On August 29, Cypress Development Corp. (TSX-V: CYP) / (OTCQB: CYDVF) announced the successful completion of slurry rheology & filtration studies that are an integral part of the Pre-Feasibility Study (PFS) for the Clayton Valley clay-hosted lithium project, located immediately adjacent to Albemarle Corp.’s Silver Peak brine processing facilities in Nevada.

Management believes its U.S. location will become an increasingly valuable attribute. While many junior lithium companies like to name drop “Albemarle” and “Silver Peak,” Cypress owns 100% of one of just a few projects in Nevada that Albemarle might actually be interested in.

More promising results from Cypress’ expert technical team

Back to the latest news…. the outcome was the result of months of testing by laboratories and a detailed review with consultants & equipment vendors. This news represents a major milestone in the project because the results simplify the process flow sheet.

Cypress CEO Dr. Bill Willoughby commented in the press release,

A critical step for us at Clayton Valley is the separation of solids & liquids. A viable process is dependent upon the ability to separate the process leach solution (PLS) from the leached residue whether by thickeners, filters, or other means. Significant test work has allowed Cypress to identify a commercially viable process, based on filtration, to take the solid-liquid separation from the laboratory benchtop to the operational scale.”

Readers may recall that Cypress released positive results from the first & second phases of its PFS metallurgical program in February & July. Since then, work has continued on other aspects of the PFS, including recovery & concentration of lithium from solution through mechanical evaporation, membrane filtration, and ion-exchange processes.

CEO Willoughby continued,

The Cypress technical team discovered the Clayton Valley clays behave differently at varying leach conditions. By looking at the electro-kinetic potential of the clays we can select the optimal reagents & equipment. We also know under what conditions the rheology of the slurries becomes a limitation, and can design the flow sheet accordingly. With this new knowledge, we are confident we can simplify a significant portion of the leaching flow sheet.

Cypress is looking at additional steps to simplify plant design with the goal to further streamline the production process and lower costs. With metallurgical & materials handling studies completed, Cypress expects to publish a PFS during the fourth quarter.

Next major milestone is a PFS in 4th quarter

It appears the PFS has been pushed back a few months. After a recent capital raise the company is comfortably funded through delivery of a PFS later this year. Come to think of it, what’s the rush? Investor sentiment remains very weak for lithium, cobalt, vanadium & graphite juniors. As long as Cypress is funded, let them keep carrying out studies to improve the PFS! Below are some highlights from the PEA.

 

 

 

It’s important at this point to reiterate the considerable strength of management, the Board, technical advisers & retained consultants. All of these impressive people and groups are being effectively led by CEO Willoughby, who has a Doctorate in Mining Engineering & Metallurgy from the Univ. of Idaho.

Who on earth could possibly be better to run this show than a PhD in engineering & metallurgy!?! He knows what he’s doing, and he’s a driving force behind the very good results and progress his technical team is delivering.

I asked Dr. Willoughby about last week’s news, he said,

It’s a major technical problem to separate ultrafine clays particles < 5 microns from a leach solution. Our solution could put us in the forefront of clay-hosted lithium projects globally.”

Demand keeps increasing, supply increasingly uncertain

There’s a massive disconnect in the lithium world. For years, demand forecasts have been going up. The demand side of the equation — driven by both energy storage & the electrification of passenger & commercial vehicles — is likely to increase at a Compound Annual Growth Rate (CAGR) of at least 15%, perhaps 20% or more. For example, at a 20% CAGR from Albemarle’s 270K tonne figure in 2018, demand would reach 967K tonnes in 2025.

Albemarle has a particularly good graphic depicting this unmistakable trend. Four years ago they expected ~400K tonnes LCE demand in 2025. Now, Albemarle is forecasting demand of about 1 million tonnes in 2025. Likewise, Lithium Americas is forecasting between 1.0 to 1.2 million tonnes LCE demand in 2025, a range it says comes from industry producers & publicly reported forecasts.

, Finally, Fastmarkets expects LCE demand to grow from ~300K tonnes in 2019 to “at least” 1.1 million tonnes in 2025. So, a lot of forecasts in and around the one million tonne mark, but even if it turns out to be less, I think it will be a major challenge for supply to approach that level in the next six years.

The longer the project delays in Argentina / Chile brine projects, and the more project mishaps like at Nemaska, the more room there is for unconventional projects such as Cypress Development’s Clayton Valley. The market will take every battery-grade tonne of lithium chemicals produced by any company that can supply them. Lithium juniors who can make it across the production finish line will be richly rewarded.

Despite significant fiscal & political challenges in Argentina that could further delay brine projects there, and continued slow movement in project development & production expansions in Chile, unconventional projects are still meaningfully undervalued compared to brine projects.

For example, Cypress Development Corp.’s enterprise value (“EV“) is less than 1% of the after-tax NPV found in its PEA. Compare that to the average 8.2% EV/NPV on the chart below. Cypress’ EV/cap-ex ratio of 3.0 times (3.0x) is 40% better than the 2.1x average of the other unconventional projects.

Cypress has the highest after-tax IRR on the chart at 32.7%, compared to an average of 26.1% among the others. And, the company’s cap-ex at C$641 million is 21% lower than the peer average.

Finally, readers should note that the Clayton Valley project has a strip ratio of 0.1 to 1. The other three projects with strip ratios average 3.0 to 1. Cypress has 1/30th the strip ratio of its unconventional peers!

That’s a big reason why the company has attractive op-ex & cap-ex, despite having lower grade Li to work with. Another reason is the mineralogy; the Clayton Valley project’s lithium abundance is hosted in a friendlier clay than that at some of the other projects. Friendlier meaning easier and less costly to liberate the lithium into solution.

The extreme weakness in the vast majority of lithium juniors is actually great news. Great news for any lithium company hopeful that can produce lithium next decade. Great news for investors who may want to average down in their favorite battery metals names.

Brine projects have gone from, “can’t go wrong,” to “can’t fund”

A funny thing happened over the past two years. Brine projects went from no-brainers; (lowest cost, best understood, most reliable) — to the exact opposite. Solar evaporation ponds are getting less and less popular by the week, day, hour! And, unusually rainy weather in the Puna region of Argentina has negatively impacted pond yields. Speaking of Argentina….. well just read the headlines, it’s not pretty.

Chile imposed an onerous sliding-scale royalty on realized lithium prices from production in the Atacama salar. Albemarle’s & SQM’s best, lowest cost lithium brine operations…. the world’s best, may no longer the world’s lowest cost.

Brine projects were sure things and clay-hosted lithium projects were, “maybe in 10 years.” Now? Most brine projects are dead in the water, some of them never coming back to life. Even the top-quartile, most advanced projects are not getting funded. By contrast, the prospects for clay-hosted lithium projects are better than they were two years ago, albeit also difficult to fund.

Investors would be crazy not to consider unconventional assets. Brine projects, with evaporation ponds attached, will themselves be unconventional at some point in the future. The only question is when.

In early August, Glencore announced it was shutting a major cobalt / copper mine in Africa at the end of the year. Three weeks later, cobalt prices are up 30-35%. It might not take that much to get lithium prices back on an upswing. If prices were to improve, juniors like Cypress Development Corp., trading at under 1% of third-party derived after-tax NPVs, could do quite well.

Peter Epstein

September 13, 2019

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 Cypress Development 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 Cypress Development 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 investment decisions.

At the time this interview was posted, Peter Epstein owned shares of Cypress Development 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 & financial calculations, or for the completeness of this article or future content. [ER] is not expected or required to subsequently follow or cover any future events & news, or write about any particular company, sector or topic. [ER] is not an expert in any company, sector or investment topic.

 

 

First Vanadium Corp. (TSX-V: FVAN) / (OTCQX: FVANF) has been under pressure, along with hundreds of battery metal juniors and the underlying metals including vanadium, cobalt, lithium. Even vanadium giant Largo Resources is down 61% from its 52-week high. Yet, if one believes in vanadium, it’s hard to ignore First Vanadium’s shares at C$0.44, down 78%! The pro forma Enterprise Value [market cap + debt – cash] is just US$12.8M. The Company has C$1.9M in cash.

Yet, even at current vanadium pentoxide (“V2O5“) prices, the in-situ value of the Indicated-only portion (303 million pounds) of the Company’s estimated resource is ~US$2.5 billion. Management believes it has the largest high-grade primary vanadium resource in North America.

There has been a lot of weeping and gnashing of teeth over the V2O5 (China) price falling from a 2019 high of US$17.6 to its current US$8.2 per pound. But, as the saying goes, the cure to low prices is…. low prices. Few new projects make sense at today’s levels. I believe that V2O5 (China) between US$10-US$15 per pound might be a sweet spot, good for both producers and end users.

Steel companies can afford to pay higher prices for V2O5, but grid-scale, Vanadium Redox Flow Battery (“VRBs“) Energy Storage Systems (outside of China) might need prices below US$10/lb. to go mainstream. Importantly though, VRB plant costs are coming down. Vincent Sprenkle, a lead researcher at the U.S. Department of Energy’s Pacific Northwest National Laboratory, (“PNNL“) recently said, “VRB costs could be lowered by another 50%.” That would be very bullish for vanadium prices, it would allow for widespread adoption of VRBs even with V2O5 prices above US$10/lb.

First Vanadium has a sizable resource, a good grade, in a great jurisdiction. A Preliminary Economic Assessment (“PEA”) is expected by year end. The following interview of Paul Cowley, P.Geo., President, CEO & Director of First Vanadium, was conducted by phone & email between June 24th & July 2nd.

Please tell us about yourself and your team.

I’m an exploration geologist with 40 years’ experience in the discovery & evaluation of mineral deposits around the world. About half of my career was with a Major, BHP Minerals. I was involved in leading the team in the Canadian arctic that made 4 gold deposit discoveries that generated about 6 million ounces of gold. I also worked at Escondida and BHP’s Ekati diamond mine during their exploration days.

I’m a senior guy, but I’m the youngest of our group. The others have even more years of experience. We have two mining engineers that held mine general manager positions of very significant mines at Majors. We have four metallurgists that have worked for Majors, in senior roles. We have a construction engineer who’s built 20 mines in North & South America, he’s currently building Lundin’s mine in Ecuador.

What do you make of the recent volatility in the vanadium price?

Since early March 2019 the vanadium price has taken an unexpected turn lower. Prices are not responding to the bigger picture demand and supply imbalance. Chinese steel plants did not recharge their vanadium inventories in this period, as many expected they would, putting pressure on traders to liquidate at undercutting prices, but they will have to restock. The U.S.-China trade wars, and some shortfall of enforcement of new Chinese rebar standards, appear to have exacerbated the situation in the short term.

It’s our view that the fundamentals of demand in global steel applications will outstrip supply and should push vanadium prices higher again in the second half of the year, and beyond. Adding to the demand side is the exciting boom in solar & wind projects, all of which require battery storage. This is happening on so many levels around the world that we expect to see the vanadium battery carve out a healthy market share in this expanding renewable space. Some are calling the 2020’s, the Solar Decade.

Please explain the significance of the historical data you recently received, that extended the strike length by 300 meters to the south.

It means more potential than we had expected. From our drilling, the deposit appears to be open to expansion in several areas, but we did not expect the deposit to be open to the south. The newly acquired data demonstrates a 15% strike length increase to the south and it’s still open in that direction. This is exciting news as this data was not included in the resource estimate we put out in February.

You already have a 303 million pound vanadium resource (in-situ value of ~US$2.5 billion) in the Indicated category alone. Does the resource need to get any bigger?

That’s a good question. But it needs to be answered through an economic study. In our view, the resource is sizable. It’s currently the largest, highest-grade primary vanadium resource in North America. Our immediate priority is to demonstrate potential economic viability with what we have, knowing that we believe we could always make it bigger if and when we need to.

Several readers may assume that First Vanadium will need an expensive roaster in its operating flow sheet. What are your latest thoughts?

Not true. The path we are on with our metallurgical flow sheet does not include, or require, a roaster.

Although Nevada is the #1 global mining jurisdiction in the latest Fraser Institute Mining Survey, some complain that it takes a long time to get permits. What does your team expect in this regard?

In general, in the U.S. that is true, but not in Nevada. Nevada has a responsible review and process, but it’s a mining state. And, even more so for us now that vanadium is on the critical minerals list. The U.S. has unveiled its strategy in an effort to rebuild struggling domestic supply chains for metals & minerals it deems “critical” to the country’s manufacturing & defense sectors. Recently this was reiterated when President Trump & Prime Minister Trudeau announced a plan for the U.S. & Canada to collaborate on critical minerals.

What are the latest developments on the metallurgical front? 

We continue to make strides on the metallurgical front. In April we announced an average of 95% vanadium extraction from the rock across the deposit, into solution. We do not know what ultimate recoveries will look like just yet, but we are making good progress. And, we’re making strides in the area of pre-concentration, with the aim to reduce the plant size, which would lower the capital intensity of the project.

What are First Vanadium’s plans for a Preliminary Economic Assessment (“PEA”)? Might that be a 1H 2020 event? 

No, we think that we can move faster, our aim is to initiate a PEA in the 3rd quarter, with results to be reported before the end of the year.

Why should readers consider buying shares of First Vanadium?

I see very good value and upside; an exceptional senior technical team, a good share structure and a great project. We now have C$1.9 million in cash with the recent private placement closing, and 42.4 million shares. Our share price now is where it was at the beginning of 2018! Yet, we have delivered two successful drill campaigns, a mineral resource with considerably higher grades, and more metal in the ground than our historical resource, and 80% (303 million pounds) of it is in the Indicated category.

That, plus positive metallurgical test work and environmental baseline studies to advance permitting. If one is bullish on the vanadium price, currently at US$8.20/lb., then First Vanadium’s (TSX-V: FVAN) / (OTCQX: FVANF) project in the #1 of 84 ranked global jurisdiction of Nevada should be high on the list of projects to consider investing in.

Thank you Paul, very interesting and timely commentary on the vanadium market and on First Vanadium. I look forward to seeing a PEA later this year!

Peter Epstein

Epstein Research

July 9, 2019

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 First Vanadium Corp., 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 First Vanadium 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 article was posted, Peter Epstein owned no shares of First Vanadium Corp. and the Company 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, 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, etc., or for the completeness of this interview or future content. [ER] is not expected or required to subsequently follow or cover events & news, or write about any particular company. [ER] is not an expert in any company, industry sector or investment topic.

Rockridge Resources (TSX-V: ROCK) / (Frankfurt: RR0) is an exploration company focused on acquiring, exploring & developing mineral resource properties in Canada. Its focus is copper & base metals; more specifically — base, green energy & battery metals — of which copper is all three. Not just in any place, only top-tier mining jurisdictions such as Saskatchewan. And, only in mining districts that have had significant past exploration, development or production. And, only projects in close proximity to key infrastructure. Rockridge’s management team, Advisors & Board expertly and methodically eliminate many of the risk factors, early on, that can kill projects. This is a tremendous team for a company with a market cap of just C$5.6M / US$4.2M.

New CEO Bolsters Already Strong Team

Late last month, Rockridge appointed Grant Ewing, P.Geo to be its new CEO. Jordan Trimble remains as President & a Director. Grant has more than 25 years’ experience in the Metals & Mining space. His expertise covers the mine development cycle, from early stage exploration through to production. I spoke with Grant last week and was impressed with his very extensive knowledge of base metals and his understanding of the district that hosts the Company’s Knife Lake project. Grant seems to be an ideal person to help advance the Project and make new discoveries. Please see more about CEO Grant Ewing, P.Geo here.

The Company’s flagship project, Knife Lake, is in Saskatchewan, Canada, (ranked 3rd best mining jurisdiction in the world) in the Fraser Institute Mining Company Survey. The Project hosts a near-surface, (high-grade copper) VMS copper-zinc-silver-gold-cobalt deposit, open along strike and at depth. Management believes that there’s strong discovery potential in and around the deposit area, and at additional targets on roughly 85,200 hectares of contiguous claims. As a reminder, Rockridge has an option agreement with Eagle Plains Resources to acquire a 100% Interest in the majority of the Knife Lake VMS deposit.

Flagship Project, Knife Lake, 12 Drill Hole Results Now in….

The Project is within the famous Flin Flon-Snow Lake mining district that contains a prolific VMS base metals belt. Management believes there’s tremendous exploration upside. The goal? High-grade discoveries in a mineralized belt that could host multiple deposits, as VMS–style zones often contain clusters of mineralized zones. Of course, the trick is finding them.

However, no modern exploration, drilling method or technology has been deployed at Knife Lake. It was discovered 50 years ago and last explored in the late 1990s. Airborne geophysics, regional mapping & geochemistry was done, but technologies have improved. Management believes that modern geophysics; high resolution, deep penetrating EM & drone mag surveys to cover large areas in detail, could make a big difference.

Earlier this year, Rockridge drilled 12 holes for a total of 1,053 meters. Importantly, this represents the first significant work on the property since 2001. Readers may recall from reading past articles & interviews on Epstein Research & Equity.Guru & Aheadoftheherd, and viewing videos of then CEO Trimble, that the Company’s primary goal is to explore districts that have been under-explored, never explored, or not recently explored. Management’s highly skilled & experienced technical team & advisors deploy the latest exploration technologies & methods. A lot has changed in 18 years; a simple example would be the use of lower-cost, high resolution drones to fly various surveys.

These 12 assays, added to the historical database, will generate a new NI 43-101 mineral resource estimate in late July or early August. This will be a major milestone that will hopefully draw the attention of prospective strategic partners. Subsequent to that de-risking event, Rockridge is funded for a Summer exploration program, that will likely stretch into Fall. The goal is to identify & refine targets at depth and regionally. Modern vectoring techniques will be deployed, using metal ratios & structural interpretation to identify “primary” VMS deposits.

Other modern methods include high-resolution geophysics, deep penetrating EM to identify conductors, and drone mag surveys to cover large areas in detail. Finally, ground work & sampling will be conducted, analyzing rock geochemistry to identify prospective VMS style hydrothermal systems. Importantly, very limited previous drilling was done below 100m, but of the deeper holes, several intersected mineralization at around 300m. Could they be mineralized lenses?

Last month Rockridge reported additional results from its Winter diamond drill program. The first 5 holes are shown in the chart above. Readers may recall that a key takeaway was that holes KF19001 & KF19002 largely confirmed historical grades, intercept widths & geological conditions. Hole KF19003, reported on May 7th, was a blockbuster, 37.6m of 2.42% Cu Eq., significantly better than the first 2 holes. KF19003 had a grade (Cu Eq.) x thickness (in meters) value of 91, compared to 41 & 49. Importantly, it confirmed high-grade mineralization up-dip of KF19002 in an area where no historical drilling is known to have been done. Therefore, this assay, and perhaps nearby assays to follow, could potentially increase the size & grade of the upcoming mineral resource estimate.

Best Intercept in Last 7 Holes: 15.2 m of 2.45% Cu Eq.

In a press release June 10th, holes KF19006 thru KF19012 did not contain any blockbusters, but 6 of 7 were nicely mineralized with Cu Eq. values ranging from 0.46% to 2.45%. The interval widths averaged nearly 8 meters. The best intercept was 15.15 m at 2.45% Cu Eq. in hole KF19006. This intercept is a good one, like those found in holes KF19001 & KF19002, reported in the April 30th. press release. Importantly, KF19006 tested the up-dip extension of the Knife Lake deposit in an area that had not been previously tested. Likewise, hole KF19007 tested the down-dip extension of the deposit near KF19006. KF19007 intersected a solid 2.95 m of 0.82% Cu Eq. grade. The latest property map provided from today’s press release is too large to fit comfortably within this article, please click on link here.

Rockridge’s CEO, Grant Ewing commented:

The Knife Lake property package is highly prospective for new discoveries using modern exploration techniques & methods given the lack of recent field work. The known deposit is thought to be a remobilized portion of a presumably larger primary VMS deposit, and there is excellent potential for deposit expansion at depth which we plan to test in future programs. Furthermore, there are several high quality targets to test on the expansive landholding, and there have yet to be satellite deposits discovered in the vicinity as VMS systems often host clusters or stacked deposits.

Something I found interesting was the 2 portions of the 15.2 m intercept in KF19006 that assayed 7.25 m of 0.72 g/t Gold, (from 8.75 to 16.0 m), and 5.0 m of 0.93 g/t Gold, (from 11.0 to 16.0 m), both within 16.0 m of surface. Those 2 grades (true widths undetermined) are the highest Gold values reported to date. The 0.93 g/t showing is nearly 50% higher, and 1.0 m longer, (5.0 vs. 4.0 m) than the next highest grade Gold showing, in blockbuster hole KF19003. While intriguing, these values in isolation may not amount to much. Still, they’re worth keeping an eye on.

Rockridge’s President & Director, Jordan Trimble commented:

The results from this first-pass drill program have exceeded our expectations with almost all drill holes having intersected high-grade copper mineralization, and in doing so, we have successfully confirmed the tenor of mineralization reported by previous operators, while expanding known zones of mineralization. We are working towards issuing an NI 43-101 compliant resource estimate as well as planning a regional summer field program, both of which will provide steady news flow and catalysts over the near term. We will continue to execute on our value creation strategy of going into overlooked but prospective projects in prolific mining jurisdictions and using modern exploration methodologies to test new ideas and make new discoveries.”

The deposit remains open at depth. Additional discoveries are very possible as the property is nearly 85,200 hectares in size and vastly under-explored. The Winter drill program gives the Company’s technical team valuable information about geology, alteration & mineralization that will be applied to regional exploration targets. The Company is now working towards completing an NI 43-101 compliant resource estimate for Knife Lake with the results from this drill program. A summer exploration program is also being planned, details to follow.

Conclusion

As mentioned, Rockridge Resources (TSX-V: ROCK) / (Frankfurt: RR0) has a tremendous team — Management, Board & Advisors — for a company with a market cap of C$5.6M = US$4.2M. Readers should take just 5-10 minutes to review the Company’s new June Corporate Presentation. And, the latest press releases can be found here. The flagship Knife Lake project is large enough, at ~85,200 hectares, to keep the Company busy for years to come. Even if management were to farm out (get free-carried) a portion of the Property, there would still be tens of thousands of hectares remaining to explore in a top mining district in Canada.

