FOSTERVILLE SOUTH 2.0 LISTS TOMORROW

By
Keith Schaefer
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0

K92 Mining and Fosterville South Were 10-Baggers

FOSTERVILLE SOUTH 2.0 LISTS TOMORROW–

YOU GET IT DAY ONE!!!



The single most successful team in junior mining in the last two years has a brand new exploration company that will trade TOMORROW.  That’s right–I’m giving it to you on DAY ONE.

Their last two stocks were both 10-baggers for me and my subscribers.  So you can bet this team has my attention, and I begged them to let me tell you about it in the first few days of trading so EVERYBODY could benefit.

Today is the background.  Tomorrow is the symbol.

In the summer of 2019 my portfolio was enjoying a huge run in Bryan Slusarchuk’s  K92 Mining (KNT-TSX) when I got a call from the man who introduced me to Bryan many years ago.

“You better call Bryan.  He’s got something special and you’re going to want to know about it.”

As K92 was fast becoming my Stock of the Year in 2019, I got right on that.  That took a couple days, as Bryan was becoming a man-in-demand.  His K92 was growing into one of the largest, highest grade orebodies discovered in recent times.  In the two years the stock has gone from $0.50 – $9.00  Every banker and analyst on the Street wants his attention now.

That call turned into Fosterville South – FSX-TSXv,  which turned into my Stock of the Year in 2020. Bryan went through how he was teaming up with Chairman James Hutton—whom I knew well as a long-time subscriber of mine.  Hutton had developed a tight relationship with an Aussie geologist by the name of Rex Motton who had accumulated a large gold play in southern Australia—with some eye-popping grades.

Prior to the Fosterville IPO, I interviewed Bryan, Hutton and Motton and came to understand…well, everything that we all know now:
  1. 1-2 oz (30-60 g/t) gold at or near surface
  2. Lots of historical production
  3. But no modern work done on the properties
  4. In the middle of farmland and forest, making logistics very cheap
  5. Kirkland Lake’s Fosterville Mine, right nearby, was the single most profitable gold mine in the world at the time
Members of my Premium Service and I participated in the 40 cent IPO financing.  The stock opened at 90 cents, traded there for 3 days and ran to $5 in under four months—on HUGE VOLUME.

That meant that I had nearly a 13 BAGGER in the books for 2020 before 6 months of the year were over.

Now, I can’t tell you their next play—also in Australia—will do the same thing. But I can tell you the geology is VERY similar.  You get the name and trading symbol tomorrow–the day it lists.  This has a shot at being The Stock of the Year for 2021–for you too.

Because of the historical gold numbers and “closology” to Fosterville, we all knew FSX would be something special. The market gave us that feedback as well—there was incredible institutional interest out of the gate—from around the world!!!  Crazy….for an exploration stock, this was unlike anything we had ever seen.

When I say we, I really mean management.  I’m pretty close to this group so they shared the market euphoria in those pre-IPO days.

Fosterville South is so sexy because it’s so close to the Fosterville Mine in Australia, operated by Kirkland Lake Gold (KL-NYSE/TSX).  The Fosterville Mine has been the single most profitable mine on earth for a couple years thanks to the Swan Zone, a 2 M oz. deposit at 2 ounces or 60 g/t per ton.
 

The Swan Zone is a freak of nature. Not only is it high grade and unbelievably profitable—it’s in a first world country and surrounded by suburban and farming communities.  Infrastructure and logistics is incredible. 

By that I mean drilling and operations are incredibly cheap.

Fosterville South had/has a good sized property on that same trend that already had high grade historical production on it—in multiple locations!

An investor just could not ask for a better set up than that.  
 

Same Team, Same Neighborhood, Same Set-up

 
Well folks, I think history is about to repeat itself.  Get ready, because the same team is bringing a very similar asset package to market—again with a low valuation, but this time with a full treasury of $12 million.

This may even be a better setup than Fosterville South (40 cents to $5 in months)?  How could I say that?

For one, the treasury is already full.  By the way, $12 million goes a long way when drill holes only cost $50,000.  Second, drilling will start immediately.

I’m not predicting the result but I think you will agree that the potential of this setup is not debatable.  After what Fosterville South did–everyone in the market is also going to want a piece of the next one from the same group.

By being a reader of mine, you are one of the first to hear about it!

This is not a developing story to circle back to later in 2021.  This is happening now.  Drills will start turning within weeks.   I am already on the edge of my seat.

This new company has two large properties that are quite close to each other in southern Australia, and both have an astounding number of historical high grade gold occurrences AND several shafts that became producers 150 years ago—at grades of 75 g/t, 55 g/t, 53 g/t etc….

Those high grade numbers mean well over 1 ounce per ton and even over 2 ounces per ton! 

The past work done on the project dates back to the 1800s where old-timers literally just picked the high-grade gold off the surface.  There has been no work done here with modern techniques and those historic high grade discoveries are EVERYWHERE.

An exploration punt yes —— but what an incredible looking piece of land.  This team is starting at 2nd base with so many historical workings.  No homeruns needed here, just a solid single will bring the runner to home plate.

There is just so much gold already discovered on the property and it is all super high grade. You literally can dig up gold almost everywhere.   The biggest challenge for the team has really been figuring out where to focus first.

That is one high-class problem to have.       
 

DO NOT MISS MY E-MAIL TOMORROW!!!

 

Fosterville South helped make 2020 a GREAT YEAR for my portfolio.

This team’s new stock has me so excited because I think it’s a 2021 look-alike to FSX. The macro situation is the same as 2020–Central Banks have printed so much money that you know the gold miners are going to have another big run. 

This new pubco has the right team, the right assets and a full treasury—and it is hitting the ground running—with speed—the value creation here will be much quicker than average junior.  They are cashed up, know exactly what they are going after and the drills start turning ASAP.

There is no reason this can’t be the The Stock of the Year for 2021, just as FSX was for me in 2020.

The drills are turning in February and that should mean press release, after press release after press release.  If the news is good—this team and these assets will grab the market’s attention and keep it for months. 

The big junior gold mining successes have the three elements of SIZE, GRADE and SPEED.  This stock promises to have all of them in the cheapest, least complicated and hottest gold camps on the planet.

While this is exploration (never forget that!), the land is littered with historical high-grade discoveries from 150 years ago.  The job for this team is to get out there, delineate what they have and quantify it for the market.

