Is It Time to Get Into Uranium?

Source: Maurice Jackson for Streetwise Reports 06/20/2018 Maurice Jackson of Proven and Probable explores the prospects for investment in uranium with Mickey Fulp, the Mercenary Geologist. Maurice Jackson: Joining us for a conversation is Mickey Fulp, the Mercenary Geologist, as we will discuss Is it time to get into Uranium. Mickey, we have some interesting developments going on in uranium. You’re one of the most trusted names on the subject. I know a number of our speculators want to hear more about uranium. Beginning domestically, what do you see happening in the U.S. under the Trump administration that may impact uranium? Mickey Fulp: Well, there’s a couple of things the Trump administration has done that are positive for uranium. First off would be the recent National Security Council resolution that would require utilities to buy their electricity from U.S. nuclear power plants and coal plants. This is an effort, once again, to put people back to work in the extractive industries, namely uranium, nuclear power plants, coal mining and coal fire power plants. In addition, not all of it has to do with Trump, but it’s a movement that includes the Congress and some uranium companies, etc. The U.S. Department of Energy (DOE) under Secretary Rick Perry, who was the governor of Texas, a significant uranium producing state in the past, restricted the DOE sales and barters of U.S. stockpiles of U308. This year they’ve cut those back. During the Obama administration, five to seven million pounds a year were … Continue reading

Lithium Explorer Files Resource Estimate Report for Large Nevada Project

Source: Streetwise Reports 06/20/2018 An independent resource estimate report has been completed and filed on SEDAR; a PEA is expected within a few months for a project that has the potential to be a major supplier of lithium products. Cypress Development Corp. (CYP:TSX.V; CYDVF:OTCQB; C1Z1:FSE) recently announced it has filed a National Instrument (NI) 43-101 Technical Report on SEDAR with the title “Resource Estimate Clayton Valley Lithium Project.” Clayton Valley is the company’s 100%-owned lithium project in Nevada, and the report describes the independent resource estimate conducted there by Global Resource Engineering (GRE), a Colorado-based firm. Included within the document is a recommendation for a Preliminary Economic Assessment (PEA), which GRE expects to complete in the next couple of months. Some key report findings are: The mineral resources are reported using a cut-off grade of 300 ppm Li and constrained to pit shell reflecting a $15/tonne operating cost, $10,000/tonne of LCE price and 80% net recovery to LCE. Total Indicated Mineral Resource of 697 million tonnes at an average grade of 886 ppm Li, or 3.287 million tonnes of lithium carbonate equivalent (LCE). Total Inferred Mineral Resource of 643 million tonnes at an average grade of 852 ppm Li, or 2.916 million tonnes of LCE. Minor changes in the resource model occurred following the May 1, 2018 press release due to adjustments in model boundaries. The proportion of indicated to inferred tonnes increased somewhat while the net lithium tonnes in the model decreased slightly. A database of 23 drill holes … Continue reading

US Oil & Gas Small Cap Has 'Potential for Significant Upside'

Source: Streetwise Reports 06/20/2018 ROTH Capital Partners initiated coverage and reviewed this energy company’s U.S. projects. In a June 18 research note, analyst John White reported that ROTH Capital Partners initiated coverage with a Buy rating on Torchlight Energy Resources Inc. (TRCH:NASDAQ), which “offers very significant upside.” ROTH’s price target of $1.75 per share compares to where the company is currently trading, at $1.37 per share. White noted that Torchlight has three oil and gas projects, one in the Orogrande Basin, Hazel in the Midland Basin and Winkler in the Delaware Basin. Due to the “scope of the Orogrande and results to date,” the company has shifted its primary focus to that West Texas asset from Hazel, indicated White. As for the Orogrande, Torchlight has about a 68% interest in 133,000 adjoining net acres of oil and gas leases, a “position comparable to many, much larger exploration and production companies,” described White. The company has drilled two wells and is working on another, all in the Pennsylvanian Formation. Results from the third well are expected “in the near term.” To fund exploration in the Orogrande initially, Torchlight plans to use the $6 million generated from a public offering earlier in the year. Additionally, management has indicated it is willing to divest of Hazel to yield further capital to support efforts at Orogrande. “The rationale for the divestiture hinges on liquidity and the potential capital needs at the Orogrande project,” the analyst wrote. About the Orogrande project, White concluded, “While we … Continue reading

Target Price Raised on 'One of Our Favorite Small-Cap Montney Names'