Copper prices are down into the US$2.60’s/lb. from close to US$3/lb., but near-term fluctuations in the price are meaningless for anyone who believes that copper is needed for, 1) clean-green energy storage, 2) the global electrification of passenger & commercial vehicles, and 3) the surge of infrastructure building needed to accommodate a growing global middle-class population migrating to ever-larger cities. Not to mention the re-building of old and destroyed infrastructure like buildings, roads & bridges. Everything uses copper, everything will continue to use copper. The price of copper has to rise, or there won’t be enough copper, it’s that simple. Several experts believe that the copper price is headed to US$4-$5/lb. by 2020 or 2021. If so, a company like Rockridge Resources has a lot of leverage to that outcome.

Peter Epstein
Epstein Research (ER)

June 13, 2019

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 Rockridge Resources, 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 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 Rockridge 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 article was posted, Peter Epstein owned stock in Rockridge Resources and the Company 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. 

Standard Lithium Ltd. (TSXV: SLL) / (OTCQX: STLHF) shares are caught up in a battery metals sell off, but is it warranted given recent positive developments, ongoing supply challenges in the Lithium Triangle & exciting near-term Company catalysts? Its Arkansas Project could reach commercial production by 2022, and ramp up to ~20K tonnes/yr. of Lithium Carbonate, bolting onto brine streams from 3 existing facilities, to feed a central crystallizer plant by the mid-2020s. [a crystallizer is standard equipment made by multiple manufactures, used in many commercial applications, to convert a solution into a solid material] In this case, the solid material would be a high-purity, finished lithium product.

After successful bench & mini-pilot scale testing, Standard Lithium is at Demonstration Plant stage. The Demo Plant being constructed by Zeton Inc. is a 20 m x 20 m x 11 m tall, industrial-scale modular facility designed to process tail brine from the Lanxess South Plant in southern Arkansas. Lanxess is a leading European specialty chemicals company with > 15,000 employees in 33 countries. It develops, manufactures & markets a wide range of specialty chemicals & plastics. Last year, sales were nearly C$11 billion.

The Demonstration Plant is based on Standard Lithium’s proprietary technology that uses a solid sorbent material to selectively extract lithium. The Plant is designed to continuously process a flow of tail brine at 50 gallons per minute from the Lanxess South Plant, equivalent to annual production of 100-150 tonnes Lithium Carbonate. The Demo Plant is designed to be expanded to commercial scale early next decade.

Dr. Andy Robinson, Standard Lithium President & COO, commented in a June 3rd press release,

The Standard Lithium team is very pleased with both the speed of execution and the exceptional quality and attention to detail that Zeton are bringing to our Demonstration Plant. We are very confident that we will be delivering a high-quality plant to the project site in southern Arkansas, and we look forward to integrating it into Lanxess’ brine operations. We are progressing very quickly on the ground, and hope to announce real progress in project implementation in the near-future.

With all the doom & gloom around lithium pricing, even at current pricing of ~US$11.5K per tonne, 20K tonnes of Lithium Carbonate/yr. = US$230M = ~C$311M revenue at the Project level. There are possible scenarios to produce up to 30K tonnes/yr., for 25+ years by the 2H of the 2020s. Subject to a formal JV between Standard & Lanxess — in exchange for 100% funding of commercialization costs (hundreds of millions of CAD$ over several years) — by Lanxess; Standard Lithium will end up with 30%-40% of the Project. That’s a win-win for both companies in my opinion.

I believe that lithium carbonate pricing will improve early next decade, perhaps meaningfully, as forecasts for the global electrification of commercial & passenger transportation and the deployment of large-scale Energy Storage Systems, continue to rise.

On the other hand, long-term lithium supply is highly uncertain. Brine projects in Argentina & Chile are coming, but they’re delayed due to funding & other challenges. Claimed project capacities of 20-40K tonnes of Lithium Carbonate/yr. may never be attained, look at Argentina’s Orocobre Ltd., after 4 years, it’s running at ~72% of nameplate capacity.

Of roughly 12 potentially viable brine projects in Chile & Argentina, I assume 4 won’t make it and the other 8 are delayed by an average of 2 years. I then pencil in a 4-yr ramp up period to 75% of stated project capacity. Under those assumptions, if 450K tonnes/yr. was expected from the Lithium Triangle in 2025 — what we might see, instead, is 225K tonnes/yr. in 2028! This means security of supply (from the U.S., Canada & Australia) will be of critical importance. Speed to market will be rewarded handsomely with long-term contracts at strong prices.

In the chart below we see a review done by Orocobre of 2018’s expectations vs. reality, a combined 78% shortfall in hydroxide & carbonate expansions. 285.5K tonnes of new supply expected, 64K tonnes delivered. We see this year after year after year…. when will the market catch on? This can only be good news for lithium pricing going forward.

Any lithium company, be it brine, hard rock, clay or “unconventional;” that can reach production by early next decade, will be in the driver’s seat. I believe that Standard Lithium, with JV partner Lanxess could be in commercial operation by 2022. The Lanxess project has been de-risked in a number of important ways. I hope that readers & investors in lithium companies are starting to understand that risks avoided can add considerable value to a project. However, one risk still at large is technology & scale-up risk. With that in mind, I spoke at length with Standard Lithium’s President & COO, quoted above, Dr. Andy Robinson. Robinson has 20+ years’ experience as a Geoscientist and has a PhD in Geochemistry. No one is better suited to be in the position he’s in.

Please tell us about your background and what brought you to Standard Lithium.

I’m a PhD Geochemist who worked in the engineering consulting world for 10 years, and then as an entrepreneurial project developer in the mining & power space for the last decade. Robert (CEO Robert Mintak) and I worked together at Pure Energy. When we took over management of Standard Lithium in the spring of 2017, we had a very clear vision of what we wanted to build. We took our experience in the lithium business, both in terms of modern technology and project development goals, and looked for the ideal project. The ideal project had to have:

The right location for a modern approach,

Existing infrastructure at the project site – not 100’s of km away…

The right partner,

Minimal permitting & environmental risks, and

A globally significant resource

This was the only way we could realistically hope to get a project into commercial production within 5 years versus the usual 10 or more years.

How did your team choose a process technology to move forward with?

We took an agnostic approach to processing technology. The project drives the process. We started by understanding project fundamentals, then we developed a flow sheet that would work for our specific project in Southern Arkansas. Our process development work was guided by the philosophy that we didn’t just want it to work in a lab – we wanted a robust flow sheet that could work economically at commercial-scale.

Please describe the steps your team went through at the bench and minipilot plant stages.

At the bench-scale, we worked with large volumes of real brine from the project – we then tested a whole range of different technologies, ranging from those already in commercial use, through to novel and experimental technologies, to determine which general ‘suite’ of technologies would work best with our brine’s characteristics. We quickly determined that a modern alternative to the types of technologies developed in the 1970’s & commercialized in the 1990’s would be the ideal solution.

So, we spent the time at bench-scale solving chemistry problems of selectively extracting lithium from the brine – then we ran 2 programs of mini-pilot work to build our understanding of the process engineering. One was done at a batch-scale, then we scaled that up and ran it on a continuous basis. Now, in June 2019, we’ve just completed 2 years of test work on our southern Arkansas brines.

What were the key takeaways from each stage?

At the bench-scale – we learned that direct lithium extraction from the tail brine using a highly selective solid sorbent was the way to go. At the mini-pilot-scale – using both chemical & process engineers from a wide range of disciplines — allowed us to develop the simplest, most efficient flow sheet we could, at a reasonable cost. We’re using equipment and processes already in use around the world, at very large commercial-scale, in complementary existing industries.

Please describe Standard Lithium’s upcoming Demonstration Plant, what do you hope to achieve?

The upcoming Demonstration Plant will be final proof-of-concept for our Project – it’s a large Plant, that can be scaled directly to a commercial facility. It’s designed to process up to 50 gallons per minute of tail brine from Lanxess’ South Plant, and produce at a rate of 100-150 tonnes of lithium carbonate per year, so about 10 to 12 tonnes per month. We hope to scale our Demo Plant up to 9,000-10,000 tonnes/yr. during the first phase of commercial execution.

If all goes as planned, Standard Lithium could be in commercial operations in 2022? 2023? Do you have a goal? 

We’re aiming for a commercial decision in the first half next year, and our goal is to be in commercial operations by 2022. I should add that 2022 is aggressive, but achievable – as opposed to the aspirational targets suggested by other brine projects. Some of those projects are years away from a Bankable Feasibility Study, and then will require several more years to design, permit, win over local communities, obtain funding, construct solar evaporation ponds, regional infrastructure like roads, and build a processing facility.

Many companies are suggesting 3-year ramp up periods to full capacity, but if history is any guide, it will probably be longer. So, Standard Lithium could reach initial commercial operations years before some, if not most, of the brine projects in the ‘Lithium Triangle.’ If true, we would hope to lock-in long-term contracts (through Lanxess) at very favorable pricing.

Might you be able to sell lithium output into specialty nichemarkets that command premium pricing?

That’s a great question. If one looks at Lanxess’ business model, it centers around taking raw materials and converting them into a large variety of tertiary products that maximize the value obtained from their feedstock. They do these conversions using their global specialty chemicals expertise. Several niche lithium chemicals command high margins and typically are served by a small number of manufacturers. Lanxess is a leading global specialty chemical company, they know how to: a) build & operate a chemical plant, and b) extract maximum value from their chemical feedstock!

What would you like to say to readers who are still unsure about your operational flow sheet?

 We think there’s still a general misunderstanding in the lithium industry about lithium processing technology. There’s a pervasive thought that evaporation ponds are conventional and therefore ‘safe,’ and that anything different is high-risk. In reality, each evaporation pond project is unique, each has initial, and ongoing, chemical & operational challenges; Orocobre is an example of taking the traditional approach and not delivering battery-quality, or nameplate capacity.

Interestingly, FMC (now Livent Corp.) has been successfully operating an ‘alternative’ lithium-selective sorbent technology (similar to ours) in Argentina since the 1990’s. Standard Lithium (TSXV: SLL) / (OTCQX: STLHF) is not engaging in a high-risk processing technology – we’re simply making incremental improvements to what has already been done successfully for decades.

Once people see our onsite Demonstration Plant in continuous operation later this year, I think perceptions will change as to our technology being unconventional. We don’t have untested technology, we have customized technology, specifically designed with our project fundamentals in mind. The project drives the process. It took years of hard work and millions of dollars, but we think we’re about to cross the finish line regarding proof-of-concept. That should turn a lot of heads.

Peter Epstein

Epstein Research

June 6, 2019

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 Standard Lithium, 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 Standard Lithium 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 article was posted, Peter Epstein owned shares of Standard Lithium and it 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.

 

On May 27, Portofino Resources (TSX-V: POR) announced initial sampling results at its Yergo lithium brine project that covers the entire Aparejos Salar in the Province of Catamarca, Argentina. Yergo is within 15 km of Neo Lithium’s high-grade, PFS-stage 3Q Project. Before getting to this important company news, a quick recap of Portofino.

The Company controls 3 projects in Catamarca, covering > 8,600 hectares, via low-cost, 4-yr. options. Through the end of 2020, total cash outlays are < $65K, for all 3 projects. There are no work commitments or royalties. Portofino’s most advanced (initial drilling this summer) asset is the 100%-controlled, 1,804-hectare Hombre Muerto West project. Close neighbors in the Hombre del Muerto Salar include– Livent Corp. (formerly FMC), POSCO, and Australian-listed Galaxy Resources. POSCO paid ~$375M to Galaxy for 17,500 hectares in Catamarca province, that’s ~$21,400/ha. If POSCO, Galaxy, Livent Corp., Lithium Americas, Albemarle, SQM, Ganfeng, Orocobre Ltd. or smaller players like Neo Lithium, Millennial Lithium, Argosy Minerals, Advantage Lithium and Galan Lithium, were to pay half of what POSCO paid (per hectare) for 1/3 of Portofino’s 1,804 hectares in Hombre Muerto; that would equate to 6x the Company’s current market cap of C$1M. As a reminder, of 18 surface samples taken at the Hombre Muerto West project last year, 2 were > 1,000 mg/L Li, averaging 1,026 mg/L Li, 4 were > 800 mg/L Li, averaging 935 mg/L Li and 6 were > 700 mg/L Li, averaging 871 mg/L.

A Second Project, Named Project II, Looks Promising as Well….

Portofino can acquire 85% of Project II, which is 3,950 hectares in size and located 10 km from the Chile border (see map above) and 65 km northeast of Neo Lithium’s 3Q project. Historical exploration work included near-surface brine samples that averaged 274 mg/L Li, with several in excess of 300 mg/L Li. Project II captures the whole salar, has relatively easy access, and has returned consistent surface / near-surface sampling results over a wide area. The Maricunga project (BFS completed) is located just across the Chile border. Maricunga is billed as the highest grade, undeveloped brine project in the Americas.

Last, but not Least, Yergo, Subject of the May 27th News

Portofino has the right to acquire a 100% Interest in the 2,932 hectare Yergo lithium brine project. The property covers the entire Aparejos salar {see map above}. Earlier this year, surface & near-surface brine sampling & geological mapping were done. Twenty-two locations were sampled, returning values up to 373 mg/L Li and up to 8,001 mg/L Potassium (“K“). The sample sites averaged 224 mg/L Li, 4,878 mg/L K and 184 mg/L Magnesium (“Mg“.) The average Mg:Li ratio of the 22 samples is a very low 0.8:1. Due to unusually high levels of water in the salar, 16 of the 22 samples were taken from the southeast portion of the salar. Those 16 samples averaged 278 mg/L Li, 6,091 mg/L K and 86 mg/L Mg. The average Mg:Li ratio of the 16 samples is extremely low at 0.4:1. Most projects in Argentina have Mg:Li ratios of 3.0 to 3.5 to 1.

According to the press release, one sample taken from the northwestern portion of the salar returned a value of 351 mg/L Li, indicating a potential area of elevated near-surface Li brines up to 3 km in length by 1-2 km in width. Additional sampling will be required to better test the central portions of the area. Management intends to complete additional sampling once surface waters have evaporated to allow for less-diluted brine samples. Due to the close proximity of the salars comprising Neo Lithium’s 3Q Project and Portofino’s Yergo project, geologists studying Yergo believe it’s likely that they have similar geological histories and are similarly enriched in Lithium & Potassium.

David Tafel, Portofino’s CEO stated:

“We are encouraged with these very good, initial lithium and potassium sample results combined with extremely low magnesium/lithium ratios. As soon as weather permits, our geological team will continue their exploration work to follow up on the potential surface extent of the mineralization.“

Conclusion

Although the main event is drilling in June/July at Hombre Muerto West, these surface sample results from the Yergo project are certainly promising. Portofino is slowly but surely, without burning too much cash, advancing multiple projects. In a better battery metals market or a better lithium juniors market, I believe that the optionality embedded in Portofino’s 3 projects would be valued higher. Perhaps a lot higher. A C$1M market cap is a cheap entry point to see a few drill holes in one of the best lithium enriched salars on the planet. A proven salar with long-term existing production and advanced-staged development projects underway.

The following chart is another look at relative valuation. I calculated each company’s Enterprise Value per hectare. Portofino is the 2nd cheapest by this measure. To be fair, this is not the best metric, because not all hectares are of equal quality, or equally far advanced. For instance, some of the companies below have Preliminary Economic Assessments (“PEAs“) on select projects. However, I believe that Portofino’s 3 projects have the potential to be Company-makers (it’s easy to be a Company-maker when your market cap is C$1M). By contrast, some of the companies below have projects and green field properties in provinces or salars that have shown poor or mediocre drill results. Mediocre doesn’t make the grade in this market!

To be clear, Portofino Resources (TSX-V: POR) is a very high risk investment opportunity, it has not drilled a single hole yet. But several of the companies listed above have properties in less attractive salars, have experienced drilling problems, reported unimpressive grades, narrow brine intervals or announced small resources. One company reported a resource of just 66,000 tonnes of Indicated & Inferred lithium carbonate! Portofino could end up with mediocre drill results, or run into problems, but with a market cap of just C$1M, it might be worth taking drilling risk for the possibility of good, or very good, drill results, and perhaps a better lithium junior market later this year.

May 29, 2019

Peter Epstein, Epstein Research

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 Portofino 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 Portofino 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 article was posted, Peter Epstein owned shares of Portofino Resources and Portofino 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.

 

This is big, really big. I can’t say that it’s a surprise that Glencore might want to partner with First Cobalt Corp. (TSX-V: FCC) / (QTCQX: FTSSF), but it would be by far the best possible outcome for management’s strategic review of its 100%-owned refinery in Ontario. Shareholders & prospective investors were understandably growing nervous about First Cobalt’s ability to deliver the restart funding with little or no additional equity issuance. Not because of management, because the battery metals sector is a complete disaster. Everyone knows that the Cobalt price is down a lot, did you know that Vanadium is down 73.5% in 6 months? This news alone, if this agreement is consummated, could mark a turning point for select Cobalt juniors. {See full press release here}

Glencore adds tremendous credibility to First Cobalt’s Refinery

In addition to the potential for significant revenue (C$100M+ at US$20/lb. Cobalt) and good, very good or great EBITDA margins (depending on the Cobalt price), this would open A LOT of doors for the company. They would instantly become the premier pure-play, North American Cobalt junior, not that there are many left to choose from. First Cobalt could solidify its leading position by acquiring other companies & assets. Might eCobalt Solutions (TSX: ECS) be first on the list !?! eCobalt might now prefer the embrace of First Cobalt over a takeover by Australian-listed Jervois Mining. I have no insight on this, I’m just reflecting on the recent acquisition of ECS shares.

At the risk of getting ahead of myself, this is a MOU not a signed, sealed & delivered deal, I continue with the benefits of an agreement between First Cobalt & Glencore. Glencore adds increased credibility to First Cobalt, the management team and the refinery. It would be a supreme vote of confidence. Outside of North America, First Cobalt might not be a very well-known name. That would change overnight, in fact it might be changing as I write this sentence…. First Cobalt would attract additional world-class executives. The company could pay a dividend! My quick math suggests that a 5% dividend yield would be possible from 50% of the cash flow on 2,000-2,500 tonnes of production at US$20/lb. Cobalt.

Glencore would greatly de-risk Refinery restart & attract attention to FCC.v

It’s amazing what Glencore would bring to the table that no one else possibly could. It appears from the press release that Glencore might provide a loan for up to US$30M, all of the capital needed, to restart the refinery. In addition, Glencore would provide technical assistance in bringing the refinery back into production, for instance they would, “collaborate on final flow sheet design.” Glencore would source up to 100% of the feedstock. The refinery is a hydro-metallurgical Cobalt facility in the Canadian Cobalt Camp of Ontario. It has the potential to produce either a Cobalt Sulfate for lithium-ion batteries, or Cobalt metal for the North American Aerospace industry and other industrial & military applications.

Taking this news a step further, if the restart were to be a success, guess who would be there to help (if feasible) ramp up operations from 2,000-2,500 to perhaps 4,000-5,000 tonnes/yr.? Glencore is to Cobalt what Albemarle and SQM are to Lithium. Yes, closing on this agreement would be really, really good for shareholders.

Assuming that Glencore is on board, the refinery would likely be up and running sooner than otherwise would be the case. And, once the world realized that a Cobalt Refinery was coming online in Canada in 2021, and that produced Cobalt would to be ethically sourced from mine to finished product, end-users would be very interested in speaking with First Cobalt. First on the list of visitors to see CEO Trent Mell would likely be execs from the automakers. The company has already signed NDAs with a number of them. Next to visit? Li-ion battery makers. Both automakers and battery companies need ethically sourced Cobalt for genuine moral considerations, for public relations and for security of supply.

As per the press release,

“With no cobalt sulfate production in North America today, the First Cobalt Refinery has the potential to become the first such producer for the American electric vehicle market. The Company has signed confidentiality agreements with several automotive companies interested in securing cobalt for the North American market.”

I have to remind myself that this is a MOU, not a done deal, but I think the chances of it getting done are pretty high. First Cobalt & Glencore have likely been talking about the refinery for months now, if not longer. And, although I’ve outlined the many benefits for First Cobalt shareholders, Glencore benefits as well. Over time, if the refinery could produce 5,000 tonnes of Cobalt products, and Glencore controls that off-take, that’s a meaningful amount, probably > 10% of the battery-grade Cobalt processed / refined & sold outside of Africa & China.

Speaking of China, recent news shows that geopolitical risks are alive and well with China hinting at restricting the free trade of rare earth metals from China to the U.S. It doesn’t matter who’s to blame, how the U.S. and China got here, all that matters are the potential consequences. Today it’s rare earth metals, will China threaten to stop exporting lithium & cobalt next? I doubt that China would sell to Canada or Mexico if there was an embargo against the U.S. for rare earth metals, lithium, cobalt, vanadium, graphite, etc.

But now I’ve veered off course, this isn’t about China… The news today is about Glencore signing a MOU with First Cobalt Corp. (TSX-V: FCC) / (OTCQX: FTSSF) to help design, re-engineer, refurbish & commission the company’s Cobalt refinery in Ontario. Glencore could deliver up 100% of the feedstock needed to produce 2,000-2,500 tonnes of finished Cobalt. And, Glencore is considering paying the entire US$30M cost (in the form of a loan to First Cobalt Corp.) to get it up and running again. This is the biggest news of the year for the Company. This is important news for the Cobalt sector. Let’s see if this marks a change in sentiment for Cobalt juniors.

May 24, 2019

Peter Epstein

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 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 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 article was posted, Peter Epstein owned shares of First Cobalt Corp. and the Company was an advertiser on Epstein Research [ER].

Readers should consider me biased in favor of the Company and understand & 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.

 

Rockridge Resources (TSX-V: ROCK) is a fairly new mineral exploration company focused on the acquisition, exploration & development of mineral resource properties in Canada. Its focus is copper & base metals. More specifically, base, green energy & battery metals, of which copper is all three! Not just any place in Canada, world-class mining jurisdictions such as Saskatchewan. And, not just good jurisdictions, but in mining camps with significant past exploration, development or production, in close proximity to key mining infrastructure.