Most junior exploration punts are about trying to find a needle in a haystack.  That is why it often takes up to three years for a junior to get a resource calculation completed. 

This stock isn’t about searching for that needle…….it has a box of needles that is sitting on top of the hay thanks to the historical discoveries.   That means that this project should develop much faster.

And you are hearing about it on DAY ONE.  The IPO is tomorrow.  BE READY!!

Testing is MORE Important As We Start To Gather

By
Keith Schaefer
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0

Testing Is MORE Important as
We Start to Gather
Simple Seamless & Safe


Even with MANY vaccines, people will have to get up-to-date COVID testing for YEARS.

People will still be concerned for a LONG time—there are several COVID-19 variants already. Vaccines will have to keep up (the good news is that current vaccines are working for all variants, but not always to the same 99% effectiveness).

The Big 3–Government, Industry and Labour—will continue to demand up-to-date screening and testing for travel, work spaces and entertainment.  The liability of NOT having this will be huge.  Nobody can afford to be seen to be lax; it would be a PR and business disaster.

So that means that even with multiple working vaccines, there will still be billions of COVID tests administered every year—for at least SEVERAL years.

In fact, to get back to “normal”—where tens of millions of people travel, or go watch little Johnny play hockey…there could literally be billions every month.

This is an entirely new global industry springing up almost overnight. It’s overwhelming, but positive in that this will allow people to get back to a semblance of “normal” life.

And of course, somebody is going to make a lot of money on all this. 

Well — I’ve got BIG NEWS coming for you tomorrow. 

I have found a COVID test solution company not only can accurately reads EVERY different lateral flow COVID test out there—in minutes—but can also automatically upload those results to The Cloud, available for you to show any venue/business that you want to enter—on demand.

This is a proven product and software, developed in the West but proven out during the Ebola pandemics in Africa. It is now ready to be used by industry here in North America.

It has been given the stamp of approval by the United States Department of Defense who said that this on-site testing solution is AS ACCURATE than lab testing.
 
 
What has me impressed more than anything—the technology is so recognized and advanced that the small cap company driving it now is being invited in by The Big 3 to help create a simple, seamless and safe testing system. 

Even at just a couple bucks per test, the value of such a system isn’t in the hundred of millions…it is in the billions.

You get the name and ticker of that company tomorrow.  Today I want to make sure you understand how big of a gamechanger this COVID testing technology platform is for all of us. 

We need faster and more accurate COVID testing NOW.  And we need to be able to keep track of it and prove to others we are up to date.

I’ll start with air travel, as it has the most glaring need for a solution like this.  But think of 70,000 seat soccer and football stadiums. Resorts, public beaches, factories, large offices—this solution is needed EVERYWHERE.

Ok, so most countries are now rightly requiring a COVID test from all arriving passengers.  With all the COVID variants popping up, a simple proof of vaccination won’t be good enough for a few years.

But the pre-flight testing process is still logistically painful, not very accurate and full of holes.  A passenger gets tested 24 to 72 hours at a lab before flying.  If the results are on time, the error rate on testing is still roughly 10 – 23 percent.

First off, society needs an accurate test done in minutes, not days.  Second, a digital record of those test results could be available to you so you don’t have to get a new test every time you want to do something new.

Online up-to-date COVID test data would allow you to enter your leaving and arriving airport, and your hotel and restaurant that night–so you don’t have to get multiple tests done. Everyone knows you are safe.  Think about that. 

How much easier would you breathe knowing that you and those around you don’t have COVID…knowing that their vaccine is working?

Ongoing testing will be our reality for several years—even with a vaccine.

Our challenge is making it simple, cheap and accurate. The stock with that solution –that’s being invited in by The Big 3—is tomorrow’s story. 

This solution can read every kind of lateral flow COVID test. Humans can read the test but they make mistakes.  This the device reads the test—in two minutes.  So there is computer accuracy and minimal human error.  It’s faster, as accurate and less expensive. 

And it can be done on-site, anywhere, by anyone capable of swabbing a nose.  It takes almost no training to operate.

The test results can be uploaded into a database—with all the requisite privacy laws—so that the airline knows you are COVID free.  Immigration at the other end knows you are COVID free.  And you know every other passenger on the plane is COVID free.

There is no system like this today.  But as The Big 3 develop it, this company’s technology is ready to be the backbone of it.

This solution is better in every possible way. The testing is cheaper, faster, as accurate and can be done at high volume by staff with minimal medical expertise.  And most importantly this company is being invited in by The Big Boys.

The process is so simple and so MUCH BETTER than the testing that is now being done.  That is why this COVID solution is going to be going everywhere.
 

Taking Air Travel
From Painful And Scary
To Simple And Safe


With this company’s COVID solution here is what it is going to look like for a traveller….

They walk into a testing room in airport right before their flight and sit down on a chair.  Get a 2 minute nasal swab and boom — they are done. 

The test gets a barcode. The test cartridge gets popped into the device, read and results are immediately uploaded to the Cloud and your boarding pass is updated on your cell phone. 

Full circle we are talking 20 minutes between testing and you having updated results on your phone. 

This device is completely de-risked because it has been used literally a million times before dealing with Ebola, HIV, and malaria in Africa.  This device and this technology is NOT new.  It’s proven.  And this micro-cap has it for COVID.

The Big 3 are trying to figure out a low-impact, fast process that allows air travel to happen almost as seamlessly as before.  This company’s system has the hardware, the software and the track record to make that a reality—quickly.

This company’s system allows for many different groups to communicate, avoid duplication and streamline an air travel process that would have passengers and regulators happy.

It is low-impact, accurate, fast and cheap.  It’s a no-brainer solution for everyone involved.  That’s probably why this company is getting a lot of attention from The Big 3. It works now and is fully ready to roll. 

All airports will have to be part of this sooner rather than later.  The Government, airlines, airports, travellers, medical professionals… are all pushing for this kind of solution to be in place NOW!

It gives lab quality analysis at the point of test and can be administered by people with minimal training..  It’s a universal device that works with all lateral flow COVID tests.  That’s important, because there are going to be a lot of tests out there.

And like I said before ALL OF THIS IS PROVEN.
 

The Scale Involved Is Massive
And Much More Than Airports


250 million people travel by air to and from the United States each year.  It is realistic to believe our future is going to require that every one of those travellers needing a COVID test.

