Old West's Brian Laks dives into metals, mining, and uranium

Summary

• Laks remains bullish on uranium, but the trade has shifted from indiscriminate asymmetry to selective underwriting: spot is around $70 per pound, long-term contracting around $80, and inflation on capex—and potentially opex—may have pushed project break-evens to $60-$70 or higher. He expects uranium to “probably continue higher”; the prior peak near $130 is “not out of the question,” while $200 or $500 is possible if scarcity pricing outruns the slow supply response.

• The uranium demand case is stronger than Old West originally expected because reactor extensions, new builds, small modular reactors and AI data centers are converging on nuclear power’s combination of scale, reliability and small physical footprint. Yet today’s price merely “starts the clock” on permitting and multi-year construction, and Laks doubts the available projects can cover unfulfilled utility requirements into the 2030s.

• Old West manages commodity cycles by enlarging positions when sentiment divorces from fundamentals and trimming when equities price in a much more bullish commodity than the spot market shows. It reduced lower-quality uranium names in late 2021 as uranium rose from roughly $20 to $50 and stocks began discounting $80-$100, then added earlier this year after spot fell from $100 to about $60 and sentiment became “washed out.” Laks generally looks one to three years out: long enough to find large price/value gaps, but short enough to limit error and opportunity cost.

• Copper is now probably Old West’s largest mining focus because electrification makes it “the arteries of electricity,” while declining grades, scarce discoveries, depletion, rising costs and long development timelines constrain supply. Some projects may work at $4-$5 per pound and others require $6, but overruns and delayed delivery help explain why some prognosticators argue for $15,000-$20,000 per tonne farther out.

• Gold remains a substantial holding and portfolio hedge, though Laks has trimmed as enthusiasm increased because its demand and fair value are unusually dependent on psychology, central banks and uncertainty. At current prices, the equity case is that gold rose faster than miners’ costs, producing wider margins and free cash flow; the contrarian warning arrives when “the uncle” and “the grandma” start asking whether to buy coins.

• Tariffs and industrial policy can create strategic upside, but Laks refuses to make government intervention the core underwriting case. The idea of a 50% copper tariff briefly pushed the US price roughly 30% above the world price before raw copper was excluded; his preferred setup is a domestic project that works at the global price, with any tariff-related premium or other policy support treated as “a bonus.”

• The larger thesis is that the West let China dominate the periodic table for 30-40 years, leaving critical-mineral supply chains exposed as AI and the energy transition demand far more electricity and physical inputs. Laks sees government equity stakes, contracts, faster permitting and possible stockpiling as evidence that critical minerals are becoming strategic, while AI remains a “brain in a box” that still needs energy, materials, sensors and equipment to act in the physical world.

Deep dive

1. Uranium moved from a ghost town to a valuation exercise

• Old West built its uranium positions in 2017-2019, when the sector was populated by “a few specialist funds, you know, a couple maniacs on Twitter” and otherwise defined by apathy or disgust. The stocks traded cheaply enough that being early did not require an immediate commodity-price spike.

• The original asymmetry was stark: at a $50 uranium price, many companies still traded at “10 or 20 cents on the dollar.” Laks expected the thesis to unfold over several years, but uranium’s move from roughly $20 to $50 in 2021 accelerated the equity rerating.

• By late 2021, some stocks appeared to discount uranium at $80, $90 or $100. Old West accepted the market’s early payment, reduced lower-quality positions and retained a selective basket: “If the market wants to pay us in a much shorter time frame, we’re happy to take it.”

• Because the eventual winner depends partly on how the price moves—not just where it ends—Laks said Old West built a basket rather than trying to predict the specific best-performing name.

• The trade later reversed. After spot exceeded $100, fell toward $60 over roughly 12 months and drove sentiment to an extreme, Old West increased uranium weights earlier this year because fundamentals remained strong and several projects were materially closer to development.

2. Selling at fair value can sacrifice the mania premium

• Laks’s self-criticism is that Old West does not always “stay at the party the full time.” A company worth 20-30 times earnings can reach 100 times during a retail-driven multiple expansion, adding another three-to-fivefold return after the fundamental target has already been met.