The company’s flagship project Knife Lake is in Saskatchewan, Canada, (ranked 3rd best mining jurisdiction in the world) in the Fraser Institute Mining Company Survey. The Project hosts the Knife Lake deposit, a near-surface, (high-grade copper) VMS copper-cobalt-gold-silver-zinc deposit open along strike and at depth. Management believes there’s strong discovery potential in and around the deposit area, and at additional targets on ~85,000 hectares of contiguous claims.

On May 7, Rockridge reported additional results from its Winter diamond drill program at its flagship Knife Lake project in Saskatchewan. Hot on the heels of last week’s press release (April 30th) of 2 holes, comes 3 more. I was planning on writing an article on those excellent results, but Equity.Guru beat me to the punch, putting out this well done piece. Readers following along may recall that the key takeaway was that holes KF19001 & KF19002 largely confirmed historical grades, intercept widths & geological conditions. Fast forward to May 7th, and management’s interpretation of drill holes KF19003, KF19004 & KF19005 was announced. Results on the remaining 7 holes will be released over the next 20-30 days. As a reminder, Rockridge has an option agreement with Eagle Plains Resources to acquire a 100% Interest in the majority of the Knife Lake Cu-Zn-Ag-Au-Co VMS deposit.

Earlier this year, Rockridge drilled 12 holes for a total of 1,053 meters. Importantly, this represents the first work on the property since 2001. Readers may recall from reading past articles & interviews on Epstein Research and Equity.Guru and viewing videos of CEO Trimble, that the company’s primary goal is to explore districts that have been under-explored, never explored, or not recently explored. Management’s highly skilled and experienced technical team & advisors deploy the latest exploration technologies & methods. A lot has changed in 18 years; a simple example would be the use of drones to fly various surveys.

Whatever management is doing seems to be working, as evidenced by 2 of the first 5 holes returning very strong results, and the third hole, KF19003 a true blockbuster.

Hole KF19003 was even better than the first 2 holes. In fact, significantly better, with a grade (Cu Eq.) x thickness (in meters) value of 91, compared to 41 & 49. Make no mistake, KF19001 / 19002 were great, they averaged 1.21 Cu Eq. over an average 38.5m. But, KF19003, WAS something to write home about…. [if under the age of 30, Google the idiom, “nothing to write home about“]. Near-surface like the first 2 holes, the 37.6m interval assayed 2% Cu, 0.2 g/t Au, 9.9 g/t Ag, 0.36% Zn & 0.01% Co, for an estimated 2.42% Cu Eq. grade. 2% Cu over 37.6 meters is a tremendous showing at under 41 meters downhole.

Holes KF19004 & KF19005 were mineralized, but had narrower intercept widths of interest. Still, there were attractive Cu Eq. grades (1.25% & 1.20%, respectively). Interestingly, Gallium (up to 25.6 ppm) & Indium (up to 15.2 ppm) values were found in the mineralized zones of all 3 holes. Those 2 Rare Earth Metals trade at an average of about US$300/kg. Each 10 ppm = 1kg/tonne. KF19004 & KF19005 confirmed mineralization up-dip of historically drilled high grade mineralization. So, those 2 holes were like KF19001 & KF19002, important in building the potential resource size. All activities are advancing the Project toward a NI 43-101 compliant mineral resource estimate later this year.

Perhaps best of all, drill hole KF19003 confirmed high-grade mineralization up-dip of KF19002 in an area where no historical drilling is known to have been done. Therefore, this assay, and perhaps nearby assays to follow, will increase the size & grade of the upcoming mineral resource estimate. There were also encouraging zinc values, incl. 4m (from the 37.6m) of 1.32% Zn, nearly C$50/tonne rock. Gold values up to 0.63 g/t are interesting, but like the zinc, I’m referring to only the best grades, from smaller intercepts. That 4m interval I mentioned also had 7.54% Cu. This is clearly a COPPER deposit, Knife Lake is a near-surface, high-grade Cu project. See drill hole results from KF19001 – KF19005 below. Holes KF19001 & KF19002 were released on April 30, and KF19003-KF19005 on May 7.

Rockridge’s President & CEO, Jordan Trimble commented: “The results from drill hole KF19003, specifically 2.42% Cu Eq. over 37.6m, far exceeded our expectations and represents one of the best holes ever drilled on the project. It is important to note that this drill hole was collared in an area where no historical drilling has been reported. As such these drill results are expected to have a positive impact on the historical resource. Final results from the remaining 7 drill holes are pending and will provide steady news flow over the near term.

Drill indicated intercepts (core length) are reported as drilled widths and true thickness is undetermined. {details about calculation of Cu Eq. grade can be found in the press release}.{details about calculation of Cu Eq. grade can be found in the press release}.

From the press release, “The Knife Lake area saw extensive exploration from the late 1960s to the 1990s with the last documented work program completed in 2001. Between 1996 & 1998, Leader Mining completed 315 diamond drill holes, outlining a broad zone of mineralization occurring at a depth of less than 100 m. Late in 1998, Leader published an historical estimate, reporting a, “drill-indicated” resource of 20.3 M tonnes, grading 0.6% Cu, 0.1 g/t Au, 3 g/t Ag, 0.06% Co & 0.11% Zn. Within the historical estimate there is a higher grade zone containing 11.0 M tonnes of 0.75% Cu, plus other metals.”

NOTE: These mineral resource estimates are not supported by a compliant NI 43-101 technical report. A qualified person has not done the work to classify these estimates as current mineral resources in accordance with NI 43-101 standards. Furthermore, the categories used for these historical resource estimates are described as, “drill-indicated”. This is not a NI 43-101 resource category, but based on the methodologies & drill hole spacing, management believes it would likely be classified as Inferred.

The Project is within the word famous Flin Flon-Snow Lake mining district that contains a prolific VMS base metals belt. Management paid < half a penny/lb. of copper and they believe there’s tremendous exploration upside. The goal? High-grade discoveries in a mineralized belt that could host multiple deposits, as VMS-style zones often contain clusters of mineralized zones. Of course, the trick is finding them. No modern exploration, drilling or technology has been deployed at Knife Lake. It was discovered 50 years ago and last explored in the 1990s. Airborne geophysics, regional mapping & geochemistry was done. Management believes that modern geophysics; high resolution, deep penetrating EM & drone mag surveys to cover large areas in detail, could make a big difference.

The deposit remains open at depth. Additional discoveries are very possible as the property is > 85,000 hectares in size. The winter drill program marks the end of the beginning of this highly prospective project. Importantly, the program gives the company’s technical team valuable information about geology, alteration & mineralization that will be applied to regional exploration targets. According to the press release, most of the historical work was shallow drilling in and around the deposit area. Very little regional or district work has been documented. In fact, there wasn’t even much drilling done below the deposit. That’s why management is optimistic about discovery potential both at depth and regionally. I’m excited to see what the next 7 assays add to the Rockridge Resources (TSX-V: ROCK) story!

Peter Epstein

May 9, 2019

Disclosures: The content of this article is for information only. Readers fully understand and agree that nothing contained herein, written by Peter Epstein about Rockridge Resources, 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 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 Rockridge 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 article was posted, Peter Epstein owned stock in Rockridge Resources and the Company 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. 

In February, Blue Sky Uranium (TSX-V: BSK; OTC: BKUCF) delivered a very positive Preliminary Economic Assessment (“PEA“) on the Ivana uranium-vanadium deposit at the Company’s 100%-owned Amarillo Grande project in Argentina. The after-tax IRR & NPV is 29.3% & $135M. The upfront cap-ex is estimated at $128M. Importantly, the all-in sustaining cost is estimated to be in the lowest quartile of the global cost curve, at $18.27/lb. The resource contains nearly 23M pounds uranium, plus 12M pounds vanadium. These indicative economics are based on just a 13-yr. mine life. The metrics are strong, but they could get even better. CEO Niko Cacos has stated in recent interviews that the next C$2-$3M capital raise (probably in May) will fund them into the 4th quarter, and pay for well over 100 shallow drill holes that could potentially double the resource size.

The Company is well on its way to a larger resource. On April 29, Blue Sky Uranium reported,

additional high-grade uranium & vanadium results from pit sampling carried out in the area immediately west of the Ivana Uranium-Vanadium deposit, at the Company’s wholly-owned Amarillo Grande Project in Rio Negro, Argentina. This newly-identified near-surface mineralization is open to expansion, as indicated on Figure 1, (https://bit. ly/2IZknLO) but drilling is required for further testing as the target zone is interpreted to be at greater depth in adjacent areas.”

Doubling the resource would provide a strong foundation for a blockbuster Pre-Feasibility Study (“PFS“) next year. Ultimately, management believes there’s potential for > 100 M pounds uranium, which might include > 50 M pounds vanadium. That would take longer to drill out, so I’m assuming a doubling in the next 9 months and a PFS completed in about a year from now. In my opinion, all else equal, a PFS could show an after-tax IRR > 35% and all-in sustaining costs of $16-$17/lb. The mine life could be extended to 20+ years, or annual production of uranium + vanadium in the initial 10 years could be significantly increased.

Therefore, if management is correct in their belief that a doubling of the resource is possible by 1H 2020, then the current market cap of C$20M = US$15M could be an attractive entry point. If over a longer time frame the Company could triple, quadruple or quintuple the current resource, then instead of bottom quartile costs, they could be looking at a project in the bottom decile. However, they don’t need to spend the time & money this year or next to get anywhere near 100 M pounds of uranium on the books. They have to deliver a strong PFS and then assess the uranium market at that time. If the market has improved, I think that Blue Sky could start production by 2022.

Uranium & vanadium prices over the past 6 months have had a negative impact on company share prices. Uranium bottomed at about $17.5/lb. in 2016, but rebounded to a bit over $29/lb. in Q4 of last year. Sentiment started to shift, momentum seemed to be gaining, but the spot price stalled. It now sits at close to $26/lb. Likewise, vanadium had a tremendous run, from about $3/lb. 3 years ago to just shy of $34/lb. in early November, 2018. Since then vanadium pentoxide (China price) has fallen to ~$12/lb., down 65%. As an aside, cobalt is off about 62% from its 52-week high.

Most analysts & industry pundits believe that both vanadium & uranium prices are headed higher by year-end and higher again in 2020. For vanadium, a price between $10-$20/lb. could be the new normal. Blue Sky doesn’t need a high vanadium price, it’s just icing on the cake. At $10/lb., it doesn’t help project economics all that much. At $20/lb. it has a moderately favourable impact. The PEA uses a $15/lb. price assumption.

Everyone talks about the spot price when they discuss uranium. The spot price is ~$26/lb., but the long-term contract price is quoted at $32/lb. {See Cameco’s pricing page}. Notice that the spread between contract & spot prices over the past 4.25 years ranged from 7% to 89% and averaged 37%. Currently the spread is about 23%. All Blue Sky needs to start production early next decade is $10/lb. more in the spot price, which would likely translate to a contract price in the mid $40’s/lb. The Company doesn’t need that price this year, or even next year. Early 2021 would be perfect timing.

According to the PEA, Blue Sky’s Project has a 20% IRR at $40/lb., and that will likely improve in the upcoming PFS.

It’s not rocket science to understand why prices should rise…. Utilities have been on the sidelines for years, buying in the spot market, letting uranium inventories shrink, because they are not worried about re-supplying. All of that will change beginning next year, and more in 2021-2022. In fact, in 2021-25 global utilities are most exposed to a potential spike in prices (they’re increasingly un-contracted). Blue Sky could time the market perfectly by commencing production in 2022. Of the 60-80 uranium juniors, how many could possibly be in production as soon as 2022? I’m thinking less than 6. Why so few? Most are at exploration stage in jurisdictions where it routinely takes 5 to 15 years to reach production, (if ever). Many can’t raise capital, so their projects are dead in the water.

And, for those who are more advanced, if they require a minimum of $50+/lb. to get off the ground, they could be stalled as well. Once the market realizes that a) uranium prices are headed higher, (but not necessarily to $50+/lb. anytime soon), b) an ideal time to enter production would be in the first half of next decade, and c) sustainable low cost & security of supply will be critically important — there could be a tsunami of capital pouring into just a handful of uranium juniors. Blue Sky Uranium would likely be one of the first to benefit. And, with a market cap of just US$15M, it could become an attractive takeover target.

I mention security of supply, the Section 232 Petition in the U.S. makes it clear that uranium imports into North America & Europe, are increasingly from State-owned or controlled enterprises in adversarial countries like Russia and its allies, or countries heavily influenced by China. Energy Fuels states in a recent press release that, “greater than 60% of newly mined uranium now comes from State-owned enterprises that unfriendly nations own or control.

If or when the U.S., the largest consumer of uranium in the world, faces a challenge in obtaining uranium, even if it starts to look like there might be a problem…. utilities will be anxious to source uranium from safe havens. Argentina certainly qualifies as a safe haven. Management has been operating natural resource companies in Argentina for well over 20 years, they have extensive contacts and vast experience in the country. They believe that first production could be in 2021, I’m saying 2022 to be conservative. Whether it’s 2021, 2022 or 2023, that’s still near-term production compared to the vast majority of uranium peers, most of whom need $50+/lb. uranium or are in jurisdictions known to take a long time to advance projects into production.

Fewer than 6. That’s right, I said fewer than 6 uranium juniors could reach production by 2022, if the long-term contract price remains below $50/lb. Think about that for a moment. By contrast, there are over 300 cannabis-hemp related companies listed in Canada and/or the U.S. A lot of those companies will be viable or will be acquired. It’s really hard to pick the best cannabis plays, but if one wants to place a bet on uranium, Blue Sky Uranium deserves to be high on the list of names to consider.

Peter Epstein

May 3, 2019

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 Blue Sky Uranium, 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 Blue Sky Uranium 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 article was posted, Peter Epstein owned no shares of Blue Sky Uranium and Blue Sky 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.

Green shoots? Anyone seeing the green shoots of a Springtime recovery in lithium stocks? No, me neither…. However, I do note one positive development, Lithium Americas is receiving US$160M for 12.5% of its JV brine project in Argentina. That implies a C$1.7 billion valuation for the entire project, of which Lithium Americas will own half. This is the best news since POSCO paid US$280M to Galaxy Resources for 17,500 hectares in Catamarca province, Argentina. They paid US$16,000/ha for a reported 2.54 million tonnes of high-grade resources.

Speaking of Catamarca,that’s where CEO David Tafel’s company Portofino Resources (TSX-V: POR) controls 3 projects totaling > 8,600 hectares. One of the Projects is very near the projects of POSCO & Galaxy. Another is near Neo Lithium’s very high-grade 3Q project. I recognize I’m name dropping and playing the close-ology game, but Portofino has 3 shots at glory. Three legitimate chances of finding good, or even high-grade lithium deposits. Yet its market cap is just C$2M. This seems like attractive risk/reward to me.

Please give readers the latest snapshot of Portofino Resources.

Sure. Portofino Resources holds an interest in 3 lithium property groups in Argentina representing over 8,600 hectares. Our projects are located within the world-renowned “Lithium Triangle”, specifically focused in Catamarca Province, which was ranked by the Fraser Institute Annual Survey of Mining Companies, 2018, as the best mining province in Argentina. The Hombre Muerto West project is our most advanced and is within Argentina’s most prolific producing lithium brine Salar.

Portofino’s close neighbors in the Hombre del Muerto Salar include Majors– Livent Corp. (formerly FMC Lithium) and POSCO, and Australian-listed Galaxy Resources. All of our projects have been negotiated on the basis of 4-yr earn-in agreements with very low upfront costs. Between now and the end of next year, our total cash outlay is ~US$50K, for all 3 projects, and that’s not until 2020. I should add, we have no work commitments or royalties on any of our projects.

Very few lithium stocks are doing well lately, or over the past year for that matter. What’s your view of the sector?

Yes, it has been a very tough year for lithium stocks and lithium company shareholders, as the excitement for lithium projects has retreated and share trading has dried up. The market is no longer interested in companies with vast hectarage. It’s more about advancing projects with good addresses and good grades. Investors have become much more selective. However, a few companies with promising projects have begun to move up off their lows, and I believe this will continue. NOTE: {Bacanora Lithium, Lithium Americas & Neo Lithium are up an average of ~75% from their 52-week lows}

Tell us more about the Hombre Muerto West project, how many drill holes are planned?

We have a team on site that should complete a geophysical survey by the end of April. This is a follow up on encouraging lithium results achieved during last year’s surface sampling. The present program will help define the extent of brine in the sub-surface, which will be used to define targets for initial drilling. We expect to generate at least 2 or 3 drill targets from the geophysics. Drilling should commence following interpretation of the survey results.

What grades & intercept widths would your team consider to be a success?

Depending upon geophysical results, we will likely drill to an initial depth of 150m and hope for grades exceeding 400-500 ml/L lithium over 75-100m.

What excites you most about Hombre Muerto West?

Our Hombre Muerto West project is located within the best known and top producing lithium brine Salar in Argentina. Galaxy Resources recently sold a portion of their holdings in the Salar to POSCO for US$280 million (US$16,000 per hectare!). In 2018, our geological team sampled 18 sites in a near-surface auger program. Six samples were over 700 mg/L lithium and the highest sample returned 1,031 mg/L lithium plus 9,511 mg/L potassium. The samples also contained low impurity levels, including low magnesium.

Please tell us more about your second project, named Project II.

 Portofino can acquire 85% of Project II, which is 3,950 hectares in size, located approximately 10 km from the Chile border, and 65 km northeast of Neo Lithium Corp’s well known 3Q project. Historical exploration work included near-surface auger brine samples that averaged 274 mg/L lithium, with several in excess of 300 mg/L lithium.

What excites you most about Project II?

Project II captures the whole salar, has relatively easy access, and has returned consistent surface / near-surface sampling results over a wide area. In addition, the Maricunga (BFS completed) lithium project is located just across the Chile border. Maricunga is billed as the highest grade, undeveloped lithium salar project in the Americas.

Are you in discussions with any potential strategic partners?

Yes, we are having preliminary discussions, off and on, with multiple interested parties. We would like to bring in a partner on one or more of our projects. However, there is no certainty that any agreements will be reached.

Please tell us more about your third project, Yergo.

 Portofino has the right to acquire a 100% Interest in the 2,932 hectare Yergo lithium brine project. The property covers the entire Aparejos salar. Yergo is located approximately 15 km southeast of Neo Lithium Corp’s 3Q project. We completed an initial field exploration & sampling program consisting of surface & near-surface brine sampling & geological mapping. A total of 25 locations across the property were sampled. Samples have been shipped to a certified lab in Argentina. Results will be announced as soon as received.

You said that Yergo is ~15 km from Neo Lithium’s project. Neo just released a very favorable PFS. Does Yergo have anything in common with the 3Q?

Neo Lithium’s deposit is very high-grade with very low impurities. Our geological team just completed an initial sampling & mapping exploration program. We believe there are common characteristics. Once we have had a chance to review the results, we will be in a better position to comment further on commonalities.

What excites you most about the Yergo project? 

As mentioned, Yergo is close to Neo Lithium’s PFS-stage 3Q project, yet as far as we are aware, it had remained completely unexplored. Our geologists were quite upbeat after their visit and we are anxious to see the lab results of our initial sampling program.

Your 3 projects might be promising, but at 1,804 ha, 3,950 ha & 2,932 ha, are they large enough to host sizable resources? 

Our Hombre Muerto West property is relatively small, about 1,800 hectares, but could still host a sizable resource subject to ultimate grade/basin determination. However, it would make sense to consolidate our project with another in the same salar. Our other 2 projects are big enough, and in each case we control the entire salar. The advanced-stage, well regarded Maricunga project in Chile is approx. 4,000 hectares– so comparable from that perspective to both Yergo and Project II.

Why should readers consider buying shares of Portofino Resources?

 Lithium stocks are out of favor, but select stocks have moved off their lows. We have just 24 M shares outstanding and a modest market value of ~C$2M. Our 3 projects are located in close proximity to advanced-stage & producing lithium companies. Near-surface sampling at Hombre Muerto West returned some very positive results. Depending on the weather, we hope to start drilling in coming months. We have 2 exploration programs underway, the other being Yergo, so readers can expect news on both projects. We believe there’s significant upside potential in the share price.

April 12, 2019

Peter Epstein

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 Portofino 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 Portofino 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 article was posted, Peter Epstein owned shares of Portofino Resources and Portofino 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.

The market for natural resources remains subdued, but there are pockets of strength. In the Uranium sector, Energy Fuels, IsoEnergy & Appia Energy are up an average of ~150% from their respective 52-week lows. In Copper, Trilogy Metals & Pacific Booker are up an average of ~250%. Good things are happening, but not in Cobalt, at least not yet.

Could This Pure-Play, North American Cobalt Junior Shine Again?

However, when natural resource stocks gather steam, other sectors will join the party, and select Cobalt names will be invited. That doesn’t mean they all will, many companies are broken beyond repair. Last year there were over 100 Cobalt juniors listed in North America alone. Most are still-listed, but many can’t raise a penny to move projects forward. I believe there are fewer than 10 Cobalt names worth looking at.

One of 2017’s blue chip Cobalt juniors that I think has ample room for upside (again) this year is First Cobalt Corp. (TSX-V: FCC) / (OTCQX: FTSSF) / (ASX: FCC). The Company just raised C$1.6 M. Sell-side analysts peg the stock price in a range of C$0.70 to C$1.00. Yet, the current price is C$0.145. Without going into the analyst’s methodologies, (I have not seen the reports), I can see why they’re bullish. But before continuing, we need to discuss the pink elephant in the room – Cobalt prices – you may have noticed that they are down quite a bit.

But, What About the Cobalt Price?

That’s a big problem, but only for readers who believe that Cobalt will remain below US$15/lb. If one does not believe the price will rebound, then First Cobalt Corp. is not the stock for you. I’m not suggesting the price will soon soar, but a near doubling in the price to US$25/lb. in the next year could propel the best positioned companies higher, perhaps a lot higher. The price was > US$40/lb. < 12 months ago, and at US$25/lb. < 3 months ago.