Not just the United States mind you.  Every country on the planet are going to be requiring the same thing.

This is where we are headed.  Just as airport screening was changed post 9-11, COVID testing on-site is going to become part of normal airport routine in the years ahead.

And we aren’t even just talking about flying country to country.  The CDC (Center for Disease Control in Atlanta) is considering mandating COVID testing for domestic flights as well.  And why wouldn’t they if the want to get this pandemic under control? 

If that happens we are talking billions of COVID tests being required.  Even at a couple bucks per test net to this company—that’s A LOT OF MONEY!!

That is the scale I’m talking about for this COVID solution. The demand for on-site or just-in-time  testing is incredible.  And the quick test, along with the system that could application of the technology–extends FAR beyond air travel. 

Want to get people back on cruise ships?  Rapid, accurate screening and testing at the time of boarding would do it. 

How about a football game with 70,000 people?  A little nose swab and a few minute wait to get in wouldn’t be a big deal.  Again the NFL, NBA, NHL, and every professional league in the world would be all over it.

How about a production plant with thousands of employees?  The unions are going to want this testing in place to protect workers.

But with this solution, testing could be minimized because of the secure online storage of your testing database.

Rapid Diagnostic test are fast, cheap and easy to use but they manual, error prone (false diagnosis) and don’t allow for automated data control.  This solution does that.

This proven, ready-to-go technology solution is THE GAME CHANGER; the enabler.
 

Zoom Let Us Work From Home –
This Lets Us Get Back Together

 
We stayed at home and worked through zoom.

We are going to get back on planes, go to concerts, watch our favorite teams play in person and feel secure at work because of the COVID testing solution I’m going to introduce you to tomorrow.

I’m not just excited for the stock.  I’m excited for how the technology is going to change the world –– get us back to normal faster and make testing safer and simpler.

This is the rapid, accurate, COVID testing solution that we have needed since the pandemic began. 

Look folks, the technology works.  That’s not the issue.  The issue with many of these junior tech stories is channel-to-market.  That’s THE BIG THING—how do they sell it; how do you get the early adopters to come in.

This company is being invited in by the powerful groups on the front line of this crisis!  Wait until you read my story tomorrow.
 

DO NOT MISS MY EMAIL TOMORROW!!!!!


The solution is such a step change for society…

1 – Can be done on-site and not 24 hours before your arrive somewhere at a different location
2 – Can handle screening and testing large numbers of people in a small window of time
3 – Can automatically upload those test results to a database that could be shared between parties (ie. Between a departing airport and an arriving airport)
4 – Is more accurate because it removes human error
5 – Is less expensive
6 – Does not require any kind of medically trained professional to operate

Our current best testing options do not tick any of those boxes.  What this company has ticks all of the boxes.

This company is now being invited in by The Big 3 to help develop an air-travel system.  That means this

COULD (nothing is a given) become an entrenched supplier in North America QUICKLY.

The scale here is huge.  We are talking hundreds of millions of COVID tests per year–maybe more.

Airports, yes of course.  But also sporting events, concerts, big workplaces, hospitals, seniors homes, everywhere.  Mass testing, instant results.

And despite being a step-change in terms of a solution it doesn’t increase the cost of testing…..the automation reduces it.  There is no reason that every airport in the world isn’t going to be screaming to get this solution in place immediately.

All that had to happen was for the solution to makes its way through the North American red tape and get in front of the right people.

This is A Big Moment in allowing large and SAFE gatherings of people.

This company could hold one of the keys for life getting back to normal.

Do not miss this one.  Tomorrow I tell you everything. 

I Rarely Pay Heed to Analyst Targets—Except This One

By
Keith Schaefer
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0

When we bought Aldeyra (ALDX – NASDAQ) in May of last year the stock was $3.50. The analyst price targets were a long way off.

Oppenheimer was the lowest, with a target of $12. Stifel was double that – at $25. Cantor Fitzgerald topped them all with a $33 target.

When I saw those targets, I got interested.  Why?

Because analysts put big targets on little stocks when there is a huge addressable market (known as TAM – the T is for total).

It does not mean the stock will capitalize on that TAM. In fact, most of the high-flying stocks today are running on dreams of multi-billion-dollar TAMs that will never amount to much revenue for them.

But TAM means potential, and especially when it comes to biotech, if you are going to dream, dream big.

At the time the stock was well below where it was pre-COVID (it had been a $6 stock before COVID hit). 

There were a few Phase 3 trials set to launch.

While the timeline of those trials would take a hit with the pandemic, nothing was permanently impaired.

Fast forward a year and now the stock is a 3+bagger for me and my subscribers. But if anything, the outlook for Aldeyra is even better than it was. While you have to take some profits on your big winners, there is plenty of reason to believe the stock had further to go.

The Platform

Aldeyra has been around since 2004.  Their focus has been a molecule called reactive aldehyde species (RASP).

RASP molecules are created by our body. They bind to cells and aggravate them. When they do that, the cells inflame.  RASP causes inflammation.

You cannot really get rid of the RASP molecules. They are part of our make-up. But some people have genetics that make too much of them.

When your body makes too much RASP that leads to diseases. Those are the diseases that Aldeyra is going after.

The basic idea behind nearly all of Aldeyra’s targets is that if you can stop RASP molecules from attaching to cells then you can stop the diseases caused by RASPs.

Aldeyra’s drugs do this by attaching to the RASPs instead. They neutralize them.

There are several different inflammatory diseases related to high levels of RASPs. Aldeyra is going after a few big ones. 

The biggest is dry eye disease (DED). It’s a huge market, which I’ll get into shortly. A second is allergic conjunctivitis (AC). Both are already in late-stage trials. Others include psoriasis, atopic asthma, even COVID, as well as a few rare diseases.

A Big Market

The big kahuna is DED. 

DED is a massive market. There are 34 million DED sufferers in the United States.  About 20 million of those are diagnosed.

The current standard-of-care options (which includes a Novartis (NOVN – SW) owned drug called Xiidra that I will get back to shortly) cost $500 per month.

If you assume about one-third of sufferers are candidates for a prescription and that they use it for 6 months a year, the overall market size is over $21 billion.

Yes, there will be plenty of competition but that is a huge pie. 

Aldeyra is a $500 million company right now. That’s tiny for the opportunity.

