Copper Investing

VIDEO - Rick Van Nieuwenhuyse: "Base Metals Investors Should Remember Grade is King"

Base Metals Investing

Van Nieuwenhuyse, who’s president and CEO of Trilogy Metals, shares his views on the base metals market and what to expect from his company in 2018.

At this year’s Vancouver Resource Investment Conference, the Investing News Network caught up with Rick Van Nieuwenhuyse, president and CEO of Trilogy Metals (TSX:TMQ,NYSEAMERICAN:TMQ).
Last year, copper and zinc outperformed gold, increasing 23 and 20 percent, respectively. Van Nieuwenhuyse is bullish on base metals, and expects prices to continue to perform well in 2018.
“I think copper prices will build over time, but what is unique to our investors is that we don’t need higher copper prices to make our projects viable,” he added.
Trilogy Metals, whose share price has risen over 179 percent on the TSX in the past year, hit several milestones in 2017. “Last year we did a lot of drilling and South32 (ASX:S32) came in as a partner, so I think that brought a lot of attention to the story,” he said, adding that Trilogy is preparing to have a steady news flow this year as well.

Watch the video above or read the transcript below to learn more about Van Nieuwenhuyse’s views on the base metals market and what to expect from Trilogy in 2018. And don’t forget to check out our other videos from the show.

INN: Last year we saw a rebound in the resource sector as a whole, including copper and zinc. Do you expect more of the same this year?
Rick Van Nieuwenhuyse: Yes, I think what we are seeing is the supply and demand balance has just switched over from being in oversupply to being in undersupply. When actually last year, when everybody expected there to be an oversupply of copper there was actually a deficit. So yes, I think we’re gonna see more the same for both copper and zinc specifically this year.
INN: In terms of copper we’re seeing a market that is expecting a lot of demand from the electric car sector. At the same time, grades from mines are declining, in that particular environment why should investors look into Trilogy Metals?
RVN: Well, because we give investors a huge leverage to copper. We have 10 billion pounds of copper plus zinc, gold and silver. We have high-grade copper, 5 percent in open pit mining scenario.That’s going to be the highest pit copper mine in the world.So you get a kind of double leverage of copper due to the fact that we have a lot of copper and that it’s very low cost to produce it. So I don’t think you’ll find another story out there that will compare particularly when you take into the consideration that it’s in a safe jurisdiction, we are in Alaska, we’re in the United States.
INN: In terms of copper prices, you said you’re bullish on copper as well. Do you have a particular price prediction? Are prices going to continue to go up?
RVN: I think they will over time. I think what’s unique in our project is that we don’t need higher copper prices to make our project valuable to investors, at 5 percent that’s 10 times the average grading mined in open pit mines around the world today. We don’t need a higher copper price, we just need people interested in copper, which again it’s happening now that we’re in a deficit supply of copper.
INN: And aside from copper, you also have zinc, are you bullish on zinc as well? Will prices continue to increase?
RVN: Yes, we’ve seen zinc move nicely, from 80 cents up to a $1.50 per pound range. Zinc was a bit ahead of copper in terms of a deficit arriving. I think we’ll see zinc perform well, we’ve good supply management in the zinc space, with Glencore having put a few mines on hold in the last 2 or 3 years ago.Those will come back on as the price goes up, but it demonstrated to the world that there is going to be a supply management.
I think that’s something, particularly for the copper space, there isn’t a lot of new projects out there in the wings. As the deficit continues is just going to take time, more and more time to get new projects under construction and producing more metals.
INN: Last year Trilogy’s stock price increased over 100 percent. What were some of the factors that impacted your stock?
RVN: Well, we had a lot of a news flow last year, with a lot of drilling, we brought in a major company as a partner, South32 (ASX:S32), and that brought attention to the story.We’re going to have a lot of news flow this year too. We spent $10 million in drilling last year. We have some fantastic drill results and continue to expand our resource at our second project which is called Bornite.Then meanwhile in the Arctic we’re completing a pre feasibility study that will be out next month. So, there will be a lot of news flow very similar to last year and I think the copper space will continue to be the focus of investors interest.
INN: And what were some of the challenges you faced last year?
RVN: People. For the last five years a lot of people just kind of left the business, as this is a cyclical business. When things are out of favor you tend to lose people.They decided to go to real estate business or something else. And so when you ramp back up, the industry ramps back up, the hardest resources to get is the people. People who know what they’re doing in. Fortunately,we’ve had a good group of people that we’ve worked with for a long time. But as an industry, I think that certainly is the biggest challenge going forward.
INN: Looking ahead, I know you’ve already mentioned some of the milestones investors can expect from your company this year, anything else you want to add?
RVN: We will have a lot of news flow with the pre feasibility study, which is expected to be out for late February. Then the drilling starting a few months later. We’re doing both infill and expansion drilling in our Bornite project and we’ll start to permit Arctic, so there will be a lot of news flow, a lot of activity going on this year.
INN: And finally, what would be your suggestion or best piece of advice for an investor that is new to the base metals sector?
RVN: Grade is king. There’s a lot of projects out there in coppers space center, 0.2, 0.3 percent copper.There’s nothing wrong with those, eventually those will be mined. But in terms of making profits sooner and having the more solid investment, the attitude in the business is grade is king. So really look hard at the quality of the assets that your investing in and the jurisdiction.The Congo has fantastic copper projects, but unfortunately, they are located in the Congo,very challenging place, a very expensive place to work.
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Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.

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