How Investors Can Participate in the Hydrogen Economy

Source: McAlinden Research for Streetwise Reports   10/09/2020

McAlinden Research Partners makes the case for growth in the hydrogen fuel market, and lists the companies investors might target to benefit from that growth.

Summary: Hydrogen fuel cell technology has been derogatively dismissed as “fool cell” technology, with many doubting it can gain traction. But, after decades of false starts, it looks like the hydrogen economy is finally poised to take off, as governments and private companies announce initiatives that will grow hydrogen’s share in the power generation mix.

Related stocks: Linde ((LIN:NYSE)), Air Products & Chemicals Inc. (APD:NYSE), Plug Power Inc. (PLUG:NASDAQ), Ballard Power Systems Inc. (BLDP:NASDAQ), Bloom Energy Corp. (BE:NYSE), ITM Power plc (ITM:LON), FuelCell Energy Inc. (FCEL:NASDAQ), AFC Energy (AFC:LON)

In the clean energy space, most of the attention goes to solar, wind and maybe even hydropower. In the automotive space, the lion’s share of attention goes to battery-powered electric vehicles (BEVs). But these are not the only options on the market for zero-carbon energy. In fuel cell form, hydrogen can power everything from vehicles to buildings to power tools, and it does so without emitting carbon.

In simple terms, the technology works as follows: Hydrogen fuel cell vehicles combine hydrogen stored in a tank with oxygen from the air to produce electricity. That activity powers the car, emitting water vapor as the only by-product.

On the subject of using hydrogen to power cars, MRP has previously written that: “While fuel cells pose no threat to batteries’ dominance in transportation, dismissing hydrogen and fuel cells would be as premature as dismissing solar in the early 2000s, or wind in the mid-1990s. The sector’s growth continues to track, and possibly exceed, the earlier trajectories for solar and wind energy.”

To receive all of MRP’s insights in your inbox Monday–Friday, follow this link for a free 30-day trial. This content was delivered to McAlinden Research Partners clients on October 1.

Not everyone is convinced. Fuel cell technology has long been considered too costly and impractical, and many people have expressed doubts that it can gain traction. Tesla CEO Elon Musk famously dismissed hydrogen fuel cells as “fool cells” and “mind-bogglingly stupid.” For some reason, Mr. Musk’s reaction brings to mind how former Microsoft CEO Steve Balmer also famously laughed at the iPhone in 2007, calling it the “most expensive phone in the world and it doesn’t appeal to business customers because it doesn’t have a keyboard.”

It is certainly true that hydrogen fuel cells have been touted for over two decades as the next miracle in transportation fuel, with little to show in terms of mass adoption. But we are now witnessing one important catalyst that could help the industry take off: Governments and private companies alike are stepping up their efforts to build up a global hydrogen industry.

Pro-Hydrogen Government Mandates

Global efforts to decarbonize the power and transportation sector have pushed a growing number of countries—including Australia, China, Japan and South Korea—into adopting policies that will further the use of hydrogen. The most ambitious plan to date emerged this summer when the European Union (EU) announced it would allocate billions of euros to build up the bloc’s hydrogen economy. The goal is to create the conditions that will enable Europe to generate a substantial share of its energy from the element by 2050.

The EU’s hydrogen strategy outlines clear targets. If those targets are achieved, Europe will have installed 40 gigawatts (GW) of renewable hydrogen electrolyzers by 2030 (up from one GW today) and increased its annual production of renewable hydrogen to 10 million tonnes (up from practically nothing). By 2050, the EU hopes to have scaled its renewable hydrogen capacity to 500GW.

Needless to say, it is government incentives and mandates that spawned industries in solar, wind and electric cars, enabling them to survive until they became economically competitive with fossil fuels. The same cycle is unfolding with hydrogen.

From 20 Thousand Vehicles Today to 17 Million by 2040

Under 20,000 thousand hydrogen fuel cell vehicles (FCEVs) were sold/leased globally by year-end 2019. Analysts expect the rollout pace to accelerate going forward. Hydrogen fuel cell vehicles have already entered the commercialization phase in at least twenty countries. By 2025, sufficient hydrogen fueling infrastructures will be in place in several regions of the world, giving a significant boost to the market for these vehicles.

Europe alone could have 17 million hydrogen-powered transportation units by 2040, according to Rethink Energy Research’s new report, titled “Europe goes all in on hydrogen for the transport economy.” That compares to under a thousand units today. The tally would include 9 million passenger vehicles, 5 million light commercial vehicles, 2 million trucks, 240,000 buses and 9,600 trains.

Rethink’s research team further anticipates that total demand for hydrogen from Europe’s road transport sector will exceed 1,350 kilotons (1.35 million tonnes) per year by 2030, up from just 2 kilotons (2,000 tonnes) today. Demand is expected to accelerate beyond that point, growing nearly sevenfold to reach 13,800 kilotons (13.8 million tonnes) by 2040.

$11 Trillion Market in the Making

Wall Street is also gearing up for the hydrogen economy. According to a media article, Morgan Stanley’s Stephen Byrd believes green hydrogen will become economically viable quicker than investors appreciate. Bank of America analysts are equally optimistic, saying the hydrogen economy is on track to explode into an $11 trillion market by 2050. Incidentally, Bank of America likens today’s hydrogen market to smartphones pre-2007, noting that we are at the tipping point before the technology goes fully mainstream.

How to Gain Exposure

A hydrogen power boom would be a game changer for the hydrogen-related companies that have soldiered through years of modest sales and negative cash flow. Investors looking to gain exposure to this market can do so in three ways:

  • Hydrogen Gas Producers: They can invest in hydrogen gas-sellers like Linde (LIN) and Air Products & Chemicals (APD), whose markets caps are $124 billion ($124B) and $65B, respectively.
  • Hydrogen Fuel Cell Pure-Plays: Investors can also turn to pure-play hydrogen fuel cell companies like Plug Power (PLUG), Ballard Power Systems (BLDP), Bloom Energy (BE), ITM Power (ITM), FuelCell Energy (FCEL), AFC Energy (AFC) and Nel ASA (NEL:Oslo). These companies design, develop, commercialize and manufacture hydrogen fuel cell systems, and/or focus on hydrogen storage and dispensing infrastructure. Companies in the second group have market caps of $5B and under.
  • Clean Energy Exchange-Traded Funds: The iShares Global Clean Energy ETF (ICLN) invests in companies involved in the solar, wind, hydroelectric, geothermal, ethanol and biofuels industries—including hydrogen.

Most fuel cell pure-plays have seen their share prices soar by several multiples these past 12 months. The gains have not deterred Wall Street analysts from raising price targets on these stocks in recent weeks, citing the massive opportunity ahead for fuel cell companies and hydrogen technologies in general. In the case of PLUG, whose stock is up a staggering 675% in one year, 10 out of 11 analysts currently rate the shares as a Buy. Here’s a more extensive list of publicly traded fuel cell companies.

 McAlinden Research Partners
McAlinden Research Partners (MRP) provides independent investment strategy research to investors worldwide. The firm’s mission is to identify alpha-generating investment themes early in their unfolding and bring them to its clients’ attention. MRP’s research process reflects founder Joe McAlinden’s 50 years of experience on Wall Street. The methodologies he developed as chief investment officer of Morgan Stanley Investment Management, where he oversaw more than $400 billion in assets, provide the foundation for the strategy research MRP now brings to hedge funds, pension funds, sovereign wealth funds and other asset managers around the globe.

Sign up for our FREE newsletter at: www.streetwisereports.com/get-news

Disclosure:
1) McAlinden Research Partners disclosures are below.
2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: None. Click here for important disclosures about sponsor fees. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
3) Statements and opinions expressed are the opinions of the author and not of Streetwise Reports or its officers. The author is wholly responsible for the validity of the statements. The author was not paid by Streetwise Reports for this article. Streetwise Reports was not paid by the author to publish or syndicate this article. Streetwise Reports requires contributing authors to disclose any shareholdings in, or economic relationships with, companies that they write about. Streetwise Reports relies upon the authors to accurately provide this information and Streetwise Reports has no means of verifying its accuracy.
4) This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the decision to publish an article until three business days after the publication of the article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases.

McAlinden Research Partners:
This report has been prepared solely for informational purposes and is not an offer to buy/sell/endorse or a solicitation of an offer to buy/sell/endorse Interests or any other security or instrument or to participate in any trading or investment strategy. No representation or warranty (express or implied) is made or can be given with respect to the sequence, accuracy, completeness, or timeliness of the information in this Report. Unless otherwise noted, all information is sourced from public data.
McAlinden Research Partners is a division of Catalpa Capital Advisors, LLC (CCA), a Registered Investment Advisor. References to specific securities, asset classes and financial markets discussed herein are for illustrative purposes only and should not be interpreted as recommendations to purchase or sell such securities. CCA, MRP, employees and direct affiliates of the firm may or may not own any of the securities mentioned in the report at the time of publication.

( Companies Mentioned: (LON:AFC) ,
APD:NYSE,
BLDP:NASDAQ,
BE:NYSE,
FCEL:NASDAQ,
ITM:LON,
(LIN:NYSE),
PLUG:NASDAQ,
)

Source: McAlinden Research for Streetwise Reports   10/09/2020

McAlinden Research Partners makes the case for growth in the hydrogen fuel market, and lists the companies investors might target to benefit from that growth.

Summary: Hydrogen fuel cell technology has been derogatively dismissed as "fool cell" technology, with many doubting it can gain traction. But, after decades of false starts, it looks like the hydrogen economy is finally poised to take off, as governments and private companies announce initiatives that will grow hydrogen's share in the power generation mix.

Related stocks: Linde ((LIN:NYSE)), Air Products & Chemicals Inc. (APD:NYSE), Plug Power Inc. (PLUG:NASDAQ), Ballard Power Systems Inc. (BLDP:NASDAQ), Bloom Energy Corp. (BE:NYSE), ITM Power plc (ITM:LON), FuelCell Energy Inc. (FCEL:NASDAQ), AFC Energy (AFC:LON)

In the clean energy space, most of the attention goes to solar, wind and maybe even hydropower. In the automotive space, the lion's share of attention goes to battery-powered electric vehicles (BEVs). But these are not the only options on the market for zero-carbon energy. In fuel cell form, hydrogen can power everything from vehicles to buildings to power tools, and it does so without emitting carbon.

In simple terms, the technology works as follows: Hydrogen fuel cell vehicles combine hydrogen stored in a tank with oxygen from the air to produce electricity. That activity powers the car, emitting water vapor as the only by-product.

On the subject of using hydrogen to power cars, MRP has previously written that: "While fuel cells pose no threat to batteries' dominance in transportation, dismissing hydrogen and fuel cells would be as premature as dismissing solar in the early 2000s, or wind in the mid-1990s. The sector's growth continues to track, and possibly exceed, the earlier trajectories for solar and wind energy."

To receive all of MRP's insights in your inbox Monday–Friday, follow this link for a free 30-day trial. This content was delivered to McAlinden Research Partners clients on October 1.

Not everyone is convinced. Fuel cell technology has long been considered too costly and impractical, and many people have expressed doubts that it can gain traction. Tesla CEO Elon Musk famously dismissed hydrogen fuel cells as "fool cells" and "mind-bogglingly stupid." For some reason, Mr. Musk's reaction brings to mind how former Microsoft CEO Steve Balmer also famously laughed at the iPhone in 2007, calling it the "most expensive phone in the world and it doesn't appeal to business customers because it doesn't have a keyboard."

It is certainly true that hydrogen fuel cells have been touted for over two decades as the next miracle in transportation fuel, with little to show in terms of mass adoption. But we are now witnessing one important catalyst that could help the industry take off: Governments and private companies alike are stepping up their efforts to build up a global hydrogen industry.

Pro-Hydrogen Government Mandates

Global efforts to decarbonize the power and transportation sector have pushed a growing number of countries—including Australia, China, Japan and South Korea—into adopting policies that will further the use of hydrogen. The most ambitious plan to date emerged this summer when the European Union (EU) announced it would allocate billions of euros to build up the bloc's hydrogen economy. The goal is to create the conditions that will enable Europe to generate a substantial share of its energy from the element by 2050.

The EU's hydrogen strategy outlines clear targets. If those targets are achieved, Europe will have installed 40 gigawatts (GW) of renewable hydrogen electrolyzers by 2030 (up from one GW today) and increased its annual production of renewable hydrogen to 10 million tonnes (up from practically nothing). By 2050, the EU hopes to have scaled its renewable hydrogen capacity to 500GW.

Needless to say, it is government incentives and mandates that spawned industries in solar, wind and electric cars, enabling them to survive until they became economically competitive with fossil fuels. The same cycle is unfolding with hydrogen.

From 20 Thousand Vehicles Today to 17 Million by 2040

Under 20,000 thousand hydrogen fuel cell vehicles (FCEVs) were sold/leased globally by year-end 2019. Analysts expect the rollout pace to accelerate going forward. Hydrogen fuel cell vehicles have already entered the commercialization phase in at least twenty countries. By 2025, sufficient hydrogen fueling infrastructures will be in place in several regions of the world, giving a significant boost to the market for these vehicles.

Europe alone could have 17 million hydrogen-powered transportation units by 2040, according to Rethink Energy Research's new report, titled "Europe goes all in on hydrogen for the transport economy." That compares to under a thousand units today. The tally would include 9 million passenger vehicles, 5 million light commercial vehicles, 2 million trucks, 240,000 buses and 9,600 trains.

Rethink's research team further anticipates that total demand for hydrogen from Europe's road transport sector will exceed 1,350 kilotons (1.35 million tonnes) per year by 2030, up from just 2 kilotons (2,000 tonnes) today. Demand is expected to accelerate beyond that point, growing nearly sevenfold to reach 13,800 kilotons (13.8 million tonnes) by 2040.

$11 Trillion Market in the Making

Wall Street is also gearing up for the hydrogen economy. According to a media article, Morgan Stanley's Stephen Byrd believes green hydrogen will become economically viable quicker than investors appreciate. Bank of America analysts are equally optimistic, saying the hydrogen economy is on track to explode into an $11 trillion market by 2050. Incidentally, Bank of America likens today's hydrogen market to smartphones pre-2007, noting that we are at the tipping point before the technology goes fully mainstream.

How to Gain Exposure

A hydrogen power boom would be a game changer for the hydrogen-related companies that have soldiered through years of modest sales and negative cash flow. Investors looking to gain exposure to this market can do so in three ways:

  • Hydrogen Gas Producers: They can invest in hydrogen gas-sellers like Linde (LIN) and Air Products & Chemicals (APD), whose markets caps are $124 billion ($124B) and $65B, respectively.
  • Hydrogen Fuel Cell Pure-Plays: Investors can also turn to pure-play hydrogen fuel cell companies like Plug Power (PLUG), Ballard Power Systems (BLDP), Bloom Energy (BE), ITM Power (ITM), FuelCell Energy (FCEL), AFC Energy (AFC) and Nel ASA (NEL:Oslo). These companies design, develop, commercialize and manufacture hydrogen fuel cell systems, and/or focus on hydrogen storage and dispensing infrastructure. Companies in the second group have market caps of $5B and under.
  • Clean Energy Exchange-Traded Funds: The iShares Global Clean Energy ETF (ICLN) invests in companies involved in the solar, wind, hydroelectric, geothermal, ethanol and biofuels industries—including hydrogen.