Consider Xiidra. Xiidra has been on the market since 2016. The drug did about $400 million in sales last year and looks to be back on track for a similar run rate going forward after experiencing a COVID dip in 2020.

Novartis bought Xiidra from Takeda Pharmaceuticals in July 2019. They paid $3.4 billion in cash and $1.9 billion in potential milestone payments.

There is your upside.

TRANQUILITY Trial

While many stocks are popping on smoke and mirrors, Aldeyra is doing it for a good-old fashioned reason – positive results.

On January 7th Aldeyra announced preliminary results for 12 patients (23 in total including 11 on placebo) in their Phase 3 DED trial called TRANQUILITY.

They are targeting DED with their drug, called Reproxalap, a RASP inhibitor.

This was early data. These first 12 patients will be used to inform the larger TRANQUILITY trial that will begin in February.

The results showed a “meaningful improvement” in DED symptoms.

The results were “statistically significant” across the spectrum of DED symptoms: ocular redness, dryness, and discomfort.

But the biggest takeaway was that Reproxalap works fast – “within minutes of dosing”.

There are a couple of existing treatments on the market (including Xiidra) that Reproxalap will be competing with – each of these takes weeks or months to work.

This is a big problem for existing treatment. Between 50-80% of patients treated for DED drop off between the second and third refill.

These early results show Reproxalap acts MUCH faster – comparable to steroids, but steroids cannot be given on a regular basis while Reproxalap can.

Reproxalap just looks better than the competition. 

Aldeyra presented results early in 2020 that showed a head-to-head with Xiidra.

Source: Aldeyra Investor Presentation

Their results showed a significant improvement in redness of the eye as well.

Now keep in mind, these results released two weeks ago just early data. That much larger trial that begins in

February is going to be what the FDA uses to make their decision.

But there is no question that the results are encouraging. 

The company is bullish. On the January 7th call, CEO Todd Brady said that he believes Aldeyra has “already achieved the symptom endpoints required for NDA submission”.

INVIGORATE

DED would be enough to move Aldeyra’s on its own but the company is also in the late stages of targeting another big market – Allergic Conjunctivitus (AC).

It is a big name but essentially this is allergies—allergies that make your eyes red, sore and itchy.

AC effects 100 million people in the United States. There are 30 million of them that do not respond well to antihistamines.

AC, together with DED, are the two largest markets in ophthalmology.

Aldeyra is going after AC with Reproxalap.  Like DED, they are already in a Phase 3 trial. This one is called INVIGORATE.

INVIGORATE is enrolling 100 patients and evaluating ocular itch, the most common symptom of AC.

INVIGORATE is expected to have data in the first half of 2021.

The Phase 2 results look encouraging to a positive Phase 3 result:

Source: Aldeyra Investor Presentation

Next Steps

There will continue to be a lot of news flow over the next few months. Positive results are going to move the stock higher. A negative hiccup will going to whack at the price.

First on the horizon is RASP data for those early 12 patients in TRANQUILITY.  This will happen by the end of March.

The data we saw on January 7th was all about the symptoms. But Aldeyra is measuring the RASP level in these patients directly. They may decide to seek approval of Reproxalap based on RASP reduction.

Given that the symptoms have declined, you would assume that the RASP levels have to. We also know from Phase 2 trials that Reproxalap worked to lower RASP levels in those patients. All the markers point positively. But we will not know for sure until we see the data.

That is going to follow with INVIGORATE data sometime in the second quarter and then the biggie – the full TRANQUILITY data for the larger patient group in the second half of the year.

If all goes well expect commercialization of Reproxalap in the 2022 timeframe. And expect a higher stock price.

The Set-Up

One of the most respected biotech investment firms out there, Perceptive Advisors, recently increased the size of their position in Aldeyra by 40%. They now hold 22% of the company.

Perceptive Advisors purchased a little over a million shares in the two days after Aldeyra announced the positive results from the 23-patient group. This is no coincidence.

They followed this up by purchasing another 1.4 million shares in Aldeyra’s January 13th share offering.

Aldeyra’s share offering priced 6.8 million shares at $9.50. Often a stock will slump after offering shares but in Aldeyra’s case within a day the stock was at new highs.

Oppenheimer estimates that DED could mean $500 million peak revenue (in 2027 mind you) if its approved. 

This would be inline with what we see with Xiidra – Oppenheimer put a 4x multiple on that revenue to estimate the unrisked $2 billion market cap from DED alone. 

Given that Aldeyra’s enterprise value is still a little under $500 million, you have to think the stock has room to move higher on more positive results.

Novartis took over Xiidra for nearly half that much (more if you include the milestone payments).

The caveat is that the data we saw two weeks ago was from 12 patients. The sample size so far is small.  

If data from the larger TRANQUILITY cohort of patients fails or if the results coming out in March do not match expectations the stock is going to fall hard.

Even if approved, there is going to be competition. There are a half dozen molecules in development targeting DED and AC.

Jefferies said that of those molecules, the clinical data for Reproxalap puts it at the top of the list – and that was before the January results.

2021 it is going to be a busy year and hopefully a profitable one. While the stock has been a big winner for us it has much further to go if the data is good. 

There are always surprises in drug trials and Aldeyra could fall flat.  But the data that investors are seeing so far looks to me like a very good risk/reward.

 

 Keith Schaefer

The Low-Cost Producer Always Wins—Christina Lake Cannabis

By
Keith Schaefer
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0

The lowest cost producer in any commodity always wins.  It really is that simple.

And that’s why I’m long 150,000 shares of Christina Lake Cannabis—CLC-TSXv/CLCFF-PINK.

I’m about to explain to you how much I like management, the business model, the upcoming catalysts and yes, even the Canadian cannabis industry – but after 30 years of investing in natural resources, I can tell you in plain English that the low-cost producer ALWAYS wins. 

And I think that’s about to become very apparent with Christina Lake Cannabis.  Their news flow over the coming weeks will prove to the market they are one of the best teams with the best products in the sector. 

I expect to be a VERY happy shareholder in the very near term (disclosure—my cost base is 70 cents).

I’m not telling you anything out of school here; this is all very simple to figure out on your own from public documents.  They’ve brought in a bumper crop of cannabis, they’re extracting now and first sales will be happening soon.  That’s just how the annual business cycle works. 