• His difficulty is that this final return depends primarily on investor psychology. Old West therefore tries to retain some exposure after fair value while scaling down enough that a reversal does not turn a successful investment into a round trip.

• Enphase was the memorable example: Old West began buying near $1, while the stock ultimately reached roughly $300. More generally, once a holding reaches $20 or $50, it can already look like one of the firm’s best investments, making it difficult to justify holding every share for the remaining speculative upside.

• The discussion sharpened the trade-off: a stock bought at $20 can reach a $40 fair value, touch $50, then collapse to $20 after a disastrous quarter resets the fundamentals. Laks’s answer was implicit: missing the final mania is “a great problem to have.”

3. Uranium’s price signal has arrived, but its supply response has not

• Laks separated the roughly $70 spot market from the long-term price near $80. Utility contracts use blends of fixed and market pricing with ceilings and floors, so the contracting market is distinct from a single spot print.

• Inflation has raised both capital and operating costs. In 2017-2018, moving uranium from $20 to $50 appeared sufficient for many projects; today, Laks thinks the relevant break-even may be $60, $70 or even higher, with some restarted producers still struggling at current prices.

• At today’s level, high-quality projects should receive the green light, but “price alone is not enough.” A viable price merely starts permitting and construction, and those real-world processes impose a multi-year lag that cannot be erased if uranium suddenly reaches $150.

• The central question is whether the available projects can cover unfulfilled utility requirements into the 2030s. Laks does not think they can, so he expects higher prices, while treating $200 or $500 as possible scarcity outcomes rather than the normalized price required for his thesis.

• His preferred one-to-three-year horizon balances time for a thesis to work against the risk of being wrong and the opportunity cost of waiting; he stacks positions on rolling horizons so something is always working.

4. AI has strengthened nuclear demand beyond the original thesis

• Nuclear’s original attraction remains its ability to produce large quantities of electricity with 24/7 reliability and a small footprint. Reactor-life extensions, new construction and small modular reactors now add demand channels that were less prominent when Old West began investing.

• AI data centers supplied uranium equities with a second leg: after many stocks declined roughly 50% following the 2021 peak, they did not surpass their prior highs until early 2024, when spot uranium moved above $100 and enthusiasm returned.

• Walker’s challenge was that the world now looks substantially more bullish than the thesis outlined four years earlier: technology companies are pursuing nuclear power, governments are reconsidering closures, and future electricity demand may require marginal uranium projects that current prices do not support.

• Laks agreed that currently advancing projects are “probably not” enough. He nevertheless expects a portfolio solution—more nuclear, natural gas and probably continued coal use—because very high uranium prices could eventually cause consumers to substitute, even as nuclear remains a major part of the answer.

5. The commodity portfolio broadened as uranium’s asymmetry narrowed

• Five years ago, uranium was by far Old West’s largest metals exposure. Today the portfolio is more balanced because buying Cameco around $70 is fundamentally different from buying it around $7; as Laks joked, owning even one uranium stock once made an investor “overweight.”

• The 2022 commodity selloff created the next opening. China-demand concerns, zero-COVID policy and Federal Reserve tightening helped wash away the Russia-Ukraine commodity spike, even though weak prices also discouraged the long-lead investments needed to meet eventual cyclical demand recovery.

• Old West found uranium-like supply-demand mismatches in copper, tin and other metals. Tin is harder to express because there may be only two investable producers, while copper offers more liquid producers and developers and is probably now the firm’s largest mining focus.

• The mandate is not permanent commodity ownership. Laks said the best outcome would be to own none of these companies in five years because they had performed extremely well and other assets then offered superior forward risk-reward.

6. Gold works as a hedge, but not as a cleanly modelled commodity

• Gold has been a portfolio cornerstone for nearly a decade, yet Laks finds its demand difficult to predict because central banks, investors and psychology matter more than physical consumption. Unlike an industrial metal, it resists a straightforward marginal-cost calculation: “What should the price be?”

