on it. We do interviews like like this uh every now and then. Uh and then we're subscriptionbased. That's how we make our money and off of the portfolio. Uh and so if you'd like to subscribe to the weekly letter, there's there's a way to do it from the website.

[00:32:57]>> Great chat. Thank you so much for joining me today.

[00:33:00]>> All right. Thank you.