With a low-cost outdoor growing facility and a high-powered sales team with a lot experience in the Canadian market, they should be showing millions—and likely tens of millions—of dollars in revenue this year.  (I’ll show you the numbers below.)

And if they manage their finances as well as they do their outdoor grow, then I would even hope to see some positive cash flow.  I’m not saying that WILL happen—but CLC was NOT part of the first wave of grow-ops who overbuilt production facilities and are now saddled with huge writedowns and debt.

With no physical or financial baggage, shareholders can reap the rewards of management’s lean operating structure.

Canadian cannabis is still a lucrative business, despite the headlines.  I mean, most of these cannabis stocks have been on a major run up since the US election in early November. It’s not like I’m fighting the tape here.  But to get the best performing stocks, diligent investors just have to know where to look.

Example: one of the top cannabis oil extractors, The Valens Company, (VLNS-TSX) just made national headlines in Canada for having a fire sale on their inventory—that’s a big negative headline right?  Yet they reportedly were still selling their cannabis oil for $7,000 per kg or $7/g. 

That’s a fire sale price—and that’s a price that CLC management says they generate real cash flow.

Yes, prices are slowly coming down and yes there is an oversupply—but if $7/g is fire sale and regular sales are still $9,000 per kilo and higher—outdoor growers who are vertically integrated (i.e. do their own oil extraction) like Christina Lake should be laughing all the way to the bank. 

At least, that’s the bet I made when I bought this stock.

The very first reason Valens gave for their writedown & exiting the business was “(1) the anticipated increase in outdoor cannabis volumes..” That would be Christina Lake.

And experienced cannabis investors will remember back at the 2017 high (pardon the pun) that everyone said indoor grow was the only way to go—history has proved that to be a big mistake.
 


Indoor growing costs are MUCH more than outdoor. Second wave producers like Christina Lake get to benefit from those growing pains (so many puns here!).

CLC is one of the top outdoor growers of cannabis.  We know that already because they have mentioned several times that they had a bumper 2020 crop at their site in south-central B.C., literally just a couple miles from the US border.

They expected 15 tonnes of biomass and got 32 tonnes. (I don’t have room here to explain why the climate at Christina Lake is the best in Canada for cannabis, but it is.)


If you get to spread your growing costs over 32 tonnes instead of 15–that cuts your input costs by A LOT! 
Once processed, CLC expects to have about 2,500 kg to 3,000 kg of high quality, high-THC distillate. 

They believe they can sell the oil for $5,000- $8,000 per kg.  If they can get those prices, it would equal ballpark $25 million of revenue.  Certainly the Valens experience would suggest that is very achievable.

The question is—how low can they keep costs. When I talk to CEO Joel Dumaresq and Milan Stefancik, Director of Sales and Marketing, they don’t want to talk specifics—but they will say that their biomass input costs are no more than 20% of the industry average.

To further reduce costs, CLC does their own extraction–right on site.  They have a state-of-the-art Vitalis CO2 extraction machine.

Before they can start selling their product—which should be happening within weeks—they have to get it certified; they get an independent Certificate of Analysis (COA) which tells customers what’s in it and how potent it is.

This is very important—and it has to happen BEFORE first sales.  To me, that would be Big News for investors; a big de-risk.  One of the main reasons that cannabis companies are going bankrupt is because a) they over capitalized and b) their product is not very good! 

Valens admitted in their press release they had a lot of inferior product—and you can say that is anything less than 90% THC content.  As the industry has matured and innovated, new equipment is doing a better job creating better cannabis products.  AND…customers are getting a lot more discerning.

Days ago, Bloomberg news quoted Peter Machalek, vice-president of sales and partnerships at TREC Brands, parent of both Thums Up and Wink as saying “You can’t give away mid-range THC product for a buck now. The market has become much more sophisticated, following what the consumers are demanding.” 

The Market demands high quality now. If your cannabis oil doesn’t have 90% THC, there’s a good chance your company won’t be here next year.

And the market will soon find out what CLC has, as its COA’s start to roll in on the various strains that it produced last year.

Then it’s up to Stefancik and his team to sell it.  Stefancik has been selling Canadian cannabis for a long time, and knows all the players. He was formerly at Aurora (ACB-TSX), managing Alberta at it’s most rampant expansion, and then he moved up to a national sales director role there. He says the issue isn’t finding customers for your product, but rather finding the right customers.

“Given our great quality and low cost, we will have no trouble finding customers,” says Stefancik.  “Because we’re starting with such low cost, our extraction effectively allows us to be profitable at very low prices.
Ideally he says, 10 large customers each taking 10% of his product keeps his operations lean.

He is expecting demand to continue to curve up. Stefancik points out that the Ontario government –which is pretty much half the Canadian market, has said they will approve 80 new retail stores a month—or almost 1000 in 2021 (https://www.agco.ca/status-current-cannabis-retail-store-applications).

CLC can grow organically by expanding their acreage at Christina Lake.  But Dumaresq says they will only grow as the market allows—they are not going to make the Big Mistakes that the first wave of producers did.
In conclusion—you can read between the lines of what management is saying to determine their costs are 10-20 cents a gram, vs. industry average of $1-$1.50. If CLC isn’t the lowest cost producer, they’re certainly in that top decile.

As more outdoor grows sprout up, that average cost will come down. I get all that.  This is a business and there will always be competition.

But CLC will already have proven products, customers and track record to keep market share.  The team is experienced.  No big salaries here (unlike the first wave of CEOs). They can grow prudently.

I like all that, and I like that the first crop is already in.  Almost all the risk is gone here for the next few months.  Big seasonal catalysts are coming up—COAs and first sales—that should establish them with both the cannabis players and investors. That should be an inflection point for shareholders.

And nobody knows this story.  There’s no research coverage here yet on Christina Lake Cannabis. Everybody is blinded by the negative headlines—yet the charts of the Canadian leaders keep going up right now.

They’re funded. They have no financial baggage or excess inventory.  They’re on the cusp of revenue. There’s lots of near term catalysts.  I think CLC has a great shot at being one of my biggest wins of 2021. 



Christina Lake Cannabis has reviewed and sponsored this article. The information in this newsletter does not constitute an offer to sell or a solicitation of an offer to buy any securities of a corporation or entity, including U.S. Traded Securities or U.S. Quoted Securities, in the United States or to U.S. Persons. Securities may not be offered or sold in the United States except in compliance with the registration requirements of the Securities Act and applicable U.S. state securities laws or pursuant to an exemption therefrom. Any public offering of securities in the United States may only be made by means of a prospectus containing detailed information about the corporation or entity and its management as well as financial statements. No securities regulatory authority in the United States has either approved or disapproved of the contents of any newsletter.

