Cobalt Pure-Play Hitched to Electric Vehicle Boom

Source: Streetwise Reports 11/21/2017 Forecasts of an electric vehicle boom are behind skyrocketing demand for cobalt, a major component in batteries. In this interview with The Energy Report, Anthony Milewski, CEO of Cobalt 27 Capital Corp., discusses the company’s unique position as a two-pronged pure-play on cobalt. The Energy Report: Would you bring us up to date on what’s happening in the cobalt market? Anthony Milewski: A few weeks ago was LME Week in London, which is the annual gathering of producers and consumers for not just cobalt but for a variety of base metals. It’s an international gathering with people from all over the world—China, United States, Europe, Africa. And I would say that it’s really the mating season for cobalt. What that means is cobalt contracts are typically 12-months long, although there’s a lot of variation. Many of the next 12 months of contracts are set during this week or discussed, if not signed. It’s a major week for the consumers and producers to get together and have a meeting of the minds around what the next 12 months will look like for cobalt. TER: What was the outcome of these meetings? AM: The first takeaway is that there’s tremendous new demand coming into the market because of the electric vehicle. All of the talk and all the meetings I was in was around the impact of electric vehicle sales and penetration on the cobalt market. A second conversation that’s going on is about future supply, security of … Continue reading

Pure-Play Vanadium Producer's Q3 Revenues Increase 153% YOY

Source: Streetwise Reports 11/21/2017 With the price of vanadium on the rise, one pure-play producer is reaping the benefits. Vanadium, a metal that maintains a low profile, has been on a tear recently. The metal is used to harden steel: a mere two pounds of vanadium added to one ton of steel doubles its strength. The price of vanadium has surged since the summer, led by the expectation of China increasing the required amount of vanadium in steel used for construction, according to Bloomberg. China is the largest supplier of vanadium, responsible for over 50% of the world’s annual production. Although over 90% of vanadium is used in steel, rechargeable vanadium redox flow batteries are gaining in popularity for large-scale energy storage, and with them the demand for vanadium grows. Bloomberg reported that while the price of vanadium is soaring, “there’s currently no easy way to invest directly in vanadium. The metal isn’t traded on any exchanges and for a company like Glencore Plc, which describes itself as one of the largest producers of primary vanadium, the metal represents a small percentage of the group’s total production.” Largo Resources Ltd. (LGO:TSX) offers a pure play on vanadium. The company hosts the Maracás Menchen Mine in Brazil, which, according to the company, boasts the world’s highest-grade vanadium deposit with a P&P reserve grade of 1.17% vanadium pentoxide (V2O5), with low costs of production. The company released its Q3 earnings on Nov. 6, reporting revenue growth of 153% year over year, and … Continue reading

Oil Charts Showing Extreme Paradoxes

Source: Clive Maund for Streetwise Reports 11/20/2017 Technical analyst Clive Maund discusses the conflicting signals from oil’s price chart and from the COT and Hedgers’ charts. It’s a good time to take an updated look at oil, because the paradoxes we observed regarding gold and silver, which we looked at in yesterday’s new Gold and Silver Market updates are much more extreme in the case of oil. On the latest 5-year chart for Light Crude we see that oil has in recent weeks succeeding in breaking out of its giant Head-and-Shoulders base pattern at last. We also see that volume has expanded greatly over the past two years which is viewed as a sign of a completing bottom. Recent strong upside volume has driven both volume indicators to new highs, despite the price still being way below its 2013 highs—this is viewed as a very bullish sign, and suggests that oil will advance at least to the $80 area. So what’s with the bearish looking COTs and Hedgers charts? Ordinarily we would be wary of oil peaking and reacting back upon seeing the latest COTs and Hedgers charts, which flat out contradict what we have just observed on the oil chart. First off, here’s the latest oil COT chart, as we can see Commercial short and Large Spec long positions are at their highest levels for the life of this chart, which is 1-year, by a significant margin. This would normally make us wary. Click on chart to pop up … Continue reading