Most fuel cell pure-plays have seen their share prices soar by several multiples these past 12 months. The gains have not deterred Wall Street analysts from raising price targets on these stocks in recent weeks, citing the massive opportunity ahead for fuel cell companies and hydrogen technologies in general. In the case of PLUG, whose stock is up a staggering 675% in one year, 10 out of 11 analysts currently rate the shares as a Buy. Here's a more extensive list of publicly traded fuel cell companies.

 McAlinden Research Partners McAlinden Research Partners (MRP) provides independent investment strategy research to investors worldwide. The firm's mission is to identify alpha-generating investment themes early in their unfolding and bring them to its clients' attention. MRP's research process reflects founder Joe McAlinden's 50 years of experience on Wall Street. The methodologies he developed as chief investment officer of Morgan Stanley Investment Management, where he oversaw more than $400 billion in assets, provide the foundation for the strategy research MRP now brings to hedge funds, pension funds, sovereign wealth funds and other asset managers around the globe.

Sign up for our FREE newsletter at: www.streetwisereports.com/get-news

Disclosure:
1) McAlinden Research Partners disclosures are below.
2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: None. Click here for important disclosures about sponsor fees. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
3) Statements and opinions expressed are the opinions of the author and not of Streetwise Reports or its officers. The author is wholly responsible for the validity of the statements. The author was not paid by Streetwise Reports for this article. Streetwise Reports was not paid by the author to publish or syndicate this article. Streetwise Reports requires contributing authors to disclose any shareholdings in, or economic relationships with, companies that they write about. Streetwise Reports relies upon the authors to accurately provide this information and Streetwise Reports has no means of verifying its accuracy.
4) This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the decision to publish an article until three business days after the publication of the article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases.

McAlinden Research Partners:
This report has been prepared solely for informational purposes and is not an offer to buy/sell/endorse or a solicitation of an offer to buy/sell/endorse Interests or any other security or instrument or to participate in any trading or investment strategy. No representation or warranty (express or implied) is made or can be given with respect to the sequence, accuracy, completeness, or timeliness of the information in this Report. Unless otherwise noted, all information is sourced from public data.
McAlinden Research Partners is a division of Catalpa Capital Advisors, LLC (CCA), a Registered Investment Advisor. References to specific securities, asset classes and financial markets discussed herein are for illustrative purposes only and should not be interpreted as recommendations to purchase or sell such securities. CCA, MRP, employees and direct affiliates of the firm may or may not own any of the securities mentioned in the report at the time of publication.

( Companies Mentioned: (LON:AFC) , APD:NYSE, BLDP:NASDAQ, BE:NYSE, FCEL:NASDAQ, ITM:LON, (LIN:NYSE), PLUG:NASDAQ, )

VivoPower Shares Continue Meteoric Rise After Firm Inks Deal to Acquire 51% of Tembo e-LV

Source: Streetwise Reports   10/09/2020

Shares of VivoPower International traded 60% higher setting a new 52-week high after the firm reported it executed a definitive agreement to acquire 51% of light electric vehicle comp…

Source: Streetwise Reports   10/09/2020

Shares of VivoPower International traded 60% higher setting a new 52-week high after the firm reported it executed a definitive agreement to acquire 51% of light electric vehicle company Tembo e-LV.

VivoPower International Plc (VVPR:NASDAQ) today announced that it has "signed a definitive agreement to acquire a 51% shareholding in Tembo e-LV B.V. (Tembo)."

The company noted that Tembo is a specialist battery-electric and off-road vehicle company that is headquartered in the Netherlands. Tembo maintains global sales and distribution channels across four continents including Europe, Africa, Australia and North America. Tembo's services and products cater to a wide range of industries including infrastructure, mining, utilities and government services. The company also provides customized light electric vehicles for rugged applications such as game safaris and humanitarian aid.

The firm advised that the total agreed upon purchase price for 51% of Tembo is US$4.7 million. The company added that it will also have the option to acquire the remaining 49% of Tembo in the future, but the exact terms and pricing for that option were not provided in the report. VivoPower noted that the transaction remains subject to ordinary closing conditions, which include capital structuring and funding mix requirements.

The report indicated that Tembo generated revenues (unaudited) of US$2.3 million in FY/19. VivoPower commented that the potential market for commercial fleet electric vehicles in the areas Tembo operates could be at least US$36 billion and that these estimates do not even include the U.S., Asia or South America where Tembo does not presently operate.

VivoPower International's Executive Chairman and CEO Kevin Chin remarked, "We look forward to working even more closely with the Tembo team in scaling up its capacity to deliver customized and/or ruggedized commercial fleet electrification solutions. Furthermore, this acquisition will enable VivoPower to accelerate the roll out of our sustainable energy solutions offering, with an initial focus on the mining, infrastructure and utilities sectors globally."

The report stated that together VivoPower and Tembo currently have more than 700 customers and that a large number of them are involved in the infrastructure mining and utilities sectors.

Tembo's CEO and Founder Frank Daams added, "VivoPower's investment will allow Tembo to build additional capacity to meet pent up demand from our customers and improve efficiencies of scale. Given that the Tembo and VivoPower teams have already started working together on customer-initiated requests for proposals, we believe that this will translate into a growing order book."

VivoPower is based in London and describes itself as "an international battery technology, electric vehicle, solar and critical power services company whose core purpose is to deliver sustainable energy solutions to its customers." In addition to the U.K., the company has operations in Australia, Canada and the U.S.

VivoPower International started off the day with a market capitalization of around $136.8 million with approximately 13.56 million shares outstanding. VVPR shares opened 57% higher today at $15.84 (+$10.09, +56.99%) over yesterday's $10.09 closing price and reached a new 52-week high price this morning of $24.33. The stock has traded today between $14.10 and $24.33 per share and is currently trading at $17.00 (+$6.91, +68.48%).

Sign up for our FREE newsletter at: www.streetwisereports.com/get-news

Disclosure:
1) Stephen Hytha compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. He or members of his household own securities of the following companies mentioned in the article: None. He or members of his household are paid by the following companies mentioned in this article: None.
2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: None. Click here for important disclosures about sponsor fees.
3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the decision to publish an article until three business days after the publication of the article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases.

( Companies Mentioned: VVPR:NASDAQ, )

Hydrocarbon Explorer to Acquire WPX Energy in All-Stock Deal

Source: Streetwise Reports   10/06/2020

The positive impact of the transaction on the acquirer, Devon Energy, is discussed in a Raymond James report.

In a Sept. 28 research note, Raymond James analyst John Freeman reported that Devon Energy Corp. (DVN:NYSE) agreed to acquire WPX Energy in an all-stock transaction valued at about $12 billion, debt inclusive.

“We concur with the market’s positive assessment of the deal and have long been advocates of increasing scale in the shale game,” Freeman commented. Devon Energy stock surged after the merger announcement.

The analyst presented the ways in which Devon Energy will benefit from the transaction. It will expand its lease holdings to 400,000 acres and achieve an estimated $575 million worth in synergies by year-end 2021. Also, the acquisition lowers Devon’s exposure to federal acreage in the Delaware Basin to 35%.

It “further accelerates Devon’s transition to a shareholder returns-based, low-growth business model (reinvest about 75% of operating cash flow with maximum production growth of 5%),” noted Freeman.

The acquisition is immediately accretive to Devon Energy, Freeman added. Raymond James estimates that in 2021, the combined company’s earnings per share will increase to $0.36 per share from $0.07, and cash flow per share will grow to $4 per share from $3.38. Free cash flow yield in 2021 is an estimated 10.7%, assuming the current strip price based on a current West Texas Intermediate oil price of $40 per barrel. Leverage is expected to drop to 1.5x by year-end 2021 and to 1x by year-end 2022.

The deal between these two Oklahoma-based hydrocarbon firms will allow Devon Energy to pay out a variable dividend in addition to its existing fixed dividend, and it announced plans to do so. With its new policy, the company intends to distribute up to 50% of excess free cash flow each quarter. In 2021, excess free cash flow, at the current strip price, is estimated by Raymond James to be about $375 million and at $50 per barrel, should be about $800 million.

“Overall, we view the acquisition as a positive,” Freeman concluded.

Raymond James has an Outperform rating and a $15 per share target price on Devon Energy, the stock of which is trading currently at about $10.13 per share.

Sign up for our FREE newsletter at: www.streetwisereports.com/get-news

Disclosure:
1) Doresa Banning compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.
2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: None. Click here for important disclosures about sponsor fees.
3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the decision to publish an article until three business days after the publication of the article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases.

Disclosures from Raymond James, Devon Energy Corp., September 28, 2020

ANALYST INFORMATION

Analysts Holdings and Compensation: Equity analysts and their staffs at Raymond James are compensated based on a salary and bonus system. Several factors enter into the bonus determination, including quality and performance of research product, the analyst’s success in rating stocks versus an industry index, and support effectiveness to trading and the retail and institutional sales forces. Other factors may include but are not limited to: overall ratings from internal (other than investment banking) or external parties and the general productivity and revenue generated in covered stocks.

The analyst John Freeman, primarily responsible for the preparation of this research report, attests to the following: (1) that the views and opinions rendered in this research report reflect his or her personal views about the subject companies or issuers and (2) that no part of the research analyst’s compensation was, is, or will be directly or indirectly related to the specific recommendations or views in this research report. In addition, said analyst(s) has not received compensation from any subject company in the last 12 months.

RAYMOND JAMES RELATIONSHIP DISCLOSURES
Certain affiliates of the RJ Group expect to receive or intend to seek compensation for investment banking services from all companies under research coverage within the next three months.

Raymond James & Associates received non-investment banking securities-related compensation from Devon Energy Corporation within the past 12 months.

Raymond James & Associates, Inc. makes a market in the shares of Devon Energy Corporation and WPX
Energy, Inc.

Additional Risk and Disclosure information, as well as more information on the Raymond James rating system and suitability categories, is available here.

( Companies Mentioned: DVN:NYSE,
)

Source: Streetwise Reports   10/06/2020

The positive impact of the transaction on the acquirer, Devon Energy, is discussed in a Raymond James report.

In a Sept. 28 research note, Raymond James analyst John Freeman reported that Devon Energy Corp. (DVN:NYSE) agreed to acquire WPX Energy in an all-stock transaction valued at about $12 billion, debt inclusive.

"We concur with the market's positive assessment of the deal and have long been advocates of increasing scale in the shale game," Freeman commented. Devon Energy stock surged after the merger announcement.

The analyst presented the ways in which Devon Energy will benefit from the transaction. It will expand its lease holdings to 400,000 acres and achieve an estimated $575 million worth in synergies by year-end 2021. Also, the acquisition lowers Devon's exposure to federal acreage in the Delaware Basin to 35%.

It "further accelerates Devon's transition to a shareholder returns-based, low-growth business model (reinvest about 75% of operating cash flow with maximum production growth of 5%)," noted Freeman.

The acquisition is immediately accretive to Devon Energy, Freeman added. Raymond James estimates that in 2021, the combined company's earnings per share will increase to $0.36 per share from $0.07, and cash flow per share will grow to $4 per share from $3.38. Free cash flow yield in 2021 is an estimated 10.7%, assuming the current strip price based on a current West Texas Intermediate oil price of $40 per barrel. Leverage is expected to drop to 1.5x by year-end 2021 and to 1x by year-end 2022.

The deal between these two Oklahoma-based hydrocarbon firms will allow Devon Energy to pay out a variable dividend in addition to its existing fixed dividend, and it announced plans to do so. With its new policy, the company intends to distribute up to 50% of excess free cash flow each quarter. In 2021, excess free cash flow, at the current strip price, is estimated by Raymond James to be about $375 million and at $50 per barrel, should be about $800 million.

"Overall, we view the acquisition as a positive," Freeman concluded.

Raymond James has an Outperform rating and a $15 per share target price on Devon Energy, the stock of which is trading currently at about $10.13 per share.

Sign up for our FREE newsletter at: www.streetwisereports.com/get-news

Disclosure:
1) Doresa Banning compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.
2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: None. Click here for important disclosures about sponsor fees.
3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the decision to publish an article until three business days after the publication of the article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases.

Disclosures from Raymond James, Devon Energy Corp., September 28, 2020

ANALYST INFORMATION

Analysts Holdings and Compensation: Equity analysts and their staffs at Raymond James are compensated based on a salary and bonus system. Several factors enter into the bonus determination, including quality and performance of research product, the analyst's success in rating stocks versus an industry index, and support effectiveness to trading and the retail and institutional sales forces. Other factors may include but are not limited to: overall ratings from internal (other than investment banking) or external parties and the general productivity and revenue generated in covered stocks.

The analyst John Freeman, primarily responsible for the preparation of this research report, attests to the following: (1) that the views and opinions rendered in this research report reflect his or her personal views about the subject companies or issuers and (2) that no part of the research analyst's compensation was, is, or will be directly or indirectly related to the specific recommendations or views in this research report. In addition, said analyst(s) has not received compensation from any subject company in the last 12 months.

RAYMOND JAMES RELATIONSHIP DISCLOSURES
Certain affiliates of the RJ Group expect to receive or intend to seek compensation for investment banking services from all companies under research coverage within the next three months.

Raymond James & Associates received non-investment banking securities-related compensation from Devon Energy Corporation within the past 12 months.

Raymond James & Associates, Inc. makes a market in the shares of Devon Energy Corporation and WPX Energy, Inc.

Additional Risk and Disclosure information, as well as more information on the Raymond James rating system and suitability categories, is available here.

( Companies Mentioned: DVN:NYSE, )

Analyst: Cobalt Company with Canadian Assets Positioned for Growth

Source: Peter Epstein for Streetwise Reports   10/06/2020

Peter Epstein of Epstein Research explains why he believes First Cobalt Corp. is the best way to play “irrepressible” strength in the electronic vehicle market and growing cobalt demand.

Battery metals lithium, vanadium, nickel, cobalt. . .each has traded at much higher levels, and each is widely expected to increase again (perhaps substantially). Note: unless indicated otherwise, all figures in US dollars.

Will lithium, vanadium and nickel prices rise again? I don’t know. This article is about cobalt, which briefly traded at $44/lb. in Q2/2018, but now changes hands at about $16/lb. I believe a rebound to $25/lb. is reasonable within two to three years.

Outlook For EVs and Energy Storage Remains Strong; Good For Cobalt

Even as some predict cobalt’s demise, several factors make me bullish. First and foremost, despite a global pandemic, long-term trends in the electronic vehicle (EV) market look as strong as ever. Look no further than Tesla’s enterprise value ( also EV) of $400 billion. If one is bullish on EVs, cobalt remains a great way to play that thematic.

In North America there are surprisingly few pure-play cobalt juniors to choose from. Even fewer are anywhere near positive cash flow. A name I’ve been following for years, First Cobalt Corp. (FCC:TSX.V; FTSSF:OTCQX; FCC:ASX), hopes to be profitable in 2022.

Management expects a very healthy $41 million ($41M) of pre-tax cash flow at the refinery level (economics to be split between First Cobalt and Glencore) in its first full year of toll-milling operations.

