5 Strategic Mineral Stocks to Watch – Part 2

President Obama made renewable energy a key part of his presidential mandate

3. American Vanadium Corp. (TSX-V: AVC)

President Obama likes vanadium; or rather, he likes to say the word vanadium. Last February Obama joked that “Vanadium redox fuel cells is one of the coolest things I’ve ever said out loud“. Obama also said this “next generation energy storage system will help families and businesses cut down on energy waste, save money and reduce dangerous carbon emissions”. So what is vanadium and, more importantly, what is a vanadium redox fuel cell?

Vanadium is the 23 element on the periodic table and is a soft silver-grey ductile transition metal. It is primarily produced in Russia and China from steel smelter slag and in a few other countries around the world as a flue dust of heavy oil or a byproduct of uranium mining. Most vanadium, approximately 85%, is used as an alloy called ferrovanadium as an additive to improve steels. But recently its vanadium’s status as a strategic metal and its green energy applications that have people, including President Obama, talking. Although, the more correct terminology is the vanadium redox flow battery.

Vanadium redox flow batteries are distinguished from fuel cells by the fact that the chemical reaction involved is reversible meaning that they can be recharged without replacing the electroactive material. Also, an important factor in the redox flow battery is that the power and energy density of the batteries are independent of each other in contrast to rechargeable secondary batteries which avoids cross contamination. These special characteristics make the vanadium redox flow battery uniquely applicable for energy storage applications including transportation and utilities.

Although vanadium has only recently been grabbing media headlines, one TSX-V listed company decided to pursue vanadium as an emerging opportunity when they fortuitously discovered the critical element in Nevada while drilling for base metals back in November, 2007. That company was American Vanadium which, at the time, was operating as Rocky Mountain Resources.

American Vanadium recently reported they are on track at the Gibellini vanadium project in Nevada to delivery of Feasibility Study in Q3, 2011 and is looking to start of production by 2013. This will position the company to have the only vanadium mine in the US, which is by some accounts, an enviable position.

Chris Barry, an analyst at House Mountain Partners, notes in a recent report, “With its low-cost project economics, AVC presents a unique opportunity to join the ranks of vanadium producers and contribute to the growing demand for this little-known metal. This is where we think AVC can create value for shareholders, near-term production of a strategic metal in a stable geopolitical jurisdiction.” Mr. Barry went on to say that, “Vanadium is most exciting because there is an increasing potential demand for the metal in the energy storage and battery spaces.”

MiningFeeds.com interviewed Bill Radvak, President & CEO of American Vanadium, to get to the bottom of vanadium and to find out what’s in store for the company – CLICK HERE – for the interview.

4. Noventa Ltd. (TSX: NTA)

Get ready for a crash course in tantalum. Tantalum is a rare, hard, blue-gray, lustrous transition metal that is highly resistant to corrosion. The chemical inertness of tantalum makes it a valuable substance for laboratory equipment and a substitute for platinum, but its main use today is in tantalum capacitors in electronic equipment such as mobile phones, DVD players, video game systems and computers. Tantalum, always found together together with the chemically similar niobium, is also widely used as minor component in alloys.

Investors who were interested in tantalum and were attracted to Noventa were in store for another type of crash course. On December 14, 2010, Noventa sold 160 million shares at $0.15 ($3.00 on a post consolidated basis) in an offering led by Canaccord Genuity and Religare Capital Markets, raising $24-million in an effort to expand its tantalum mining operations in southeast Africa. Past issues with the project were not sufficient to ward off investors looking for the next “hot rare sector”. Noventa’s annual information form noted the company’s main Marropino mine had been a losing venture since at least 2007 until it was put into care and maintenance in May, 2009.

Cashed up, the AIM-listed tantalum producer began trading on the TSX on December 21st, 2010. Then after a few months, on June 2, 2011, shareholders were informed that poor production processes spawned the need for a substantial cash infusion in order to hit production targets. That day Noventa’s stock was hit hard falling from $2.64  to close the day at $1.13. A staggering loss of 57.2%. Since then, unfortunately for Noventa shareholders, things haven’t been getting any better and the company’s shares are currently trading at $0.60.

So is there a glimmer of hope for this beaten down tantalum miner? In June the company released its strategic plan to stabilize the company. On July 18th, in accordance with their plan, Noventa negotiated improved terms to its tantalum offtake agreements with H C Starck.   Under the revised agreement, H C Stark agreed to pay between 27% and 36% higher prices per pound of tantalum throughout 2013.

A step in the right direction? One brokerage firm thinks so. On July 19th the company appointed Jacob Securities as their agent in Canada for their required funding. Jacob Securities has been developing a focus on critical minerals, including rare earth elements, and may be in a position to help Noventa attract the capital required to keep moving forward. For the related MiningFeeds.com article, “Valuation of Rare Earth Stocks” by Jacob Securities analyst Luisa Morena – CLICK HERE.

Graphene is an atomic-scale chicken wire made of carbon atoms and their bonds.

5. Northern Graphite Corp. (TSX-V: NGC)

Northern Graphite is the only miner on our list that isn’t in the element business. Rather, the company is focused on mining graphite. Graphite is one of fourteen critical minerals that were identified by a recent report by the European Commission as being under “supply risk”.

According to the United States Geological Survey (USGS), world production of natural graphite in 2008 was 1,110 thousand tonnes (kt), of which the following major exporters are: China (800 kt), India (130 kt), Brazil (76 kt), North Korea (30 kt) and Canada (28 kt). The mineral graphite is one of the eight allotropes of carbon. The most common allotrope being diamonds. While diamonds are a girl’s best friend could graphite become an investor’s best friend? Greg Bowes, President and CEO of Northern Graphite certainly thinks so and points to graphene, a next-generation material made from graphite.

Graphene is a one-atom-thick planar sheet of carbon atoms that are densely packed in a honeycomb crystal lattice. It can be thought of as an atomic-scale chicken wire made of carbon atoms and their bonds. Scientists around the world believe that graphene is a strong candidate to replace semiconductor chips. Moore’s Law observes that the density of transistors on an integrated circuit doubles every two years. But silicon and other existing transistor materials are thought to be close to the minimum size where they can remain effective. Graphene transistors can potentially run at faster speeds and cope with higher temperatures. Graphene could be the solution that will allow computing technology to continue to grow in power whilst shrinking in size, extending the life of Moore’s law by many years.

Northern Graphite, based in Ottawa, recently closed a $4 million initial public offering at $0.50 per unit and began trading on the TSX-V Exchange on April 20th, 2011. And so far so good. The company’s shares took-off and hit a high of $1.55 in early June and have since settled back to the $1.20 range. Northern Graphite’s principal asset is the Bissett Creek graphite project located 100km east of North Bay, Ontario. The Company has completed an NI 43-101 preliminary assessment report on the project and anticipates that it will be in a position to begin construction of the mine early in 2012, subject to positive results from the bankable final feasibility study and the availability of financing.

MiningFeeds.com recently sat down with Northern Graphite’s top executive Greg Bowes to talk about the company’s future prospects and to learn more about the project – CLICK HERE – for the interview.

For 5 Strategic Mineral Stocks to Watch – Part 1CLICK HERE.

Mike Luft

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