For those fearing that Cobalt is being engineered out of Electric Vehicle batteries due to high cost and/or security of supply concerns, they are only partially correct. I defer to industry experts Benchmark Mineral Intelligence. In February Simon Moores said, “As the energy storage revolution continues to pick up pace, Cobalt demand is set to rise 4 times by 2028.” That would be a 15% CAGR. The 8.1.1 chemistry is Nickel-Manganese-Cobalt in the ratio of 8:1:1.

Experts That I Trust See Strong Cobalt Demand Through 2028

Cobalt was designated a strategic mineral in the U.S. and in many other countries. I believe it will remain in strong demand, and that North American sources will be highly sought after. There’s growing discussion about the 2021 & 2022 EV model years being a global tipping point. Security of supply dictates that Cobalt needs to be locked up by end users well before then. The U.S. is not low on Cobalt supply…. it has NO domestic Cobalt supply!

In addition to controlling ~45% of the past-producing Cobalt, Ontario, Cobalt-Silver camp, First Cobalt owns 100% of a fully-permitted, primary Cobalt Refinery. It can produce Cobalt Sulphate or Metallic Cobalt products and is the only one of its kind in North America. Management believes it could be up and running in 18-24 months.

Very Few Cobalt Juniors Have Hard Assets, like a Permitted Cobalt Refinery

Mining services firm Hatch estimated the Refinery’s replacement value at US$ 100M = C$ 133M. That figure does not include the time value of money, the 4-6 years it might take to get a new refinery designed, permitted, funded, constructed & commissioned. Compare that to the Company’s Enterprise Value [market cap + debt – cash] of ~C$43M. The estimated replacement value of the Refinery alone is 3 times First Cobalt’s entire Enterprise Value! There are few options outside of China to produce Cobalt Sulfate for the battery market, and management says there’s no other near-term refining prospect in North America.

How much revenue could the Refinery generate? At the Company’s base case of 1,000 tonnes/yr., at US$20/lb., that’s roughly US$44M = ~C$59M in revenue. Energy Fuels, an established uranium / vanadium producer, trades at 11.8x trailing 12-month revenue. SQM, a large lithium producer, trades at 4.8x. Bushveld Minerals, a vanadium player, trades at 6.2x, Katanga Mining, a Copper-Cobalt producer with operations in the DRC, trades at 6.4x. Those companies average ~7x trailing revenue. All have refineries or processing facilities. I’m not saying that First Cobalt will or should trade at 7x revenue. However, one can see the potential value of owned & operated hard assets.

In the bare bones analysis above, I estimate what revenue the Refinery could generate operating 90% of the days in a year and 90% of the hours in a day. Combined, that’s 81% annual capacity utilization. I assume a 28% Cobalt concentrate feedstock, and a 90% recovery of Cobalt. At a price of US$20/lb., annualized gross revenue would be ~C$117M. At US$25/lb. it would be ~C$146M, and at US$30/lb. gross revenue would be ~C$175M. Although US$30/lb. Cobalt seems high today, it might not be in 2 years. As mentioned, the price was > US$40/lb. less than 12 months ago. However, to be clear, there’s no guarantee of a meaningful rebound in price.

I fear that investors are treating the estimated replacement value of the Refinery like they would the Net Present Value (“NPV“) of a mining project. That would be a mistake. The estimated value of a hard asset is more reliable than the NPV of a project, especially if the NPV comes from a PEA or PFS. Management says the Refinery can be monetized (cash flowing) in 18-24 months. By definition, a NPV is the present value of future cash flows stretching out decades.

First Cobalt’s Refinery Has Estimated Replacement Value of US$100M

First Cobalt is trading at ~0.33x the estimated replacement value of the Refinery alone. That means investors today get the Company’s flagship project in the U.S. for free, plus 50 past-producing mine sites in Cobalt, Ontario, with a large margin for error embedded in the estimated value of the Refinery.

There’s considerable risk for mining projects at PEA or PFS-stage. First Cobalt’s Refinery simply does not carry that kind of risk. Management needs to arrange funding to get it into production, that’s the primary risk. And, a higher Cobalt price would be nice. However, unlike for mining projects, the Company does not need to raise hundreds of millions of dollars. It needs ~US$25M (includes a 30% contingency). That funding should be achievable through a combination of debt, equity, streaming/royalty financing, and/or selling a portion of the asset.

U.S. Project Iron Creek has 45M lbs. Cobalt + 175M lbs. Copper, With Substantial Upside

Nearly 1,000 words in and I haven’t discussed First Cobalt’s flagship project, Iron Creek in Idaho (USA). There are very few primary Cobalt projects in the world. This one has a resource (26.9 M tonnes) that will be upsized by up to 50% (my guess only) this quarter. The existing resource contains an estimated 45M pounds Cobalt + 175M pounds Copper. Importantly, there’s no arsenic, which means simpler processing & permitting. The grade is low, so I asked CEO Trent Mell about that. His response,

One can certainly point to some high-grade Cobalt drill results that have been released over the past couple of years, but these are typically vein-style deposits that struggle to hold together in resource modeling. In other words, grade is worthless without sufficient tonnage. By contrast, there are a number of Australian Nickel-Cobalt deposits that have the tonnage but lower grades than we have at Iron Creek.”

The rule of law, plus strong access to infrastructure, plus superior proximity to U.S. markets, make Iron Creek a desirable project compared to the dozens of projects & mines in Africa, a continent that accounts for up to 75% of global supply. Sourcing Cobalt from North America is becoming more important by the day. It will be interesting to see the size of the new resource and how much larger still the resource could become next year.

Iron Creek remains open in all directions. That suggests the possibility of a much larger resource. If the Company could double the size, that would greatly enhance the indicative economics of a PEA or PFS. In addition, CEO Trent Mell has mentioned the potential contribution from Copper. He said that up to one third of Iron Creek’s revenue could come from Copper. That would be a tremendous credit against the primary Cobalt production costs. I’m a big fan of Copper, the world cannot have an energy revolution (clean/green renewable energy sources), or the electrification of passenger & commercial transportation, or the building & rebuilding of critical infrastructure, without Copper.

Conclusion

I said that there are 10 or fewer Cobalt juniors worth looking at. First Cobalt (TSX-V: FCC) / (OTCQX: FTSSF) / (ASX: FCC) is high on the list. It has a lot of boxes checked, but at the same time, is still relatively early-stage. So, there’s high return potential, with commensurate high risk. As more boxes get checked, like the upcoming resource update at Iron Creek, ongoing metallurgical testing, lining up feedstock & funding sources for the Refinery…. this de-risking should get noticed by the market. That, and the estimated value of the Refinery being 3 times larger than the Company’s entire Enterprise Value, suggest today’s share price could be an attractive entry point.

{see Corporate Presentation}

{latest Press Releases}

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 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 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 article was posted, Peter Epstein owned shares of First Cobalt Corp. and the Company 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.

Lithium stocks were hot a year ago, now they’re not. Brine projects in Argentina commanded rapt attention, now no one cares. Clay-hosted Lithium projects were non-starters 2-3 years ago, now they’re in the “maybe” column. Clay-hosted Lithium projects are “unconventional,” meaning untested, and therefore difficult or impossible to fund. However, “unconventional” need not mean difficult to move forward or impossible to fund. What if I told you about a company with a project that had relatively low-grade Lithium, is pre-PEA, and is located in southern Arkansas? Sounds attractive, right? No, it sounds highly….. “unconventional.” Last I checked, Arkansas was not in the heart of the Lithium Triangle.

Sometimes unconventional is not all bad. Standard Lithium (TSX-V: SLL) / (OTCQX: STLHF) is a company like no other, and that’s a good thing. Although pre-PEA (PEA now underway), Standard’s 150,000 acre Arkansas Lithium project, called the LANXESS project, has been de-risked in a surprising number of important ways. For instance, while other mining juniors talk about being near, “past producing mines,” the LANXESS project is currently in operation, at massive commercial scale — but producing Bromine from brine, not Lithium (yet). It is a past-producer, but also a present & future producer!

The LANXESS project is hardly early-stage. All of the project’s infrastructure is in place and currently in use. Power, rail, gas, water, tanks, chemicals, pumps, tankers, trucks, drilling equipment, wells, roads, pipelines, etc. 24/7/365, dozens of wells are pumping billions of gallons of brine (salty water), annually, containing Bromine, Lithium and other elements, through 3 nearby processing facilities. The LANXESS project happens to be smack in the middle of North America’s largest brine production & processing facilities. These facilities have been in operation for decades.

Think about the risks avoided here. The Project is in the U.S., thousands of experienced workers are in place working, there’s no discovery or resource expansion risk (the resource is already large enough), the Project is by and large already permitted, it’s in environmental compliance. There’s local community support (no Aboriginal or First Nations issues).

Year-round operations, port access in the Gulf of Mexico, workers go home each night (no fly-in / fly-out). Best of all, the Project is in commercial-scale operation right now, albeit for Bromine. These are logistical items that Lithium companies in Argentina & Chile, not to mention Australia & Canada, would die for, milestones that can take years and hundreds of millions of dollars to obtain.

Not only are operations in place at a large commercial scale, but pumping history, hydrology & geology is all readily available to Standard Lithium for review. This and other data enabled the Company to estimate a 3.1 M metric tonne Lithium Carbonate Equiv. (“LCE“) Inferred resource at the LANXESS project. So, we can be reasonably certain that there’s considerable resource size. However, to be safe we await the Inferred resource being converted to Measured & Indicated, which is expected later this year.

One might think that pulling Lithium out along with the Bromine would be straightforward, it’s not, it proved to be quite a technical challenge. However, a challenge on the verge of being solved, as Standard Lithium is operating a mini pilot plant that has already produced battery-grade Lithium Carbonate. However, this process needs to be scaled up very significantly.

I’ve mentioned several ways in which the Company’s Project is de-risked, taking that theme to a whole new level is a prospective JV with LANXESS (hence the project name). Standard Lithium signed a MOU with LANXESS in May 2018 and a JV term sheet in November. LANXESS is a giant German chemical conglomerate that would provide substantial help on the technical, operational, sales / marketing and R&D fronts.

Assuming reasonable project economics, LANXESS has committed to finance 100% of the commercialization of the Project. LANXESS’, (through its wholly-owned subsidiaryGreat Lake Chemicals, operations in Southern Arkansas encompass more than 150,000 acres, 10,000 brine leases & surface agreements and 250 miles of pipelines. LANXESS extracts brine from wells located throughout the area and transports it to 3 Arkansas processing plants through a network of pipelines.

Executing the JV would be huge, LANXESS would own a majority of the Project, but funding is without question the largest risk factor these days. LANXESS funding would be the biggest de-risking event of them all. Several world-class brine projects in Argentina are all but stalled due to a lack of project funding. That’s even though those projects are “conventional” proposing to use conventional solar evaporation ponds. And then there’s Quebec’s Nemaska Lithium, they were billed as fully-funded, until they found a ~C$400M hole in their funding basket. Nothing against Nemaska, Lithium projects are complex and unique. Delays and cost over-runs are the norm.

Standard Lithium’s processing technology, if operating at commercial scale, would process enormous volumes of brine in days vs. over a year for solar evaporation ponds. The technology is designed to be easily and conveniently scalable, it’s modular. If need be, the Company could plan production based on market conditions. Management is not going to run into a ~C$400M cap-ex problem, the amount of operating data available is immense and remember, most of the infrastructure is already in place.

So, what does all of this mean for Standard Lithium? Assuming LANXESS comes on board (LANXESS named Standard Lithium and the Arkansas lithium project during the opening minutes of their 4th Quarter earnings call), they have many risk factors covered, including the biggest risk, project funding. Instead of facing the daunting task of having to raise hundreds of millions in equity capital to fund a commercial development, the Company is probably looking at raising closer to C$25M over the next 18 months. They just closed an C$11M bought deal financing.

Risk Factors

The main risk factor is scaling their proprietary technology from pilot to commercial-scale. With regard to this risk, I think it’s a question of when, not if, the Company achieves this milestone. A moderate delay would be disappointing but would not deliver a fatal blow. Standard Lithium hopes to eventually reach a run-rate of ~20,000 tonnes/yr. LCE. That will likely take several years, after first achieving limited commercial production potentially as early as 2021. Ultimately, production of 30,000+ tonnes/yr. LCE for decades is a possibility, by optimizing the well fields and tapping into the Company’s nearby TETRA Project area.

What might the mid-year PEA show? We don’t know yet, but we can make some educated guesses. Cap-ex? In Argentina, the average Lithium brine project cap-ex requirement from among 6 well known projects is C$540 M. The LANXESS project will be built in stages, so the cap-ex will be substantially lower. Remember, most of the infrastructure is already in place and in operation.

Op-ex should be on the low side as well. For example, the Company has ready access to some of the cheapest chemical reagents in the world. And, the Lithium operations will be sharing some costs with the Bromine operations. Brine exits the Bromine operations at 70 degrees Celsius, so no extra energy needs to be added as it enters the Lithium facilities. Management’s goal is to be in the bottom quartile on the cost curve.

Look at “conventional” brine producer Orocobre Ltd., it’s in year 4 of commercial operation, but is still running at ~70%-80% of nameplate capacity. This is no knock on Orocobre, they were the first new brine project in Argentina in 20 years, it just demonstrates how very difficult each unique brine (chemistry) project is. And the weather, it has been surprisingly rainy this year and last, which is bad news for solar evaporation ponds. Global warming?

In the early-to-mid 2020s there will be fierce competition for scarce resources in Argentina (labor, executives with brine project building experience, consultants, water, power, mining services & equipment, environmental work & construction activities (at 4,000 meter elevations), access to governmental agencies for permits & approvals). Among the 6-10 brine projects in Argentina at PEA-stage or more advanced, several might never reach production. Several others could be delayed by 1,2,3,4 years in reaching nameplate capacities of 20k-35k tonnes/yr. LCE.

Conclusion

Standard Lithium (TSX-V: SLL) / (OTCQX: STLHF) will not be fighting for scarce resources, (another risk avoided) there should be no operating or infrastructure bottlenecks, the weather is not a factor. There won’t be cost blowouts. If a Bank Feasibility Study calls for first production in mid-2021, and LANXESS is committed to project finance, operations & off-take, it will likely happen pretty much on time and on budget.

For hard rock producers in western Australia my understanding is that the situation is a lot better, but we could still see bottlenecks as many hard rock producers try to ramp up supply at the same time. Instead of companies failing, perhaps we will see a wave of M&A in western Australia.

That higher degree of certainty is worth a lot in the wild west of Lithium project development. And, if the brine projects in the Lithium Triangle can’t deliver close to nameplate capacity in the early-to-mid-2020’s, there’s going to be tremendous demand for Standard Lithium’s output, and Lithium prices will likely be high. Who knows, maybe even the “unconventional” clay-hosted Lithium producers will have their day in the sun?

March 29, 2019

Peter Epstein

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 Standard Lithium, 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 Standard Lithium 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 article was posted, Peter Epstein owned shares of Standard Lithium and the Company 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.

 

Defense Metals (TSV-V: DEFN) / (OTCQB: DFMTF) is a great name. The Company is defending against Chinese dominance of Rare Earth Elements (“REEs“), and Defense Departments require select REEs to defend their countries! Several REEs are very difficult or impossible to replace in critical applications, yet enable products essential to modern civilization. Any company outside of China that can reliably produce a few key REEs will have a license to print money. This week, SGS Canada provided select head assay results from a 30-tonne bulk sample. Four REE assays were reported in this press release {see chart below}. Using the price/kg of each metal, the in-situ value is ~US$ 535/t. That’s equivalent to ~ 0.41 troy ounces Gold or ~12.8 g/t Gold.

In the following interview of CEO Max Sali, readers will learn more about REEs and about Light Rare Earth Elements (“LREEs“), which REEs are in highest demand, and for which applications. Spoiler alert, Neodymium & Praseodymium are in the top 4 or 5. I asked Max why his team believes that its deposit of LREEs might be economically viable given the odds stacked against any deposit becoming a mine. To finish off, we discussed some early-stage uranium assets the Company picked up in the famous Athabasca basin. {Corporate Presentation}

Please give readers the latest snapshot of Defense Metals.

Sure. Defense Metals (TSV-V: DEFN) / (OTCQB: DFMTF) is focused on sourcing, exploring and developing rare earth & uranium properties in Canada. Our flagship project is the Wicheeda rare earth deposit. NOTE: {here’s a good, brand new article by Rick Mills on Defense Metals}

The Wicheeda deposit (6 mineral claims, 1,780 hectares) is 80 km northwest of Prince George, in British Columbia, (“BC“) Canada, and contains potentially exploitable concentrations of Rare Earth Elements. The deposit was explored in the 1970’s & 1980’s, but received little further attention until 2008 when it was drilled by Spectrum Mining Corp. They reported an Inferred resource of 11.3 million tonnes. More recently, SGS Canada provided us with an important update on the deposit. Four REE assays from a 30 tonne bulk sample we sent them earlier this year showed significant concentrations of both Neodymium & Praseodymium.

The Wicheeda deposit is a very exciting project because we can potentially get it into production fairly quickly, especially given nearby infrastructure (roads, rail, water, power, labor, mining equipment & services). A favorable mineralogy & Light Rare Earth Element (“LREE“) distribution make the Wicheeda deposit highly attractive. Some impurities can be removed through electromagnetic separation done on site. The press release we put out this week was important because it gave us a new understanding of the deposit, {see graph below}. Total Rare Earth Oxide (“TREO“) was 4.81%, which we feel is attractive.

Wicheeda is ideally suited for open pit mining and conventional flotation to produce a REE-enriched oxide concentrate. In addition to Lanthanum, Cerium & Neodymium, we also have Praseodymium. Importantly, the deposit is open in most directions and outcrops at surface, meaning a low strip ratio and the potential for expansion. Encouraging bench-scale tests have been done, giving our team the goal of a 60%+ concentrate.

Although the main focus is our rare earth deposit, we also have 2 prospective uranium properties (5 claims blocks), in the heart of the eastern Athabasca basin near Denison Mines and IsoEnergy. Both of those companies are spending millions on drilling this year. IsoEnergy has made a new high-grade discovery 5-10 km from one of our properties.

Which rare earths are in the deposit? Which rare earths in your deposit are most valuable? 

The following REEs can be found, Lanthanium, Cerium, Praseodymium, Neodymium, Samarium, Europium, Gadolinium, Yttrium & Dysprosium. There are also trace amounts of a few others. Neodymium & Praseodymium are the most valuable in the suite.

How have the prices of your most important rare earth metals trended over the past few years?

 Neodymium and Praseodymium are the most important rare earth metals we have identified at the Wicheeda deposit. Neodymium (Nd) & Praseodymium (Pr) are the two rare earth elements which form the majority of rare earth permanent magnets. Below are 5-yr price charts from Kitco. The most recent prices of US$62.0 per kg for Neodymium Oxide and US$78.4 per kg for Praseodymium Oxide are down from recent highs, but up 35%-40% from mid-2016 lows.

Does management have any indicative information on metallurgy, the potential recoveries of individual metals?

Bench-scale flotation and hydrometallurgical test work was done on Wicheeda deposit drill cores at a SGS Lakefield lab during 2010/2011. SGS successfully developed a flotation flow sheet that recovered 83% of the rare earth oxide (REO) and produced a concentrate grading 42% REO. Subsequent hydrometallurgical testing in 2012 on a 2-kg sample of the concentrate grading 39.7% TREO (total REO) produced an upgraded and purified precipitate containing 71% TREO through a process of pre-leaching and roasting.

SGS Canada is well into the planned work program which includes chemical & mineralogical characterization, grindability & laboratory flotation testing on a 200-kg subsample (of the 30 tonne surface bulk sample). The objectives are to validate the process and confirm that conditions of the previously established 2010/2011 bench-scale drill core flotation test work can be upscaled to the current bulk sample; in addition to further optimization of the process flowsheet.

What will management learn from SGS Canada’s work?

As mentioned, Defense Metals delivered a 30 tonne surface bulk sample from the Wicheeda deposit to SGS Canada. SGS is conducting a multi-phase program of bench-scale metallurgical test work preparatory to commissioning larger scale flotation pilot plant testing. Larger scale pilot plant production is expected to validate bench-scale metallurgy and produce LREE product samples for potential off-take partners. The ultimate goal of the test work is to finalize the process flowsheet prior to the commissioning of larger-scale pilot plant testing. SGS has agreed to give us regular updates on its progress. In addition, Defense Metals plans to re-assay the ‘pulps’ used to produce a new 43-101 Inferred resource estimate. A Preliminary Economic Assessment (“PEA“) will follow.

Defense Metals also has uranium assets in the eastern Athabasca basin, please describe those properties. 

Yes, these properties are early stage, and total nearly 10,000 hectares. We have people reviewing the historical work done on the properties, which actually comprise 5 claim blocks. We will likely do some airborne electromagnetic survey work, but to be honest, the eastern Athabasca basin is a hotbed of activity, so we may just allow our neighbors to drill around us and see what they find. Our holding costs on the properties are extremely low.

We are very pleased to have Dale Wallster join our technical advisory board. Dale is a geologist & prospector with 35 years’ experience in North American mineral deposit exploration, with a focus on the targeting & discovery of unconformity-related uranium deposits. He was President & Founder of Roughrider Uranium Corp., a company acquired by Hathor Exploration in 2006 for its strategically located uranium properties in the Athabasca Basin. Dale and his team are widely credited for the discovery of Hathor’s Roughrider deposit. In January 2012, Hathor became a wholly-owned subsidiary of Rio Tinto as part of a C$650 million acquisition.

Why should readers consider buying shares of Defense Metals? 

Defense Metals (TSV-V: DEFN) / (OTCQB: DFMTF) offers an attractive, early-stage way to play the REE market. Our LREE deposit appears to be sizable and is open in multiple directions. It contains potentially economic amounts of select rare earth metals. At least 2 of the REEs, Neodymium (Nd) & Praseodymium (Pr) are quite valuable and in high demand for use in permanent magnets. There are indications that the metallurgy of the Wicheeda deposit is favorable and considerable testing is being done on metallurgy.

