ASX:MLX
Metals X Ltd
Investment Summary
The fund managers believe Metals X Ltd (MLX) presents an exceptionally attractive investment opportunity within the base metals sector, underpinned by favourable macroeconomic trends and structural supply-side constraints in the tin market. In their opinion, MLX stands out as a rare pure-play tin producer operating a single, low-cost mine in a tier-1 jurisdiction (Tasmania), with significant free cash flow generation and a pristine balance sheet. The fund managers highlight that tin is a strategically important metal in the global electrification push, with parallels to uranium in terms of market thinness and geopolitical supply risk. Ongoing disruptions in key producing countries such as Indonesia, Myanmar, and most recently the Democratic Republic of Congo—where Alphamin’s Bisie mine was shut down—have severely impacted global tin supply, pushing prices to multi-year highs. Metals X, with no debt and substantial cash reserves, is well-positioned to capitalize on these supply shocks. In their view, the company is trading at an unjustifiably low valuation relative to its strong cash flows and long mine life (projected to 2035), with a recent capital return initiative further affirming management’s shareholder alignment. The fund managers believe that MLX remains undervalued and expect further re-rating as the market recognises the strength of its financials and strategic positioning in a structurally constrained commodity.
Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.
Commentary From The Manager
Cerutty Macro Fund
Date
31 Mar 2024
Price
$0.36
Medium
Monthly Report
Commentary
Cerutty Macro Fund continues to hold Metals X Ltd, viewing it as a high-quality, undervalued way to gain exposure to tin—a commodity central to the global electrification trend. The Fund’s updated thesis reflects a bullish view on tin’s tightening supply/demand dynamics, with constrained production in key regions like Indonesia and Myanmar driving sharp inventory drawdowns and price increases. Metals X, as a low-cost, single-mine producer based in Tasmania, stands out for its simplicity, operational strength, and jurisdictional safety. With a robust balance sheet—$155 million in cash and no debt—the company generated A$45 million in EBITDA in H1 FY24 and is poised to deliver ~$80 million in annual net cash flow at current tin prices. Cerutty sees further upside from a new off-take agreement with JV partner Yunnan Tin, which should materially lower marketing and sales costs. At just over 2x net cash flow and ~1.5x EBITDA, Cerutty believes Metals X is trading on overly conservative multiples due to misplaced concerns about Chinese JV involvement. The initiation of a 10% on-market share buyback further supports shareholder alignment and signals confidence from management. In Cerutty Macro Fund’s view, MLX offers compelling value in a market yet to fully appreciate tin’s strategic importance.
Cerutty Macro Fund
Date
31 Mar 2025
Price
$0.69
Medium
Monthly Report
Commentary
Cerutty Macro Fund has updated its investment thesis in Metals X Ltd (MLX), reaffirming its position due to ongoing supply-side disruptions in the global tin market. While previous disruptions in Indonesia and Myanmar remain unresolved, the recent forced closure of the Bisie tin mine in the DRC — responsible for ~7% of global supply — has further tightened the market. Tin prices have responded sharply, recently peaking near USD$39k/t and remaining elevated despite broader market volatility. Cerutty Macro Fund highlights that Metals X, now the only listed pure-play tin producer, is well-positioned to benefit from these dynamics. The fund notes that even at tin prices significantly lower than current levels, MLX generated $30 million in net cash flow in Q4CY24, implying potential for over $180 million annualized at today’s prices. With a robust balance sheet — ~$250 million in net cash and no debt — and a long-life asset in the Renison deposit (producing ~10kt/year to at least 2035), Cerutty Macro Fund sees MLX as uniquely leveraged to a structurally fragile tin market. While acknowledging uncertainty in future tin pricing, the fund believes Metals X is well-placed for a strong year ahead.
Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.