First Cobalt owns 100% of a permitted Ontario, Canada, cobalt refinery that mining giant Glencore International Plc (GLEN:LSE) is backing with debt financing (terms yet to be determined) to restart operations. This refinery has a feasibility study on it delineating a $139M after-tax net present value (NPV 8%) and 53% internal rate of return (IRR) at a $25/lb. cobalt price assumption.

Refurbishing and expanding First Cobalt’s refinery is underway and is expected to cost $60M, a meaningful portion in the form of loans from Glencore. Some of the remaining capital needed could come from Canadian government agencies, possibly including grants. First Cobalt and Glencore will share in the refinery’s economics (terms to be determined) until loans are repaid.

Why Is the Outlook for Cobalt, Especially from North America, Bright?

COVID-19 has spurred several countries, most notably China, to stimulate weak economies with EV subsidies, rebates, tax breaks, etc. The global economy is in recession, so new car markets are not doing so great. However, EV sales have held up remarkably well.

Signs of global warming have become increasingly prominent across the globe, making it impossible to deny or ignore. This can be seen in intense forest fires in places including; the U.S., Australia, the Amazon, Canada, Europe and Siberia, as well as more powerful and frequent hurricanes (among other phenomena).

This trend is driving the world toward even more rapid adoption of EVs and renewable energy. Wind and solar power require battery storage systems (mostly large, non-portable lithium (Li)-ion batteries), that use cobalt.

Li-ion batteries will be the dominant EV and energy storage battery architecture for at least the next 10–15 years. Expert consultants like Benchmark Mineral Intelligence, CRU and Roskill agree. Roskill recently stated, “[T]he cobalt market is entering a new phase of consolidation and rejuvenation. Medium-term demand is expected to grow steadily once battery and aerospace sectors recover from recent setbacks with the assistance of government subsidy/rescue schemes in China and Europe. As market participants re-focus on supply chain security and sustainability, a more resilient and diverse cobalt value chain could be built. As such, cobalt should continue to play an essential role in the global transition towards clean energy technologies.”

Although I’m bullish on EVs, energy storage and cobalt demand, some readers might be concerned about recent headlines that Tesla is using batteries that contain no cobalt. These will only be in a minority of Tesla’s vehicles, some low-end Chinese models. Make no mistake, most global EV makers are sticking with cobalt.

Benchmark Mineral Intelligence Expects 15%/Yr. Growth In Cobalt Demand

Granted, due to sourcing challenges and cost considerations, the percentage of cobalt used in Li-ion batteries for EVs is declining. From 20+% (on average) cobalt content today, it could fall to ~10%, but probably not lower. Why? Cobalt plays a crucial part in stabilizing the battery structure, which in turn enhances energy density and safety.

Even as cobalt use per EV battery declines, the soaring number of EV batteries mitigates the decline, such that total cobalt consumed (in EVs) will continue increasing, albeit modestly.

In the chart below from Benchmark Mineral Intelligence, cobalt demand for Li-ion batteries (in non-portable applications, like grid-scale energy storage systems) is forecast to grow much faster than cobalt demand for EV batteries. Overall, Benchmark forecasts cobalt demand from all end uses to rise a robust ~15%/year from 2020-2025.

New applications that require Li-ion batteries are growing by leaps and bounds. This recent Reuters article explains that the rollout of 5G telecom networks will require a significant amount of cobalt: “The need for larger rechargeable batteries and more energy storage for 5G technology will significantly boost demand for cobalt. . .Larger batteries using lithium, cobalt oxide chemistry (LCO), are needed in 5G phones as the antenna, used to transmit and receive radio waves, needs more power than antennas in 4G phones. Base stations for 5G need more power, necessitating widespread use of energy storage systems. In China, the fastest growing 5G market, base stations use LCO batteries.”

Refinery Opex Estimate Cut by 13.2%; After-Tax IRR Rises to 55%

Returning to First Cobalt, management recently revealed a 13.2% decline in anticipated opex in its refinery feasibility study’s flow sheet. Due to these savings, and two additional years of mine life, the after-tax NPV 8% from the feasibility study increases by ~$38M to $177M, and the IRR rises to 55%. The ratio of NPV to upfront capex improved from an already strong 2.5x to 3.0x.

Importantly, a number of other initiatives are being carefully studied that could potentially cut opex a further 5–10%. Having Glencore on one’s technical team helps a lot in this regard! If further opex reductions are forthcoming, the after-tax NPV 8% could rise above $200M. Compare that to First Cobalt’s market cap of $41M.

The refinery alone could be worth 4x–5x the current market cap in a few years. Yet, that does not even take into consideration a portfolio of silver assets that management is trying to monetize or its cobalt assets in Idaho (USA). The U.S. cobalt resources are probably not worth much at current cobalt prices, but could become valuable again if the price rebounds.

First Cobalt’s refinery has tailings capacity of 26 years, yet the refinery life outlined in the enhanced feasibility study is just 13 years. Instead of 13 years at 25,000 tonnes/year, imagine the economics for an 18-year refinery life at 35,000 tonnes/year output.

North America Desperate for Conflict-Free, Non-Chinese, Battery-Grade Cobalt

Two thirds of mined cobalt production comes from the Democratic Republic of Congo (DRC) in Africa, and over three-quarters of that production gets refined in China. For security of supply reasons, automakers would greatly benefit from cobalt that, although sourced from a mine in the DRC, is guaranteed by Glencore to be conflict-free.

Glencore’s conflict-free feedstock, fed into First Cobalt’s refinery in Ontario, would circumvent the need to deal with China, generating considerable cost, time and logistical savings—not to mention, far less pollution from not having to ship feedstock to China and refined cobalt products back to North America.

Given challenging U.S.-Chinese relations, U.S. auto plants would benefit from security of supply from Ontario. Instead of relying on China, refined battery-grade cobalt from Ontario could be delivered to Canada, the U.S., Mexico and even Europe.

Last week Ford Motor Co. (F:NYSE) announced plans to invest CA$1.8 billion to produce, “fully battery electric vehicles” in Canada—not just anywhere in Canada, but in Ontario, ~500 kilometers from First Cobalt’s refinery. This is a big deal for the Canadian EV industry.

Conclusion

As compelling as First Cobalt is, there remains a high level of risk. In the next two years, First Cobalt expects to amass ~$50–60M in debt (primarily from Glencore). If the refinery does not approach nameplate capacity by 2022–23, or cobalt remains around $16–18/lb., the ompany could be in trouble.

However, the flipside of a heavily indebted company with Glencore breathing down its neck is First Cobalt’s share of cash flow from operations paying off debt in three to five years. This debt payment outcome is the base case, not an aggressive upside scenario.

Once First Cobalt reaches free cash flow positive, with line of sight towards being able to pay down loans, the true value of its hard-to-replicate operating cobalt refinery—feeding battery-grade cobalt to U.S., Canadian and Mexican auto markets—will become a lot clearer.

Upon that substantial de-risking, and the cobalt price hopefully being stronger, First Cobalt Corp.’s share price could be a lot higher than today’s CA$0.135/share. Lithium prices remain depressed, but several lithium juniors have recently started rallying hard. Could cobalt names be next?

Peter Epstein is the founder of Epstein Research. His background is in company and financial analysis. He holds an MBA degree in financial analysis from New York University’s Stern School of Business.

Sign up for our FREE newsletter at: www.streetwisereports.com/get-news

Disclosures: The content of this article is for information only. Readers fully understand and agree that nothing contained herein, written by Peter Epstein of Epstein Research [ER], (together, [ER]) about First Cobalt Corp., including but not limited to, commentary, opinions, views, assumptions, reported facts, calculations, etc. is to be considered implicit or explicit investment advice. Nothing contained herein is a recommendation or solicitation to buy or sell any security. [ER] is not responsible for investment actions taken by the reader. [ER] has never been, and is not currently, a registered or licensed financial advisor or broker / dealer, investment advisor, stockbroker, trader, money manager, compliance or legal officer, and does not perform market making activities. [ER] is not directly employed by any company, group, organization, party or person. The shares of First Cobalt Corp. are highly speculative, not suitable for all investors. Readers understand and agree that investments in small cap stocks can result in a 100% loss of invested funds. It is assumed and agreed upon by readers that they will consult with their own licensed or registered financial advisors before making any investment decisions.

At the time this interview was posted, Peter Epstein owned shares of First Cobalt Corp., and the Company was an advertiser on [ER].

While the author believes he’s diligent in screening out companies that, for any reasons whatsoever, are unattractive investment opportunities, he cannot guarantee that his efforts will (or have been) successful. [ER] is not responsible for any perceived, or actual, errors including, but not limited to, commentary, opinions, views, assumptions, reported facts and financial calculations, or for the completeness of this article or future content. [ER] is not expected or required to subsequently follow or cover any specific events or news, or write about any particular company or topic. [ER] is not an expert in any company, industry sector or investment topic.

Streetwise Reports Disclosure:
1) Peter Epstein’s disclosures are listed above.
2) The following companies mentioned in the article are billboard sponsors of Streetwise Reports: None. Click here for important disclosures about sponsor fees. Please click here for more information. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
3) Statements and opinions expressed are the opinions of the author and not of Streetwise Reports or its officers. The author is wholly responsible for the validity of the statements. The author was not paid by Streetwise Reports for this article. Streetwise Reports was not paid by the author to publish or syndicate this article. Streetwise Reports requires contributing authors to disclose any shareholdings in, or economic relationships with, companies that they write about. Streetwise Reports relies upon the authors to accurately provide this information and Streetwise Reports has no means of verifying its accuracy.

4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the decision to publish an article until three business days after the publication of the article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases.

( Companies Mentioned: FCC:TSX.V; FTSSF:OTCQX; FCC:ASX,
)

Source: Peter Epstein for Streetwise Reports   10/06/2020

Peter Epstein of Epstein Research explains why he believes First Cobalt Corp. is the best way to play "irrepressible" strength in the electronic vehicle market and growing cobalt demand.

Battery metals lithium, vanadium, nickel, cobalt. . .each has traded at much higher levels, and each is widely expected to increase again (perhaps substantially). Note: unless indicated otherwise, all figures in US dollars.

Will lithium, vanadium and nickel prices rise again? I don't know. This article is about cobalt, which briefly traded at $44/lb. in Q2/2018, but now changes hands at about $16/lb. I believe a rebound to $25/lb. is reasonable within two to three years.

Outlook For EVs and Energy Storage Remains Strong; Good For Cobalt

Even as some predict cobalt's demise, several factors make me bullish. First and foremost, despite a global pandemic, long-term trends in the electronic vehicle (EV) market look as strong as ever. Look no further than Tesla's enterprise value ( also EV) of $400 billion. If one is bullish on EVs, cobalt remains a great way to play that thematic.

In North America there are surprisingly few pure-play cobalt juniors to choose from. Even fewer are anywhere near positive cash flow. A name I've been following for years, First Cobalt Corp. (FCC:TSX.V; FTSSF:OTCQX; FCC:ASX), hopes to be profitable in 2022.

Management expects a very healthy $41 million ($41M) of pre-tax cash flow at the refinery level (economics to be split between First Cobalt and Glencore) in its first full year of toll-milling operations.

First Cobalt owns 100% of a permitted Ontario, Canada, cobalt refinery that mining giant Glencore International Plc (GLEN:LSE) is backing with debt financing (terms yet to be determined) to restart operations. This refinery has a feasibility study on it delineating a $139M after-tax net present value (NPV 8%) and 53% internal rate of return (IRR) at a $25/lb. cobalt price assumption.

Refurbishing and expanding First Cobalt's refinery is underway and is expected to cost $60M, a meaningful portion in the form of loans from Glencore. Some of the remaining capital needed could come from Canadian government agencies, possibly including grants. First Cobalt and Glencore will share in the refinery's economics (terms to be determined) until loans are repaid.

Why Is the Outlook for Cobalt, Especially from North America, Bright?

COVID-19 has spurred several countries, most notably China, to stimulate weak economies with EV subsidies, rebates, tax breaks, etc. The global economy is in recession, so new car markets are not doing so great. However, EV sales have held up remarkably well.

Signs of global warming have become increasingly prominent across the globe, making it impossible to deny or ignore. This can be seen in intense forest fires in places including; the U.S., Australia, the Amazon, Canada, Europe and Siberia, as well as more powerful and frequent hurricanes (among other phenomena).

This trend is driving the world toward even more rapid adoption of EVs and renewable energy. Wind and solar power require battery storage systems (mostly large, non-portable lithium (Li)-ion batteries), that use cobalt.

Li-ion batteries will be the dominant EV and energy storage battery architecture for at least the next 10–15 years. Expert consultants like Benchmark Mineral Intelligence, CRU and Roskill agree. Roskill recently stated, "[T]he cobalt market is entering a new phase of consolidation and rejuvenation. Medium-term demand is expected to grow steadily once battery and aerospace sectors recover from recent setbacks with the assistance of government subsidy/rescue schemes in China and Europe. As market participants re-focus on supply chain security and sustainability, a more resilient and diverse cobalt value chain could be built. As such, cobalt should continue to play an essential role in the global transition towards clean energy technologies."

Although I'm bullish on EVs, energy storage and cobalt demand, some readers might be concerned about recent headlines that Tesla is using batteries that contain no cobalt. These will only be in a minority of Tesla's vehicles, some low-end Chinese models. Make no mistake, most global EV makers are sticking with cobalt.

Benchmark Mineral Intelligence Expects 15%/Yr. Growth In Cobalt Demand

Granted, due to sourcing challenges and cost considerations, the percentage of cobalt used in Li-ion batteries for EVs is declining. From 20+% (on average) cobalt content today, it could fall to ~10%, but probably not lower. Why? Cobalt plays a crucial part in stabilizing the battery structure, which in turn enhances energy density and safety.

Even as cobalt use per EV battery declines, the soaring number of EV batteries mitigates the decline, such that total cobalt consumed (in EVs) will continue increasing, albeit modestly.

In the chart below from Benchmark Mineral Intelligence, cobalt demand for Li-ion batteries (in non-portable applications, like grid-scale energy storage systems) is forecast to grow much faster than cobalt demand for EV batteries. Overall, Benchmark forecasts cobalt demand from all end uses to rise a robust ~15%/year from 2020-2025.

New applications that require Li-ion batteries are growing by leaps and bounds. This recent Reuters article explains that the rollout of 5G telecom networks will require a significant amount of cobalt: "The need for larger rechargeable batteries and more energy storage for 5G technology will significantly boost demand for cobalt. . .Larger batteries using lithium, cobalt oxide chemistry (LCO), are needed in 5G phones as the antenna, used to transmit and receive radio waves, needs more power than antennas in 4G phones. Base stations for 5G need more power, necessitating widespread use of energy storage systems. In China, the fastest growing 5G market, base stations use LCO batteries."

Refinery Opex Estimate Cut by 13.2%; After-Tax IRR Rises to 55%

Returning to First Cobalt, management recently revealed a 13.2% decline in anticipated opex in its refinery feasibility study's flow sheet. Due to these savings, and two additional years of mine life, the after-tax NPV 8% from the feasibility study increases by ~$38M to $177M, and the IRR rises to 55%. The ratio of NPV to upfront capex improved from an already strong 2.5x to 3.0x.

