The Washington H. Soul Pattinson and Co. Ltd (ASX: SOL), AKA Soul Patts, share price is in focus today as the investment conglomerate's annual general meeting (AGM) gets closer.
Upcoming AGM
Today, Soul Patts sent out an invitation for shareholders to attend the AGM, which is scheduled for 10 December 2021. This AGM is going to be held virtually because of various COVID-19 effects.
Within the AGM, Soul Patts said that it was considering a shareholder offer for Round Oak Minerals.
The investment conglomerate said it's thinking about an initial public offering (IPO) of Round Oak Metals Ltd, which is a subsidiary of Soul Patts. It is proposed that the prospectus for Round Oak that will be issued will be lodged with the Australian Securities and Investments Commission (ASIC) on or about 10 November 2021. Shareholders that have an Australian registered address will be entitled to subscribe for shares in Round Oak through an exclusive offer.
What is Round Oak Metals?
It's described as a growing producer of copper, zinc, gold and silver.
It has a "major" copper development project in north east Victoria called Stockman – it holds three exploration leases and one mining lease, covering approximately 42sq km. The development consists of two underground mines: the historic Wilga Mine which previously operated in the 1990s, and a new mine to be developed at Currawong. Soul Patts has said that a 10-year life of mine plan is expected to produce 30kt of copper equivalent per annum
The Jaguar operation is an operating zinc and copper mine in WA. Mt Colin is a copper and gold mine in north west Queensland. The Barbara mine is a copper mine in western Queensland, which is currently on care and maintenance.
Soul Patts pointed out that Round Oak's profit improved by $103 million in FY21, which was a "significant improvement".
Tailwinds for Round Oak
Soul Patts has outlined a number of structural tailwinds in supply and demand which are expected to support strong copper prices.
The first point is the robust construction demand led by China. The Asian superpower accounts for around half of global demand for copper, with further tailwinds for growth due to expected increasing urbanisation, investments in transportation and power networks, and strong manufacturing.
Another tailwind is the transition to renewable energy source. It was pointed out that offshore wind, onshore wind and solar all use significantly more copper per MW of energy production than conventional sources.
The next expected tailwind for copper prices is the increasing electric vehicle uptake. Plug-in hybrid electric vehicles and battery electric vehicles are estimated to require 2.6x and 3.6x (respectively) the copper used in internal combustion engine cars with total sales expected to triple by 2025.
Other tailwinds for future copper prices include a declining mill grade, increasing capital intensity to bring new production online and declining discovery rates of new major copper sources.
Is the Soul Patts share price a buy?
The broker Morgans currently has a price target of $36.78 on the business, though it rates Soul Patts as a hold at the moment.