Keith Schaefer is not registered with the United States Securities and Exchange Commission (the “SEC”): as a “broker-dealer” under the Exchange Act, as an “investment adviser” under the Investment Advisers Act of 1940, or in any other capacity. He is also not registered with any state securities commission or authority as a broker-dealer or investment advisor or in any other capacity.

An EV Trade That Actually Has Fundamentals

By
Keith Schaefer
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0

Trading Symbols:                                     NEO

Share Price Today:                                   $15.50

Shares Outstanding:                                37.6 Million

Market Capitalization:                              $580 million

Net Debt:                                                  -$75 million

Enterprise Value:                                     $507 million

Note: NEO reports in USD but I am using CAD in this report

Electric vehicle (EV) stocks have gone through the roof. Everything EV is flying.  

Car companies that have never sold a car are worth billions. 

There are LiDAR companies with a capitalization rivaling big established automakers. 

The battery company QuantumScape (QS – NASDAQ) has an $11 billion market cap and no revenue – and this is after the stock has been cut in half.

Most of these names are doing it on fumes. They are getting rewarded for projections that will happen a decade from now.

Let’s set it straight – no one knows what their 2030 sales are going to be.

The numbers being thrown around are pie-in-the-sky.

But while nine out of ten EV names are rising on hype alone, there is the odd play with some fundamentals behind it.

That is what I am here to tell you about. 

An electric vehicle play that trades at 6x EBITDA and 7x its 2019 free cash flow. 

One with strategic rare earth assets in North America and Europe. And a very real chance that it is acquired at some point.

The name?  Neo Performance Materials (NEO – TSX).

 

Rare Earths and the EV Connection

 

First, a little background on rare earth elements (REEs).

REEs consist of 17 metals on the periodic table that are often found together in deposits in small quantities.

The excitement around REEs comes from their usage in electric vehicle production. 

The reason is magnets. Two REEs, neodymium-praseodymium (shorthand of NdPr, thankfully), are needed for permanent magnets.

Permanent magnets are used in brushless motors. And brushless motors are used in electric vehicles.

On average about 1 kg of permanent magnets is needed for each EV motor. 

According to Bank of America, 10 million new EVs would require around 7,000t of neodymium. That equates to around 24% of global NdPr supply.

That means we are going to see a surge in demand for REEs as EV adoption takes hold.

Bank of America estimates that electric vehicle demand for NdPr will increase from 2kt right now to 17kt by 2030. With that kind of increase, EV’s would account for 31% of the overall NdPr market.

Source: Bank of America Global Research Estimates

A similar forecast has been made by the research firm Adamas Intelligence

Source: Neo Performance Material Investor Presentation

Neo Performance Materials is well positioned for the surge in demand. They own several processing assets – REE separation, magnetic powder production and magnet manufacturing.

Many of their operations are in Europe and North America. They operate the only REE separation facility in Europe.

 

Source: Neo Performance Materials Investor Presentation

REEs have made headlines in the last decade when China has threatened to restrict their export.

China produces around 85-90% of rare earth metals.

In this respect, Neo Performance Materials assets are strategic – they represent REE processing and manufacturing that does not rely on China.

Another REE stock that has been a big winner of late has been the SPAC conversion MP Materials (MP – NASDAQ). MP Materials has seen its stock soar while playing up their non-China production.

MP Materials produces rare earth metals. The company operates the Mountain Pass rare earth mine in California. 

Since announcing the SPAC deal, MP Materials stock has more than tripled off of its $10 list price and now sits at $33.

If one were to take MP Materials and Neo Performance Materials together, the two companies would represent an REE supply chain that does not rely on China. That could be a big plus for strategic buyers and Western governments.

But suggesting such a combination would normally be just wild speculation. 

Except in this case, the assets have hooked up before.

 

The Molycorp Break-up

MP Materials and Neo Performance Materials used to operate together under a single umbrella of Molycorp. 

MP Materials was the mining assets and Neo Performance Materials was the processing infrastructure. 

Molycorp went public in 2010 at the height of the first rare earth boom. At its peak, the stock had a $6 billion market capitalization.

Much like MP Materials, Molycorp started off with just the mining assets – the Mountain Pass mine. In 2012 Molycorp acquired the downstream processing. 

But REE prices fell and Molycorp failed. The two assets were split up after bankruptcy.

The Mountain Pass mine was sold for $20 million to a group in private equity before emerging again as a SPAC in the form of MP Materials this year.

The rest of Molycorp came out of from bankruptcy in 2017. It formed the public company Neo Performance Materials.

Getting the Band back Together?

The synergies of the two businesses are clear. MP Materials owns the mine. Neo Performance Materials owns the processing. 

Source: Neo Performance Investor Presentation

The acquisitive aspirations of MP Materials are no secret. CEO James Litinsky has said that their strategy is to vertically integrate.

Litinsky has also said he would like MP Materials to replace Chinese companies as the “Go-To” for rare earth material supply chain needs. 

In their regulatory S-1 filing, MP Materials disclosed that their long-term mission was to “capture the full rare earth value chain”.

They go on to say that they “intend to explore long-term vertical integration through further downstream processing of our REO into rare earth metals, alloys and finished magnets.”

It is spelled out again in their investor presentation.

Source: MP Materials Investor Presentation

Tale of Two Stocks

MP Materials certainly has the currency for a takeover. The stock has risen 3-fold since Q3 2020.

Even with a recent surge in the stock in 2021, Neo Performance Materials stock has paled when compared to MP Materials. 

Source: StockCharts.com

Part of the reason for the underperformance is COVID.  Neo Performance Materials has a wide variety of end markets for their REE materials and many of those have been hit by the pandemic.

Neo Performance Materials operates 3 business segments:

 

  1. Magnaquench
  2. Chemicals and Oxides
  3. Rare Metals

Magnaquench is a producer of rare earth powders. It produces neodymium-iron-boron (NdFeB) magnet powders. These are used in bonded permanent magnets.  

The segment also manufactures magnets used in electric vehicle motors and small miniature motors (for applications like robotics, pumps and appliances).