Importantly, a number of other initiatives are being carefully studied that could potentially cut opex a further 5–10%. Having Glencore on one's technical team helps a lot in this regard! If further opex reductions are forthcoming, the after-tax NPV 8% could rise above $200M. Compare that to First Cobalt's market cap of $41M.

The refinery alone could be worth 4x–5x the current market cap in a few years. Yet, that does not even take into consideration a portfolio of silver assets that management is trying to monetize or its cobalt assets in Idaho (USA). The U.S. cobalt resources are probably not worth much at current cobalt prices, but could become valuable again if the price rebounds.

First Cobalt's refinery has tailings capacity of 26 years, yet the refinery life outlined in the enhanced feasibility study is just 13 years. Instead of 13 years at 25,000 tonnes/year, imagine the economics for an 18-year refinery life at 35,000 tonnes/year output.

North America Desperate for Conflict-Free, Non-Chinese, Battery-Grade Cobalt

Two thirds of mined cobalt production comes from the Democratic Republic of Congo (DRC) in Africa, and over three-quarters of that production gets refined in China. For security of supply reasons, automakers would greatly benefit from cobalt that, although sourced from a mine in the DRC, is guaranteed by Glencore to be conflict-free.

Glencore's conflict-free feedstock, fed into First Cobalt's refinery in Ontario, would circumvent the need to deal with China, generating considerable cost, time and logistical savings—not to mention, far less pollution from not having to ship feedstock to China and refined cobalt products back to North America.

Given challenging U.S.-Chinese relations, U.S. auto plants would benefit from security of supply from Ontario. Instead of relying on China, refined battery-grade cobalt from Ontario could be delivered to Canada, the U.S., Mexico and even Europe.

Last week Ford Motor Co. (F:NYSE) announced plans to invest CA$1.8 billion to produce, "fully battery electric vehicles" in Canada—not just anywhere in Canada, but in Ontario, ~500 kilometers from First Cobalt's refinery. This is a big deal for the Canadian EV industry.

Conclusion

As compelling as First Cobalt is, there remains a high level of risk. In the next two years, First Cobalt expects to amass ~$50–60M in debt (primarily from Glencore). If the refinery does not approach nameplate capacity by 2022–23, or cobalt remains around $16–18/lb., the ompany could be in trouble.

However, the flipside of a heavily indebted company with Glencore breathing down its neck is First Cobalt's share of cash flow from operations paying off debt in three to five years. This debt payment outcome is the base case, not an aggressive upside scenario.

Once First Cobalt reaches free cash flow positive, with line of sight towards being able to pay down loans, the true value of its hard-to-replicate operating cobalt refinery—feeding battery-grade cobalt to U.S., Canadian and Mexican auto markets—will become a lot clearer.

Upon that substantial de-risking, and the cobalt price hopefully being stronger, First Cobalt Corp.'s share price could be a lot higher than today's CA$0.135/share. Lithium prices remain depressed, but several lithium juniors have recently started rallying hard. Could cobalt names be next?

Peter Epstein is the founder of Epstein Research. His background is in company and financial analysis. He holds an MBA degree in financial analysis from New York University's Stern School of Business.

Sign up for our FREE newsletter at: www.streetwisereports.com/get-news

Disclosures: The content of this article is for information only. Readers fully understand and agree that nothing contained herein, written by Peter Epstein of Epstein Research [ER], (together, [ER]) about First Cobalt Corp., including but not limited to, commentary, opinions, views, assumptions, reported facts, calculations, etc. is to be considered implicit or explicit investment advice. Nothing contained herein is a recommendation or solicitation to buy or sell any security. [ER] is not responsible for investment actions taken by the reader. [ER] has never been, and is not currently, a registered or licensed financial advisor or broker / dealer, investment advisor, stockbroker, trader, money manager, compliance or legal officer, and does not perform market making activities. [ER] is not directly employed by any company, group, organization, party or person. The shares of First Cobalt Corp. are highly speculative, not suitable for all investors. Readers understand and agree that investments in small cap stocks can result in a 100% loss of invested funds. It is assumed and agreed upon by readers that they will consult with their own licensed or registered financial advisors before making any investment decisions.

At the time this interview was posted, Peter Epstein owned shares of First Cobalt Corp., and the Company was an advertiser on [ER].

While the author believes he's diligent in screening out companies that, for any reasons whatsoever, are unattractive investment opportunities, he cannot guarantee that his efforts will (or have been) successful. [ER] is not responsible for any perceived, or actual, errors including, but not limited to, commentary, opinions, views, assumptions, reported facts and financial calculations, or for the completeness of this article or future content. [ER] is not expected or required to subsequently follow or cover any specific events or news, or write about any particular company or topic. [ER] is not an expert in any company, industry sector or investment topic.

Streetwise Reports Disclosure:
1) Peter Epstein's disclosures are listed above.
2) The following companies mentioned in the article are billboard sponsors of Streetwise Reports: None. Click here for important disclosures about sponsor fees. Please click here for more information. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
3) Statements and opinions expressed are the opinions of the author and not of Streetwise Reports or its officers. The author is wholly responsible for the validity of the statements. The author was not paid by Streetwise Reports for this article. Streetwise Reports was not paid by the author to publish or syndicate this article. Streetwise Reports requires contributing authors to disclose any shareholdings in, or economic relationships with, companies that they write about. Streetwise Reports relies upon the authors to accurately provide this information and Streetwise Reports has no means of verifying its accuracy.
4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the decision to publish an article until three business days after the publication of the article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases.

( Companies Mentioned: FCC:TSX.V; FTSSF:OTCQX; FCC:ASX, )

Lundin Energy to Acquire Idemitsu’s Barents Sea Assets for US$125 Million

Source: Streetwise Reports   10/06/2020

Shares of Sweden’s Lundin Energy AB traded 17% higher after the company reported that it is acquiring Idemitsu Petroleum Norge’s Barents Sea portfolio for US$125 million in cash.Stock…

Source: Streetwise Reports   10/06/2020

Shares of Sweden's Lundin Energy AB traded 17% higher after the company reported that it is acquiring Idemitsu Petroleum Norge's Barents Sea portfolio for US$125 million in cash.

Stockholm-based oil and gas exploration and production company Lundin Energy AB (LNEGY:OTCPK) yesterday announced that its wholly owned subsidiary, Lundin Energy Norway AS (together Lundin Energy), "has entered into an agreement with Idemitsu Petroleum Norge AS (IPN) to acquire interests in a portfolio of licenses in the Barents Sea, including a 10% working interest in the Wisting oil discovery and a further 15% working interest in the Alta oil discovery."

The firm stated that the transaction will serve to strengthen its position in one of its core exploration areas and highlighted that it provides Lundin Energy with an interest in the development of a major commercial oil discovery. The company noted that acquiring these pre-development resources will contribute to its strategic sustaining long-term production profile.

The deal will result in Lundin gaining a 10% working interest in the major Wisting oil discovery and an additional 15% percent working interest in the Alta oil discovery, which will raise its interest in that project to a total of 55%.

The firm indicated that it anticipates that the purchase of the licenses will add net contingent resources of around 70 MMboe, in exchange for cash consideration of US$125 million.

The company noted that its Barents Sea material exploration wells will now target gross unrisked prospective resources of over 800 MMboe. The firm stated that the new 10% working interest in the Wisting oil discovery offers the potential for an estimated gross resources of 500 MMbo. Wisting is projected to be one of the next Barents Sea production hubs and it operator, Equinor, is targeting a PDO by year-end 2022 to take advantage of tax incentives offered by the government of Norway.

In addition, the firm stated the deal increase its working interest in the Polmak exploration well from 40% to 47.5%. The company explained that Polmak is the first of three high impact Barents Sea exploration prospects it plans to drill during Q4/20 where it is targeting prospective resources of over 800 MMbo.

The company advised that the transaction remains subject to approval by IPN's parent company Idemitsu Kosan Co. Ltd.'s Board of Directors along with customary Norwegian regulatory approvals. The report noted that the transaction, which will be effective retroactively to January 2020, adds estimated net contingent resources of approximately 70 MMboe for consideration of US$125 million in cash.

The company's President and CEO Alex Schneiter remarked, "I am very pleased to announce this strategic acquisition which strengthens Lundin Energy's position in one of our core exploration areas and provides an interest in a major commercial oil discovery, as well as increasing our working interest in the operated Alta oil discovery."

"We will look to supplement our successful organic growth strategy with value-add, bolt-on acquisitions which add high quality, commercial resources and importantly, also complement our low cost and low carbon emissions production portfolio. With the high impact Polmak well due to spud shortly, I am excited at the opportunity and position we have built in the Barents and look forward to reporting on our progress in the months ahead," Schneiter added.

Lundin Energy has a market capitalization of around $6.7 billion. LNEGY shares opened nearly 32% higher today at $23.51 (+$5.66, +31.71%) over yesterday's $17.85 closing price. The stock has traded today between $17.00 and $23.51 per share and is currently trading at $20.90 (+$3.05, +17.09%).

Sign up for our FREE newsletter at: www.streetwisereports.com/get-news

Disclosure:
1) Stephen Hytha compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. He or members of his household own securities of the following companies mentioned in the article: None. He or members of his household are paid by the following companies mentioned in this article: None.
2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: None. Click here for important disclosures about sponsor fees.
3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the decision to publish an article until three business days after the publication of the article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases.

( Companies Mentioned: LNEGY:OTCPK, )

Uranium Is at a Key Inflection Point

Source: McAlinden Research for Streetwise Reports   09/30/2020

The uranium industry is setting up for a classic commodity supply-demand imbalance, which should benefit mining companies in this space, writes McAlinden Research Partners.

Summary: With nuclear power back on the agenda of some big energy markets, demand for uranium now exceeds pre-Fukushima levels and has outstripped primary supply over the past few years. Until now, stockpiles made up the difference, but even those are being depleted. Accordingly, the uranium industry is setting up for a classic commodity supply-demand imbalance, which should benefit mining companies in this space.

The Global Nuclear Fleet Is Expanding

Nearly a decade after the Fukushima disaster prompted the panic closure of dozens of nuclear reactors worldwide, the global fleet is expanding once again.

There are 440 reactors operating in the world today, with 54 more currently under construction and scheduled to become operational by 2026. An additional 110 reactors are on order or planned. Many countries with existing nuclear programs plan to add capacity, but most of the growth is occurring in Asia, where large populations, rising incomes and surging demand for electricity are driving activity.

In the past decade, new plants coming online have been largely balanced by old plants being retired. Going forward, new units are expected to exceed retirements. Projections from the Nuclear Fuel Report show 154 reactors closing by 2040 versus 289 coming online, resulting in a net gain of 135 reactors.

Mine Production is Falling

Those new reactors will require the world to produce more uranium. But while demand for the commodity is building up, supply is falling. Consider that there just 62 companies exploring for uranium today, down from 420 companies pre-Fukushima. Moreover, primary production has lagged global demand ever since below-breakeven uranium prices forced several mines to be shut down a couple of years ago.

To receive all of MRP’s insights in your inbox Monday–Friday, follow this link for a free 30-day trial. This content was delivered to McAlinden Research Partners clients on September 21.

Mines in 2019 produced some 63,273 tonnes of uranium oxide concentrate (aka “U3O8”) containing 53,656 tonnes of uranium (tU). That fulfilled just 79% of the 67,800 tU required by utilities last year. The balance had to come from secondary sources including stockpiles of uranium held by utilities.

The 441 reactors currently in operation have a combined capacity of about 400 GWe and require some 67,500 tU (or 79,500 tonnes of U308). Mine production for 2020 was expected to be around 63,600 tU. But that was before the coronavirus pandemic forced the world’s largest producers to suspend operations until it was safe for workers to get back to work. Because of the COVID-related disruption, uranium production in 2020 could fall as low as 45,000 tU, leaving a shortfall of 33% which again has to be filled from inventories and secondary supplies.

At this point, most analysts are projecting the uranium deficit will last until 2022, at the very least.

U.S. Strategic Uranium Reserve?

The deficit could be compounded by another wildcard: Possible stockpiling by the United States.

As the largest consumer of global uranium production, the U.S. accounts for nearly 30% of worldwide demand. Very little of that uranium is sourced internally, as domestic producers simply don’t have that kind of capacity. Last year, U.S. nuclear power plants got 90% of their uranium from foreign suppliers and only 10% from U.S. mines. While Canada remained the top supplier, the combined purchases of uranium from Russia/Kazakhstan/Uzbekistan (“non-allies”) exceeded those from Canada/Australia/US for the first time ever, and this may be exceeded further in 2020 given shutdowns at Canada’s Cameco operations.

Not surprisingly, there’s been talk in Congress about the need to reduce U.S. reliance on outside suppliers. For 2021, the Trump administration has asked Congress for $1.5 billion over the next 10 years to establish a uranium stockpile. While approval seems improbable at the moment, that could change in the future. After all, nuclear power plants generate 20% of U.S. electricity and are increasingly vulnerable to geopolitical risk.

In late 1973, an OPEC oil embargo nearly brought the U.S. economy to its knees as U.S. access to oil dried up quickly. To ensure that foreign suppliers could never again hold the economy hostage, U.S. Congress passed the Energy Policy and Conservation Act in 1975, establishing a strategic petroleum reserve. If Congress determines in the future that a strategic uranium reserve is needed, the ensuing stockpiling would provide a boost to the commodity’s price.

Prices Could Move Quickly

Whether or not the U.S. goes ahead with a strategic reserve does not change the fact that the uranium industry is setting up for a classic commodity supply-demand imbalance, with global demand outstripping annual primary supply from currently operating mines. Once the market absorbs this reality, prices will head north, and it is worth noting here that commodity prices can move fairly quickly.

In a six-week stretch from mid-March to early May, the price of uranium soared 42% from $24.00 to $34.05/lb before trending back down to $30.10/lb. While the March–May spike was merely a bounce off of oversold levels, there are fundamental reasons for uranium’s price to move up again in the months ahead.

First, many U.S. and European utilities have largely run down their stockpiles. Unless global production ramps up again, a supply crunch seems inevitable. Given that the cost to produce a pound of uranium averages around $50–$60/lb, the current market price is well below the incentive price needed to bring meaningful new production back online.

Second, with output down this year, even Cameco and Kazatomprom—the world’s largest producers—have resorted to buying uranium in the spot market to help meet their contractual requirements with utilities. The more they buy, and the longer they’re active in the market, the more likely we will see a spike in the price.

Third, utilities themselves have become more aggressive buyers in the spot market. The reason for this is simple. Uranium is typically supplied to nuclear power plants through long-term contracts. Several contracts up for renewal pre-date the Fukushima disaster, when the prevailing price was $73/lb. But producers are unwilling to lock themselves into new long-term contracts at current levels, forcing utilities to rely on the spot market for supplies. An acceleration of this trend should put upward pressure on the uranium price.

Jordan Trimble, CEO of Skyharbour Resources, notes that, since 2003 we have experienced eight periods in which the spot price of uranium spiked over a short period of time. Each time, the average price increase was +58% over an average of 6.6 months.

How to Gain Exposure

A fresh bull run would greatly benefit uranium miners and boost their share prices.

Investors seeking to capitalize on that opportunity have several ETFs to choose from. One of these is the North Shore Global Uranium Mining ETF (URNM), which invests in a basket of global companies involved in the mining, exploration, development and production of uranium, as well as companies that hold physical uranium.