If the Company receives additional positive reports from SGS Canada, that could be a catalyst for our share price, as it would provide support for the thesis that we can put the project into initial production fairly quickly. While still early-stage, the Wicheeda deposit has had ample historical work done on it dating back decades, and is undergoing significant, wide-ranging testing right now. If we can advance this project in 2019 the way that we think we can, our current market cap of C$5.1 M = US$3.8 M (23.75 M shares outstanding) could prove to be an attractive entry point.

Thank you Max, that was very interesting, congratulations on the new assay results.

{Corporate Presentation}

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 Defense Metals, 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 Defense Metals 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 in Defense Metals and it 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. [ER] may buy or sell shares in Defense Metals and other advertising companies at any time.

First Vanadium (TSX-V: FVAN) is one of the better known vanadium companies. Its CEO, Paul Cowley, can be seen in a number of video clips that I linked to at the bottom of the page. Despite being a blue chip name, First Vanadium’s market cap is just US$19.5 M. This, for a company that claims to have the highest-grade primary vanadium project in North America, and a plan to fast-track its flagship project in Nevada. To top it all off, management just released a summary of their Maiden mineral resource estimate.

 The Maiden mineral resource estimate came in at 303 M Indicated pounds @ 0.615% & 75 M Inferred pounds @ 0.52%. That represents a moderate increase in size & grade from the historical resource estimate of 289 M Inferred pounds @ 0.515%. Importantly, 80% of the new resource (in pounds) is in the Indicated category. At the current vanadium pentoxide price of US$17.60/lb., the in-situ value of First Vanadium’s 303 M Indicated pounds alone = US$ 5.33 billion. That’s about 275x its market cap. Note: {in-situ values can be misleading for early-stage projects, but they can be compared to peers at similar stage}.

Is vanadium for real? Will Vanadium Redox Flow Batteries cause demand & prices of vanadium pentoxide (“V2O5“) to soar? Will global infrastructure projects demand greatly increased amounts of vanadium-strengthened steel rebar? Please continue reading for answers to these and many other important questions. Note: Peter Epstein and Epstein Research have no prior or existing relationship with CEO Paul Cowley or First Vanadium Corp.

Please give readers the latest snapshot of First Vanadium.

First Vanadium Corp. is focused on vanadium and its advanced-stage Carlin Vanadium project in Nevada, the largest and highest grade primary vanadium deposit in North America. The Company is run by professional geologists & engineers who have worked for Major mining companies in senior positions in exploration, deposit discovery, construction & mining operations.

The company has a tight share structure and is well-funded. We just released a Maiden mineral resource estimate that’s 80% in the Indicated category and that’s larger than our historical resource, which was 100% Inferred. We are very pleased with these results.

Why vanadium, why not lithium, cobalt, graphite, nickel or copper?

All of these minerals are going to be winners in the near future with the inevitable rapid demand increases for these metals with the commercialization of lithium-ion electric batteries in automobiles and vanadium redox flow batteries in large power storage applications. There is just not enough production of these minerals from existing mines to meet the projected demand of this exciting evolution in Battery Technology and commercialization.

In addition, in the case of vanadium, it is chiefly used as an alloy for strengthening steel in infrastructure; rebar, pipelines, airplanes and car frames. CIBC Mellon has estimated that there will be $35 trillion dollars of global infrastructure projects starting over the next 20 years, which will spark big demand for vanadium.

Tell us more about the Carlin Vanadium project.

The Carlin Vanadium project is a black shale-hosted sedimentary bed of high-grade vanadium which is shallow dipping and near-surface, making it ideal for open pit mining. The project’s superior location and infrastructure are added benefits, being located less than 6 miles by road to a major rail hub, a major highway, power and mining community.

Furthermore, the grades are higher, about double that of other Nevada based vanadium projects, and there’s significantly more vanadium metal in our deposit, also about double that of our peers. Our Maiden mineral resource estimate shows the large scale and high grade of the deposit.

How significant has First Vanadium’s exploration drilling been compared to historical drilling? How many new holes were drilled?

The two drill campaigns that First Vanadium did in 2018 totaling 89 holes were extremely strategic and successful in both in-filling and expanding the deposit. We frequently received assay values with higher grades than those found in the older drill data. This is reflected in our Maiden mineral resource estimate that shows a 0.615% grade in the Indicated category alone. The infill drilling improved the confidence level to justify a high percentage of the resource being in the Indicated category.

Please explain First Vanadium’s fast-track approach at the Carlin project.

In the 15 months we have had the project, we quickly received permits to drill, conducted two drill campaigns, made significant inroads in metallurgy, conducted environmental studies, and delivered a significant Maiden mineral resource estimate, with 80% of the vanadium in the Indicated category, all to advance the project and unlock value for shareholders. These steps are the normal steps taken by companies to advance and de-risk projects, but normally it would take 3-4 years to accomplish what we have done in 15 months.

Is there too much talk about VRBs, which only represent 1%-2% of vanadium use? Is the VRB opportunity possibly overrated? 

The Vanadium Redox Flow Battery has only just started to be commercialized over the last two years and currently draws a small percentage of global vanadium consumption. It will ramp up in the short and intermediate time frame to become a much more significant part of vanadium consumption. For example, one project alone in China, the Dalian project, is expected to consume 7,000 tonnes of vanadium, ~8% of annual production, the equivalent of powering 100,000 homes. You can see that the scaling opportunity is eye-opening.

The VRB battery is a superior battery for storing large amounts of electricity and they are forecast to last 25 years, whereas the equivalent lithium-ion battery needs to be replaced every 3 to 5 years due to its depleting characteristics. The VRB battery is the ideal battery solution for the green energy space for large-capacity electricity storage in power grids and in wind & solar applications. Some have stated that if vanadium prices are too high, the VRB battery will not be completive, but continuing technical advancements are being made to bring costs down. Some vanadium producers are offering to lease the vanadium in the battery to reduce costs to the end user.

What do you make of the sharp decline in vanadium prices in Q4 2018?

Vanadium was the best performing metal in 2018, despite the pull-back at the end of the year. September & October 2018 saw a rapid increase in vanadium prices leading up to the implementation of the announced November 1st, 2018 Chinese law requiring 30% more vanadium in Chinese rebar. Rapid price increases are normally followed by pull-backs as a normal reactionary correction, but eventually that pull-back over-reaction needed to stabilize and reflect more prevailing supply & demand factors.

Naturally, the reason for the run-up in price is real and is expected to add more demand to the stage. The strong demand for the metal, and the tight supply, are still the norm– forcing prices up. From mid-January to late-February, the Chinese price of vanadium pentoxide is up 12.8% from US$15.60 to US$17.60/lb. (see chart below from vanadiumprice.com). We expect 2019 will be another strong year for vanadium prices.

What’s the biggest risk to the Carlin project in the next 12 months?

Perceptions. In the valuations of vanadium projects and their in-situ assets, and in vanadium price performance and trajectory through 2019 to provide the investor with confidence and interest in the future of this metal.

Thank you Paul, that was very helpful, I think that readers should have a much better understanding of First Vanadium after reading this interview. Congratulations on your Maiden mineral resource estimate, and continued good luck on fast-tracking the Carlin Vanadium project.

Peter Epstein

March 1, 2019

Video clips of CEO Paul Cowley and/or First Vanadium Corp.

 https://www.youtube.com/watch?v=SEsx6wPCQiM&t=9s

 https://www.youtube.com/watch?v=THrnsK_ODwU&t=97s

 https://www.youtube.com/watch?v=mdx-TFega1Q

 

 

 

Delrey Metals Corp.’s (CSE:DLRY, FSE:1OZ) mandate is to create shareholder value by sourcing, financing & developing undervalued strategic energy metals properties & projects through staking ground or making accretive, prudently and creatively financed acquisitions & joint ventures / farm-ins. They’re off to a good start and have a clean balance sheet with just 34 million shares outstanding and cash of ~C$ 1.5 million. The market cap is about C$8 M = US$6.1 M. The Company is aggressively pursuing additional strategic energy metals assets, and have honed in on 2 or 3 in particular.

Delrey Metals has acquired 5 highly prospective properties in Canada. 4 are prospective for vanadium, for a total of 9,482 hectares, and 1 is a cobaltcopper-zinc opportunity that Cobalt 27 Capital Corp. acquired a 2% NSR on. All 4 vanadium assets will be receiving airborne magnetic surveys and geophysics in February. Subject to results, management will determine which properties to focus on. Both the Porcher and Blackie properties have unique features that if confirmed, will likely make them top priority targets for the next phase of exploration.

Early Days for the Canadian Vanadium Opportunity

Interest in vanadium has grown along with the price. Demand from China continues to be the key driver. While the rest of the world grows at 2%-3% per year, a bad year for China is +6%, and its the 2nd largest economy on the planet. Not only does China use a tremendous amount of steel, it uses huge quantities or rebar which is used in construction & infrastructure building (and rebuilding).

Regarding vanadium pentoxide pricing, there’s been a lot of angst over the recent dramatic decline, but Chinese prices seem to be settling in around US$17/lb. The chart above shows a price closer to US$15/lb., but the price was US$16.90/lb. as of February 3rd. It topped out at nearly US$35/lb. in November, so the price has been halved from a 13-yr. high. Importantly, US$17/lb. is still a strong price, up from a low of US$2.35/lb. on 12/31/15. From $2.35/lb., the Chinese vanadium pentoxide price has risen at a 3-yr CAGR of ~93%. A price between US$15-US$25 is a sweet spot, too high a price and VRBs get priced out of the market.

Perfect Storm of Demand & Supply Fundamentals

Vanadium is primarily used (91%) to strengthen steel rebar, (2 pounds of vanadium added to a tonne of steel doubles its strength), last year China came out with new regulations for Chinese rebar makers– use more vanadium! However, reportedly, 30%-40% of Chinese rebar producers did not follow the regulation implemented in November, which was likely a big factor in the vanadium price crash. The increased demand from this initiative alone is estimated at 10,000 tonnes per year. That’s on a global market of about 90,000 tonnes. 10,000 tonnes/yr. is what Largo Resources’ main mine in Brazil produces, one of the largest mines in the world.

Global demand for vanadium is also being enhanced by other internal moves in China, most notably a total ban on the import of slag and scrap (waste products) that contain vanadium. These waste streams had been used as feedstock for vanadium producers in China. The ban is expected to reduce domestic Chinese production by ~5,000 tonnes/yr.

Quickly on the supply side there have been mine closures dating back to 2015 that are impacting the market. In 2015 a major Brazilian company liquidated, closing the Evraz Highveld mine, representing 10%-15% of global vanadium production. However, at the time the inventory of vanadium was high, so there was a limited price reaction.

Fast forward 2-3 years, there have been other smaller mine closures in China & Brazil, and the above mentioned increase in demand, causing vanadium inventory to be drawn down substantially. Therefore, both sustained demand drivers and ongoing supply constraints help explain the price move from $2.35/lb. at the end of 2015 to a peak of nearly US$35/lb. in 4th qtr. 2018.

Vanadium Reflux Flow Batteries Could use 31k tonnes of V2O5 by 2025

And then there’s Vanadium Reflux Flow Batteries (“VRBs“). They represent just ~1.5% of the global vanadium market, but some pundits have large, grid-scale energy storage growing at a CAGR of up to 40%. Roskill forecasts vanadium use in VRBs to be 31,000 tonnes by 2025. If true, VRB’s would be a significant demand driver, easily overtaking the uses in Aerospace & chemical catalysts combined.

2019 could be a sweet spot in vanadium pricing, several experts expect prices in the US$15/lb. to US$25/lb. range. That would sustain bullish sentiment for companies with properties outside of China, Russia & South Africa. Delrey Metals has exactly that, 5 early-stage prospects in Canada, all with decent infrastructure, all situated on past producing mining or logging sites, and most important, all having had historical work. Prior work included magnetic and other surveys, soil sampling, surface samples, concentrates were made from some samples, and a drill program (at the Star property).

Blackie Vanadium Property

The Blackie Vanadium property is in west-central British Columbia,, ~96 km south-southwest from Prince Rupert. The property is on Banks Island and is accessible year-round. It is located on tidewater, accessible to the Prince Rupert deep water port, which allows for an 8 day trip to North American west coast ports. There’s a network of logging roads (<500 meters away) allowing for low-cost exploration & development.

The property consists of 5 tenures covering 1,213 Hectares, open for expansion in multiple directions. Blackie is on a brownfield site, the Yellow Giant underground mine was operational as recently as 2015. Blackie is host to a gabbroic body 1.2 km by 0.4 km, with an estimated thickness of at least 500 m (McDougall, 1985).

Assays from samples collected by McDougall (1984) ranged from 20% to 25% Iron, 1.1% to 1.9% Titanium, and up to 0.33% V (0.59% V205).  Concentrate results made from these samples returned 0.5% to 1% V (0.89% to 1.78% V205). Individual outcrop results from a previous operator returned up to 49% Iron, 7.0% Titanium and an extremely anomalous 1.2% V (2.14% V2O5) “Several million tons of Iron-Titanium-Vanadium bearing material are known at this locality” 1(Rose and Mulligan, 1970).

The Porcher property

The Porcher property is located in west-central BC, ~38 km south-southwest from Prince Rupert. The property is located on Porcher Island and is accessible year-round. There’s a network of nearby logging roads, allowing for cost-effective exploration & development.

Porcher consists of 7 tenures covering 3,122 Hectares, open for expansion in multiple directions. The property is located in a past-producing mining district. The Surf Point Mine, located ~9 km from the Porcher property, operated from 1919 through to 1939. Like with the Blackie property, Porcher is located on tidewater, less than 39 km from Prince Rupert’s deep water port.

Porcher is host to 2 gabbroic dykes hosting iron-titanium-vanadium mineralization. These sizable dykes are 5.2 km x 1 km, and 4 km x 0.6 km. The dykes are coincident with a large magnetic anomaly identified in the Canada 200 m Residual Total Magnetic field dataset. Limited sampling by McDougall (1961) was completed, with concentrate results ranging from 0.3% to 1.5% Titanium and 0.2% to 0.5% V (0.34% to 0.84% V205). V2O5 deposits globally range from about 0.3% to 0.7%.

Peneece Vanadium Property

The Peneece Vanadium property is in southwest BC, a narrow coastal mainland fjord 85 km east of Vancouver Island. The property consists of 5 tenures covering 1,500 Hectares, open for expansion in multiple directions. Peneece is located along tidewater and is accessible year-round. There’s a network of logging roads within the center of the project area.

The property is host to a >4.8 km long by 0.8 km wide (open to the northwest) pyritic gabbroic complex associated with a very large and intense magnetic anomaly which is believed to be caused by a large body of vanadium-bearing massive titaniferous magnetite.

Access problems prevented sampling of the highly magnetic core, and only marginal material samples were obtained. Concentrate results from these samples graded 0.16% to 0.33% V (0.29% to 0.59% V205 – AR 12204) and up to 6.5g/t Ag, a precious metal not typically found in these systems.

The Star Property

The Star property is located in west-central BC, ~ 27 km south-southwest from Prince Rupert. Like the Porcher property, Star is situated on Porcher Island and is accessible year-round. There’s a network of logging roads covering the majority of the property.

Star consists of 4 tenures covering 3,647 Hectares, open for expansion in multiple directions. The Star property is in the same historic mining district as the Porcher property.  A gold mine operated from 1919 to 1939.  It is located 10 km from the Star property.

The eastern part of the property was explored and drilled in 1955 for Iron Ore by One Resources Canada Corp. Twelve short (<50 m) diamond drill holes were completed for a total of 696 m, targeting a small magnetic anomaly. Conclusions from this work program were that ‘at least several hundred thousand tonnes of magnetite-bearing rock with a grade of the order of 35% Iron exist within the drilling area’ (PF671671).

The One Resources Canada Corp. 200m Residual Total Magnetic field dataset highlights a large 5 km x 7 km magnetic high located in the center of the Star claim group. Historic drilling indicated a much larger resource potentially exists within the property area to the west. While the historic drill program did not analyze the magnetite for Vanadium, a Regional Geochemical Survey (RGS) was completed by the British Columbia Geological Survey in 2000 over the Star claim group, which highlighted up to 148 ppm vanadium-in-silt (99th percentile) and 5.06% Iron.

Management believes the Star property has the makings of a significant vanadium discovery including a large magnetic (5km x 7km) high, drained by extremely anomalous vanadium-in-stream results, with a several hundred-thousand-tonne magnetite resource on the margin.

The Sunset Property

The Sunset Property consists of 4 mineral titles covering 785 Hectares. The area had exploration work done in the 1970’s-1980’s. Several cobalt-copper-zinc soil geochemistry anomalies were discovered. In 1987, Decade International outlined a large cobalt‐copper‐zinc anomaly.

A recent exploration program consisting of mapping, grid preparation, geochemical soil sampling & magnetometer surveys has been done, validating the previous cobalt‐copper-zinc soil geochemical anomaly. Copper values in soil over 500 ppm, when plotted with historical values, indicate a cluster about 1,000 meters by 500 meters. Numerous anomalous Cobalt values lie within this area and a smaller cluster of anomalous zinc in soil is also present.

The presence of elevated levels of Cobalt is interesting, and a 2% NSR royalty on Cobalt only has been sold to Cobalt 27 Capital Corp.

Delrey Metals recently finished a phase one exploration program at Sunset. In September 2018, the Company collected 708 soil samples, 68 rock samples and 11 stream sediment samples. As a result of the sampling, management extended its cobalt-copper-zinc anomaly about a kilometre to the west, and discovered a new zone, called Roughrider, which graded up to 4.3% copper. Management believes the new zone may indicate a cobalt-copper-zinc VMS-style of mineralization.

With these 5 properties, investors have multiple opportunities to win if management advances any of the properties to a maiden resource or to a PEA. If one believes in the fundamentals of Vanadium, Canada is a great place to be looking for potentially economic deposits. In addition, management is actively looking at other attractive properties to acquire or option. 2019 is shaping up to be a busy and productive year for Delrey Metals (CSE:DLRY, FSE:1OZ).

DisclosuresThe 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 Delrey Metals, including but not limited to, commentary, opinions, views, assumptions, reported facts, calculations, etc. is not to be considered implicit or explicit investment advice. Nothing co-ntained 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 Delrey Metals 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 article was posted, Delrey Metals 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. [ER] may buy or sell shares in Delrey Metals and other advertising companies at any time.

by Peter Epstein

CEO Robert Mintak has 2 unconventional lithium projects in the U.S., one of which he believes is de-risked more than most lithium projects around the world due to infrastructure, permitting, jurisdiction and other key factors.  While Robert can’t know for sure until Standard Lithium releases a Preliminary Economic Assessment (PEA), it seems likely that cap-ex will be low compared to conventional brine projects.  For reasons explained below, op-ex is likely to be in the bottom half of the industry cost curve.  The Company’s goal is to be in the bottom quartile.

Standard Lithium is on a clear path to signing a JV with giant German chemical company, LANXESS.  If the JV is consummated, LANXESS will be committed to funding commercial development.  This would be a tremendous de-risking event for the project and for Standard Lithium.  Funding has been a huge challenge for lithium brine projects around the world.  Please continue reading to learn more about this unique U.S. lithium project which could reach initial production in 2 years, 2021.

Peter Epstein: Please explain Standard Lithium to readers who are unfamiliar with your company:

Robert Mintak: We are an integrated technology and specialty chemical company. We are listed on the TSX-V as a mining exploration company but we are not exploring, you won’t see any new mineral discovery announcements coming any time soon. Our business model is simple and somewhat unconventional compared to our peers, we believe the fastest way to go into production and to limit investor risk is to form strategic partnerships that allow us to piggyback off the existing infrastructure and investment of massive operating commercial brine assets in the USA.

I have been involved in the lithium sector for the better part of the past decade. My experience and successes in the lithium sector have been in forging strategic relationships and partnerships with large multinational companies and stakeholders. Previous to Standard Lithium at Pure Energy I brought POSCO, Tenova Bateman, SRI and Tesla to the table, at Standard Lithium we have continued that dynamic with the agreements and partnerships executed including NYSE listed Tetra Technologies and of course our announced planned JV with LANXESS.

Epstein: How is your proprietary process different from lithium brine operations like those found in Argentina?  

Mintak: First, I would like to state that the project drives the process Every lithium brine project globally is by and large wholly unique. Not only the chemistry of the brine, when developing the process flow sheet, as a project builder you need to consider access to and cost of, chemical reagents, water, power.

Permitting, extraction & re-injection of brine, access to land and a skilled workforce arefundamental considerations before you even begin bench-scale testing. Trying to force an extraction technology on a project is akin to the square peg round hole analogy.

Going back to your question, our patent-pending selective extraction, technology, we call “LiSTR” vis-a-vis a typical Argentine brine project that would use either solar evaporation ponds or a modified version of solar evaporation with ion exchange.  As I mentioned, the project drives the process.

Mintak: It rains in south Arkansas, the land is hilly and forested, evaporation ponds are not an option. There has been significant work done over the years, by researchers, universities, large chemical companies etc. on lithium extraction processes and so we stand on the shoulders of giants or as we like to say, ‘we are boldly going where others have already gone’.

A unique advantage in south Arkansas is access to large volumes of raw brine to process test. Unlike our peers, we can literally open a spigot and fill large IBC’s or totes with brine and ship to our facility for process testing. We do not need to permit a well, or get extraction permits. This cut months off the development timeline and allowed us to test a number of existing extraction processes including, but not limited to; solvent extraction, a variety of ion exchange resins, nanofiltration, and floatation.

Through this test work, we have developed a proprietary process that uses a solid ceramic adsorbent material with a crystal lattice that is capable of selectively pulling Li + ions from the waste brine after it has gone through the bromine-extraction step. The ceramic adsorbent materials are mounted in stirred-tank reactors that contain brine. In the second step, the adsorbent releases the Li + ions for recovery. Importantly, the Li-extraction process takes advantage of the fact that the brine leaves the bromine process heated to ~70°C.

This means that no additional energy is required, the reaction kinetics for the adsorption is suitable. The process is capable of reducing the time required for Li extraction from many months (with the evaporation ponds) to hours, and is capable of producing a high-purity lithium chloride solution for further processing into battery quality compounds. The LiSTR process is designed to be scalable at each stage, from bench scale – mini-pilot- demonstration – commercial. We are using technologies and processes used in other industries, we are not reinventing the wheel, just turning it.