AgriTech Company Sells to Organic and Cannabis Markets

Source: Streetwise Reports 11/16/2017 The company’s soon-to-be-announced prefeasibility study will evaluate expansion plans. The growing world population means food production needs to increase, and fertilizers are essential inputs to greater production. However, the potash industry has been on hard times since the financial crisis in 2008 that has led to a decrease in the price of potash; this was compounded by the implosion of the potash cartel by the Russian-Belarusian producers in 2013. That had been keeping supply relatively limited; the fertilizer sector has not yet recovered from these blows. A unique player in the sector is Verde AgriTech Plc (NPK:TSX; AMHPF:OTCQB), which is advancing the Cerrado Verde project in Brazil. The potassium-rich deposit hosts a blend of minerals, including magnesium, silicon, iron and manganese, that serves as both a fertilizer and soil conditioner. In addition to the 68 minerals and trace elements it provides, it increases the soil’s ability to retain water and nutrients. Verde’s main product is branded Super Greensand. Verde’s mineral resource begins at surface and contains over 1.4 billion tonnes in the Measured and Indicated categories and 1.8 billion tonnes Inferred, based on a NI-43-101-compliant mineral resource estimate from 2014. Production has begun, with 20,000 tonnes estimated in 2017, and 100,000 tonnes targeted in 2018. According to the company, Verde’s products make crops more resistant to pests, diseases and drought, and offer essential nutrients. They are approved for organic agriculture. Super Greensand, the company stated, “has no chloride and no salinity, ensuring that crops will not … Continue reading

Uranium Production Cuts 'Very Positive' for Market

Source: Streetwise Reports 11/13/2017 Rob Chang, an analyst with Cantor Fitzgerald, discussed how one uranium company’s upcoming facility closures should affect the market. Cameco Corp. (CCO:TSX; CCJ:NYSE) intends to halt uranium production at its McArthur River and Key Lake operations for 10 months beginning in February 2018, Chang reported in a Nov. 8 research note. He indicated this “major production cut” will drop total estimated 2018 uranium production by about 9%, which equals about 13.7 Mlb. As for the overall effect this could have on the market, Chang concluded, “We expect strength in uranium prices and equities on the back of this news. This is the type of supply shock that will spur strength in the spot U3O8 price as a significant amount of expected production for 2018 is removed.” The analyst qualified those statements, however, noting the change may be slow to take effect for three primary reasons: 1. The market is “less efficient” due to the limited number of existing, qualified uranium purchasers today, Chang wrote. 2. Utilities are not under pressure to buy uranium soon, the analyst noted. They have “shored up what were once large shortages through spot purchases or short contracts,” leaving an estimated under 10% of total uranium demand for 2018 and 2019 “uncovered.” 3. Current inventory levels could “dampen” the expected price movement, said Chang. “We estimate that there are 800–1,200 Mlb of total above-ground inventory of which about 700–800 Mlb are held by utilities.” However, not all of that supply is available … Continue reading

Analyst Initiates on 'Potential Tenbagger' Oil & Gas Company

Source: Streetwise Reports 11/08/2017 Bill Newman, an analyst with Mackie Research Capital Corp., explained how this energy firm could deliver substantial upside. An Oct. 26 research report noted that Mackie Research Capital Corp. initiated coverage on Pulse Oil Corp. (PUL:TSX.V) with a Speculative Buy rating and a $0.50 per share target price. Pulse is an oil and gas exploration and production company targeting plays in Alberta, Canada. “The big upside for investors, and what differentiates this small-cap company from others in the current market, is its miscible flood enhanced oil recovery project (EOR) of two Nisku pinnacle reefs at Bigoray (100% working interest),” wrote analyst Bill Newman. Newman described two production scenarios for those assets. The first, at the high end of expectations, assumes an 80% recovery rate, which is the “average recovery factor of 52 nearby analogous reefs that have been developed with a miscible flood,” he wrote. This could produce more than 2 Mboe/day and add 12 MMboe of light oil reserves, for a value of more than $177 million ($2.01 per share). The lower end assumes a recovery rate of 60%. This could translate into ~6.5 MMboe of new reserves, for a value of about $65 million ($0.74 per share). Newman pointed out that these figures, $177 million and $65 million, compare to Pulse’s current market capitalization of ~$4 million. About the possible production, Newman concluded: “The potential upside from a successful Nisku reef EOR project is so large that we expect substantial stock price appreciation (i.e., … Continue reading

Two Uranium Firms Transact a 'Win-Win' Deal

Source: Streetwise Reports 11/07/2017 Analyst Rob Chang, with Cantor Fitzgerald, discussed how the sale and acquisition of a Wyoming uranium asset benefit both energy companies involved in the deal. In a Nov. 2 research note, analyst Rob Chang of Cantor Fitzgerald reported that Uranium Energy Corp. (UEC:NYSE.MKT) and Energy Fuels Inc. (EFR:TSX; UUUU:NYSE.MKT) entered into an agreement for the former to buy the latter’s non-core Reno Creek North uranium project. The sale price is $5.39 million ($5.39M), to be “comprised of $2.94M in cash and $2.45M in shares of Uranium Energy,” Chang noted. The deal is “priced at a valuation of $1.25 per pound,” based on Reno Creek North’s “NI 43-101 compliant resource of 3.8 million tons grading 0.056% U3O8 containing 4.3 million pounds (Mlb).” This compares to the cost of Reno Creek, which Uranium Energy acquired in May. That was “$0.79 per pound plus warrants and a net profit interest royalty of 0.5%,” indicated Chang. About the acquisition, Chang concluded it is “positive for Uranium Energy as it consolidates its Reno Creek project and increases its Measured and Indicated resource by 20%.” Additionally, it “adds 4.5 Mlb U3O8 to a project that already had 22 Mlb of Indicated resources.” With respect to the sale, Chang noted: “This is a positive development for Energy Fuels as it monetizes an asset that we did not see going into production until 2025” because it needs “permitting, developing and financing.” Together, the company’s numerous, more advanced projects, including Jane Dough, Hank, Alta Mesa, … Continue reading

