Raiden Resources Is Locked and Loaded to Deliver Outsized Share Price Returns
With demand soaring for copper and gold, RDN stock is the undervalued growth opportunity you’ve been looking for
Emerging Growth Report on Raiden Resources (ASX: RDN)
Despite the rumblings in the global financial markets, resource companies may actually represent the most compelling contrarian opportunity in recent memory. Thanks to a unique combination of monetary uncertainty and fiscal determination, the resource industry – though feeling some heat recently from downside pressure – offers viable upside in the years ahead.
In particular, companies that are tied to both base and precious metals are fortuitously well-positioned for significant growth. While the framework for economic growth due to global stimulus and encouraging developments in the Covid-19 vaccine rollout has been established, investor fears remain abound due to uncertainty and debt, driving demand for both base and precious metals. Hence, there’s huge demand and interest for companies that can offer exposure to this thematic and that’s exactly what Raiden Resources(ASX:RDN / DAX:YM4) presents to investors.
Headquartered in West Perth, Australia, Raiden Resources offers a distinct proposition from many other exploration companies given the Company has established a dominant ground holding in not one, but two emerging copper-gold districts. The Company has consistently been securing new projects and acquisitions in the prolific Western Tethyan over the last three years and is now one of the leading exploration players in this strategic copper-gold belt. Featuring a library of attractive attributes including political stability, low operating cost environment, access to robust transportation infrastructure, in country copper and gold smelters, as well as, recent acceleration of mining and development activities by the likes of Rio Tinto and Zijin Mining, the Western Tethyan region, after decades of under investment and under exploration, is emerging as the Beverly Hills address for copper and gold explorers.
Not being content with the afore mentioned success, Raiden Resources, through prudent corporate transactions and an aggressive growth mindset, has also established itself as a major exploration player in another emerging gold district, the Pilbara region in Western Australia. The Company recently announced the completion of an acquisition of a major ground holding in the Pilbara, which includes the Arrow gold project adjacent to De Grey Mining’s’ major Hemi multi-ounce gold discovery. As a result of the Hemi discovery, ground along trend of this discovery in the Pilbara has become scarce to say the least. The fact that Raiden has managed to secure a large ground package, along strike of the Hemi deposit speaks to the ability of the management to secure strategic assets in a competitive market.
Having secured large chunks of ground in two emerging districts, Raiden finds itself neighboring some of the giants of the mining industry. This strategic position may also allow the Company to consider alternative funding avenues and potential strategic partnerships, through which it may look to advance some of the exploration work.
Before we dive into the specifics of RDN stock, let’s discuss the fundamental backdrop that has driven early bird interest in this Australian mining firm.
While copper has a storied history of being the choice material for physical currency, in modernity, this increasingly relevant metal has been associated with industrial development. Today, copper represents a critical asset category as it forms the backbone of the digitalization of everything economy.
Below are three main reasons why copper – and by logical deduction, the market valuation of Raiden Resources – will likely rise in significance:
- Undervalued relative to 2011 highs
- Massive demand influx anticipated sparking a supply squeeze
- Geopolitical race for copper
First, copper tends to be an overlooked asset relative to precious metals, especially gold. Moreover, the global price of copper peaked in February 2011 at $9,880 per metric ton. Since then, copper succumbed to a severe bearish trend channel, taking its spot price down to $4,471 in January 2016.
Yes, copper did move higher during the campaign trail leading up to the 2016 U.S. presidential election. Further, the metal increased on the bullish implications of former President Donald Trump’s America First policy to bolster economic activity. However, several headwinds, including a U.S.-China trade war saw copper dip back down to $5,700 in late summer of 2019.
Following yet another severe decline to around $5,000 in April 2020, copper has since skyrocketed on speculative anticipation of an economic recovery. In January of this year, copper reached just shy of $8,000 per metric ton, a multi-year high going back to early 2013.
Second, copper is likely to blow past the $9,880 global average price record if international economic activity continues to climb from declining Covid-19 cases and the distribution of vaccines. According to Canaccord Genuity mining analysts, they anticipate that Chinese stimulus measures will “support copper demand in combination with an expected global economic recovery in 2021.”
From a statement, Canaccord revealed, “We now expect copper prices to average $3.50/lb ($7,716/mt) in 2021, an approximate 17% increase on our previous forecast of $3.00/lb ($6,614/mt).” Other sources confirm this bullish sentiment, with metals industry experts forecasting that the copper supply will slip into deficit this year.
Third, while copper itself may have a boring reputation, it’s presently mired in a geopolitical cold war. Forming the underpinnings of multiple industries ranging from electronics to construction, copper is vital to advanced economic development. Therefore, this industrial metal has business and national security implications.