URNM launched in December 2019, so it is a relatively new ETF with just 14.4M in AUM. It is a pureplay on uranium miners, unlike the older and larger Global X Uranium ETF (URA) which combines uranium miners with nuclear component producers.

In our April 16 report on uranium, MRP wrote: “An ongoing supply shock is moving the uranium market’s demand/supply balance in favor of miners.” Since the publication of that report, the North Shore Global Uranium Mining ETF (URNM) has returned +25%, outperforming the SPY’s +19% gain.

URNM vs. PICK

URNM Top 10 Holdings

 McAlinden Research Partners
McAlinden Research Partners (MRP) provides independent investment strategy research to investors worldwide. The firm’s mission is to identify alpha-generating investment themes early in their unfolding and bring them to its clients’ attention. MRP’s research process reflects founder Joe McAlinden’s 50 years of experience on Wall Street. The methodologies he developed as chief investment officer of Morgan Stanley Investment Management, where he oversaw more than $400 billion in assets, provide the foundation for the strategy research MRP now brings to hedge funds, pension funds, sovereign wealth funds and other asset managers around the globe.

Sign up for our FREE newsletter at: www.streetwisereports.com/get-news

Disclosure:
1) McAlinden Research Partners disclosures are below.
2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: Skyharbour Resources. Click here for important disclosures about sponsor fees. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
3) Statements and opinions expressed are the opinions of the author and not of Streetwise Reports or its officers. The author is wholly responsible for the validity of the statements. The author was not paid by Streetwise Reports for this article. Streetwise Reports was not paid by the author to publish or syndicate this article. Streetwise Reports requires contributing authors to disclose any shareholdings in, or economic relationships with, companies that they write about. Streetwise Reports relies upon the authors to accurately provide this information and Streetwise Reports has no means of verifying its accuracy.
4) This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the decision to publish an article until three business days after the publication of the article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Skyharbour Resources, a company mentioned in this article.

McAlinden Research Partners:
This report has been prepared solely for informational purposes and is not an offer to buy/sell/endorse or a solicitation of an offer to buy/sell/endorse Interests or any other security or instrument or to participate in any trading or investment strategy. No representation or warranty (express or implied) is made or can be given with respect to the sequence, accuracy, completeness, or timeliness of the information in this Report. Unless otherwise noted, all information is sourced from public data.

McAlinden Research Partners is a division of Catalpa Capital Advisors, LLC (CCA), a Registered Investment Advisor. References to specific securities, asset classes and financial markets discussed herein are for illustrative purposes only and should not be interpreted as recommendations to purchase or sell such securities. CCA, MRP, employees and direct affiliates of the firm may or may not own any of the securities mentioned in the report at the time of publication.

Source: McAlinden Research for Streetwise Reports   09/30/2020

The uranium industry is setting up for a classic commodity supply-demand imbalance, which should benefit mining companies in this space, writes McAlinden Research Partners.

Summary: With nuclear power back on the agenda of some big energy markets, demand for uranium now exceeds pre-Fukushima levels and has outstripped primary supply over the past few years. Until now, stockpiles made up the difference, but even those are being depleted. Accordingly, the uranium industry is setting up for a classic commodity supply-demand imbalance, which should benefit mining companies in this space.

The Global Nuclear Fleet Is Expanding

Nearly a decade after the Fukushima disaster prompted the panic closure of dozens of nuclear reactors worldwide, the global fleet is expanding once again.

There are 440 reactors operating in the world today, with 54 more currently under construction and scheduled to become operational by 2026. An additional 110 reactors are on order or planned. Many countries with existing nuclear programs plan to add capacity, but most of the growth is occurring in Asia, where large populations, rising incomes and surging demand for electricity are driving activity.

In the past decade, new plants coming online have been largely balanced by old plants being retired. Going forward, new units are expected to exceed retirements. Projections from the Nuclear Fuel Report show 154 reactors closing by 2040 versus 289 coming online, resulting in a net gain of 135 reactors.

Mine Production is Falling

Those new reactors will require the world to produce more uranium. But while demand for the commodity is building up, supply is falling. Consider that there just 62 companies exploring for uranium today, down from 420 companies pre-Fukushima. Moreover, primary production has lagged global demand ever since below-breakeven uranium prices forced several mines to be shut down a couple of years ago.

To receive all of MRP's insights in your inbox Monday–Friday, follow this link for a free 30-day trial. This content was delivered to McAlinden Research Partners clients on September 21.

Mines in 2019 produced some 63,273 tonnes of uranium oxide concentrate (aka "U3O8") containing 53,656 tonnes of uranium (tU). That fulfilled just 79% of the 67,800 tU required by utilities last year. The balance had to come from secondary sources including stockpiles of uranium held by utilities.

The 441 reactors currently in operation have a combined capacity of about 400 GWe and require some 67,500 tU (or 79,500 tonnes of U308). Mine production for 2020 was expected to be around 63,600 tU. But that was before the coronavirus pandemic forced the world's largest producers to suspend operations until it was safe for workers to get back to work. Because of the COVID-related disruption, uranium production in 2020 could fall as low as 45,000 tU, leaving a shortfall of 33% which again has to be filled from inventories and secondary supplies.

At this point, most analysts are projecting the uranium deficit will last until 2022, at the very least.

U.S. Strategic Uranium Reserve?

The deficit could be compounded by another wildcard: Possible stockpiling by the United States.

As the largest consumer of global uranium production, the U.S. accounts for nearly 30% of worldwide demand. Very little of that uranium is sourced internally, as domestic producers simply don't have that kind of capacity. Last year, U.S. nuclear power plants got 90% of their uranium from foreign suppliers and only 10% from U.S. mines. While Canada remained the top supplier, the combined purchases of uranium from Russia/Kazakhstan/Uzbekistan ("non-allies") exceeded those from Canada/Australia/US for the first time ever, and this may be exceeded further in 2020 given shutdowns at Canada's Cameco operations.

Not surprisingly, there's been talk in Congress about the need to reduce U.S. reliance on outside suppliers. For 2021, the Trump administration has asked Congress for $1.5 billion over the next 10 years to establish a uranium stockpile. While approval seems improbable at the moment, that could change in the future. After all, nuclear power plants generate 20% of U.S. electricity and are increasingly vulnerable to geopolitical risk.

In late 1973, an OPEC oil embargo nearly brought the U.S. economy to its knees as U.S. access to oil dried up quickly. To ensure that foreign suppliers could never again hold the economy hostage, U.S. Congress passed the Energy Policy and Conservation Act in 1975, establishing a strategic petroleum reserve. If Congress determines in the future that a strategic uranium reserve is needed, the ensuing stockpiling would provide a boost to the commodity's price.

Prices Could Move Quickly

Whether or not the U.S. goes ahead with a strategic reserve does not change the fact that the uranium industry is setting up for a classic commodity supply-demand imbalance, with global demand outstripping annual primary supply from currently operating mines. Once the market absorbs this reality, prices will head north, and it is worth noting here that commodity prices can move fairly quickly.

In a six-week stretch from mid-March to early May, the price of uranium soared 42% from $24.00 to $34.05/lb before trending back down to $30.10/lb. While the March–May spike was merely a bounce off of oversold levels, there are fundamental reasons for uranium's price to move up again in the months ahead.

First, many U.S. and European utilities have largely run down their stockpiles. Unless global production ramps up again, a supply crunch seems inevitable. Given that the cost to produce a pound of uranium averages around $50–$60/lb, the current market price is well below the incentive price needed to bring meaningful new production back online.

Second, with output down this year, even Cameco and Kazatomprom—the world's largest producers—have resorted to buying uranium in the spot market to help meet their contractual requirements with utilities. The more they buy, and the longer they're active in the market, the more likely we will see a spike in the price.

Third, utilities themselves have become more aggressive buyers in the spot market. The reason for this is simple. Uranium is typically supplied to nuclear power plants through long-term contracts. Several contracts up for renewal pre-date the Fukushima disaster, when the prevailing price was $73/lb. But producers are unwilling to lock themselves into new long-term contracts at current levels, forcing utilities to rely on the spot market for supplies. An acceleration of this trend should put upward pressure on the uranium price.

Jordan Trimble, CEO of Skyharbour Resources, notes that, since 2003 we have experienced eight periods in which the spot price of uranium spiked over a short period of time. Each time, the average price increase was +58% over an average of 6.6 months.

How to Gain Exposure

A fresh bull run would greatly benefit uranium miners and boost their share prices.

Investors seeking to capitalize on that opportunity have several ETFs to choose from. One of these is the North Shore Global Uranium Mining ETF (URNM), which invests in a basket of global companies involved in the mining, exploration, development and production of uranium, as well as companies that hold physical uranium.

URNM launched in December 2019, so it is a relatively new ETF with just 14.4M in AUM. It is a pureplay on uranium miners, unlike the older and larger Global X Uranium ETF (URA) which combines uranium miners with nuclear component producers.

In our April 16 report on uranium, MRP wrote: "An ongoing supply shock is moving the uranium market's demand/supply balance in favor of miners." Since the publication of that report, the North Shore Global Uranium Mining ETF (URNM) has returned +25%, outperforming the SPY's +19% gain.

URNM vs. PICK

URNM Top 10 Holdings

 McAlinden Research Partners McAlinden Research Partners (MRP) provides independent investment strategy research to investors worldwide. The firm's mission is to identify alpha-generating investment themes early in their unfolding and bring them to its clients' attention. MRP's research process reflects founder Joe McAlinden's 50 years of experience on Wall Street. The methodologies he developed as chief investment officer of Morgan Stanley Investment Management, where he oversaw more than $400 billion in assets, provide the foundation for the strategy research MRP now brings to hedge funds, pension funds, sovereign wealth funds and other asset managers around the globe.

Sign up for our FREE newsletter at: www.streetwisereports.com/get-news

Disclosure:
1) McAlinden Research Partners disclosures are below.
2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: Skyharbour Resources. Click here for important disclosures about sponsor fees. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
3) Statements and opinions expressed are the opinions of the author and not of Streetwise Reports or its officers. The author is wholly responsible for the validity of the statements. The author was not paid by Streetwise Reports for this article. Streetwise Reports was not paid by the author to publish or syndicate this article. Streetwise Reports requires contributing authors to disclose any shareholdings in, or economic relationships with, companies that they write about. Streetwise Reports relies upon the authors to accurately provide this information and Streetwise Reports has no means of verifying its accuracy.
4) This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the decision to publish an article until three business days after the publication of the article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Skyharbour Resources, a company mentioned in this article.

McAlinden Research Partners:
This report has been prepared solely for informational purposes and is not an offer to buy/sell/endorse or a solicitation of an offer to buy/sell/endorse Interests or any other security or instrument or to participate in any trading or investment strategy. No representation or warranty (express or implied) is made or can be given with respect to the sequence, accuracy, completeness, or timeliness of the information in this Report. Unless otherwise noted, all information is sourced from public data.

McAlinden Research Partners is a division of Catalpa Capital Advisors, LLC (CCA), a Registered Investment Advisor. References to specific securities, asset classes and financial markets discussed herein are for illustrative purposes only and should not be interpreted as recommendations to purchase or sell such securities. CCA, MRP, employees and direct affiliates of the firm may or may not own any of the securities mentioned in the report at the time of publication.

Explorer with Gold, PGE, REE Prospects Offers Bite of ‘Big Discovery Apple’

Source: Peter Epstein for Streetwise Reports   09/23/2020

International Montoro Resources, with multiple properties and a low enterprise value compared to peers, is “too cheap to ignore,” according to Peter Epstein of Epstein Research.

International Montoro Resources (IMT:TSX.V) is trading at a very cheap valuation, an enterprise value (EV) of ~CA$4.5 million (CA$4.5M). This is absurd given the company’s existing assets, near-term prospects and expert deal-making team. In addition to two promising gold properties, IMT has two nickel–copper (Cu)–platinum group element (PGE)–cobalt (Co) projects (all in Ontario), and a rare earth element (REE) project in British Columbia (BC).

The company’s Wicheeda North REE project alone is arguably worth as much or more than IMT’s entire EV. Adjoining this 1,444-hectare property is Defense Metals Corp.’s (DEFN:TSX.V; DFMTF:OTCQB; 35D:FSE) 1,708-hectare Wicheeda REE project. Defense Metals is a single-project company with a market cap of $8M. I believe IMT’s smaller and less developed REE property is, nonetheless, worth at least $4.5M.

The following four properties are the primary assets being advanced at this time. Those projects are: Wicheeda North, BC (REE); Blackfly, Atikokan, Ontario (gold); Serpent River/Pecors, Elliot Lake, Ontario (Ni-Cu-PGE + uranium + REEs); Camping Lake, Red Lake, Ontario (gold).

Note: Another acquisition was just announced—two high-grade gold properties in central Newfoundland. I will follow up these properties in my next article.

Blackfly Gold Property near Atikokan, Ontario

IMT recently entered into an option agreement to acquire the Blackfly Gold property (BGP) near Atikokan, Ontario. The BGP claims cover 1,296 hectares. The project is west of Falcon Gold Corp.’s (FG:TSX.V) Central Canada project, which recently reported 10.2 g/t gold over 3.0 meters (3.0m), and has a non-complaint historic resource of 230,000 ounces at 9.9 g/t gold.

Note: Karim Rayani is CEO of both IMT and Falcon Gold, and an active buyer of shares in both companies.

On Sept. 22, IMT announced the mobilization of an exploration team for follow-up geological mapping and sampling on the Blackfly vein. There’s significant mineralization, with values upward of 15 g/t gold over a 1.1m drill hole interval, and up to 167 g/t in grab samples.

The Northwest zone at Blackfly returned drill hole intercepts of 8.3m at 0.94 g/t gold and 11.0 g/t over 2.0m.

Blackfly is ~14 kilometers (14 km) southwest along strike of Agnico Eagle Mines Ltd.’s (AEM:TSX; AEM:NYSE) Hammond Reef deposit, which has 4.5 million ounces (4.5 Moz gold. A resurgence of interest in the Atikokan camp is due to development of Hammond Reef and Agnico staking and acquiring surrounding land. On top of Agnico, IMT, Falcon Gold, Abitibi Royalties Inc. (RZZ:TSX.V) and Portofino Resources Inc. (POR:TSX.V; POT:FSE) have also secured properties.

Work from 1941 described two gold vein shoots at Blackfly. The southern shoot averaged 11.9 g/t gold over a thickness of 0.33m on a strike length of 21.6m. The northern shoot averaged 13.4 g/t over 0.27m on a strike of 32.0m. Work conducted by TerraX in 2010–2012 included compilation of historical reports and data, drilling and surface geochemistry.

TerraX stated in a report that the lineament containing the Blackfly vein has alteration and mineralization traceable over a 4.4 km strike length on the property. The best gold values were from grab samples that graded 167 and 85.6 g/t gold.

Elliot Lake, Ontario (Serpent River/Pecors Ni-Cu-PGE + Uranium + REEs

X-Terra Resources Inc. (XTT:TSX.V; XTRRF:OTCMKTS; XTR:FSE) has been sitting on REE and uranium assets for over a decade. The Serpent River/Pecors property is a 100%-owned, 1,840-hectare parcel in Ontario. Rio Algom mined >100 million pounds of U308 from similar deposits in the Elliot Lake camp.