Source: Streetwise Reports 06/16/2018 Analyst Garett Ursu with Cormark Securities compared the current numbers to past ones and explained why this energy company still has upside. In a June 13 research note, Garett Ursu, an analyst with Cormark Securities, reported that Blackbird Energy Inc. (BBI:TSX.V) released the recent findings of an independent evaluation of some of its Montney resources in Alberta. Consequently, Cormark increased its per-share target price on the company to CA$1 from CA$0.90. The report, prepared by McDaniel & Associates, indicated that Blackbird’s best estimate, or 2C, contingent resources increased 149% from the company’s 2017 resource evaluation. They now are 112.2 million barrels of oil equivalent (112.2 MMboe), having grown from 45 MMboe. Forty-three percent of the newly quantified resources are liquids. The NPV-10 of these contingent resources of Blackbird is $587.3 million ($587.3M), or $0.78 per share, Ursu noted, when accounting for the commodity price and the 80% chance of development cited by McDaniel & Associates. This valuation is 35% higher than the one in the 2017 resource estimate, which was $436.5M. “This is net of future development capital (FDC) of ~$1,833 MM (~$668 MM discounted at 10%),” the report stated. Ursu highlighted that the 2C resources addressed in the current report are located on only two of Blackbird’s four prospective zones in the Montney Formation. This equates to 33.4 of its 113.5 net sections, or 29%, of its land there. Blackbird previously, in 2017, reported Proven and Probable, or 2P, reserves with an NPV-10 of $395M, … Continue reading

Coverage Initiated on 'Premier, Niche, North American Completions Player'

Source: Streetwise Reports 06/15/2018 A Raymond James report explained why this energy/oil field services company makes a compelling investment. In a June 12 research note, analyst J. Marshall Adkins indicated that Raymond James initiated coverage on Nine Energy Service Inc. (NINE:NYSE), a “premier, niche, Northern American completions player” with a Strong Buy rating and a $40 per share target price. The current stock price is around $29.62 per share, a valuation that “alludes to promising upside” of about 35%. He added that in its space, Nine “is uniquely positioned to profit from anticipated growth and emerging capacity constraints.” Adkins listed a handful of external trends in the horizontal well market, to which Nine has great exposure, which should drive growth for the company over the ensuing five years. They are a preference for horizontal over vertical wells along with increases in the number of horizontal wells completed annually, the lateral lengths for horizontal well bores, horizontal well complexity and fracking stage counts. Internally, Nine has specific advantages that should lead to growth as well, both via cash flow generation and acquisitions. One such benefit is the niche nature of its completions business, being in subsectors that tend to be “more value added, less commoditized,” and less competitive than, say, pressure pumping, noted Adkins. Those segments include horizontal well cementing and completion tools, cased hole wire line and large diameter coiled tubing. Another plus is Nine’s strong management team, specifically their ability to exercise financial discipline and generate EBITDA growth, as … Continue reading

Royalty Company Acquires Cobalt Stream

Source: Streetwise Reports 06/14/2018 An Eight Capital report reviewed this Vancouver-based firm’s recent acquisition. In a June 12 research report, analyst Ralph Profiti with Eight Capital reported Wheaton Precious Metals Corp. (WPM:TSX; WPM:NYSE) acquired a cobalt stream for CA$390 million from the Voisey’s Bay mine, where Vale S.A. will complete a US$28 million underground expansion by 2022. The agreement terms are such that Wheaton will pay the entire purchase price upfront to Vale. To do so, it will draw from cash and borrow against its CA$2 billion credit facility. Until it recoups the CA$390 million, the company will pay 18% of the cobalt spot price, after which it will pay 22%. Wheaton will receive its first cobalt from Voisey’s Bay in January 2021 when ramp-up of the underground mine begins. For the first 10 years, 2.6 million pounds (2.6 Mlb) of cobalt will go to Wheaton annually, followed by 2.4 Mlb annually throughout the mine’s remaining life. These amounts equate to “42.4% of Voisey’s Bay cobalt production until 31 Mlb are delivered and 21.2% thereafter,” explained Profiti. The cobalt stream arrangement also encompasses “a completion test on underground operations measured by throughput (85% of targeted levels by Dec. 31, 2025),” Profiti noted. Eight Capital views the deal as “positive,” wrote Profiti. It should return an estimated 9%, assuming a cobalt price of CA$35 per pound and a 20% tax rate. This return rate is higher than the 4 to 6% expected from recent larger precious metals streams, the analyst pointed … Continue reading

New Lithium Kids in Town

Source: Howard Klein for Streetwise Reports 06/11/2018 Howard Klein of RK Equities and the “Lithium-ion Bull” newsletter expresses his thoughts on several different segments of the lithium market. Lithium equities these past two or three years have often been the land of the Deaf, Dumb and Blind: Most Institutional Investors, Certain Sell-side Analysts, and Mass Affluent Retail are playing bitcoin, cannabis and Tesla, but not yet playing battery materials. Despite bouts of over-exuberance in selected issuers, the “Lucky Country,” Australia, has been a welcoming home to more than a handful of #Lithium Pinball Wizards of and in Oz. Hard rock names in Western Australia in particular, but more broadly, an ASX listing has generally resulted in a lower cost of equity capital than a TSX or AIM listing for lithium developers. Orocobre, Pilbara, Galaxy—to name three—have all managed to raise equity capital when they needed it at relatively high valuations. The KiDs R Alright is one of many The Who metaphors I have used to describe Kidman Resources Ltd. (KDR:ASX) over the past year. Lithium Mr. Market is ripe for some Kidman history rhymes. To enable more Mass Affluent Retail to experience “Life in the Fast Lane.” Eight months after I penned a Seeking Alpha Blog as an open letter to Global X Management with a roadmap to improve its lithium index, Amplify Advanced Battery Metals and Materials ETF (BATT) has emerged as a competitor to that which I called DIM LIT, but have had a bit of change of … Continue reading