Epstein: How might your cap-ex compare to that of lithium brine projects?  For instance, there are 6 projects at PEA-stage, or more advanced, with an average cap-ex of C$540M:

Mintak: We have not published a PEA, so I cannot comment directly on cost comparisons other than pointing to the existing infrastructure at the project. The well-fields are in place and currently producing and circulating 125 million barrels of brine annually. The pipelines are in place, as is power and water. Road and rail is at the site. This is a bolt-on technology to existing chemical plants. 

Epstein: How might your op-ex/tonne compare to that of lithium brine projects? 

Mintak: Again, we have not yet published a PEA, but we are targeting the lowest quartile cost of production for lithium carbonate. We have confidence that this is achievable as the primary cost inputs are very attractive in south Arkansas, power and water are plentiful and inexpensive. Chemical reagents are produced in or shipped in close proximity to south Arkansas, the region is well connected to the Houston shipping channel. At the project level, we can leverage the buying power of a global chemical company when procuring materials and service agreements. 

Epstein: Please describe who LANXESS is.  In what ways (if any) is LANXESS already helping you? 

Mintak: LANXESS is a global specialty chemical company based in Cologne, Germany. They operate 74 chemical plants around the world, 19,000 employees. 2017 revenue around $11 billion. They acquired Chemtura in 2017 for $2.57 billion which included the Arkansas bromine business.

Current land operations in southern Arkansas encompass more than 150,000 acres, 10,000 brine leases, and surface agreements and 250 miles of pipelines. Their three bromine extraction plants currently employ approximately 500 people and they process and reinject 125 million barrels of brine annually (over 5 billion gallons)

We have signed a binding MOU and a general term sheet for a planned JV with LANXESS for the phased development of the south Arkansas project with the goal of producing battery quality lithium materials on a mass scale from brine that is a by-product of existing bromine production facilities run by LANXESS and from 30,000 acres of undeveloped brine leases that Standard Lithium holds.

As part of the binding MOU, we will locate and operate our pilot plant at one of LANXESS’ chemical plants in south Arkansas. We will connect the plant into their brine pipeline system, post bromine extraction, and demonstrate (on a continuous basis) our selective lithium extraction process. We will also be locating our AI-powered lithium carbonate crystallization pilot plant at the site in south Arkansas.

The MOU we have struck with LANXESS allows us to leverage their massive infrastructure investment to de-risk our processing technology without having to spend 10’s of millions of dollars on resource development and the years of time that would entail.  The planned JV with LANXESS includes a commitment from them for commercial project financing (subject to proof of concept and a positive PFS). That is a very important differentiator between Standard Lithium and our peers.

Epstein: In addition to LANXESS, you have been working with a number of other parties, please explain.

Mintak: As a development company, managing the runway and executing on our business plan requires strategic planning. We have taken the stance that we can accomplish more and in a more cost-effective manner, through strategic partnerships and agreements. In south Arkansas, we secured the only available large brine lease package with our agreement with NYSE listed Tetra Technologies.

For our pilot plant development, we are working with two global brands, Salt Works Technologies in Richmond B.C. and Zeton in Burlington Ontario. For analytics and research, we are working with two professors from the fine chemical/pharma departments at the University of British Columbia.

Epstein: What’s the status of your pilot plant, and what are the next steps?

Mintak: Two pilot plants. We have two pilot plants in development. “LiSTR”, the selective extraction demonstration pilot plant is under construction in Burlington Ontario. Zeton is a global leader in pilot plant construction. The plant will be shipped from Zeton to south Arkansas in Q2 of this year and will be located at LANXESS’ Southern Bromine Extraction plant.

The site has virtually everything required to operate in place; steam, water, power, and the demo plant will connect to the existing brine feed and disposal pipeline system. We intend to run this plant in a continuous operating state, not in a batch process. We expect to run the plant through Q3/4 of 2019 and Q1 of 2020. The results of this work will feed into a Feasibility study targeted to be completed in Q2 2020.

The second pilot plant is our “SiFT” Lithium Carbonate Crystallisation Pilot Plant which is being built by Saltworks Technologies Inc., at their facility in Richmond, British Columbia, Canada.  The crystallisation technologies used today in the industry were developed in the mid-twentieth century and are suited for producing technical grade compounds. As higher and higher purity compounds are needed by cathode makers the industry needs to evolve.

Mintak: The SiFT process has been developed by Prof. Jason Hein at the University of British Columbia and introduces advances and technologies from the pharma and fine chemical world to the lithium battery material world. It integrates Artificial Intelligence (AI) enabled high-speed, multi-image photo-microscopy and computer image recognition for crystal size and shape that acts like an auto-pilot, continually monitoring and optimizing the process. We have an operating prototype pilot plant that we are currently testing. The next step is to build a demonstration-scale plant that we will ship to Arkansas in the Q3 of 2019.

Epstein: Most conventional brine projects are planned for about 20,000-30,000 tonnes of Lithium Carbonate Equiv. (“LCE)/yr. Will your project be able to scale up to that range? 

Mintak: Yes, that is an achievable production target based upon current commercial brine production volumes, with an expansion opportunity from our undeveloped brine leases.

Epstein: Please describe Standard Lithium’s near-term catalysts.

Mintak: The immediate near-term catalysts to watch for are a PEA in late Q1 or early Q2 and of course, our pilot plant(s) being moved to site and commissioned in the first half of this year. Investors can also expect further details on our strategic agreement with LANXESS

Thank you Mr. Mintak for a detailed review of Standard Lithium (TSX-V: SLL) / (OTCQB: STLHF).

Peter Epstein – January 25, 2019

DisclosuresThe 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 Standard Lithium, 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 Standard Lithium 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 in Standard Lithium and it 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. [ER] may buy or sell shares in Standard Lithium and other advertising companies at any time.

On April 20th, Centenera Mining [TSX-V: CT, OTCQB: CTMIF] reported a strong partial drill hole result at its Esperanza Copper-Gold porphyry project in San Juan Province, Argentina.  Excitement over this assay was running high.  Management believed that the core looked good, so they rushed the top 166 meters to the lab.

Sometimes when expectations are elevated, actual news can disappoint…. not in this case!  The plan was to punch down to 500 m, but drilling difficulties ended the hole at 387 m.  Importantly, Esperanza remains open at depth and in all directions.

Mineralization was excellent through the top 166 m.  On May 8th, Centenera put out the full drill hole assay, covering 387 m (from surface).  Before jumping into the details, let me put into perspective historical work that Centenera has access to.  Prior drilling returned the following highlights:

Mineralization outcrops at surface with a pyrite halo extending over a 1,400 m x 850 m area, drill holes generally intersected mineralization at surface, and the deposit is open in all directions.  The majority of holes terminated in mineralization, the deposit is open at depth.  Several holes demonstrated increasing grade with depth.

These are solid numbers, the best interval was 88 m, weighing in at 0.69% Copper (“Cu”) Equivalent (“Eq.”).  The goal with this year’s drilling is to find more results like these through prudent step-out drilling.  When exploring porphyry targets, one needs to find both wide intervals — 100+ meters, plus high-grade — say 0.60%-1.00% Cu Eq.

Having said that, the depth of a porphyry target matters a lot.  All else equal, near-surface deposits can be viable at lower grades because pre-stripping (mining waste rock, or overburden, to reach an orebody) is expensive and time consuming.  That’s why this first full assay from Centenera’s 2018 drill program is so exciting; a wide interval, plus strong grade,plus continuous mineralization from surface.

Drill hole 18-ESP-025 collared in mineralization that continued to the bottom of the hole at 387 m (hole abandoned due to drilling difficulties).  Mineralization remains open at depth.

There is a number of porphyry exploration and development projects around the world with 0.30%-0.40% Cu Eq.orebodies.  The lower the grade, the smaller the margin for error and the greater the need for abundant size.  Centenera’s May 8th announcement places it well on its way to establishing economic grade, now it’s a matter of delineating a large-scale deposit.  A surface expression of 1,400 x 850 meters is a good start.

East-west cross section showing complete results from 18-ESP-025 and a few previous drill holes.  The exploration vector to higher grade Cu & Au is interpreted to be west, where 2 targets are highlighted.  All drill holes are open at depth, and there’s significant untested ground to the west & east.  Green = Cu grade / Red = Au grade.

By large-scale I mean > 3 billion pounds Cu Eq.  This year’s drilling will be testing for bulk tonnage potential.  Readers please note, the Company might not be able to identify muti-billions of pounds in a maiden resource estimate, but perhaps management can do so over time.

According to the Company, drill hole #: 18-ESP-025 would have ranked #3 among top global Cu intersections drilled in q1 2018.  Drill intersections ranked by [the Cu portion only, multiplied by interval width (in meters)].  Despite a very promisingCu-Au project, and several other projects / properties in Argentina, Centenera’s market cap remains fairly low at justC$10.2 M / US$ 7.9 M.  Shares are at C$0.14.

The above ranking is of projects where Cu is the primary metal and does not take into account other commodity credits.  For example, Esperanza has meaningful gold credits that are not included.  In addition to being at surface, (vs. an avg. depth to top of interval of 437 m) the Esperanza project is in a favorable mining province in Argentina, in fact the single best province — San Juan — (as measured by the latest annual Fraser Institute of Mining Survey).

0.40% Cu Eq. NI 43-101 compliant resource estimate would mark a robust outcome.  Although there’s limited evidence of large scale to date, management’s goal is to find at least 500 million tonnes of mineralization (by no means a sure thing).  500 million tonnes at a grade of 0.40% would equate to nearly 4.5 billion Cu Eq. pounds.   Management’s stated goal for its projects is to, “drill, add value and advance to JV or sale.”  

I expanded the above chart from a prior article I wrote about Centenera Mining to include higher grades along the left side. This does not mean I believe that the overall mineralized grade will be up to 0.70%-0.75% Cu Eq., but in a constrained open-pit scenario (a subset of the entire deposit), perhaps Cu Eq. of 0.45%+ could be achieved.
Near-term catalysts
Centenera has several catalysts worth watching for. First and foremost — another drill result in June.  That hole was completed to a depth of approximately 450 m.  Also, a possible update on its 100% owned Organullo epithermal gold project in Salta province.  {2nd best province in Argentina– see brief overview of Organullo on left}

A study conducted in 2012 (using historical drill data) resulted inpotential tonnages & exploration target grades of gold.

** These potential exploration target quantities & grades are conceptual in nature, insufficient exploration & geological modelling has been done to define a mineral resource.  

The conceptual (initial) target is between 600-960k ounces gold, grading between 0.92-0.94 g/t Au.  Management acknowledges that Organullo will require a lot of drilling.

Another important catalyst is the upcoming closing of Centenera’s C$3 million capital raise.  Once fresh capital has been banked, investors will stop worrying about that perceived overhang.

In the second half of 2018, there’s a decent chance cash burn will decrease as management finds partner(s) on one or both main projects.  Partnerships typically involve giving up partial ownership in exchange for being free-carried(partner pays 100% of project costs) for a number of years [through key exploration (and possibly development) milestones].

It’s not hard to speculate on prospective partners.  For instance, below a list of 20 companies that are Major or mid-tier Copper & Gold miners / project developers, with assets in Argentina and/or Chile, Peru, Ecuador.  The top 9 players by market cap would not look at Centenera without evidence of the possibility of finding > 10 billion pounds Cu Eq.  The bottom 3 are small compared to the others, but could certainly come up with a relatively modest amount ofupfront funding required to get the Esperanza project into more robust, steady, active exploration.

I believe that Centenera Mining’s valuation at C$10.1 M / USD$ 7.8 M is too cheap given its portfolio of projects & properties in Argentina.  Savvy natural resource stock investors point out that there are dozens of copper-focused porphyry targets in the hands of juniors that have > 1 billion pounds Cu Eq.  That’s true, I’m tracking about 3 dozen.

However, there are red flags associated with many of the other prospects.  For example, several projects are in higher-risk (than Argentina) or even dangerous jurisdictions in countries including the Philippines, Russia, Mongolia, Indonesia, the DRC & Namibia.  Even Peru, the 2nd largest Cu producing country in the world, a jurisdiction with at least 5 major Cu projects held by juniors, is facing increasing challenges on the community relations front.

And, the largest Cu producing country by far, Chile, has prospective projects at elevations above ~4,000 meters that introduce a whole new set of risks, expenses & challenges.  In part due to high altitude, Chile is much more sensitive to water issues.  I’ve been told that Chile has become considerably more expensive to operate in than most other S. American countries.

Other potential red flags…. some projects have PEAs or PFSs with mediocre-to-poor economics; cap-ex figures twice or more the size of a project’s after-tax NPV.  Or, IRRs below 15%, assumed Cu prices above US$3/lb., payback periods > 6 years, grades < 0.35% Cu Eq., strip ratios > 3:1.

Finally, infrastructure & project logistics– bulk mining operations require favorable access to transportation, roads, rail, port, power, water, a reliable work force and mining services / equipment providers.

Centenera Mining’s [TSX-V: CT, OTCQB: CTMIF] Esperanza project is probably in the middle of the pack on this score compared to the 3 dozen global juniors I’m tracking, but better than that among assets in S. America due to it being in San Juan province, having a very low strip ratio and being high grade.  Esperanza is just 35 km from power lines and enjoys year-round road access.  NOTE:  {we still need to see further evidence of large-scale potential….}

Disclosures: The content of this article is for information purposes only. Readers fully understand and agree that nothing contained herein, written by Peter Epstein, about Centenera Miningincluding but not limited to, commentary, opinions, views, assumptions, reported facts, calculations, etc. is to be considered, in any way whatsoever, implicit or explicit investment advice. Further, nothing contained herein is a recommendation or solicitation to buy, hold or sell any security. The content contained herein is not directed at any individual or group. Peter Epstein and Epstein Research [ER] are not responsible, under any circumstances whatsoever, for investment actions taken by the reader. Peter Epstein and  [ER] have never been, and are not currently, a registered or licensed financial advisor or broker/dealer, investment advisor, stockbroker, trader, money manager, compliance or legal officer, and they do not perform market making activities. Peter Epstein and [ER] are not directly employed by any company, group, organization, party or person. The shares of Centenera Mining 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 article was posted, Peter Epstein owned shares and stock options of Centenera Mining and the Company was a sponsor of Epstein ResearchReaders 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. Mr. Epstein & [ER] are 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. Mr. Epstein & [ER] are not expected or required to subsequently follow or cover events & news, or write about any particular company or topic. Mr. Epstein and [ER] are not experts in any company, industry sector or investment topic.

Cypress Development Corp. (TSX-v: CYP) / (OTCQB: CYDVF) / (Frankfurt: C1Z1) killed it with their maiden NI 43-101 compliant lithium resource estimate yesterday!  The whisper number was 4 to 6 million Inferred tonnes of Lithium Carbonate Equiv. (“LCE“), (which would have been a tremendous result), but Global Resource Engineering Ltd. determined there’s an estimated 6.54 million metric tonnes LCE.

Perhaps even more exciting than the size of the resource, (we knew it would be large), was something I never even considered, 44% (2.857 M tonnes) of the resource is in the “Indicated” category…. I thought it would 100% Inferred.  That just goes to show how strong the continuity of the lithium zones are in this giant, thick, tabular formation — where 21 of 23 drill holes ended in mineralization.

In the boxed paragraphs above, notice the added level of evidence or “confidence” (highlighted in green) needed to be designated an Indicated resource vs. Inferred.  The sizable Indicated portion will make it easier and less costly to reach PEA stage (expected in Sept/Oct).  Importantly, Cypress is funded through PEA, especially as a wave of options & warrants will likely be exercised on the back of this news.

Putting this into perspective, consider that Lithium Americas’ (formerly Western Lithium) (TSX: LAC) / (NYSE: LAC) clay-hosted Li project (then called Kings Valley) also in Nevada, had the following maiden mineral resource estimate:

It had an impressive 53% of its total resource classified asIndicated, but the absolute size of the resource was 24% & 16%, respectively, the # of tonnes of LCE in Cypress Development’s maiden Indicated & Inferred resource.

Bacanora Minerals’ clay project in Sonora Mexico had the following maiden resource:

Bacanora Minerals’ (London: BCN) maiden resource was 25% the size of Cypress Development’s Inferred resource.  However, Bacanora had no tonnage at all in the Indicatedcategory.

Fast forward to today, Lithium Americas’ project now hosts a combined Measured & Indicated resource just shy of 6 million tonnes LCE, plus an Inferred inventory of about 2.3 million tonnes.  Recall that LAC has a clay-hosted lithium project, also in Nevada.  An entirely new (will replace the prior) Preliminary Feasibility Study (“PFS“) on LAC’s clay project is expected in June.

Likewise, Bacanora’s net attributable resource has soared to 4.1 million tonnes LCE (Measured & Indicated), and 3.2 million tonnes (Inferred).  Bacanora’s BFS-stage clay project is in Sonora Mexico.

Near-term Catalysts to Keep Market on its Toes

Readers should know that there are important near-term catalysts leading up to a PEA as soon as August, (I’ve been saying in September/October).  First and foremost, ongoing metallurgy test results will be released.  The full maiden mineral resource technical report will be filed on sedar this month.  And, assays from up to 30 new drill holes are coming this Spring & Summer.  Management expects to be in talks with prospective strategic partners, but there’s no rush because, as mentioned, Cypress is funded through PEA.

Cypress should be able to substantially upgrade its NI 43-101 compliant Indicated & Inferred resource to the MeasuredIndicated categories, potentially ending up with a resource around the same size and level of confidence (albeit lower grade) as Lithium Americas’ & Bacanora’s.  In fact, in today’s press release management stated that it believes 30 additional drill holes would be sufficient to upgrade the Inferred portion to Indicated.

Cypress’ Indicated-only portion at nearly 3 M tonnes LCE is larger than most hard rock, and many brine projects around the world.  Cypress is trading at and Enterprise Value (“EV“) to tonne LCE ratio of just C$3.5(share price C$0.33 intra-day May 1st) and that’s on a fully-diluted share count.  Compare that to C$18/t for Lithium Americas (I assume 25% of LAC’s EV is attributable to its Nevada clay project), C$27/t for Bacanora, and an average of C$92/t for several other global hard rock and brine projects (most peers in the chart below are more advanced than Cypress).

The graph below, from a recent Lithium Americas’ corporate presentation, shows where clay-hosted lithium projects fit into the conventional world of hard rock (mostly in western Australia) and brine (mostly in Chile & Argentina).  Generically speaking, clay is right in the middle on both operating costs and lithium grade.  What the chart doesn’t show is that the most significant clay projects (BCN’s, LAC’s and now CYP’s) are quite sizable – much larger than the average conventional lithium project.

To recap, this is a major advancement for Cypress.  It puts them on the map, not just U.S. & North American maps, but global maps.  A KEY TAKEAWAY is that the amount of TIME & CASH needed to drill out the entire resource for a Bank Feasibility Study (“BFS“) next year should be relatively low, especially compared to the time & capital deployed by Lithium Americas & Bacanora to get to PFS & BFS, respectively.  Cypress is now (in my opinion only) in a position to deliver a BFS in mid-to-late 2019 at a total cost (including company overhead) of < C$10 million.

Also of major importance in today’s press release, 

  • Preliminary test work conducted at SGS Canada Inc (Lakefield) and Continental Metallurgical Services, LLC has shown the material exhibits high lithium extractions with short leach times. Lithium extractions of greater than 80% can be achieved in 4 to 8 hours using conventional dilute sulfuric acid leaching.  Currently, Hazen Research Inc is conducting additional leach tests and preliminary results confirm high lithium extractions for new mineral zones.
  • The presence of acid leachable lithium presents a significant cost savings by avoiding calcine and regrind of material during processing.  Preliminary results also show the consumption of sulfuric acid and other reagents are relatively low.
  • The production of high-purity lithium carbonate was demonstrated in the laboratory using conventional recovery methods.
  • The large tonnage of the deposit lends potential to target higher-grade lithium mineralization for the PEA…. {since the scale is so large, there’s a chance the Company can capture higher-grade lithium values (in a subset of the overall resource) for the upcoming PEA}

Improvements in metallurgy to, “greater than 80% extraction” (I’m assuming in the low 80%’s) was reported in the press release.  The last news on that front had stated, “up to 80%.”  Also noteworthy was that management produced a small amount of high-purity lithium carbonate using conventional recovery methods.

Bottom line, there’s an increasing chance that due to favorable mineralogy, Cypress Development Corp. (TSX-v:CYP) / (OTCQB: CYDVF) / (Frankfurt: C1Z1) will be able to avoid certain significant steps in Bacanora’s process flow sheet.  That could mean NOT having to do a pilot plant, potentially saving ten(s) of millions in cap-ex and 1-2 years of project development / construction time.

Cypress’ resource is at or near surface, down to over 120 meters (and is mostly open at depth), the anticipated strip ratio is essentially zero (call it 0.1 to 1).  By contrast, Bacanora’s strip ratio is expected to be 3.9 to 1.  That represents a huge difference in mining costs.  As a reminder, the biggest advantage the Company has over both Lithium Americas & Bacanora is that over 75% of its resource is hosted in non-refractory clay.  That’s why management believes it might not need to operate a pilot plant (avoiding calcine & regrind of material during processing would make the flow sheet a conventional leach process).

Management has delivered a blockbuster maiden resource, > 6 million tonnes of LCE (combined Indicated & Inferred).  Therefore, Cypress need never worry again about resource size, they already have huge scale and could potentially reach BFS-stage much faster and considerably cheaper than LAC & BCN did. 

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 Cypress Development 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 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 Cypress Development 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 / registered financial advisors before making investment decisions.

At the time this interview was posted, Peter Epstein owned shares and/or stock options in Cypress Development Corp. and the Company 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. 

I recently returned from a hectic trip to Toronto for an annual mining industry investment conference known as PDAC.  I met with 28 companies and spoke to dozens of investors.  I expected to talk a lot about Lithium & Cobalt— how the sell-off in those sectors could be close to over, how demand forecasts keep rising in the face of uncertain long-term supply, etc.