Portfolio Review on Two Major Gold Companies and a Renewable Energy Company with a Purchase Offer

Source: Adrian Day for Streetwise Reports 11/06/2017 Adrian Day of Adrian Day Asset Management discusses three companies in his portfolio: one renewable energy company and two precious metal companies. Alterra Power Corp. (AXY:TSX, 7.83) has agreed to be acquired by Innergex, a Canadian renewable energy company. Investors will receive C$2.06 cash and 0.4172 of an Innergex share. As always occurs, the acquirer’s stock price fell on the news (from $15 to $14.11); at today’s price, the acquisition equates to C$7.95. We are often saddened to see a long-term holding go, even at a nice premium, and especially so in this case, where after a long difficult period, the company had turned and was generating operational profits, cut its debt, and instituted a dividend with a view to becoming a cash-flowing, high-yielding vehicle. Founder and Chairman Ross Beaty, in fact, noted that the company “was just hitting our stride” when the offer from Innergex was made. We had recommended it as a buy in our last newsletter at C$5.33. We do not intend to hold Innergex on our list for the long term. What we know about the company appears positive enough: it has a good balance sheet, a diversified portfolio, it pays a dividend equating to a 4.7% yield (and will continue its payout policy), and combining the companies will reduce the cost of capital for Alterra’s projects, a significant drawback to a standalone Alterra. Certainly some of you may wish to hold this company, but we will not be … Continue reading

Portfolio Review on Two Major Gold Companies and a Renewable Energy Company with a Purchase Offer

Source: Adrian Day for Streetwise Reports 11/06/2017 Adrian Day of Adrian Day Asset Management discusses three companies in his portfolio: one renewable energy company and two precious metal companies. Alterra Power Corp. (AXY:TSX, 7.83) has agreed to be acquired by Innergex, a Canadian renewable energy company. Investors will receive C$2.06 cash and 0.4172 of an Innergex share. As always occurs, the acquirer’s stock price fell on the news (from $15 to $14.11); at today’s price, the acquisition equates to C$7.95. We are often saddened to see a long-term holding go, even at a nice premium, and especially so in this case, where after a long difficult period, the company had turned and was generating operational profits, cut its debt, and instituted a dividend with a view to becoming a cash-flowing, high-yielding vehicle. Founder and Chairman Ross Beaty, in fact, noted that the company “was just hitting our stride” when the offer from Innergex was made. We had recommended it as a buy in our last newsletter at C$5.33. We do not intend to hold Innergex on our list for the long term. What we know about the company appears positive enough: it has a good balance sheet, a diversified portfolio, it pays a dividend equating to a 4.7% yield (and will continue its payout policy), and combining the companies will reduce the cost of capital for Alterra’s projects, a significant drawback to a standalone Alterra. Certainly some of you may wish to hold this company, but we will not be … Continue reading

Oil Poised to Break Key Resistance

Source: Clive Maund for Streetwise Reports 11/03/2017 Technical analyst Clive Maund describes the ways in which oil is positioned to rally. In the last Oil Market update posted on Oct. 23, we observed oil’s intrinsic strength, and how it looked like it was building up to break out of its giant, complex, Head-and-Shoulders (H & S) bottom. We were wary of its reacting back short-term on dollar strength, but that has not happened. Instead, it has continued to firm up. Oil has already broken above the neckline of its H & S bottom and is at the point of breaking above key resistance at $55 at this year’s highs. This will mark a clear breakout from the H & S bottom and should trigger a strong run-up. We can see all this on the latest five-year chart for Light Crude, shown below, and again on the strength of its volume indicators, which suggest that a powerful rally is on the cards for oil, and probably soon. We can see recent action in context and in more detail on the 2-year chart, which has the U.S. Dollar index at the bottom for comparison. It shows that oil has not (thus far, at least) been bothered by the strength in the dollar, and has advanced to arrive at the key resistance approaching and at the $55 level. Given this intrinsic strength, it now looks likely that oil will push ahead in coming weeks and break out above this level, regardless of whether … Continue reading