Indeed, what really stands out for copper is the progression of electric vehicles (EVs). Thanks to the metal’s “durability, high conductivity and efficiency,” copper is an essential component of EVs. Not only that, it underlines charging stations and supporting infrastructure – sectors that symbiotically align together as EV manufacturers race to transition the world away from fossil fuels.
Of course, the U.S. and western-friendly nations would like to lead this charge, but China is generating waves as the Asian juggernaut aggressively attempts to corner the EV market. This is a paradigm-shattering development, one that could see copper and RDN stock jump substantially higher from where they currently are.
The investment thesis for gold really needs no introduction. Universally considered a store of value, gold has long been associated with the money of royalty and principalities. Further, it is a benchmark of investor uncertainty – and there is plenty of that going on right now.
However, recent events have forced many investors into a fresh rethink of gold:
- Monetary policy pressure
- Concerns about popular risk-on growth stocks
- Uncertainty over pandemic’s ultimate trajectory
Principally, gold is poised to outperform in the long run thanks to brewing pressure on central banks to sustain the present cheap money environment. Admittedly, gold has sold off along with other asset classes due to the suddenly rising bond yields. Gold doesn’t pay dividends or do much of anything, making it unattractive in most normal circumstances.
But our circumstances are anything but normal. To support aggressive fiscal policies to address the pandemic’s economic fallout – think student debt relief, tax cuts and public works spending – central banks must encourage the circulation of these stimulated dollars, typically via fostering a low interest-rate environment.
Yet central banks have gone too far with their forceful monetary policies. In the U.S., the real interest rate – that is, the benchmark interest rate with inflation backed out – is negative. This bizarre dynamic basically means that investors who hold cash are penalized for doing so while lenders pay you to take out a loan. In other words, there’s every reason to stay in any other asset besides U.S. dollars.
It goes without saying that this is incredibly bullish for gold provided such circumstances remain on the books.
Secondarily, investors are getting unnerved about the frothiness in the equities sector. Following the initial devastation of the novel coronavirus, many investing newcomers – finding extra time on their hands thanks to the broader work-from-home initiative – piled into publicly traded companies with which they were most familiar. Largely, this encompassed technology stocks.
However, there’s growing sentiment that the valuation spike that these popular tech stocks enjoyed may not be sustainable. We could see a rotation out of these risky names to avoid holding the bag, which indirectly benefits the case for gold bullion.
Lastly, we have lingering fear about how this pandemic will ultimately pan out. True, new daily coronavirus infections have dramatically declined from their peaks in the U.S. and across several impacted countries. Nevertheless, we’ve seen this story before, with lax attitudes contributing to a greater resurgence down the line.
Also, new Covid-19 variants that have sprouted in disparate parts of the world have raised fresh concerns about a deadlier wave of infections. No one knows for sure how what will happen next. But this uncertainty is exactly the kind of catalyst which has previously served gold well.
Why Raiden Resources?
A combination play, Raiden Resources is distinctly relevant as it provides exposure to both commodities and can rise on the international push to kickstart the global economy along with retail investors’ anxiety toward previously soaring growth stocks that could be vulnerable to a harsh correction.
Below are three key reasons to consider RDN stock.
- Lack of growth opportunities today
- A strategic player in the Western Tethyan belt
- Secured a large foot hold in an emerging Australian gold field
- Aggressive and growth orientated management team
- Near term technical programs geared for discovery
- Market timing
The basis for speculating on any small-capitalization company is outsized opportunity. Leveraging the law of small numbers, investments like RDN stock can jump exponentially. Yet the difference between Raiden Resources and other small caps is that the former is backed by multiple underlying core catalysts, which we discussed above.
Nevertheless, the rest of the investment community mostly hasn’t recognized RDN stock. Instead, they have chased up the usual suspects – names that are popular on the Robinhood trading app and more recently, the social media platform Reddit.
For now, sentiment is targeting these “meme stocks” because they’re still delivering the goods. Over time, though, the law of diminishing returns will make these flavors of the week less attractive. In fact, evidence indicates that the mindless diving into financially challenged companies may have overextended itself.
In sharp contrast, Raiden Resources isn’t banking on a random social media post to drive up RDN stock. Rather, over the last three years the company has worked to position itself into possibly one of the world’s most exciting copper and gold exploration opportunities in the Tethyan Copper and Gold Belt and in the Pilbara region of Western Australia.
Crossing through the territory of Serbia and Bulgaria, the Western Tethyan region offers unique characteristics that make it powerfully compelling for resource investors. First and foremost is geopolitical stability. Bulgaria is a member state of the European Union while Serbia applied for membership and is on the path to accession, possibly by 2025.