A historical, non-NI-43-101-compliant resource estimate of 14.8 million pounds (20 million tonnes at 0.037% U3O8) was done. Significant REE values accompany the uranium mineralization. Elliot Lake was a major producer of yttrium as a byproduct of uranium production.

This is a nice call option on the uranium price, which has failed to move meaningfully despite the best uranium fundamentals in nearly a decade. Even if uranium prices remain stalled around $30/lb., Serpent River also holds considerable promise for nickel, copper and PGEs like palladium.

In 2009, IMT commissioned a geophysical specialist to further interpret the airborne survey data. The resulting 3D representation of the inversion block showed an approximate size of 7 x 3 km, and an estimated depth of nearly 2 km, so approaching 40 cubic km.

Everyone knows that gold has soared lately; it’s up +62% since the beginning of 2016. However, few may know that palladium is up +344%! Think about that: Has it been the best performing metal on the planet? Even small amounts of palladium in the metals mix could be valuable credits to production costs.

Nickel, who cares about nickel? Tesla Inc. (TSLA:NASDAQ) does! Elon Musk directed a lot of investors toward nickel juniors in comments he made last month, and nickel received additional bullish commentary in the Battery Day presentation by Tesla. Nickel looks like an ever clearer winner in lithium-ion batteries, while the role other battery metals will pay faces growing uncertainty.

Red Lake, Ontario (Camping Lake—Gold)

It’s hard to believe I’m near the bottom of an article about a company with a CA$4.5M EV, talking about a fourth promising property in a well-known jurisdiction. Camping Lake is in the Red Lake mining district of Ontario. IMT is earning into an initial 51% stake in 3,400 hectares at Camping Lake. Falcon Gold is the vendor.

So far, Camping Lake’s main claim to fame is its close proximity to Great Bear Resources Ltd.’s (GBR:TSX.V; GTBDF:OTCQX) Dixie project; it’s about 20 km to the south of Dixie. The entire Red Lake district is active with more than a dozen significant drill programs and development activities.

Red Lake’s Pure Gold Mining Inc. (PGM:TSX.V; PUR:LSE) has surpassed the $1 billion market cap threshold, up nearly 600% from March. It expects to pour first gold at its high-grade mine in the heart of the district by year’s end. Pure Gold is widely considered a prime takeout target.

Conclusion

A sum-of-the-parts valuation would come up with well north of CA$4.5M. In the hands of larger strategic partners, I think the four assets mentioned herein could be worth 3–4 times the current EV.

In his short time as CEO of IMT, Rayani is doing a great job at drawing attention to the company. One way is through his ongoing open market purchases of shares; he’s acquired >1.3M since the beginning of August.

Could each of the four properties mentioned possibly be worth $3–5M, on a standalone basis, with more eyeballs on each story? Yes. And, valuations on viable mining projects are only headed in one direction. Gold, palladium, nickel, copper, REEs—I truly believe these are some of the best commodities to bet on.

With International Montoro Resources Inc., investors get exposure to a diversified suite of metals. Four projects means four bites at the big discovery apple.

Peter Epstein is the founder of Epstein Research. His background is in company and financial analysis. He holds an MBA degree in financial analysis from New York University’s Stern School of Business.

Sign up for our FREE newsletter at: www.streetwisereports.com/get-news

Disclosures: The content of the above article is for information only. Readers fully understand and agree that nothing contained herein, written by Peter Epstein of Epstein Research [ER], (together, [ER]) about International Montoro Resources, including but not limited to, commentary, opinions, views, assumptions, reported facts, calculations, etc., is not to be considered implicit or explicit investment advice. Nothing contained herein is a recommendation or solicitation to buy or sell any security. [ER] is not responsible under any circumstances for investment actions taken by the reader. [ER] has never been, and is not currently, a registered or licensed financial advisor or broker/dealer, investment advisor, stockbroker, professional trader, money manager, compliance or legal officer, and does not perform market making activities. [ER] is not directly employed by any company, group, organization, party or person. The shares of International Montoro Resources are highly speculative, not suitable for all investors. Readers understand and agree that investments in small cap stocks can result in a 100% loss of invested funds. It is assumed and agreed upon by readers that they will consult with their own licensed or registered financial advisors before making investment decisions.

At the time this article was posted, International Montoro Resources was an advertiser on [ER] and Peter Epstein owned shares in the company.

Readers understand and agree that they must conduct their own due diligence above and beyond reading this article. While the author believes he’s diligent in screening out companies that, for any reasons whatsoever, are unattractive investment opportunities, he cannot guarantee that his efforts will (or have been) successful. [ER] is not responsible for any perceived, or actual, errors including, but not limited to, commentary, opinions, views, assumptions, reported facts and financial calculations, or for the completeness of this article or future content. [ER] is not expected or required to subsequently follow or cover events and news, or write about any particular company or topic. [ER] is not an expert in any company, industry sector or investment topic.

Streetwise Reports Disclosure:
1) Peter Epstein’s disclosures are listed above.
2) The following companies mentioned in the article are billboard sponsors of Streetwise Reports: Defense Metals. Click here for important disclosures about sponsor fees. As of the date of this article, an affiliate of Streetwise Reports has a consulting relationship with X-Terra Resources. Please click here for more information. Please click here for more information. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
3) Statements and opinions expressed are the opinions of the author and not of Streetwise Reports or its officers. The author is wholly responsible for the validity of the statements. The author was not paid by Streetwise Reports for this article. Streetwise Reports was not paid by the author to publish or syndicate this article. Streetwise Reports requires contributing authors to disclose any shareholdings in, or economic relationships with, companies that they write about. Streetwise Reports relies upon the authors to accurately provide this information and Streetwise Reports has no means of verifying its accuracy.

4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the decision to publish an article until three business days after the publication of the article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases. As of the date of this interview, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of X-Terra, a company mentioned in this article.

( Companies Mentioned: IMT:TSX.V,
)

Source: Peter Epstein for Streetwise Reports   09/23/2020

International Montoro Resources, with multiple properties and a low enterprise value compared to peers, is "too cheap to ignore," according to Peter Epstein of Epstein Research.

International Montoro Resources (IMT:TSX.V) is trading at a very cheap valuation, an enterprise value (EV) of ~CA$4.5 million (CA$4.5M). This is absurd given the company's existing assets, near-term prospects and expert deal-making team. In addition to two promising gold properties, IMT has two nickel–copper (Cu)–platinum group element (PGE)–cobalt (Co) projects (all in Ontario), and a rare earth element (REE) project in British Columbia (BC).

The company's Wicheeda North REE project alone is arguably worth as much or more than IMT's entire EV. Adjoining this 1,444-hectare property is Defense Metals Corp.'s (DEFN:TSX.V; DFMTF:OTCQB; 35D:FSE) 1,708-hectare Wicheeda REE project. Defense Metals is a single-project company with a market cap of $8M. I believe IMT's smaller and less developed REE property is, nonetheless, worth at least $4.5M.

The following four properties are the primary assets being advanced at this time. Those projects are: Wicheeda North, BC (REE); Blackfly, Atikokan, Ontario (gold); Serpent River/Pecors, Elliot Lake, Ontario (Ni-Cu-PGE + uranium + REEs); Camping Lake, Red Lake, Ontario (gold).

Note: Another acquisition was just announced—two high-grade gold properties in central Newfoundland. I will follow up these properties in my next article.

Blackfly Gold Property near Atikokan, Ontario

IMT recently entered into an option agreement to acquire the Blackfly Gold property (BGP) near Atikokan, Ontario. The BGP claims cover 1,296 hectares. The project is west of Falcon Gold Corp.'s (FG:TSX.V) Central Canada project, which recently reported 10.2 g/t gold over 3.0 meters (3.0m), and has a non-complaint historic resource of 230,000 ounces at 9.9 g/t gold.

Note: Karim Rayani is CEO of both IMT and Falcon Gold, and an active buyer of shares in both companies.

On Sept. 22, IMT announced the mobilization of an exploration team for follow-up geological mapping and sampling on the Blackfly vein. There's significant mineralization, with values upward of 15 g/t gold over a 1.1m drill hole interval, and up to 167 g/t in grab samples.

The Northwest zone at Blackfly returned drill hole intercepts of 8.3m at 0.94 g/t gold and 11.0 g/t over 2.0m.

Blackfly is ~14 kilometers (14 km) southwest along strike of Agnico Eagle Mines Ltd.'s (AEM:TSX; AEM:NYSE) Hammond Reef deposit, which has 4.5 million ounces (4.5 Moz gold. A resurgence of interest in the Atikokan camp is due to development of Hammond Reef and Agnico staking and acquiring surrounding land. On top of Agnico, IMT, Falcon Gold, Abitibi Royalties Inc. (RZZ:TSX.V) and Portofino Resources Inc. (POR:TSX.V; POT:FSE) have also secured properties.

Work from 1941 described two gold vein shoots at Blackfly. The southern shoot averaged 11.9 g/t gold over a thickness of 0.33m on a strike length of 21.6m. The northern shoot averaged 13.4 g/t over 0.27m on a strike of 32.0m. Work conducted by TerraX in 2010–2012 included compilation of historical reports and data, drilling and surface geochemistry.

TerraX stated in a report that the lineament containing the Blackfly vein has alteration and mineralization traceable over a 4.4 km strike length on the property. The best gold values were from grab samples that graded 167 and 85.6 g/t gold.

Elliot Lake, Ontario (Serpent River/Pecors Ni-Cu-PGE + Uranium + REEs

X-Terra Resources Inc. (XTT:TSX.V; XTRRF:OTCMKTS; XTR:FSE) has been sitting on REE and uranium assets for over a decade. The Serpent River/Pecors property is a 100%-owned, 1,840-hectare parcel in Ontario. Rio Algom mined >100 million pounds of U308 from similar deposits in the Elliot Lake camp.

A historical, non-NI-43-101-compliant resource estimate of 14.8 million pounds (20 million tonnes at 0.037% U3O8) was done. Significant REE values accompany the uranium mineralization. Elliot Lake was a major producer of yttrium as a byproduct of uranium production.

This is a nice call option on the uranium price, which has failed to move meaningfully despite the best uranium fundamentals in nearly a decade. Even if uranium prices remain stalled around $30/lb., Serpent River also holds considerable promise for nickel, copper and PGEs like palladium.

In 2009, IMT commissioned a geophysical specialist to further interpret the airborne survey data. The resulting 3D representation of the inversion block showed an approximate size of 7 x 3 km, and an estimated depth of nearly 2 km, so approaching 40 cubic km.

Everyone knows that gold has soared lately; it's up +62% since the beginning of 2016. However, few may know that palladium is up +344%! Think about that: Has it been the best performing metal on the planet? Even small amounts of palladium in the metals mix could be valuable credits to production costs.

Nickel, who cares about nickel? Tesla Inc. (TSLA:NASDAQ) does! Elon Musk directed a lot of investors toward nickel juniors in comments he made last month, and nickel received additional bullish commentary in the Battery Day presentation by Tesla. Nickel looks like an ever clearer winner in lithium-ion batteries, while the role other battery metals will pay faces growing uncertainty.

Red Lake, Ontario (Camping Lake—Gold)

It's hard to believe I'm near the bottom of an article about a company with a CA$4.5M EV, talking about a fourth promising property in a well-known jurisdiction. Camping Lake is in the Red Lake mining district of Ontario. IMT is earning into an initial 51% stake in 3,400 hectares at Camping Lake. Falcon Gold is the vendor.

So far, Camping Lake's main claim to fame is its close proximity to Great Bear Resources Ltd.'s (GBR:TSX.V; GTBDF:OTCQX) Dixie project; it's about 20 km to the south of Dixie. The entire Red Lake district is active with more than a dozen significant drill programs and development activities.

Red Lake's Pure Gold Mining Inc. (PGM:TSX.V; PUR:LSE) has surpassed the $1 billion market cap threshold, up nearly 600% from March. It expects to pour first gold at its high-grade mine in the heart of the district by year's end. Pure Gold is widely considered a prime takeout target.

Conclusion

A sum-of-the-parts valuation would come up with well north of CA$4.5M. In the hands of larger strategic partners, I think the four assets mentioned herein could be worth 3–4 times the current EV.

In his short time as CEO of IMT, Rayani is doing a great job at drawing attention to the company. One way is through his ongoing open market purchases of shares; he's acquired >1.3M since the beginning of August.

Could each of the four properties mentioned possibly be worth $3–5M, on a standalone basis, with more eyeballs on each story? Yes. And, valuations on viable mining projects are only headed in one direction. Gold, palladium, nickel, copper, REEs—I truly believe these are some of the best commodities to bet on.

With International Montoro Resources Inc., investors get exposure to a diversified suite of metals. Four projects means four bites at the big discovery apple.

Peter Epstein is the founder of Epstein Research. His background is in company and financial analysis. He holds an MBA degree in financial analysis from New York University's Stern School of Business.

Sign up for our FREE newsletter at: www.streetwisereports.com/get-news

Disclosures: The content of the above article is for information only. Readers fully understand and agree that nothing contained herein, written by Peter Epstein of Epstein Research [ER], (together, [ER]) about International Montoro Resources, including but not limited to, commentary, opinions, views, assumptions, reported facts, calculations, etc., is not to be considered implicit or explicit investment advice. Nothing contained herein is a recommendation or solicitation to buy or sell any security. [ER] is not responsible under any circumstances for investment actions taken by the reader. [ER] has never been, and is not currently, a registered or licensed financial advisor or broker/dealer, investment advisor, stockbroker, professional trader, money manager, compliance or legal officer, and does not perform market making activities. [ER] is not directly employed by any company, group, organization, party or person. The shares of International Montoro Resources are highly speculative, not suitable for all investors. Readers understand and agree that investments in small cap stocks can result in a 100% loss of invested funds. It is assumed and agreed upon by readers that they will consult with their own licensed or registered financial advisors before making investment decisions.

At the time this article was posted, International Montoro Resources was an advertiser on [ER] and Peter Epstein owned shares in the company.

Readers understand and agree that they must conduct their own due diligence above and beyond reading this article. While the author believes he's diligent in screening out companies that, for any reasons whatsoever, are unattractive investment opportunities, he cannot guarantee that his efforts will (or have been) successful. [ER] is not responsible for any perceived, or actual, errors including, but not limited to, commentary, opinions, views, assumptions, reported facts and financial calculations, or for the completeness of this article or future content. [ER] is not expected or required to subsequently follow or cover events and news, or write about any particular company or topic. [ER] is not an expert in any company, industry sector or investment topic.

Streetwise Reports Disclosure:
1) Peter Epstein's disclosures are listed above.
2) The following companies mentioned in the article are billboard sponsors of Streetwise Reports: Defense Metals. Click here for important disclosures about sponsor fees. As of the date of this article, an affiliate of Streetwise Reports has a consulting relationship with X-Terra Resources. Please click here for more information. Please click here for more information. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
3) Statements and opinions expressed are the opinions of the author and not of Streetwise Reports or its officers. The author is wholly responsible for the validity of the statements. The author was not paid by Streetwise Reports for this article. Streetwise Reports was not paid by the author to publish or syndicate this article. Streetwise Reports requires contributing authors to disclose any shareholdings in, or economic relationships with, companies that they write about. Streetwise Reports relies upon the authors to accurately provide this information and Streetwise Reports has no means of verifying its accuracy.
4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the decision to publish an article until three business days after the publication of the article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases. As of the date of this interview, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of X-Terra, a company mentioned in this article.