Although there were plenty of discussions on the, “battery metals,” I was surprised by the universal excitement over a metal that’s old school, but also indispensable to the future of electric vehicles & renewable energies….  A metal that needs no further introduction…. #Copper

One of the best stories I heard at PDAC was an update from Keith Henderson M.Sc., CEO & Director of Centenera Mining Corp. [TSX-V: CT / OTC: CTMIF], an Argentina-focused company with attractive Copper (“Cu”) & Gold (“Au”) exploration projects.  Upon a positive change in Argentina’s government in 2015, Centenera was quick to move more actively into the country. 

Drilling is underway at the Company’s flagship project, and management believes that it’s going quite well.  The first assay is expected around the end of March.  

The crown jewel asset and primary focus of Centenera this year is the 100% controlled, near-surface Esperanza copper-gold project — (formerly known as the Huachi project) — an outcropping CuAu porphyry system with a blockbuster discovery that included a drill hole intersection of 353 meters grading 0.49% Cu Eq., (incl. 243 m at 0.57% Cu Eq. & 88 m at 0.69% Cu Eq.).  Mineralization outlined at surface and found in shallow drilling is open in all directions and at depth.  {see Corporate Presentation}

Assays from the discovery drill campaign included:

Esperanza is in San Juan province in northwestern Argentina, sitting at an elevation of between 2,800 and 3,250 meters.  That’s relatively low compared to work being done in the high Andes.  The project is 35 km from existing power lines.  Proximity to key infrastructure is absolutely critical for mining bulk tonnage porphyry deposits.  

Exploration can be performed year-round in San Juan, ranked in the 2017 Fraser Institute of Mining Survey as the #1 province in Argentina, and 3rd best mining jurisdiction in all of South America.  Despite well-known players like Barrick (Veladero mine in San Juan) & Yamana Gold (Gualcamayo mine in San Juan) being active in the Province, the Esperanza project remains remarkably under-explored.  Only 7 drill holes (2,011 m) have tested this extensive, outcropping copper-gold porphyry system.



After several weeks of delay due to unseasonal storms and flash flooding across multiple northern provinces, drilling is well underway at Esperanza.  Interestingly, while repairing road access to site, new mineralization was exposed at surface in an area thought to be barren.  Mineralization is now interpreted to extend significantly further to the southeast than previously known.  Some of the best mineralization to date has been intersected in this area.

The Phase I drill program is investigating the potential for a bulk-tonnage copper-gold porphyry-style deposit.  Management is currently drilling 4 step-out holes, ~2,000 m in total, of at least 100 m away from historical holes, aiming to reach deeper, (500 – 600 m), than prior efforts.  Deeper drilling was called for because several assays from 2006-7 showed grade increasing at depth. 

Some drill core from the first hole is about to be sent out for assay.  I’m told that upon visual inspection, the technical team felt that the core looked really good, but readers will have to wait along with management until the end of March for lab results.

Upon success in Phase I, a Phase II program would include 4 additional step-outs of 100 – 150 m, plus 2 IP targets 500 m to the east, for a total of 6 holes. 

Based on exploration to date, the significant grade, and thickness of reported intervals, management believes there could be hundred(s) of millions of metric tonnes of mineralization.  The area of interest is already 1,400 m by 850 m.  If strong grade and wide intervals continue to be found, the deposit could host billion(s) of Copper Equivalent (“Cu Eq.“) pounds.  Make no mistake, it’s still early days, but there’s a real possibility for substantial scale to be unearthed here.  

It’s worth reminding readers that McEwen Mining’s (NYSE: MUXLos Azules project is also in San Juan province.  McEwen’s website describes Los Azules as follows; 962 million tonnes containing 10.2 billion pounds Cu in the Indicated category, plus 2.666 billion tonnes containing 19.3 billion pounds Cu Inferred, with (Cu only) grades of 0.48% & 0.33%, respectively.  That’s a combined 3.6 billion tonnes of mineralization, containing 29.6 billion pounds Indicated & Inferred Cu, at an average grade of 0.37%. 

Delineating hundred(s) of millions of tonnes is not a sure thing, and it won’t necessarily come in the maiden mineral resource estimate.  However, historical exploration, combined with the current drill program, could provide further evidence of grade, scale & continuity that attracts considerable attention.  

Centenera has a tremendous management, Board & technical team for a company its size {72.4 M shares outstanding x C$0.165 = C$12.0 M = US$9.3 M market cap}.

 Centenera Mining Corp. [TSX-V: CT / OTC: CTMIF] is sitting on what could be a major copper-gold asset in San Juan, with important drill results coming out soon.  It also holds a portfolio of promising projects, also in Argentina, including a high sulphidation epithermal gold mineralization project and a hard rock lithium play, both in Salta province. 

Here’s a very good 4-minute video clip of CEO Henderson from PDAC in early March.

Readers would benefit from reading the March 2017 Esperanza Technical Report

Recent press release: February 21, 2018    Website    Twitter    Corporate Presentation

Disclosures: The content of this article is for information purposes only. Readers fully understand and agree that nothing contained herein, written by Peter Epstein, about Centenera Mining, including but not limited to, commentary, opinions, views, assumptions, reported facts, calculations, etc. is to be considered, in any way whatsoever, implicit or explicit investment advice. Further, nothing contained herein is a recommendation or solicitation to buy, hold or sell any security. The content contained herein is not directed at any individual or group. Peter Epstein and Epstein Research [ER] are not responsible, under any circumstances whatsoever, for investment actions taken by the reader. Peter Epstein and  [ER] have never been, and are not currently, a registered or licensed financial advisor or broker/dealer, investment advisor, stockbroker, trader, money manager, compliance or legal officer, and they do not perform market making activities. Peter Epstein and [ER] are not directly employed by any company, group, organization, party or person. The shares of Centenera Mining 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 article was posted, Peter Epstein owned shares and stock options of Centenera Mining and the Company was a sponsor of Epstein ResearchReaders 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. Mr. Epstein & [ER] are 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. Mr. Epstein & [ER] are not expected or required to subsequently follow or cover events & news, or write about any particular company or topic. Mr. Epstein and [ER] are not experts in any company, industry sector or investment topic.

Power Americas Minerals (TSX-V: PAM) / (OTCQX: PWMRF) is well positioned among roughly 18 juniors exploring for Cobalt (“Co“) (and associated gold/silver) in the world-class, past-producing Silver-Cobalt Mining Camp in northeastern Ontario, Canada.  Although reports vary, something on the order of 400-750 M ounces of Silver (“Ag”) and 40-50 M pounds of Co were produced in the district.  

Power Americas has assembled a moderate-sized (vs. its peers) 3,330 hectare (~8,230 acre) land package, 100%-owned, on 15 un-patented mining claims.  

Others have properties in and around the district, most notably First Cobalt Corp., (TSX-V: FCC) and Cobalt Power Corp. (TSX-V: CPO) who, like Power Americas, have substantially all of their assets in Ontario.  First Cobalt is the bellwether Co name in the region, but it has a C$236 M market cap., ~24 times larger than Power Americas’ ~C$10 M market cap.  Cobalt Power is a ~C$28 M company.  NOTE:  {First Cobalt has by far the largest Co footprint in Ontario, PLUS the only permitted cobalt extraction refinery in North America}.

Importantly, none of the new players have advanced beyond early exploration stage.  All of these stocks are highly speculative, and most companies probably would not exist were it not for the booming Co price– which has nearly quadrupled — (from US$21.7k/tonne in Feb 2016 to US$80.5k/tonne in Feb 2018) in the past 2 years. 

Importantly, Power Americas has additional drill results to report this month and next.  The Company is looking for multiple hits of 1 or more meters of greater than 1.00% Co mineralization, which would be better than most peers in the district have reported so far.

Perfect Storm for Cobalt Prices?

In the Co price chart above, notice the steepness of the curve over just the past several months.  Cobalt has almost quadrupled (up ~270%) since February 2016 and is up ~150% since the beginning of last year.  The move in Co prices is very similar to that of lithium prices, although lithium prices began moving 6-9 months earlier, and have not been moving up lately the way Co prices have. 

Readers are likely aware that over 50% of global Co supply comes from the DRC, and that end users are very anxious to source Co elsewhere due to ongoing concerns about child labor law abuses.  Making matters worse, the DRC (suddenly) raised its royalty rate on Co from 2% to 10%, and imposed a 50% “super-profits” tax — defined as income earned on sales of Co at prices > 25% above the price in a Company’s Feasibility Study.

This news comes at the same time that a number of major automakers like BMW, Tesla & Volkswagen are reportedly searching for long-term off-take agreements for cobalt & lithium.  Of note, BMW is said to be close to a 10-yr agreement with an unnamed party.  The DRC will remain the largest producer for years to come, but the playing field is wide open for supply from Canada and other more business-friendly countries. 

Given the proverbial perfect storm for cobalt prices, the early-stage projects / properties in and around Cobalt Ontario could be among the better alternatives for Co supply next decade.  Getting back to Power Americas, the management team is excited about the drill results they will be reporting shortly.

Jeffrey Cocks, President & CEO, stated, 

“We believe we have assembled a sizable, 100%-owned land package [3,330 ha] that encompasses and surrounds several historical cobalt mines in the most active Cobalt Mining Camp in Canada.  We’re highly encouraged by our initial 2017 Exploration Program’s results, and very excited to build off these results with our 2018 winter program that is currently underway.”

Neil Pettigrew, VP Exploration, explained an important factor that differentiates Power Americas from many nearby peers, 

Cobalt mineralization on the Kittson property occurs both in veins and fractures, this gives us a wider target zone.  The mineralized zone also displays a fairly consistent strike and dip, these advantages give us a faster pathway toward defining what could be the first new NI 43-101 compliant cobalt resource in the camp.

The Company’s Co contained mineralization is similar to that of the famous Silver-Cobalt Camp in Ontario, Canada, located ~15 km to the east.  It contains the historic Shakt-Davis and Cobalt-Kittson mines, 4 mine shafts and numerous historic workings; the deepest extending down to 628 feet, and combined, > 2,500 feet of lateral development. 

In late 2017, management acquired an additional 100% interest in 10 unpatented mining claims totaling ~2,240 hectares.  Eight of the new claims are contiguous to the Kittson property and are interpreted to host the western extension of the Shakt-Davis and Edison mine structures.  The other 2 are ~5 km south of the Kittson properties’ southern boundary. 

Drilling is the Main Catalyst This Quarter

Management announced on January 23rd that it has commenced drilling on the 100% owned Kittson-Cobalt project.  A total of 18 holes and 2,000 meters is underway as a follow up on the Fall 2017 ultra-light drill program.  Sixteen holes are planned at the historic Shakt-Davis mine, and 2 on the northern extension of the historic Edison mine.  Drill holes lengths of 75 to 250 m will test mineralization both near surface and below historic workings.  Drill results will be released later this month and into March.

The fracture zone hosting the Shakt-Davis mine has returned grab samples up to 3.66% Co and 1.62% Co over 0.3 m in shallow drilling.  The northern extension of the Edison mine hosts numerous historic trenches which have returned up to 0.49% Co in grab samples.

On January 16th, the Company announced results of their diamond drill program on the Kittson-Cobalt project.  Seven shallow holes, totaling 161 meters were drilled beneath overburden-filled historic workings in the Shakt-Davis mine area.  The program successfully intersected a fracture zone that hosts the Shakt-Davis mineralization over a strike length of 55 m, up to ~30 m deep.  The zone is 5-13 m wide (drilled core length).

Commenting on these results, CEO Cocks said,

“These results represent the first drilling since the 1940’s at the Shakt-Davis mine and confirm the cobalt-rich nature of this extensive fracture zone.  The zone which hosts the Shakt-Davis mine is related to those which also host the Kittson & Edison mines to the north and east, respectively, cumulatively representing over 3 km of strike length.“

Veins hosting the mineralization at Kittson differ from the typical Cobalt Silver Camp veins in that they are lower in Ag but richer in Co, and are associated with zones hosting meaningful amounts of Au.  From assessment files in the Cobalt MNDM office,

Assays and analyses indicated 1.5% Co and minor Ag over a width of 1.37 m, with select grab samples indicating up to 4.0% Co, and others with up to 2.72 oz/t gold.  A further test of hand-picked ore indicated values of 0.87 oz/t Au, 7.92% Co & 7.72% Ni.  Another sample returned 97 oz/ton Ag & 0.336% Co. (Born and Hitch, 1990). 

Conclusion

Power Americas Minerals (TSX-V: PAM) / (OTCQX: PWMRF) has as good a chance as any to find promising cobalt mineralization in Cobalt Ontario.  A key takeaway from this article should be that Power Americas owns properties that have evidence of mineralization that is lower in silver but richer in cobalt, and is associated with zones hosting meaningful amounts of gold And, the Company has a substantially lower market cap at C$ 10 M than many of its peers in the district.  

Finally, near-term drill results, if they show some hits containing relatively large intervals of greater than 1.00% cobalt– could attract investor attention and drive the share price higher.

Disclosures:  The content of this article is for informational purposes only.  Readers fully understand and agree that nothing contained herein, written by Peter Epstein of Epstein Research[ER] including, but not limited to, commentary, opinions, views, assumptions, reported facts, estimates, calculations, etc. is to be considered implicit or explicit, investment advice. Further, nothing contained herein is a recommendation or solicitation to buy or sell any security.  Mr. Epstein and [ER] are not responsible for investment actions taken by the reader.  Mr. Epstein and [ER] have never been, and are not currently, a registered or licensed financial advisor or broker/dealer, investment advisor, stockbroker, trader, money manager, compliance or legal officer, and they do not perform market making activities. Mr. Epstein and [ER] are not directly employed by any company, group, organization, party or person. Shares of Power Americas Minerals 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 consult with their own licensed or registered financial advisors before making investment decisions.

At the time this article was posted, Peter Epstein owned shares and/or stock options in Power Americas Minerals and the Company was an advertiser on [ER].  By virtue of ownership of the Company’s shares and it being an advertiser on [ER], Peter Epstein is biased in his views on the Company.  Readers understand and agree that they must conduct their own research, above and beyond reading this article. While the author believes he’s diligent in screening out companies that are unattractive investment opportunities, he cannot guarantee that his efforts will (or have been) successful. Mr. Epstein & [ER] are 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. Mr. Epstein & [ER] are not expected or required to subsequently follow or cover events & news, or write about any particular company or topic. Mr. Epstein and [ER] are not experts in any company, industry sector or investment topic.

The following interview of CEO Brett Heath of Metalla Royalty & Streaming (CSE: MTA) / (OTCQB: MTAFF), was conducted by phone & email over the 3-day period ended January 21st.  Metalla is a well-run, rapidly growing, precious metals Royalty & Streaming company that is relatively unknown.  The Company’s tried and true business model typically commands a premium market valuation, led by industry darlings like Franco-Nevada (TSX-V: FNV) / (NYSE: FNV), Royal Gold (NYSE: RGLD) and Wheaton Precious Metals (NYSE: WPM).  

{Bios of Mr. Heath and other key executives}

Management believes its valuation is meaningfully lower than its peers.  According to YahooFinance; peers are trading at an average trailing 12 months EV/EBITDA ratio of 30.0x (25.2x excluding Osisko’s elevated 54.0x ratio), and an average EV/Revenue ratio of 17.3x.  By contrast, Metalla’s anticipated [FY 2018 ending May 31, 2018] EV/EBITDA metric is just 8.4x — a 72% discount (8.4x vs. 30.0x) to its peer group.

CEO Brett Heath commented in the interview that EBITDA for FY 2019, (ending May 31, 2019), could be ~C$8-$10 M based only on existing assets in the portfolio, meaning that the 2019 EV/EBITDA ratio might be as low as ~6.5x.  Pro forma for prospective new royalty/streaming acquisitions, Heath thinks EBITDA could be running at “well above” C$10 M by next year.  Management expects at least 4 new deals in 2018.

At some point this year, or in my opinion by early 2019 at the latest, investors will have enough demonstrated cash flow and dividend history — and visibility towards future cash flows — to warrant a higher EV/EBITDA valuation.  How much higher remains to be seen, but cutting the discount from 72% from to 40% (from and EV/EBITDA ratio of 8.4x to 18.0x) would allow for a doubling in Metalla’s share price.   

Here’s my interview with Brett. 

I received my first (monthly) dividend check in the mail…  Thanks!  What can you tell us about the dividend program moving forward this year? 

We are very excited to have accomplished this important milestone early on as a company. The power of compounding dividends over time is significant when looking at total return.  We expect to continue to raise the dividend this year until we reach 50% of after tax and G&A cash flow.  Based on our last quarter, that has the potential to get to C$0.003/month (from C$0.001/month).   

That might not sound like a lot, but it would be a 5.0% dividend yield  (all else equal, assuming no new share issuance for acquisitions) — based on the current C$0.72 share price.  That would be triple the next highest yield in the precious metals royalty & streaming sector.  NOTE:  {Wheaton Precious Metals (NYSE: WPM) is yielding 1.62%}.  

The board will meet quarterly to adjust the dividend based on silver & gold prices and the operating performance of mines that we have royalties or streams on.  We started with a low dividend rate to maintain a strong balance sheet to facilitate upcoming transactions.  

Please update readers on potential acquisitions of new royalty & streaming assets, are you close on anything?  

Yes, we are working on some very exciting deals and hope to close at least 4 transactions this year.  

Metalla’s cash flow is heavily weighted towards silver, will it remain that way, or do you expect cash flow from gold assets to even things out?

Good question.  It just so happens we are overweight silver vs. gold by virtue of executing on the best available deals at the time.  We do expect gold assets to fill in as we complete more transactions.  That being said, we will be heavily weighted towards silver over the next couple of years.  Silver often outperforms gold in bull markets, so we are very comfortable with our positioning. 

Investors have been waiting months for Metalla to be up-listed to the TSX Venture exchange.  Why is it taking so long?

We are very close.  I can assure you that it has been as frustrating for management as it has been for shareholders and prospective investors.  A lot of it has been out of our control unfortunately, but it remains a priority and we will be a tier 1 issuer.  Given the growth profile of the Company, we will be evaluating a U.S. listing as early as next year. 

In December, your team provided an update on its 2% on the NSR Joaquin project.  Tell us about Joaquin and explain the update’s significance? 

This was a great update for Metalla shareholders.  Pan American Silver is allocating $40 M to develop Joaquin with production starting in 2019.  What this means is Metalla will have another top tier counter-party in the producer category.  The mine plan is only based on one high-grade zone of the overall deposit.  This asset will most likely cash flow to Metalla for many years.  Our suspicion is that if we see higher silver prices, Pan American is likely to scale up the production profile. 

What is your team’s latest estimate of cash flow for the fiscal year ending May 31, 2018?  How should investors think about next year’s cash flow? 

We are on track to hit our goal of CAD $6 M in operating cash flow for FY 2018 (ending May 31, 2018).  First quarter (FY 2018) production was lower due to the ramp up of the Endeavor mine.  We haven’t given formal guidance on FY 2019 yet, but internal estimates are looking to be in the CAD $7M – $9M range.  That’s not including any new deals.  With the addition of new transactions, our goal is to reach an annualized rate well north of CAD $10 M within the next 12 months.

Is Metalla paying any cash taxes?  Or, are you benefiting from historical operating losses to offset earnings?

Unlike more established industry leaders like Franco-Nevada, Wheaton Precious Metals and Royal Gold, we don’t expect to pay any cash taxes for several years.  This will support our dividend paying ability. 

A slide in your corporate presentation shows how Metalla stacks up against its peers.  Can you talk about that?  

Yes, we are relatively unknown to investors, which might be why our valuation appears cheap compared to peers.  Our FY 2018 cash flow estimate, plus ~C$1 M in “G&A,” is ~C$ 7 M in EBITDA.  Our EV (market cap + debt – cash) is roughly C$ 59 M (we have ~C$ 3 M in cash & ~C$ 8.5 M of low coupon, unsecured convertible debt owned by our largest shareholder Coeur Mining).  That gives us an EV/EBITDA ratio of about 8 and a half, compared to well over 20x for our peer group. 

Admittedly, part of our valuation discount is probably warranted– we are a new company with a less proven track record, and we are under-followed, for example we don’t have any sell-side research coverage.  But, as we grow, we believe our valuation gap will close, perhaps by a lot.  

Thanks Brett.  It sounds like the story is poised to gain traction with a Tier I TSX-V listing right around the corner, new acquisitions, a rising dividend payout and a cheap valuation.  I look forward to updates on Metalla Royalty & Streaming (CSE: MTA) / (OTCQB: MTAFFin the weeks and months to come.  

Disclosures:  The content of this interview is for illustrative and informational purposes only.  Readers fully understand and agree that nothing contained herein, written by Peter Epstein of Epstein Research[ER] including but not limited to, commentary, opinions, views, assumptions, reported facts, estimates, calculations, etc. is to be considered implicit or explicit, investment advice. Further, nothing contained herein is a recommendation or solicitation to buy or sell any security.  Mr. Epstein and [ER] are not responsible for investment actions taken by the reader.  Mr. Epstein and [ER] have never been, and are not currently, a registered or licensed financial advisor or broker/dealer, investment advisor, stockbroker, trader, money manager, compliance or legal officer, and they do not perform market making activities. Mr. Epstein and [ER] are not directly employed by any company, group, organization, party or person. Shares of Metalla Royalty are 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 consult with their own licensed or registered financial advisors before making investment decisions.

At the time this article was posted, Peter Epstein owned shares in Metalla Royalty and the Company was an advertiser on [ER].  By virtue of ownership of the Company’s shares and it being an advertiser on [ER], Peter Epstein is biased in his views on the Company.  Readers understand and agree that they must conduct their own research, above and beyond reading this article. While the author believes he’s diligent in screening out companies that are unattractive investment opportunities, he cannot guarantee that his efforts will (or have been) successful. Mr. Epstein & [ER] are 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. Mr. Epstein & [ER] are not expected or required to subsequently follow or cover events & news, or write about any particular company or topic. Mr. Epstein and [ER] are not experts in any company, industry sector or investment topic.