This affords Raiden investors a significant measure of geopolitical predictability along with access to the broader European commercial networks. As well, the Western Tethyan Copper and Gold Belt had been closed off for many decades until recently. Thus, RDN stock may benefit from first-mover advantage, with the potential to explore some of the most prospective, but underexplored parts of the belt.
Better yet, both Serbia and Bulgaria have well-balanced economic profiles that are extremely attractive for foreign investment, especially towards the resource sector. These attributes include:
- Robust transportation infrastructures and in country smelting capacity
- Low overhead (i.e. utility and human labor costs)
- Easy access to global commerce routes
Although Eastern Europe doesn’t immediately strike most investors as a central mining hub, the area arguably offers the best risk-reward profile compared to other resource-centric economies.
For example, the average cost of electricity in Serbia and Bulgaria is 11.8 cents per kilowatt hour (kWh). This compares favorably to the U.S. and U.K., which come in at 14.9 cents and 26.5 cents, respectively, and very favorably to Germany at nearly 39 cents per kWh. And while these three western nations feature the highest level of political stability, their total overhead costs make these regions prohibitively expensive.
On the other hand, Russia averages an electricity cost of 6 cents per kWh and Angola an almost subterranean rate of 1.8 cents per kWh. Presently, though, both nations are incumbered with geopolitical uncertainty. And in Angola’s case, the lack of stable infrastructure makes for an “interesting” proposition, to put it diplomatically.
Therefore, Eastern Europe provides a more-than-acceptable standard of stability while offering ample margin for enterprises to invest in exploratory ventures in the historically viable Tethyan Copper and Gold Belt.
While Western Australia is considered one of the bastions of the modern exploration and is a well-established gold jurisdiction, the Pilbara region has never received the same attention as the eastern goldfields in WA. The Pilbara has always been associated with high grade, but relatively small deposits, the kind that have failed to attract majors. Recently though, the Hemi discovery seems to have changed everyone’s view of the district and has transformed the Pilbara into the hottest gold jurisdiction in Australia. Not only has Raiden established a foothold in this competitive landscape, but it has secured some key assets, right along strike of the main Hemi discovery.
Most importantly, Raiden Resources has astounding upside potential based on comparative analysis. According to a report from The Market Herald, Raiden identified intrusions at its Arrow Project which is similar to what competitor De Grey Mining (ASX:DEG) discovered in its Hemi deposit in western Australia’s Pilbara region.
Intriguingly, the Arrow Project is located adjacent to De Grey’s Mallina Project and along strike, which is where Hemi – one of the most exciting gold discoveries in memory – is located. Not surprisingly, this event has wildly catalyzed upward mobility in DEG stock.Pre-discovery, De Grey had a market cap of approximately 47 million AUD, equivalent to a share price of 0.045 AUD on Dec. 6, 2019. Post-discovery, the company saw its market cap soar to 2.07 billion AUD or 1.60 AUD per share on Apr. 23, 2021. As of April 23, 2021, Raiden has a market cap of 31.5 million AUD, with a share price of 0.026 AUD. Should its Arrow Project follow a similar geological trajectory, RDN stock could hit 1.70 AUD, or a more than 66X (6,538%) increase from its April 23 price (Refer below De Grey case study. Caution-Refer below cautionary statement).
Finally, RDN stock is an excellent candidate to advantage both the concerted efforts to spark an economic recovery and especially the market irrationality in gold. For one thing, no one can be certain about the trajectory of the post-pandemic era. Thus, some exposure to gold makes perfect sense, while betting on the recovery on the basis of an international stimulus package.
Indeed, gold declining against a real negative interest rate environment seems begging for an upside reaction. After all, financial engineering only has a very limited track record. On the flipside, gold has represented value since humans first walked the earth.
A Compelling Under-the-Radar Opportunity
Though the sharp rise in major global equity indices following the early destruction caused by the coronavirus pleasantly surprised investors, there are increasing concerns that the music will eventually fade, if not outright stop. Because the skyrocketing was largely a result of over-the-top speculation, sustainability is a massive question mark.
But that’s not the case with Raiden Resources and RDN stock. For starters, it never received the wild excesses typical of social media-driven meme stocks. Second and more importantly, RDN remains a small-cap entity despite its copper and gold operations, where the underlying assets could realistically deliver exploration value over the next several years.
Lastly, Raiden’s ambitions in the Western Tethyan Copper-Gold Belt and the Pilbara in Western Australia present a game-changing opportunity, as both of the regions feature excellent investment incentives. Backed by tremendous demand for the core assets, RDN stock could be one of the standout hits of 2021 and beyond.
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