GS Materials August 14

GS Materials - August 14 DXY 99.82 CNH 6.74 10YR 4.65 Gold 4335 Copper 14,097 Oil 87.90

Gold – ex near term catalyst? The Chinese clearly taken profit on the spec side. Interesting is the west appears to be playing catch up. I think this trade has the mkts attention, so now we get through the hottest/slowest part of summer and see how the market re-engages towards month end. Recall I mentioned in discussions form commodity trading team, how do I express Oil downside at $90 and Gold upside from $4300….Copper still has eyes. Its really reconciling what the biggest driver is. Sure there is the omnipresent threat of tariffs, however I believe this has taken a backseat to the supply side story. @robertfriedland brought this to top of my feed, The Copper Residual Link, all those in this channel will nod along, those who are not I struggle to see how they can ignore. As Jeff Currie used to shout, Physical assets v Financial assets. Its why I am watching TC/RC so closely. Robert prev said, reports of -$200 TC, I heard last week from a trader “scarcity pricing” and -$270t. …As the arcicle says “during times of abundance markets allocate metal flow, during times of scarcity, governements are the allocator”. Remember what I have been harping on about, “demand driven moves linear, supply drive ones are asymmetric”. Also I like to remind myself this, the market in oil can trade through the barrel, in Copper you can only trade the back end. Chinese smelter rates are falling towards 70% (concentrate and scrap availability down). The economic growth plan is heavily Copper dependant (energy transition, ESS, EV, solar, AI, DC, humanoids ..all equal power and copper enables that distribution at scale). If the US keeps pulling these units onshore (by luck or design), China needs to wrestle power and that is leveraging smelter prodn, which is all about concentrate. Latest print was ANTO yesterday, mkt loses c.35kt at midpoint. Consensus has mine supply growth around 0% in 2027, despite YTD running >200bpts below that….its easy for everyone to say Tariffs, so much in the price I cannot chase. The concentrate availability issue is harder to track, just watch TC’s and for as long as we thought they can never go zero, do we still think they cannot double from here? I don’t. Do we think governments wont raise the hurdle higher? A US scrap export ban is just as big a signal as a 15% tariff….. So unless you think miners are about to dramatically change the supply side (see ANTO below), or you think the world is giving up on electrification (all the RWE hype yday was DC opportunities, again see below), Copper goes higher GSXGCOPP Index

ANTOFAGASTA – post yesterdays result see GIR update link….Its always been a case of guide optimistically and then trim (the antithesis of the ask), so many clients outlined this shape again yesterday, Copper prodn has now averaged c.650kt since 2022, can they realistically achieve the big headline target of +30% (v 2024) to 850kt by 2029? This is what the mkt gave them a premium multiple for, the hurdle is higher and the competition is chaffing at the bit to steal the crown as London premium rated Copper Company….. As Matt outlines “cash costs before by-product credits increased 23% YoY (+$0.53/lb) to $2.85/lb”..this is where you want to focus “In our view, investors are increasingly likely to focus on these underlying costs rather than headline net cash costs, particularly if gold/moly prices

moderate from current elevated levels, with the quality of recent cost performance arguably less encouraging than the headline numbers imply”…. GIR has reduced our 2027-28 production forecast by 4%/3% to 672kt/792kt and see growing risk that market expectations for next year move lower over time.GIR lower our 12m PT by 5% to £42/sh (from £44/sh) on higher net debt and lower EBITDA. Our 12m PT is set at a 25/75 blend of 1.3x NAV and EV/EBITDA (NTM) with an 8.5x target multiple (unchanged).

RWE.GY – Link to GIR- GIR concluded that “stronger than anticipated returns in US renewables, upside to domestic FlexGen, and the ROE at Amprion converging to peers, could push RWE’s 2031 EPS target to c.€5.50 from the current €4.55, a +20% boost.…