Chemicals & Oxides takes rare earth concentrates and turns them into industrial materials. The materials are used in EV’s, catalytic converters and magnetics.

Rare Metals makes metal alloys that are used in aerospace, LED lighting and consumer electronics.

Source: Neo Performance Materials Investor Presentation

While COVID muddied 2020 (traditional REE end-markets like aerospace have been hammered), the long-term outlook is bright. Neo Performance Materials makes products that are used in growth industries like electric vehicles, automation and robotics, and wind power.

 

Neo Performance Materials is not Expensive

 

COVID has taken its toll on the financial performance of Neo Performance Materials.

For the first 9 months rare earth product volumes were down 13%. Revenue was down 25%. EBITDA was down 60%.

It was an ugly year. But those numbers hide the potential. 

From 2017 to 2019, NEO produced EBITDA of $74 million, $83 million, and $80 million respectively.  EBITDA margins over those 3-years ranged from 13-15%.

In 2019, Neo Performance Materials generated over $70 million of free cash flow.

Yes, the stock has gone up like everything else. But even after the recent run-up Neo Performance Materials has an enterprise value of a little over $500 million.

With an average EBITDA of $79 million over the last 3-years, the stock trades at 6.4x EV/EBITDA.  Based on last year’s free cash flow, the stock trades at only a little over 7x.

In this market that passes for cheap.  Certainly not what you would expect from a company tied into electric vehicles.

 

A Number of Ways to Win

 

This stock is not expensive for this market.

There is no question that the stock is being driven by a mania fueled by EVs and SPACs.

But Neo Performance Materials has far less priced in and has more ways to win.

You can win on the back-to-work trade, as their businesses hit by COVID come back.

You can win if MP Materials pulls the trigger and buys them.

And you can win if someone discovers this is an electric vehicle (EV) play.

There’s lots of ways to win—and it has some real fundamentals behind it.

 

 Keith Schaefer

BAM BAM RESOURCES BBR-CSE IS THE COPPER PLAY TO WATCH RIGHT NOW

By
Keith Schaefer
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0

BAM BAM RESOURCES BBR-CSE / NPEZF-OTC
IS MY FAVOURITE COPPER EXPLORATION STOCK–RIGHT NOW!!

NOTE-BAM BAM Resources just announced a 3-for-1 stock split to take effect in February.  That means I am buying THREE shares for every one I buy today.  This will increase liquidity in the stock and make it more accessible to both retail and institutional investors.

The trade for 2021 and beyond is copper.  Bam Bam Resources, Corp. (BBR:CSE / NPEZF:OTC) is my copper junior pick for RIGHT NOW!

Bam Bam has everything I look for in a junior exploration stock.  It checks every box……

Check 1 – An incredibly tightly packed share structure — just 21 million shares outstanding.  That gives huge leverage to investors.

Check 2 – Cash in the bank, fully funded for an aggressive 2021 drilling campaign.  Ready to go, not scrounging for dollars.

Check 3 – An asset that has emerged as having world-class potential with head-turning initial drilling results and ample historical data

Check 4 – A safe, secure and easily accessible Nevada location that is near all the amenities of modern mining and located just 120 miles from Tesla’s Giga Factory. All of this will allow for a predictable, low-cost development with no headaches.

Check 5 – Focused on producing a commodity/metal in copper that the world is going to be in desperate need of for the next 20 years.  Supply, demand, government policies are all bullish for copper.

Like with every junior miner I guarantee nothing……but my, oh my.  With that incredibly tight share structure—if Bam Bam’s 2021 news flow from their Majuba Hill property goes where I think it might—this could get exciting quickly.

I am on this story now because I spent all of 2020 kicking myself for missing Bam Bam in early 2020.  It was right under my nose as I was covering a multitude of gold stocks in Nevada and I missed it.

In May 2020 the company drilled what turned out to be a fabulous discovery hole.  It was a GAME CHANGER for the company and Majuba.  Starting from the surface the MHB-2 hole intersected an outstanding interval of copper and silver. Using a length weighted average, MHB-2 returned extraordinary results—the most exciting was 146 ft 0f 2.4% Cu equivalent.

Even with COVID decimating commodities in the spring the market rewarded Bam Bam with this stock chart….KA-KA-KA CHING!!!
 


My bad —— I don’t ever want to be missing out on junior mining stocks that are operating in Nevada, Canada or anywhere in my neck of the woods.  I’ve spent 30 years building a network of contacts in this business to make sure this doesn’t happen. Bam Bam Resources wasn’t even on my radar in early 2020.

To be fair to myself though…..this Majuba Hill success did kind of come out of nowhere.  For over 100 years the project was split across multiple owners and wasn’t properly explored.

Bam Bam is the first team to finally consolidate all of the land and early drilling has opened everyone’s eyes to the potential.  I missed the 2020 drilling results but I’m ready for the next round.

With the latest assay results pending, I expect the next news (which could be major) within weeks.
 

Timing Couldn’t Be Better To Prove Up
A Major Copper Porphyry Project


Coming out of COVID and going into what a massive reflation trade is the perfect time for a junior copper stock to be making some noise.  With every government in the world directing their spending towards making this a “Green Recovery”… copper is going to be the star of the show.

Timing is everything and Bam Bam couldn’t have gotten any luckier.

Majuba Hill is located in Pershing County, Nevada ——56 miles southwest of Winnemucca and 156 miles northeast of Reno. Nevada. Copper, tin, silver and gold mining started at Majuba in the early 1900s with production into the 1950s.
 


Historic mines in and around Majuba produced 2.8 million pounds of copper, 184,000 ounces of silver, 21,000 pounds of tin, 5,800 ounces of gold as well as lead and zinc.

Last year’s drilling by Bam Bam was a pretty good indication that the historic mining likely only scratched the surface.

MHB-2 truly was a spectacular hole.  The Bam Bam team had hypothesized and modelled the potential the hole had.  But until you actually drill the hole and see the grade you don’t really know.  The hole showed that the oxide extension was there and so was the grade —— 2.5% copper equivalent.

Suddenly Majuba was a project with big potential that everyone had missed.

The technical presentations that the company made subsequent to drilling this hole is likely what got the stock moving last May.  That is when the market started to grasp the bigger potential of this project. 

Majuba went from an unknown and hypothetical asset to a prospect with impressive actual drilling data and the potential to be something big.