• He expects gold “probably” to go higher but places little confidence in wonky formulas targeting $5,000, $10,000 or $20,000. Laks’s Bitcoin analogy—roughly $2 trillion of Bitcoin market cap versus $20 trillion for gold—illustrated how “vibes-based” and demand-dependent such valuation can be.

• Gold miners historically failed to capture bullion’s gains because costs rose and they could not keep production up. Over the last 12 months or longer, however, gold advanced fast enough that even operators with poor cost control began making good money, with strong margins and free cash flow.

• Old West still owns substantial gold exposure but has reduced it as enthusiasm spread. Laks’s contrarian alarm sounds when “everybody’s talking about gold” and relatives begin asking about coins, particularly because copper and other consumed metals allow more defensible supply, demand and price estimates.

7. Copper’s widening deficit rewards assets, operators and patient capital

• Copper is “the arteries of electricity around the world”: data centers, electric vehicles, renewable generation and transmission all require it. The bears argue that traditional construction uses still dominate and that China’s property market matters, but Laks expects newer electricity-related uses to grow steadily in importance.

• Supply faces a “laundry list perfect storm”—declining grades, depleted mines, fewer discoveries, higher costs and projects that require years to permit and construct. Temporary Chinese weakness can therefore create attractive entry points for a three-to-six-year investment horizon rather than invalidate the thesis.

• Project selection goes beyond choosing maximum operating leverage. High-cost mines can soar in a squeeze but might go bankrupt first; Old West instead asks who owns the high-grade or low-cost resource capable of supplying a market that needs much more copper, adjusted for the equity’s valuation.

• Laks highlighted the Lundin Group’s South American complex, including Filo’s big discovery and subsequent acquisition. His preferred formula joins a strong asset with a proven management team and non-punitive access to capital—important in an industry full of “charlatan snake oil salesmen” promoting “a pile of moose pasture.”

8. Higher incentive prices and strategic policy may reinforce each other

• At roughly $10,000 per tonne, or around $4.50 per pound, some copper projects can start to build; others may require $5 or $6. Because mines routinely arrive late and over budget, a project attractive at $4.50 can be losing money three years later, which is why some prognosticators argue for $15,000-$20,000 per tonne farther out.

• The idea of a 50% US copper tariff briefly drove the domestic price roughly 30% above the world benchmark. When raw copper was excluded and tariffs focused on finished or semi-finished goods, the spread collapsed—illustrating why Old West does not underwrite physical dislocations it cannot control.

• Laks instead wants a US project that works at the world price. Any tariff or strategic premium is incremental upside; even the Section 232 investigation mattered because it publicly established copper’s national-security importance, while excluding raw copper implicitly acknowledged inadequate domestic supply.

• MP Materials showed a more direct policy model: an above-market price floor, government equity capital and contracts supporting domestic production and downstream processing. Laks expects more equity stakes, accelerated permitting and possibly stockpiles, with the UN discussing whether to create a global minerals fund and European countries discussing stockpiling.

9. AI ultimately increases the value of energy and physical infrastructure

• Laks’s strategic framing is that globalization let China “control the entire periodic table” while the West accepted cheaper labor and outsourced environmental costs. Trade conflict and export restrictions now expose the vulnerability, and merely writing a mining company a large check cannot eliminate construction and refining bottlenecks.

• Government stockpiling with printed money is his “real blue sky scenario” for extreme prices, but it is unnecessary to the base case. Marginal prices should rise because required materials are unavailable in the right locations, forcing either delayed technology deployment or costly supply-chain rebuilding.

• Much of the investment community remained focused on large-cap technology while obscure news about permitting, mining and critical minerals revealed that physical inputs were becoming the energy transition’s choke point. Old West sees an unusual pairing: “extremely strong fundamental outlook and low cheap valuation.”

• Old West is now looking beyond mining for AI beneficiaries. Laks calls AI a “brain in a box”; however capable the brain becomes, it still needs electricity, materials, sensors and equipment—the “eyes and the ears and the hands”—to interact with the physical world and advance energy or materials science.