( Companies Mentioned: IMT:TSX.V, )

JinkoSolar Shares Rise 21% on Q2 Earnings and Positive FY Outlook

Source: Streetwise Reports   09/23/2020

JinkoSolar shares established a new 52-week high after the company reported Q2/20 financial results that included a 22% increase in year-over-year total revenue.Solar module manufactu…

Source: Streetwise Reports   09/23/2020

JinkoSolar shares established a new 52-week high after the company reported Q2/20 financial results that included a 22% increase in year-over-year total revenue.

Solar module manufacturer JinkoSolar Holding Co. Ltd. (JKS:NYSE) today announced unaudited financial results for the second quarter ended June 30, 2020.

The company's CEO Kangping Chen remarked, "JinkoSolar delivered a strong quarter with total revenue exceeding guidance...Module shipments hit a new high of 4,469 MW, an increase of 31.0% sequentially and 32.0% year-over-year. Total revenues during the quarter were US$1.20 billion, an increase of 16.0% (excluding the impact from disposal of the solar power plants in Q1/20) sequentially and 22.2% year-over-year, while gross profit was US$214.1 million. We expect orders for Q3/20 and Q4/20 to increase, with total solar module shipments expected to be in the range between 5-5.3 GW for Q3/20 and our guidance for total shipments for the FY/20 remains unchanged at 18-20 GW."

"The market continues to consolidate due to the challenging economic environment and strong competition within the industry, while the production capacity and infrastructure of integrated manufacturers remain resilient to risks and price fluctuations....As economies have started to rebound in many markets, we believe global demand will eventually accelerate and we are well positioned to benefit from the momentum," Chen added.

Chen highlighted that this week the company announced its plan to list its principal operating subsidiary Jiangxi Jinko on the Shanghai Stock Exchange's Sci-Tech innovation board, or the STAR Market. The firm reiterated its commitment to maintaining the firm's listing on the NYSE, but believes that the STAR listing will help raise the firm's profile and attract new investors globally and in China.

The company reported that in Q2/20 total revenues decreased by 0.4% to RMB8.45 billion (US$1.20 billion), compared to RMB8.48 billion in Q1/20, but increased by 22.2% compared to RMB6.91 billion in Q2/19.

The firm noted that if the impact from the disposal of two solar power plants in Mexico in the Q1/20 is excluded, the then Q2/20 revenue increased by 16.0% from RMB7.29 billion in Q1/20. The company explained that the sequential increases were mostly attributable to an increase in the shipment of solar modules and were partially offset by a decline in their average selling prices.

The company stated that net income attributable to the company's ordinary shareholders was RMB318.0 million (US$45.0 million) in Q2/20, compared with RMB282.4 million in Q1/20 and RMB125.4 million in Q2/19.

The firm noted that "basic and diluted earnings per ordinary share were RMB1.79 (US$0.25) and RMB1.64 (US$0.23), respectively, during Q2/20, which translates into basic and diluted earnings per ADS of RMB7.16 (US$1.01) and RMB6.55 (US$0.93), respectively."

The firm reported on recent operational results and stated that total solar module shipments in Q2/20 were 4,469 MW. The company advised that as of June 30, 2020, its in-house annual mono wafer, solar cell and solar module production capacity was 20 GW, 11GW and 25 GW, respectively. The firm indicated that it expects strong market demand to continue until the end December 2020. The company noted that the COVID-19 has negatively affected demand and caused supply chain difficulties, which is accelerating industry consolidation.

JinkoSolar additionally provided some Q3/20 and FY/20 forward guidance. The firm stated that it expects total solar module shipments in Q3/20 to be in the range of 5.0-5.3 GW with total revenue expected to be in the range of US$1.22-1.30 billion. Gross margin in Q3/20 is expected to range between 17% and 19%.

For FY/20, the company stated that it expects total solar module shipments of 18-20 GW. The firm added that it estimates that its annual mono wafer, solar cell and solar module production capacity will reach 20 GW, 11 GW and 30 GW, respectively, by year-end 2020.

JinkoSolar stated that it is one of the world's largest solar module manufacturers. The company markets and distributes its solar products and services to international utility, commercial and residential customers in base in numerous countries including China, Japan, Germany, U.K., the U.S. and many others. The firm advised that it owns 14 overseas subsidiaries and operates seven productions facilities globally.

JinkoSolar started the day with a market capitalization of around $1.2 billion with approximately 44.43 million shares outstanding and a short interest of about 20.8%. JKS shares opened higher today at $28.42 (+$0.76, +2.75%) over yesterday's $27.66 closing price and reached a new 52-week high price this morning of $33.63. The stock has traded today between $28.30 and $33.67 per share and is currently trading at $33.54 (+$5.89, +21.29%).

Sign up for our FREE newsletter at: www.streetwisereports.com/get-news

Disclosure:
1) Stephen Hytha compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. He or members of his household own securities of the following companies mentioned in the article: None. He or members of his household are paid by the following companies mentioned in this article: None.
2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: None. Click here for important disclosures about sponsor fees.
3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the decision to publish an article until three business days after the publication of the article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases.

( Companies Mentioned: JKS:NYSE, )

Westport Shares Rise Sharply After JV Receives Approval in China for HPDI 2.0 Powered Natural Gas Engine

Source: Streetwise Reports   09/18/2020

Shares of Westport Fuel Systems traded 33% higher after the company reported its Weichai Westport joint venture has obtained Chinese certification for WP12 natural gas engine powered …

Source: Streetwise Reports   09/18/2020

Shares of Westport Fuel Systems traded 33% higher after the company reported its Weichai Westport joint venture has obtained Chinese certification for WP12 natural gas engine powered by HPDI 2.0.

Vancouver-based designer, manufacturer and supplier of advanced clean fuel systems and components Westport Fuel Systems Inc. (WPRT:NASDAQ) today announced that its Weichai Westport Inc. (WWI) joint venture has received "certification from the Ministry of Ecology and Environment of China (MEE) for its 12-liter engine equipped with the HPDI 2.0TM fuel system (WP12HPDI)."

The company advised that the certification permits the WWI joint venture to market and sell the heavy-duty natural gas engines with HPDI technology to truck original equipment manufacturers in China. The firm noted that "Weichai Power Co. Ltd's (WEICY:OTC-Pink) 12-liter heavy-duty engine platform is the base engine for the WP12HPDI."

The company's CEO David M. Johnson commented, "Following the delays introduced by COVID-19, I'm pleased to recognize the leadership of the Weichai Westport joint venture team in securing the certification from the MEE...The China VI emission regulations are aligned with leading heavy-duty emission standards in Europe and North America, combine the best practices from both regulations, and are one of the most stringent heavy-duty vehicle emission standards in the world."

The firm stated that it will supply critical HPDI 2.0 components to the WWI joint venture and that each of these components is required for use in every engine equipped with HPDI and sold by WWI. The company advised that it previously reported the specific details of the development and supply agreement in a prior news release.

Westport Fuel Systems is a creator, manufacturer and supplier of advanced clean fuel systems and components for the global automotive industry. The company's products are engineered for clean technology applications for low-carbon fuels such as natural gas, renewable natural gas, propane and hydrogen. The firm is based in Vancouver, B.C. and noted that it has operations in Europe, Asia, North America and South America that serve customers in 70 countries worldwide.

Westport Fuel Systems started the day with a market capitalization of around $221.7 million with approximately 136.91 million shares outstanding and a short interest of about 2.2%. WPRT shares opened 26.5% higher today at $2.05 (+$0.43, +26.54%) over yesterday's $1.62 closing price. The stock has traded today between $1.99 and $2.42 per share on more than 60 times average daily volume and is currently trading at $2.16 (+$0.54, +33.33%).

Sign up for our FREE newsletter at: www.streetwisereports.com/get-news

Disclosure:
1) Stephen Hytha compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. He or members of his household own securities of the following companies mentioned in the article: None. He or members of his household are paid by the following companies mentioned in this article: None.
2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: None. Click here for important disclosures about sponsor fees.
3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the decision to publish an article until three business days after the publication of the article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases.

( Companies Mentioned: WPRT:NASDAQ, )

Skyharbour Resources: Athabasca Uranium Story Ready to Run?

Source: Peter Epstein for Streetwise Reports   09/10/2020

Jordan Trimble, CEO of Skyharbour Resources, sits down with Peter Epstein of Epstein Research to discuss the uranium market and recent developments at his company.

The gold price is 30% higher in the past year, silver is +130% in the last five months. Some are wondering what the next bull market move in metals and mining will be. I think there’s a good chance it will be uranium. An increase in the spot price from today’s $31/lb to $40/lb would make a world of difference for sector sentiment. Earlier this year, the price hit a 4.5-year high of $34.2/lb.

All eyes are on Cameco and Kazatomprom as they buy uranium in the spot market to help meet their customer requirements. The more they buy, and the longer they’re active in the market, the more likely we will see a spike in the price. Uranium prices can move very fast. In a six-week stretch from mid-March to late April the price soared 42% from $24.00 to $34.05/lb.

Yet, that was merely a bounce off of oversold levels. A 30% increase from today’s $31/lb would get the price to $40/lb, still on the low side over the past 15 years. Now, instead of me reporting facts and figures from the World Nuclear Association website, I turn to Jordan Trimble, CEO of Skyharbour Resources Ltd. (SYH:TSX.V; SYHBF:OTCQB), to get his up-to-the-minute views. He expertly reads between the lines so that we don’t have to….

Peter Epstein: Uranium fundamentals were great two years ago…. they were extraordinary a year ago…. and even more compelling now. Yet, the uranium spot price sits at US$31/lb. How soon before we see prices above US$40?

Jordan Trimble: The uranium price is moving in the right direction; the spot price has increased from the mid $20s to the low $30s/lb U3O8. Summer is seasonally slow, but I believe we’re now witnessing the early days of a new bull market. First, we saw a major supply side response play out due to historically low prices. Then, the pandemic caused further significant supply curtailments.

Primary producers shut down or cut back production including Cameco with Cigar Lake shut for five months (and McArthur River is still on care and maintenance). Several producers in Africa have slowed or closed.

Kazatomprom in Kazakhstan, which accounts for up to 40% of global production, said output would be down 16% in 2020. In order to meet contractual requirements with utilities, producers need to acquire millions of pounds of uranium in the spot market this year.

A major supply deficit is forming to the tune of 50–60 million pounds of U3O8 in a market of 180 million pounds. This could be exacerbated if Kazakhstan is unable to ramp ISR production up as quickly as it would like. Shifting to demand, the story has been improving; demand exceeds pre-Fukushima levels and has outstripped primary supply over the past few years. Finite inventories and other secondary supplies are being depleted to make up the difference.

Furthermore, well over 50% of all utility contracts require renewal by 2027. Utilities typically renew contracts 18–24 months before they expire. Several utilities have recently come to market with RFPs, but producers are unwilling to lock in long-term contracts at current levels.

Nuclear reactor demand for uranium is sticky and has been largely insulated from the pandemic versus other sources of power generation. It’s still the only source of reliable, baseload, emissions-free electricity.

Lastly, demand is expected to increase on the back of new reactor construction. There are 56 reactors under construction, and that doesn’t even consider the advent of SMRs (Small Modular Reactors).

Since 2003 we have experienced eight periods in which the spot price spiked over a short period of time. The average price increase was +58% over an average of 6.6 months. Worth noting is that spot and term prices are still below the average all-in cost of production and well below the incentive price needed to bring meaningful new production online.

Peter Epstein: It seems that the topic of restarts of Japanese reactors has faded and all eyes are on Cameco and Kazakhstan’s Kazatomprom. Are these two companies the main story?

Jordan Trimble: Japan’s role in nuclear energy should not be dismissed; there’s still the potential for a positive catalyst from additional Japanese restarts. However, this narrative has rightfully diminished in importance with only nine of Japan’s reactors back online. Additional restarts pale in comparison to new demand coming from China, India and other parts of the developing world.

Cameco and Kazatomprom are the two largest uranium producers in the world. With meaningful production at both further reduced from the second half of March through August, both companies have been drawing down inventory. Both are purchasing material on the spot market to meet contractual supply requirements.

While Cameco plans a restart at Cigar Lake in September, the same cannot be said for Kazatomprom. The virus has hit Kazakhstan hard, lockdowns have impeded their wellhead drilling and operations. It could take a while to ramp production back up to pre-pandemic levels.

Peter Epstein: Skyharbour’s crown jewel is its 100%-owned, 35,705-hectare, Moore project. What’s the status of Moore?

Jordan Trimble: We announced plans for a fully funded and permitted summer/fall drill program on our high-grade Moore Uranium project (see news release dated July 29th). Targets include both unconformity and basement-hosted mineralization along the Maverick structural corridor.

The project is 15 km east of Denison’s Wheeler River project and 39 km south of Cameco’s MacArthur River mine. Denison is our largest shareholder and an important partner.

We plan to expand high-grade mineralization recently discovered at the Maverick East Zone and to test the Viper target area along strike about 1.5 km to the northeast with a focus on basement-hosted mineralization.

Only 2.5 km of the total 4.7-km-long Maverick structural corridor has been systematically drill-tested, leaving robust discovery potential along strike both at the unconformity and at depth in the underlying basement rocks.

Peter Epstein: In recent interviews you’ve said your team believes Skyharbour is close to finding very high-grade feeder zones (like 10%+ U3O8 over 10+ meters). What makes you think you’re close?

Jordan Trimble: We believe we’re on the verge of discovering larger zones of higher-grade uranium in the basement rocks of the Moore project. We have already intersected grades up to 21% U3O8 in sandstone right above the unconformity. We know this mineralization comes from a source.

That source is likely a feeder zone in the underlying basement rocks. A great deal of time has been spent refining drill targets. We have a new geological model that will increase the chances that we find what we’re looking for.

Peter Epstein: Azincourt Energy will soon finish earning a 70% interest in the East Preston project. Please give us the latest snapshot.

Jordan Trimble: As part of our prospect generator business, Azincourt completed its winter drill program and reported results on June 8th. They completed 2,431 meters in nine holes with promising basement lithologies and graphitic structures intersected along with associated, anomalous uranium, REE mineralization and favorable alteration.

On July 24th, Azincourt announced its upcoming geophysical target generation program. So, additional news is forthcoming. To complete the 70% earn-in, they issued 2.5 million shares to Skyharbour and has to make a $200,000 cash payment.

Peter Epstein: Vertically integrated French uranium miner Orano (formerly Areva) is earning a 70% position in your Preston project. Where does Orano stand in this regard?

Jordan Trimble: Orano recently completed an exploration program on the Preston project consisting of DC resistivity ground geophysics in order to prioritize areas to be drill-tested. Previous drilling intersected numerous and extensive, well developed and commonly graphitic ductile shear zones that were clearly reactivated over time.

Of note is that Preston Lake has seen little drilling to date. Our partner Orano is France’s largest uranium mining and nuclear fuel cycle company. They have been exploring and mining uranium in Athabasca for years. In order to complete the 70% earn-in, they need to spend $8 million in exploration and cash payments.