Boreal Metals (TSX-V: BMX / Frankfurt: 03E) is a base & precious metals explorer in Scandinavia that is making a major push into the key green energy tech metal Cobalt (“Co“).  The management team & Board have a remarkable amount of experience for a company with a market cap of $17 M plus ~$3 M in cash. [~52 M shares outstanding]

In addition to 4 projects with exploration potential in Zinc (“Zn“), Copper (“Cu“), Silver (“Ag“) & Gold (“Au“); 2 in Sweden & 2 in Norway (Boreal controls 38,266 hectares), on January 16th management announced the execution of a definitive agreement with EMX Royalty Corp. for the acquisition of the 13,115 hectare Modum Cobalt project.  

The Modum project surrounds southern Norway’s historic Skuterud Mine (also known as the Modum Mine).  Historic mine workings, prospects and trends of mineralization extend onto the property Boreal intends to acquire.  Skuterud was Europe’s largest and highest grade producer of cobalt though the nineteenth century.  CEO Karl Antonius commented, 

“The Modum Project includes an impressive 12,000 hectares, that’s 12 kilometers of cobalt prospective geology, with stand-alone mining potential.  We are excited about this timely acquisition of a high-grade cobalt project within an emerging battery production sector in the Nordic Region.”  

Cobalt in Norway??

I was surprised to learn that Scandinavia is home to major cobalt operations. Umicore produces, refines and markets cobalt in Belgium.  The world’s largest cobalt refinery (Kokkola) is in Finland.  Glencore has a giant nickel refinery in Norway (Nikkelverk) that produced about 5,000 tonnes of refined cobalt in 2016.

I have to admit that at first blush, I wondered if this move into Co was the Company simply jumping on the bandwagon of a red hot sector.  However, upon speaking with Mr. Antonius and Director Eric Jensen about the project and Norway’s history as a global Co supplier, I came away excited by the prospects.  Norway, led by projects in the same district Modum is in, was a global leader in Co production for much of the 1800’s.  

Over 80% of the world’s cobalt reportedly came from Norway’s Skuterud Mine district in the 1820s-30s.  Boreal Metals’ strong in-country experience in Norway & Sweden makes it a natural fit to take this project and run with it.  I should also mention that management is actively seeking additional Co properties in the region.

The historic grade of Co mined in the district was ~0.20%, equal to roughly US$156/tonne at the spot Co price of US$78k/tonne.  A key risk factor is that this project depends on strong Co pricing for years to come.  Importantly, Au is known to accompany the Co mineralization in the area, but the grades of a potential Au by-product was never determined. 

Miners in the 1800s would not have been interested in exploiting what they would have considered to be an insignificant Au value at the time.  With Au now at US$1,340/oz., up US$100/oz. in just the past month — a gold production credit could add significant value. 

In the price chart above, readers can see that the Co price is up nearly 250% from January 2016.  It’s at a high not seen since the 2008 price spike when the metal rose above US$110k/tonne.  The outlook for both cobalt & lithium prices is quite robust.  

Analysts correctly point out that the cost of both metals as a percentage of the total cost of a lithium-ion battery is low.  Therefore, even though the cobalt price is up ~260%, and lithium prices are up by a similar amount over the past few years, overall battery costs continue to decline due to technology improvements and economies of scale.   

Much has been written about conflict cobalt, the greater than 50% of global Co that comes from the Democratic Republic of Congo (DRC).  Ongoing child labor law abuses have cast doubt on the country’s continued role as (by far) the largest producer of the metal.  

There are a number of promising developments for Co production in Canada, but for the foreseeable future the DRC will dominate.  Needless to say, every major user of Co on the planet is looking to source its needs outside of this troubled country.  

By contrast to the DRC, Sweden & Norway rank # 4 & 6, respectively, out of 176 countries / territories on Transparency International’s annual Corruption Perceptions Index.  Both countries are also highly ranked in the Fraser Institute Mining Survey; in the top quartile, with Sweden # 8 of 104 countries / territories.  

In my view, this is a primary reason to own Boreal Metals in the first place, a truly world-class mining jurisdiction.  

Zinc Price Has Made a Major Move Also….

As strong as the market is for cobalt, readers should also note the strength in zinc prices, up ~140% in the past 13 months, and at a high not seen since August 2007.  Zinc inventory levels (a key pricing indicator) at the LME are at nearly a 10-yr. low, down over 80% since January 2013.  Global Zn supply is dominated by China, which supplies more than the next 5 largest zinc producing countries combined.  Additional zinc supply from Nordic countries would be well received.    

One of Boreal’s flagship projects is Gumsberg (18,300 hectares) in southern Sweden.  Gumsberg is surrounded by past producers and developers of zinc, copper, lead, silver & gold.  Gumsberg was mined from the 13th century through the early 1900’s.  It hosts over 30 historic mines, most notably the Östrasilverberg mine, which was the largest silver mine in Europe between 1300 and 1590.  Despite its long-lived production history, relatively little modern exploration has taken place on the project. 

Compare these 2016 drill results at Gumsberg to the reported Zn grades at nearby past producers, this is a highly promising, near-surface, early-stage project.  The Company is conducting a follow up drill program with results expected in March. 

In northern Norway Boreal has the 100%-owned Burfjord Copper-Gold project.  CEO Antonius recently commented, 

“The IP Geophysical Survey increases our confidence in the strike and depth continuity of copper mineralization at Burfjord.  Copper mineralization at Burfjord consists of high-grade copper veins within a broader mineralized envelope and the results of this survey affirm Boreal’s target size criteria.”

Mineralization occurs as both high-grade Cu-Au bodies that were historically mined at high cutoff grades (>3% Cu), but management has recognized significant volumes of bulk tonnage potential Cu-Au mineralization developed in stockwork vein arrays throughout the property.  Limited historical drilling includes a 7-meter intercept of 3.6% Cu.  

Conclusion

Boreal Metals (TSX-V: BMX / Frankfurt: 03E) now has 5 high-quality projects, 3 in Norway and 2 in Sweden.  I touched briefly on 2 projects, but I will have more to say about all of the Company’s projects next month.  Chairman & Director Patricio Varas, P. GEO has over 30 years’ experience at a wide range of operating mines and exploration projects.  He’s worked on world-class deposits and founded Western Potash Corp.  {See bio above}  

Varas & CEO Antonius are joined by a number well-seasoned mining and funding professionals, {see bios on website}including Director Eric Jensen – Chief Geo & GM of Exploration for EMX Royalty Corp. and Daniel Maceneilm MSC, P. GEO.

Combined, management, the Board & Technical Advisory team have extensive experience in geoscience, mine engineering, geology, exploration (including important discoveries), project development, feasibility studies, corporate management, venture capital, private equity and capital raising (project funding).  All of this talent wrapped up in a $17 M market cap company with ~ $3 M in cash.  Five projects spanning zinc, copper, silver, gold and now cobalt – in a world-class mining jurisdiction, with more cobalt property acquisitions being considered.  

Disclosures:  The content of this article is for illustrative and informational purposes only.  Readers fully understand and agree that nothing contained herein, written by Peter Epstein of Epstein Research[ER] including but not limited to, commentary, opinions, views, assumptions, reported facts, estimates, calculations, etc. is to be considered implicit or explicit, investment advice. Further, nothing contained herein is a recommendation or solicitation to buy or sell any security.  Mr. Epstein and [ER] are not responsible for investment actions taken by the reader.  Mr. Epstein and [ER] have never been, and are not currently, a registered or licensed financial advisor or broker/dealer, investment advisor, stockbroker, trader, money manager, compliance or legal officer, and they do not perform market making activities. Mr. Epstein and [ER] are not directly employed by any company, group, organization, party or person. Shares of Boreal Metals 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 consult with their own licensed or registered financial advisors before making investment decisions.

At the time this article was posted, Peter Epstein owned shares in Boreal Metals and the Company was an advertiser on [ER].  By virtue of ownership of the Company’s shares and it being an advertiser on [ER], Peter Epstein is biased in his views on the Company.  Readers understand and agree that they must conduct their own research, above and beyond reading this article. While the author believes he’s diligent in screening out companies that are unattractive investment opportunities, he cannot guarantee that his efforts will (or have been) successful. Mr. Epstein & [ER] are 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. Mr. Epstein & [ER] are not expected or required to subsequently follow or cover events & news, or write about any particular company or topic. Mr. Epstein and [ER] are not experts in any company, industry sector or investment topic.

By now, most readers invested in the Lithium (“Li“) sector know about brine deposits, especially those located in South America’s “Lithium Triangle” (Chile, Argentina & Bolivia).  And, many are familiar with conventional hard rock mining for Li, most of which takes place in western Australia.

However, readers likely know very little about a third source of potential Li supply; from claystone deposits.  One small company betting on a technology solution to unlock its mineral wealth is Cypress Development Corp. (TSX-V: CYP) / (OTCBB: CYDVF).  49.5 M shares outstanding @ C$0.185 = C$ 9 M market cap.  C$1.5 M in cash

Cypress controls 100% of the contiguous Dean and Glory claim blocks covering an area totaling 4,220 acres in Clayton Valley, Nevada, immediately east of Albemarle’s Silver Peak Li operations and Pure Energy Minerals’ project (PEA-stage, C$330 M after-tax NPV(8%) on its southwest boundary.  Management believes that the consistent nature of the currently known Li mineralization is highly encouraging for both the potential size and potential resource extraction methodologies.  (see corporate presentation, but please return!)

To date, all of Cypress’ drilling has been on the Dean property where a 9-hole drill program was completed earlier this year.  But, a recent press release explains that Cypress plans to drill 12 holes totaling 4,000 feet.  The 2017 fall program will be divided between the Dean and Glory projects…. Upcoming drill results represent an important near-term catalyst for the company.

 Li Prices up 200% — a Game Changer For Unconventional Li Deposits 

What readers have probably heard about what I call “unconventional Li deposits” (i.e. not brine or hard rock) is true, there’s currently no meaningful commercial-scale production from claystone deposits anywhere in the world.  However, it’s very important to recognize one crucial observation…. Li prices have roughly tripled in just the past 2 years. In fact, spot prices in China have quadrupled, (see chart below) currently perched above US$ 20k/metric tonne, at or near all-time highs.

Today’s very strong Li prices are a game changer, greatly incentivizing the world to invent a better mousetrap.  The exciting thing in my view is that more and more mousetraps are being built and tested.  Not just methods to extract Li from claystone, but dozens of Li brine processing technologies, some of which could be amenable to unconventional Li deposits.

Simply put, if or when a commercial technology or technologies to exploit unconventional Li deposits is developed, the value of claystone properties such as those held by Cypress could soar.

We’ve seen this movie before….  Consider the oil shale industry 10-15 years ago when the benefits of horizontal drilling were first becoming known.  Speculators started grabbing acres surrounding known fracking hotspots, (not knowing how much, if any, hydrocarbon abundance was in place) initially paying $100-$200/acre.  Within a few years, the best located acres were trading at $10,000-$20,000/acre.

Unlike outright speculation on oil shale, in Cypress’ case we already know there’s Li in the ground, possibly high-grade compared to brine deposits, possibly large tonnage compared to hard rock deposits.  What we don’t know yet is if it’s technically and environmentally feasible to separate the Li from the clay, mud and other materials and profitably sell it.  So, again, that’s the primary risk of investing in Cypress Development Corp.  A big risk, but a known risk that can be weighed against other risks that Li juniors face.

There is another notable risk factor.  Access to water in Nevada is extremely important.  In Clayton Valley, and many other arid parts of the State, it can be very difficult to obtain water rights.  However, Cypress might not have the same risk exposure as peers looking to exploit traditional brine resources.  The Company does not propose to tap Li-saturated brine that a neighboring party could claim to own or control.

Cypress will need access to process water, not the minerals (lithium/boron/potassium) in the water– a big difference.  And, the amount of water required would presumably be far less (and probably recyclable) because Cypress would not be filling giant solar evaporation ponds like Albemarle’s nearby Silver Peak processing facilities.

Neighbor Lithium Americas’ Delivering New PFS in Mid-2018…

So, how close is the industry to solving these complex technical & environmental challenges of commercial extraction of Li from claystone deposits?  In my opinion, closer than many might guess, but with the important caveat that each deposit is unique.  For example, Lithium Americas (TSX: LAC) / (OTCQX: LACDF) has a clay deposit, the Lithium Nevada project, (formerly Kings Valley) that was actively explored, developed and promoted in 2009-2013, when the company was called Western Lithium USA Corp.

A Preliminary Feasibility Study (“PFS“) on Kings Valley was completed in 2012, and a pilot plant running Kings Valley ore operated successfully in Germany for years.  A substantial amount of effort and capital was deployed, but with a Li price in the US$5,000/t area, LAC decided not to pursue the project.  Fast forward to 2017, LAC is developing a new production flow sheet that will incorporate a number of operational improvements, but by far the biggest enhancement to the project’s actual economics will be a much higher long-term Li price assumption.

As I write this, LAC just committed to delivering a brand new PFS by June 30, 2018, and commented,

“While proprietary, much of our work relies on the application of commercially available solutions that could be deployed quickly and reliably.”  Also, according to LAC management, “…the Lithium Nevada Project’s Li clay resource is the largest known lithium resource in the U.S.”  

This suggests, in my opinion, that LAC will be putting out a PFS next year that contains a Net Present Value (“NPV”) in the hundreds of millions of U.S. dollars.  The market will take notice, and since LAC’s market cap is currently ~C$ 1 billion (due almost entirely to the company’s JV with SQM on a world-class Li brine project in Argentina), LAC should meet with success in attracting global battery & car manufacturers, among others, to the table to talk about strategic investments and off-take agreements.

Will Global Geoscience & Bacanora Prove Clay Deposits Economic? 

Bacanora Minerals (TSX-V: BCN) has done a tremendous amount of work on unconventional Li deposits.  In its case, in Mexico, on the Sonora Lithium clay deposit.  Management is close to delivering a Bank Feasibility Study (“BFS“).  Bacanora has been operating a pilot plant for over 2 years and reportedly has the kinks worked out.  Japanese trading giant Hanwa is a strong financial backer and has a robust off-take agreement in place with Bacanora.

Nevada neighbor Global Geoscience Ltd. (ASX- GSC) is an Australian-listed junior with a clay deposit in Nevada.  It is finishing up a PFS on its Rhyolite Ridge Lithium-Boron Project that has an estimated 3.4 million tonnes of Li carbonate.  Unlike Cypress’s project, Rhyolite Ridge’s economics rely on the co-production of boric acid.  This is not necessarily a good or bad thing; it just highlights that each project is unique.  GSC shares have nearly quadrupled in the past year

Bacanora’s market cap is ~C$ 190 M.  Global Geoscience’s market cap is ~C$ 310 M. Both are making steady progress towards unlocking the value of their unconventional Li deposits.  I believe that positive developments for these and other unconventional Li companies will provide a flow of really good news for Cypress.  The Company has about 49.5 M shares outstanding post the recently closed capital raise.  Its market cap is just ~C$ 9 M.

 I strongly believe that with big news from Lithium Americas, Bacanora Minerals and Global Geoscience next year, Cypress will be on the radar screens of a number of global Li players, both financial & strategic companies. 

 MGX Minerals (TSX-V: XMG) is another technology-backed unconventional Li deposit winner that grabbed the attention of investors in 2017.  Its stock price is up ~500% in the past year.  MGX is harnessing technology to extract Li from oilfield brine wastewater.  Like LAC, BCN & GSC, MGX is not in operation.  MGX’s market cap is about C$ 80 M.

Cypress; in the Right Place at the Right Time and a Cheap Valuation

First Cypress has to prove up an attractive maiden resource, then it simply needs to continue following in the footsteps of Lithium Americas, Bacanora & Global Geoscience as those companies publish a PFS and/or a BFS, lock-in large strategic/financial partners and off-take agreements.  But fear not, none of the clay deposits will be in large-scale production anytime soon, so they won’t even put a dent in a possible supply crunch around the turn of the decade, and won’t put a cap on Li prices!

Make no mistake, Cypress’ projects are earlier-stage than the companies I’ve mentioned, but in some respects might not be higher risk.  For example, the Dean and Glory projects would probably have lower strip ratios than many global Li projects (both conventional & unconventional).

 Management Team is Amazing for a Small Company

Typically, small companies have trouble attracting big talent, but not so in this case.  Why? Because smart people saw the opportunity, they saw what I’m describing in this article, basically, they saw the writing on the wall…. there’s not going to be enough Lithium!  All potential commercial-scale Li sources will be pursued to the ends of the earth.  And, with the Li price at US$20k/t+ vs. US$5k/t, the “when” can’t come fast enough.

That’s why Bill Willoughby, PE, PhD joined the Company this year.  What better person to have as CEO than a rock star, PhD mining Engineer during a once in a lifetime opportunity like this?  (the paradigm shift from ICE- powered to EV).  Bill has nearly 30 years’ experience at natural resource development companies.  Will this be his greatest success to date?  Dr. Willoughby was kind enough to provide the following quote, an exclusive for this article,

 “We feel our project is unique due to its location and physical traits. To our knowledge, Clayton Valley has the only deposits of lithium claystone that are situated next to an existing brine operation. Besides location, our deposit is shallow, flat-lying soft rock in which the lithium appears readily soluble. With the large apparent size, we’ve seen from our drilling and the lateral extent of the deposit, we believe all these factors combine to a unique opportunity to develop a significant new source of lithium.”

In addition, the Cypress team has used, and continues to work with, very well-known and respected ALS / Chemex in Reno, NV and SGS lab in Ontario.

 Cypress is sitting on Libearing property that could be worth a hell of a lot more than its C$ 9 M market cap.  This will not be an overnight success, a near-term commercial-scale producer, but actual production is not what’s required for a higher valuation.  What’s needed is a credible path towards that end, management is on that path and working diligently.

All 9 previous holes at Dean encountered significant Li values within claystone, which ranged up to 1,790 ppm Li (1,790 mg/L Li) and averaged 900 ppm Li (900 mg/L Li) throughout the average drill-depth of 243 feet.  Mineralization outcrops at surface, and average Li mineralization thickness is greater than 210 feet.  The program covered an area measuring about 12,000 feet in length by 4,000 feet in width.  The Li-bearing claystone is considered open in all directions.

South of the Dean claim block, extensive sampling by Cypress on the Glory claims identified Li mineralization in surface exposures of claystone which ranged up to 3,800 ppm Li (3,800 mg/L Li) over 9,500 feet along the same trend encountered on the adjoining Dean claims.  Results suggest a strong possibility of continuous mineralized volume of a highly leachable Li-rich claystone at surface on the Glory project.

The goal of the work on both properties is to substantiate the potential to produce Li directly from the mineralized claystone with a low-cost and environmentally friendly approach, without the need for roasting or other costly mining and complex treatments.  Cypress is proceeding with additional leach studies to determine the amount of Li extraction possible from the claystone and provide further data on the feasibility of a large-scale leach extraction method.

So, to recap so far; in my opinion it seems reasonable that Cypress will be able to come up with a maiden mineral resource estimate in the next 6 months.  Further, based on historical samples, drilling and other exploration, there’s reason to believe that the maiden resource could be sizable and relatively high-grade.  The claystone mineralization is soft and near-surface, so there’s no doubt that ore would be easy and low-cost to extract.  The main risk is that there is no known technology that can process Cypress’ Li deposits cost effectively and in an environmentally friendly manner.

From the latest Cypress press release, quote,

Cypress believes its claystone deposit in Clayton Valley has the potential to contain a significant resource of lithium, and may have physical and logistical features that could make it a productive, long-term source of lithium.  In addition to the ongoing drilling program, Cypress is continuing studies to determine the exact nature and distribution of the lithium mineralization in the claystone, and identify an effective means of extraction.”

 Conclusion

Boy this time next year, there could be two half-billion dollar Li clay projects in Nevada! Either or both project owners might have lined top Battery or EV manufacturers to drive them forward.  Notice I haven’t even mentioned Nevada’s Tesla, there’s no need, it could be anyone, literally dozens and dozens of companies.  If so, will tiny Cypress Development Corp. (TSX-V: CYP) / (OTCBB: CYDVF) still be valued at C$ 9 M?

Although years away from commercial-scale production, Cypress is year(s) ahead of unconventional Li deposits that have not been staked, permitted for initial exploration, sampled or had preliminary testing or metallurgy done….  Remember, each deposit is unique, and most high-grade Li deposits might not be nearly as amenable as Cypress’ Dean and Glory projects to potential exploitation due to distance from infrastructure, depth of deposit, grade, continuity, chemistry (concentration of coincident deleterious elements) jurisdiction, and other factors.

 Cypress Development is a company worthy of further investigation by readers.  Here are some places to go for further information.

Corporate Presentation                                                               

JuniorStockReview by Brian Leni P.Eng

Ahead of the Herd article by Rick Mills

The Stateside Report by Vince Marciano

Energy & Gold Ltd. Website by Scott Armstrong

Disclosures:  The content of this interview is for illustrative and informational purposes only.  Readers fully understand and agree that nothing contained herein, written by Peter Epstein of Epstein Research[ER] including but not limited to, commentary, opinions, views, assumptions, reported facts, estimates, calculations, etc. is to be considered implicit or explicit, investment advice. Further, nothing contained herein is a recommendation or solicitation to buy or sell any security.  Mr. Epstein and [ER] are not responsible for investment actions taken by the reader.  Mr. Epstein and [ER] have never been, and are not currently, a registered or licensed financial advisor or broker/dealer, investment advisor, stockbroker, trader, money manager, compliance or legal officer, and they do not perform market making activities. Mr. Epstein and [ER] are not directly employed by any company, group, organization, party or person. Shares of Cypress Development 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 consult with their own licensed or registered financial advisors before making investment decisions.

At the time this article was posted, Peter Epstein owned shares in Cypress Development Corp. and the Company was an advertiser on [ER].  By virtue of ownership of the Company’s shares and it being an advertiser on [ER], Peter Epstein is biased in his views on the Company.  Readers understand and agree that they must conduct their own research, above and beyond reading this article. While the author believes he’s diligent in screening out companies that are unattractive investment opportunities, he cannot guarantee that his efforts will (or have been) successful. Mr. Epstein & [ER] are 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. Mr. Epstein & [ER] are not expected or required to subsequently follow or cover events & news, or write about any particular company or topic. Mr. Epstein and [ER] are not experts in any company, industry sector or investment topic.

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