Muzhu Mining Ltd. (CSE: MUZU)
Creating lasting wealth by developing gold and silver properties with near-term mining potential
Investors paying attention to the commodity market should be aware that due to the worsening global macroeconomic situation compounded by escalating geopolitical tensions, metal prices continue to face downward pressure. Institutional investors are also turning to other lower-risk investment types, causing the valuation of mining companies to significantly decrease, with many mining stocks being undervalued.
Although mining stocks are currently facing a continuous decline, savvy investors, especially institutional ones, are more focused on the long-term profit potential. In the long run, with the ongoing advancement of green energy transformation, the demand for commodities is expected to surge, and the reversal of the commodity market trend is only a matter of time.
In contrast, technology stocks have been continuously hitting new highs recently amidst the AI boom, leading to a substantial increase in valuation and triggering concerns among many investors about the possibility of a tech stock bubble. Against this backdrop, forward-thinking contrarian investment institutions have already started positioning themselves in undervalued mining assets.
Stanley Druckenmiller’s recent actions are quite significant: reducing holdings in tech stocks and buying gold stocks.
During the fourth quarter of 2023, Druckenmiller reduced holdings in Alphabet Inc (NASDAQ: GOOGL), Alibaba Group Holding (NYSE: BABA), and Amazon.com (NASDAQ: AMZN) stocks, and purchased shares in the world’s two largest gold producers, Barrick Gold (TSX: ABX) (NYSE: GOLD) and Newmont Corporation (TSX: NGT) (NYSE: NEM). In addition, he also increased holdings in Teck Resources Ltd (TSX: TECK.A TECK.B) (NYSE: TECK).
Elliott Investment Management, an aggressive investment firm with assets under management (AUM) of $65 billion, recently took a strategic step after examining the current commodity situation: establishing a new investment company named Hyperion.
Under the leadership of former Newcrest Mining CEO Sandeep Biswas, Hyperion’s mission and goal are to build a global mining asset portfolio worth at least $1 billion, and to acquire cash-strapped mines and undervalued mining companies through direct acquisitions or equity investments.
The company’s investment targets include base metals, precious metals, as well as commodities strategically significant for electric vehicle batteries and renewable energy infrastructure, such as lithium, nickel, cobalt, and copper.
Among these metals, lithium faces particularly noticeable downward pressure on prices, but a recent study by S&P Global shows that by 2035, demand for lithium, nickel, and cobalt will be 23 times higher compared to 2021, while copper demand will double. As demand rises, the supply side faces various obstacles, and this supply-demand outlook is bound to drive significant price increases for these metals.
Value investment in metals and commodities is currently thriving. In addition to Elliott Management, other private equity firms also see investment opportunities in the mining industry, including Appian Capital.
Appian Capital states that the company plans to invest up to $2 billion in mining investments in Latin America. If building the entire critical mineral supply chain is a major strategy, then metals and mining are crucial pieces. Mining is the first to benefit, and it also has attributes for inflation protection, as miners can transmit the pressure of price increases downstream in the supply chain.