Peter Epstein: Skyharbour has been trying to farm out three projects. Can you comment on Falcon Point, Mann Lake and Yurchison?

Jordan Trimble: As an explorer that also utilizes the project generator model, Skyharbour has teamed up with industry leading companies like Orano to increase the chances and lower the cost of new discoveries. This allows us to focus on our Moore project, while ensuring steady news flow/catalysts from secondary projects.

It brings in additional cash without us having to dilute shareholders as much. It allows us to leverage peer technical and geological teams. We’re actively looking for partners at three 100%-owned projects; Falcon Point, Mann Lake and Yurchison. All three have promising geology and are drill ready.

Peter Epstein: A common refrain from uranium investors is that yes, Athabasca has monster grades, but it takes 10+ years to develop a resource into a mine. What do you say to that?

Jordan Trimble: Look, we’re in the business of finding deposits and ultimately selling them to larger companies to develop. So, our value proposition and wealth creation opportunity is at the front end of this. New discoveries and resource delineation don’t take 10+ years.

However, it’s worth noting that there are mining methods, including ISR & SABRE (borehole mining) being proposed for high-grade Athabasca deposits. These methods could significantly reduce time to production and permitting hurdles. Companies with deposits amenable to these techniques stand to benefit immensely.

Peter Epstein: Thank you, Jordan, very insightful as always. I look forward to updates on Skyharbour’s projects and expect to see the uranium price start to climb again soon.

Peter Epstein is the founder of Epstein Research. His background is in company and financial analysis. He holds an MBA degree in financial analysis from New York University’s Stern School of Business.

Sign up for our FREE newsletter at: www.streetwisereports.com/get-news

Disclosures: The content of this interview is for information only. Readers fully understand and agree that nothing contained herein, written by Peter Epstein of Epstein Research [ER], (together, [ER]) about Skyharbour Resources, including but not limited to, commentary, opinions, views, assumptions, reported facts, calculations, etc. is not to be considered implicit or explicit investment advice. Nothing contained herein is a recommendation or solicitation to buy or sell any security. [ER] is not responsible under any circumstances for investment actions taken by the reader. [ER] has never been, and is not currently, a registered or licensed financial advisor or broker/dealer, investment advisor, stockbroker, trader, money manager, compliance or legal officer, and does not perform market making activities. [ER] is not directly employed by any company, group, organization, party or person. The shares of Skyharbour Resources are highly speculative, not suitable for all investors. Readers understand and agree that investments in small cap stocks can result in a 100% loss of invested funds. It is assumed and agreed upon by readers that they will consult with their own licensed or registered financial advisors before making any investment decisions.

At the time this interview was posted, Peter Epstein owned no shares in Skyharbour Resources, and Skyharbour was an advertiser on [ER].

Readers understand and agree that they must conduct their own due diligence above and beyond reading this article. While the author believes he’s diligent in screening out companies that, for any reasons whatsoever, are unattractive investment opportunities, he cannot guarantee that his efforts will (or have been) successful. [ER] is not responsible for any perceived, or actual, errors including, but not limited to, commentary, opinions, views, assumptions, reported facts & financial calculations, or for the completeness of this article or future content. [ER] is not expected or required to subsequently follow or cover events & news, or write about any particular company or topic. [ER] is not an expert in any company, industry sector or investment topic.

Streetwise Reports Disclosure:
1) Peter Epstein’s disclosures are listed above.
2) The following companies mentioned in the article are billboard sponsors of Streetwise Reports: Skyharbour Resources. Click here for important disclosures about sponsor fees. Please click here for more information. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security. As of the date of this article, an affiliate of Streetwise Reports has a consulting relationship with Azincourt Energy. Please click here for more information.
3) Statements and opinions expressed are the opinions of the author and not of Streetwise Reports or its officers. The author is wholly responsible for the validity of the statements. The author was not paid by Streetwise Reports for this article. Streetwise Reports was not paid by the author to publish or syndicate this article. Streetwise Reports requires contributing authors to disclose any shareholdings in, or economic relationships with, companies that they write about. Streetwise Reports relies upon the authors to accurately provide this information and Streetwise Reports has no means of verifying its accuracy.

4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the decision to publish an article until three business days after the publication of the article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Skyharbour Resources and Azincourt Energy, companies mentioned in this article.

Source: Peter Epstein for Streetwise Reports   09/10/2020

Jordan Trimble, CEO of Skyharbour Resources, sits down with Peter Epstein of Epstein Research to discuss the uranium market and recent developments at his company.

The gold price is 30% higher in the past year, silver is +130% in the last five months. Some are wondering what the next bull market move in metals and mining will be. I think there's a good chance it will be uranium. An increase in the spot price from today's $31/lb to $40/lb would make a world of difference for sector sentiment. Earlier this year, the price hit a 4.5-year high of $34.2/lb.

All eyes are on Cameco and Kazatomprom as they buy uranium in the spot market to help meet their customer requirements. The more they buy, and the longer they're active in the market, the more likely we will see a spike in the price. Uranium prices can move very fast. In a six-week stretch from mid-March to late April the price soared 42% from $24.00 to $34.05/lb.

Yet, that was merely a bounce off of oversold levels. A 30% increase from today's $31/lb would get the price to $40/lb, still on the low side over the past 15 years. Now, instead of me reporting facts and figures from the World Nuclear Association website, I turn to Jordan Trimble, CEO of Skyharbour Resources Ltd. (SYH:TSX.V; SYHBF:OTCQB), to get his up-to-the-minute views. He expertly reads between the lines so that we don't have to….

Peter Epstein: Uranium fundamentals were great two years ago…. they were extraordinary a year ago…. and even more compelling now. Yet, the uranium spot price sits at US$31/lb. How soon before we see prices above US$40?

Jordan Trimble: The uranium price is moving in the right direction; the spot price has increased from the mid $20s to the low $30s/lb U3O8. Summer is seasonally slow, but I believe we're now witnessing the early days of a new bull market. First, we saw a major supply side response play out due to historically low prices. Then, the pandemic caused further significant supply curtailments.

Primary producers shut down or cut back production including Cameco with Cigar Lake shut for five months (and McArthur River is still on care and maintenance). Several producers in Africa have slowed or closed.

Kazatomprom in Kazakhstan, which accounts for up to 40% of global production, said output would be down 16% in 2020. In order to meet contractual requirements with utilities, producers need to acquire millions of pounds of uranium in the spot market this year.

A major supply deficit is forming to the tune of 50–60 million pounds of U3O8 in a market of 180 million pounds. This could be exacerbated if Kazakhstan is unable to ramp ISR production up as quickly as it would like. Shifting to demand, the story has been improving; demand exceeds pre-Fukushima levels and has outstripped primary supply over the past few years. Finite inventories and other secondary supplies are being depleted to make up the difference.

Furthermore, well over 50% of all utility contracts require renewal by 2027. Utilities typically renew contracts 18–24 months before they expire. Several utilities have recently come to market with RFPs, but producers are unwilling to lock in long-term contracts at current levels.

Nuclear reactor demand for uranium is sticky and has been largely insulated from the pandemic versus other sources of power generation. It's still the only source of reliable, baseload, emissions-free electricity.

Lastly, demand is expected to increase on the back of new reactor construction. There are 56 reactors under construction, and that doesn't even consider the advent of SMRs (Small Modular Reactors).

Since 2003 we have experienced eight periods in which the spot price spiked over a short period of time. The average price increase was +58% over an average of 6.6 months. Worth noting is that spot and term prices are still below the average all-in cost of production and well below the incentive price needed to bring meaningful new production online.

Peter Epstein: It seems that the topic of restarts of Japanese reactors has faded and all eyes are on Cameco and Kazakhstan's Kazatomprom. Are these two companies the main story?

Jordan Trimble: Japan's role in nuclear energy should not be dismissed; there's still the potential for a positive catalyst from additional Japanese restarts. However, this narrative has rightfully diminished in importance with only nine of Japan's reactors back online. Additional restarts pale in comparison to new demand coming from China, India and other parts of the developing world.

Cameco and Kazatomprom are the two largest uranium producers in the world. With meaningful production at both further reduced from the second half of March through August, both companies have been drawing down inventory. Both are purchasing material on the spot market to meet contractual supply requirements.

While Cameco plans a restart at Cigar Lake in September, the same cannot be said for Kazatomprom. The virus has hit Kazakhstan hard, lockdowns have impeded their wellhead drilling and operations. It could take a while to ramp production back up to pre-pandemic levels.

Peter Epstein: Skyharbour's crown jewel is its 100%-owned, 35,705-hectare, Moore project. What's the status of Moore?

Jordan Trimble: We announced plans for a fully funded and permitted summer/fall drill program on our high-grade Moore Uranium project (see news release dated July 29th). Targets include both unconformity and basement-hosted mineralization along the Maverick structural corridor.

The project is 15 km east of Denison's Wheeler River project and 39 km south of Cameco's MacArthur River mine. Denison is our largest shareholder and an important partner.

We plan to expand high-grade mineralization recently discovered at the Maverick East Zone and to test the Viper target area along strike about 1.5 km to the northeast with a focus on basement-hosted mineralization.

Only 2.5 km of the total 4.7-km-long Maverick structural corridor has been systematically drill-tested, leaving robust discovery potential along strike both at the unconformity and at depth in the underlying basement rocks.

Peter Epstein: In recent interviews you've said your team believes Skyharbour is close to finding very high-grade feeder zones (like 10%+ U3O8 over 10+ meters). What makes you think you're close?

Jordan Trimble: We believe we're on the verge of discovering larger zones of higher-grade uranium in the basement rocks of the Moore project. We have already intersected grades up to 21% U3O8 in sandstone right above the unconformity. We know this mineralization comes from a source.

That source is likely a feeder zone in the underlying basement rocks. A great deal of time has been spent refining drill targets. We have a new geological model that will increase the chances that we find what we're looking for.

Peter Epstein: Azincourt Energy will soon finish earning a 70% interest in the East Preston project. Please give us the latest snapshot.

Jordan Trimble: As part of our prospect generator business, Azincourt completed its winter drill program and reported results on June 8th. They completed 2,431 meters in nine holes with promising basement lithologies and graphitic structures intersected along with associated, anomalous uranium, REE mineralization and favorable alteration.

On July 24th, Azincourt announced its upcoming geophysical target generation program. So, additional news is forthcoming. To complete the 70% earn-in, they issued 2.5 million shares to Skyharbour and has to make a $200,000 cash payment.

Peter Epstein: Vertically integrated French uranium miner Orano (formerly Areva) is earning a 70% position in your Preston project. Where does Orano stand in this regard?

Jordan Trimble: Orano recently completed an exploration program on the Preston project consisting of DC resistivity ground geophysics in order to prioritize areas to be drill-tested. Previous drilling intersected numerous and extensive, well developed and commonly graphitic ductile shear zones that were clearly reactivated over time.

Of note is that Preston Lake has seen little drilling to date. Our partner Orano is France's largest uranium mining and nuclear fuel cycle company. They have been exploring and mining uranium in Athabasca for years. In order to complete the 70% earn-in, they need to spend $8 million in exploration and cash payments.

Peter Epstein: Skyharbour has been trying to farm out three projects. Can you comment on Falcon Point, Mann Lake and Yurchison?

Jordan Trimble: As an explorer that also utilizes the project generator model, Skyharbour has teamed up with industry leading companies like Orano to increase the chances and lower the cost of new discoveries. This allows us to focus on our Moore project, while ensuring steady news flow/catalysts from secondary projects.

It brings in additional cash without us having to dilute shareholders as much. It allows us to leverage peer technical and geological teams. We're actively looking for partners at three 100%-owned projects; Falcon Point, Mann Lake and Yurchison. All three have promising geology and are drill ready.

Peter Epstein: A common refrain from uranium investors is that yes, Athabasca has monster grades, but it takes 10+ years to develop a resource into a mine. What do you say to that?

Jordan Trimble: Look, we're in the business of finding deposits and ultimately selling them to larger companies to develop. So, our value proposition and wealth creation opportunity is at the front end of this. New discoveries and resource delineation don't take 10+ years.

However, it's worth noting that there are mining methods, including ISR & SABRE (borehole mining) being proposed for high-grade Athabasca deposits. These methods could significantly reduce time to production and permitting hurdles. Companies with deposits amenable to these techniques stand to benefit immensely.

Peter Epstein: Thank you, Jordan, very insightful as always. I look forward to updates on Skyharbour's projects and expect to see the uranium price start to climb again soon.

Peter Epstein is the founder of Epstein Research. His background is in company and financial analysis. He holds an MBA degree in financial analysis from New York University's Stern School of Business.

Sign up for our FREE newsletter at: www.streetwisereports.com/get-news

Disclosures: The content of this interview is for information only. Readers fully understand and agree that nothing contained herein, written by Peter Epstein of Epstein Research [ER], (together, [ER]) about Skyharbour Resources, including but not limited to, commentary, opinions, views, assumptions, reported facts, calculations, etc. is not to be considered implicit or explicit investment advice. Nothing contained herein is a recommendation or solicitation to buy or sell any security. [ER] is not responsible under any circumstances for investment actions taken by the reader. [ER] has never been, and is not currently, a registered or licensed financial advisor or broker/dealer, investment advisor, stockbroker, trader, money manager, compliance or legal officer, and does not perform market making activities. [ER] is not directly employed by any company, group, organization, party or person. The shares of Skyharbour Resources are highly speculative, not suitable for all investors. Readers understand and agree that investments in small cap stocks can result in a 100% loss of invested funds. It is assumed and agreed upon by readers that they will consult with their own licensed or registered financial advisors before making any investment decisions.

At the time this interview was posted, Peter Epstein owned no shares in Skyharbour Resources, and Skyharbour was an advertiser on [ER].

Readers understand and agree that they must conduct their own due diligence above and beyond reading this article. While the author believes he's diligent in screening out companies that, for any reasons whatsoever, are unattractive investment opportunities, he cannot guarantee that his efforts will (or have been) successful. [ER] is not responsible for any perceived, or actual, errors including, but not limited to, commentary, opinions, views, assumptions, reported facts & financial calculations, or for the completeness of this article or future content. [ER] is not expected or required to subsequently follow or cover events & news, or write about any particular company or topic. [ER] is not an expert in any company, industry sector or investment topic.

Streetwise Reports Disclosure:
1) Peter Epstein's disclosures are listed above.
2) The following companies mentioned in the article are billboard sponsors of Streetwise Reports: Skyharbour Resources. Click here for important disclosures about sponsor fees. Please click here for more information. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security. As of the date of this article, an affiliate of Streetwise Reports has a consulting relationship with Azincourt Energy. Please click here for more information.
3) Statements and opinions expressed are the opinions of the author and not of Streetwise Reports or its officers. The author is wholly responsible for the validity of the statements. The author was not paid by Streetwise Reports for this article. Streetwise Reports was not paid by the author to publish or syndicate this article. Streetwise Reports requires contributing authors to disclose any shareholdings in, or economic relationships with, companies that they write about. Streetwise Reports relies upon the authors to accurately provide this information and Streetwise Reports has no means of verifying its accuracy.
4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the decision to publish an article until three business days after the publication of the article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Skyharbour Resources and Azincourt Energy, companies mentioned in this article.