My Top Pick In Mining

As the tin price is elevated and continuing to climb, the business is generating strong free cash flow and will likely be debt free by the end of the year. The cash from the current tin bull is positioning Metals X now to be in the pole position for what will likely be an extended bull market in tin throughout the rest of the decade—a period of time where quality management decisions have the potential to deliver outsized returns to shareholders. This is the key investment thesis for Metals X and it comes with a unique call option on tin if this technology metal soars and/or remains highly elevated beyond current market expectations. The stock is currently priced for an outlook similar to what I laid out in the previous paragraph with the potential for significant additional upside from a fragile tin market.

We will have to see what management’s capital return policy is as the cash account is repleted. Executive Director Brett Smith, who is presently running the company, is a representative of APAC Resources, one of the 2 largest shareholders (15.3%) along with the Old Peak Group (15.4%). This should bode well for shareholders. My preference would be for management to (1) selectively repurchase shares under a certain valuation threshold (such as 10 times earnings) and (2) invest in either production expansion at Renison or a wholly-owned tin development project in Tasmania (whichever is more promising).

Strategic Conclusion

Metals X is a unique opportunity here in mining and still moderately priced given the trajectory of the tin price and the fragile supply picture. I think this stock is poised to outperform its mid-tier base metal piers in the near future as tin soars while the price of other metals flounder around at current levels.

Management has done an excellent job getting this company turned around and is now spinning off the nickel assets so it can remained focused on tin which I think is clearly the best strategy. I think the future is bright for Metals X and it is currently my top pick in mining.

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The information presented in the True Vine Letter is general in nature and designed for do-it-yourself and professional investors. It does not have regard to the investment objectives, financial ...

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