Assets Sale 'Creates a Financially Stronger, More Focused' Oil/Gas E&P

Source: Streetwise Reports 06/07/2018 An Eight Capital report reviewed the details of this company’s divesting deal. A June 5 research note indicated that Canacol Energy Ltd. (CNE:TSX; CNNEF:OTCQX) agreed to sell its conventional oil assets for CA$40 million (CA$40M). By doing so, it lowers its future development capital cost burden by CA$45M and also relieves itself of CA$25.6M of associated exploration commitments. “Overall, we believe that Canacol will be a financially stronger and more focused company after completing the sale,” noted Ian Macqueen, Eight Capital analyst. The deal terms are, for one, Arrow Exploration will acquire the outstanding shares of Carrao Energy, a Canacol-owned subsidiary, for CA$20M in cash and CA$20M of Arrow common shares. Carrao assets are the LLA 23 block, the Oso Pardo field on the Santa Isabel block, the Mono Araña field on the VMM-2 block, the Capella field on the Ombu block and other minor, nonoperated blocks. Additionally, Arrow will acquire a 50% interest in an undeveloped block in Colombia’s Llanos basin from Samaria Exploration and Production for a consideration of US$10M in Arrow shares. The closing date of both transactions is in mid-July, on which Canacol will distribute CA$20M of Arrow stock to shareholders and put $20M of cash into the treasury. Eight Capital has a Buy rating and a CA$7.25 per share target price on Canacol, whose stock is trading at around CA$4.20 per share. “As the company gets closer to its goal of ramping production to 230 million cubic feet per day, we … Continue reading

Craft Oil Explorer Updates Plans for Oklahoma Wells

Source: Maurice Jackson for Streetwise Reports 06/07/2018 Prospects for this craft oil company focused on small plays in domestic oil fields are discussed in this interview with Maurice Jackson of Proven and Probable. Maurice Jackson: Today we will highlight a world-class upstream oil and gas company. I’m speaking of Jericho Oil. Joining us today is Brian Williamson. He is the CEO of Jericho Oil Corp. (JCO:TSX.V; JROOF:OTC). I’d like to begin our discussion today at the 10,000 foot level and discuss the different between big oil versus craft oil. Brian Williamson: Most of the folks in the world that look at oil and gas have heard of all the large majors out there, your Exxon/Mobils, your Gulf Oils, your Anadarkos and most of the big ones around the world. What they haven’t heard about are the smaller players who are focused on specific regions, specific areas, like us, where they know one play, one opportunity, and they drive trend, technology, and development in some of the best plays in the world. It’s just that they focus on that play, that opportunity, just like Jericho does. Maurice J.: How does Jericho fit into the narrative of craft oil, and the value proposition it presents to the market? Brian W.: We believe the value is all about understanding and delivering best-in-class results in a particular opportunity in a particular play, and in our world, the ability to find oil gets harder and harder every year. You want to be aligned with a … Continue reading

Lithium Company Meets Major Derisking Financing Milestone

Source: Streetwise Reports 06/07/2018 A Canaccord Genuity report discussed the make-up and implications of the financing and relayed other recent events. In a June 4 research note, Canaccord Genuity analyst Eric Zaunscherb reported that as of May 30, Nemaska Lithium Inc. (NMX:TSX; NMKEF:OTCQX) completed a multipart, CA$1.1 billion financing for its Whabouchi mine and Shawinigan electrochemical facility, thereby derisking the project. There were four components to the financing, the last of which was a targeted $360 million equity raise comprised of a $280 million public offering of common shares on a bought deal and a concurrent $80 million private placement with Ressources Québec, Zaunscherb explained. The equity raise price, at CA$1 a share, was lower than expected. Due to that and the fact that 360 million shares remained unissued, the transaction was more dilutive to Nemaska’s net asset value than expected. The other three pieces of the financing, Zaunscherb said, were: $150 million in prepayment on a streaming agreement with Orion Mine Finance II Limited Partnership $77 million from Japan’s SoftBank Group purchase of a 9.9% strategic equity interest in Nemaska, an offtake agreement on 20% of the energy company’s production and a board seat $350 million from a five-year term bond issue The analyst noted the financing occurred during a “difficult time for lithium equities, which have dropped by an average of 55% since the beginning of the year, despite a 13% increase in lithium price.” Ultimately, Zaunscherb concluded, the financing “was a positive step in advancing Nemaska’s projects. … Continue reading