Rich-lister Kerry Harmanis made a fortune in nickel. He's now a copper bull

Kerry Harmanis made a fortune after selling Jubilee Mines to X-Strata in a $3.1bn deal during the 2007 nickel boom
He’s now a big believer in copper
Harmanis’ Talisman Mining is drilling for copper and gold in the Lachlan Fold Belt

Lawyer turned meditator and exploration guru Kerry Harmanis is a well-known name in mining, owing to the fortune he made on the $3.1 billion sale of Jubilee Mines to X-Strata in 2007.

It was perfect timing. Harmanis sold out at the end of the China-led nickel boom, realising massive gains for those who invested in the company which found and developed the Cosmos mine near Leinster in WA’s Goldfields, now part of battery metals giant IGO’s (ASX:IGO) portfolio.

These days it’s copper exploration getting the multi (hundred) millionaire out of bed as the chairman ofTalisman Mining (ASX:TLM), where Harmanis has long held a major 18% stake but stepped into a larger role amid the disruption caused by Covid-19.

“Well, for me, the one metal that you cannot replace in this whole new suite of metals that are required for EVs and batteries and going forward and decarbonisation is copper,” he told Stockhead on the sidelines of the Resources Rising Stars conference on the Gold Coast this week.

“And I think it performs by volume about 50% of the suite, and you can’t replace it.

“It’s super conductive, it’s the best conductor so it’s always going to be used in anything to do with electricity and transmission of energy.”

A new frontier

Harmanis’ Talisman is an interesting stock, counting as one of the few junior explorers with a regular source of income.

Already a historic dividend payer after returning more than $40 million from $70-odd million sale of its Springfield JV to Sandfire Resources (ASX:SFR) in 2018, Talisman gets a few million in its bank account each year from a royalty over Mineral Resources’ (ASX:MIN) Wonmunna iron ore project.

It is using that to drill its underexplored ground in the Lachlan Fold Belt near Orange in New South Wales, surrounded by some of Australia’s largest copper and gold mines like CSA in Cobar, Northparkes, Tritton, Peak, Hera and Cowal.

“I have had some doubts about New South Wales, it’s a different environment than Western Australia. But I’m now comfortable with it. We’ve got our minds around it,” Harmanis said.

“We’ve got a good little setup there and we’ve got a wonderful set of tenements that are in one of Australia’s great metal producing basins, the Lachlan Fold Belt and the greater Cobar Basin, so it’s one of the great province metal provinces in Australia.

“One can see that there’s a whole part of that belt that has never been explored properly before because of some of the soil cover. So it’s not had a lot of attention.”

There are plenty of explorers pottering around the region, especially since Alkane’s (ASX:ALK) Boda discovery a few years ago convinced juniors there were more massive porphyry discoveries to be found in the Lachlan Fold Belt.

With its success at Springfield, home to the Monty satellite deposit which fed Sandfire’s DeGrussa copper mine late in its life, Harmanis describes Talisman as expert explorers, giving the junior a point of difference.

“We would call ourselves expert explorers, we really are an exploration company,” he said.

“And we’ve got funding to do that via (when) we sold out of Springfield, but we actually paid 16 cents back to shareholders tax free, and Wonmunna we’ve got a royalty from, which is helping out paying for our exploration programs.

“We’re actually today pretty excited about current drilling for copper and copper-gold. We’re in there with a big chance at the moment.”

Mining bull

Mining stocks, and particularly explorers, have been hit hard by volatility in recent months.

Copper prices fell 1.8% overnight to US$8122/t as Chinese industrial growth figures disappointed, with copper inventories hitting their highest level since October last night.

But Harmanis remains bullish on metals over the long haul, even if he decries the “hypocrisy” of people who don’t realise how fossil fuel intensive the smelting and refining of commodities that go into solar panels and EVs remains.

“Put it like this. If we’re going to build the EVs that California and the United States, and now (Australian Energy Minister Chris) Bowen, want us to build and use by 2035 or so I don’t know which set of numbers to look at, but I have looked at it, you’re going to need 15 times the amount of cobalt, 15 times the amount of nickel, 15 times the amount of lithium, twice the amount of copper,” Harmanis opined.

“That’s a hell of a lot of mining and those assets 15 times let alone if you get 10% growth in nickel or copper in a year. That’s massive. But 15 times – where’s it all going to come from? And people don’t realise it.

“The masses don’t realise they’re all fossil fuel made.

“You can’t make these things with propellers and solar panels, which by the way put out huge amounts of emissions in their fabrication.

“If that’s what you guys want, well, I’ll just do the part that I enjoy which is finding them and making money out of them and enjoying the process.”

He admits he “missed the lithium craze”, but Harmanis thinks copper could have a longer shelf life as a boom metal from the energy transition thematic.

Freely admitting he doesn’t hit with every bet, Harmanis says a lot of success in investing comes from timing the market, as he did selling Jubilee right before a major crash in nickel prices.

“Myself personally, I think lithium is going to be technologied out in a few years, it’s too volatile and flavour of the month stuff,” he said. “I’m not into the flavour of the month, you’ve got to be pretty quick as to when you get on and when you get off.”

Taking control

But one thing common to Harmanis and other successful mining executives like Tim Goyder, is their desire to have their hands at the wheel when it comes to investing in junior explorers.

“I love exploration. I just love finding things and developing them, and delineating things and growing things from the base up,” he said.

“When I sold Jubilee, I tried to retire, it didn’t work. And I thought what’s the thing that really fires me up? It’s exploration, getting out of bed, helping build teams of complementary skills, and finding an economic deposit, moving forward with it, developing it.

“I’m typically not a trader, I’m a builder of things.

“Secondly, I will back people who also are asset builders and back people.

“I don’t always get it right, of course, by any means. But when you do get one right, like Jubilee, it overshadows all the other losses.

“With Talisman, I’ve enjoyed helping build the team.

“Before (I was chairman) I was a passive investor, and just to highlight the difference, I was more happy having the ability to drive something.”