All historic high-grade copper production at Majuba came from outcropping, oxidized copper porphyry mineralization. That previous drilling, geologic mapping and geophysical data show an area containing up to 40 million tons of copper oxide at grades of 0.43% Cu and 12 ppm Ag. 

Widespread supergene oxidation extends up to 600 feet below the surface.  The total potential for the project (stated in Bam Bam’s corporate presentation) is 350-500 million tons in sulfide/oxide mineralization at grades of 0.4% Cu, 12 ppm Ag, and 0.175 ppm Au.

The topography is a big part of the story at Majuba.  The mountain sticks straight up out of the ground, so if an economic deposit does get developed there—working the project is basically going to involve taking the top off the mountain and working down.  See the chart below—again, if future results show an economic deposit, Bam Bam will start in the red zone, mine down into the green and then all the way down into the purple.  Oxides down to sulfides. 
 


I have to say this is eerily reminiscent of the old days and the central Nevada Paradise Peak Mine. Paradise Peak stuck out of the ground just like Majuba does and as they whacked it down it produced 2 plus million ounces of gold.

Dare we dream?  Yes!  That is why we are attracted to these junior mining stories…
 

Catalysts Are Coming Throughout 2021


The oxide mineralization at Majuba’s surface has always been pretty well understood.   What had never really been sorted out was where the sulfide was and how big the oxide might be.

In other words….. Majuba hadn’t previously been recognized as the porphyry that it is.  That is a big miss because porphyry deposits are the dominant source of copper in the world.  Bam Bam will be the first to go develop this project through a porphyry lens.
 


Known oxide mineralization has now been confirmed up to at least 800 feet below surface.  2021 drilling will be all about pushing forward and seeing where the limits are to this system.  With 350—500 million ton potential we know that this could be big.

Copper porphyries are a broadly disseminated deposit, which means it will have the exact same mineralogy and grade over a large area.  So if that’s what the drilling finds, I think the Street could extrapolate value pretty quickly here. 

And investors can see how much the stock moved last May–it moved fast.

Late 2020 drilling samples are now awaiting assay results that should be out before the end of the month.  If successful, the Bam Bam team would move towards a maiden resource from the new NI43-101 report.  That has potential to be a major catalyst for the stock. We’ll see what the assay results are!

Majuba has all the signs of being a fabulous copper deposit right here in the United States just 20 miles from pavement and a railway.

It ticks A LOT of my boxes.  There’s amazing leverage here for investors with a good copper drill hole. 

Like the market rewarded gold plays in early 2020 (what a great 8 months for gold investors that was!!), it will now reward copper plays in 2021. 
 

 

Bam Bam Resources Corp has reviewed and sponsored this article. The information in this newsletter does not constitute an offer to sell or a solicitation of an offer to buy any securities of a corporation or entity, including U.S. Traded Securities or U.S. Quoted Securities, in the United States or to U.S. Persons. Securities may not be offered or sold in the United States except in compliance with the registration requirements of the Securities Act and applicable U.S. state securities laws or pursuant to an exemption therefrom. Any public offering of securities in the United States may only be made by means of a prospectus containing detailed information about the corporation or entity and its management as well as financial statements. No securities regulatory authority in the United States has either approved or disapproved of the contents of any newsletter.

Keith Schaefer is not registered with the United States Securities and Exchange Commission (the “SEC”): as a “broker-dealer” under the Exchange Act, as an “investment adviser” under the Investment Advisers Act of 1940, or in any other capacity. He is also not registered with any state securities commission or authority as a broker-dealer or investment advisor or in any other capacity.

The #1 Reflation Trade of 2021—Copper

By
Keith Schaefer
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0

The #1 Reflation Trade of
2021—Copper

 

This is the very early innings the ULTIMATE SUPER CYCLE for copper.
 
This metal has made investors a lot of money in past cycles, but this one is very different.

The Green Revolution is taking hold, and most investors are clueless about how much copper is required.  At the same time, new spending on new copper supply is falling off a cliff.  New discoveries and existing copper grades are going down.

Looking at simply supply and demand here…the conclusion is blindingly obvious. Everyone should be bullish copper.

The market is sending a very clear signal that a paradigm shift for copper is happening.  This copper train is leaving the station and we need to get on board right now!!
 


Incredibly — despite the near complete halt to economic activity from COVID– copper prices reached a seven-year high in December 2020.  The market smells what is coming in the decade ahead and is just starting to price it in.

As always the most leverage to any commodity trade is in the junior producers.  Whatever percentage copper moves higher—the junior stocks will move exponentially more.

I’ve been building and will continue to build a portfolio of junior copper players that give me huge upside exposure to copper prices.

Tomorrow I’m going to be giving you the copper junior that can offer the ULTIMATE LEVERAGE to what I believe is the ULTIMATE COPPER SUPER CYCLE. 
 

Copper Demand Is On The Verge Of Going Ballistic
 

In the past month I’ve read every piece of research on copper that I could get my hands on.

US brokerage firm Goldman Sachs may have summed up the overwhelming consensus with this:

The bull market for copper is now fully underway with prices up 50% from the 2020 lows, reaching their highest level since 2017. This current price strength is not an irrational aberration, rather we view it as the first leg of a structural bull market in copper.

As I said.  A copper SUPER CYCLE is at hand —— and I believe that even analysts like Goldman are not willing to publicly go on record with how astonishingly big this trade is going to be.

Understand this please.  Copper is the very heartbeat of the green revolution.

Every type of renewable energy source requires copper because copper is by far the most efficient conduit. 

Not just some renewable energy systems.  All of them — solar, hydro, thermal and wind energy—need copper.

And there is no alternative.

Copper helps reduce CO2 emissions and lowers the amount energy needed to produce electricity. 

That means the transition to green and demand for copper are tied at the hip.

Next point to understand —— renewable energy assets require 3-15 times as much copper as conventional power generation per unit of installed capacity.

And since we know that renewables are growing at a stunning rate so too therefore will be the demand for copper.

The equation is simple:

Renewable Growth = Copper Demand Growth

Copper is an irreplaceable metal to meet the goals of a greener economy.  Copper is unmatched in its electrical and thermal conductivity.  For the move to green there is no alternative to copper.

The renewable movement is now moving across the planet at a breathtaking pace.  Trillions of dollars are about  to be spent on this initiative. Coming out of COVID the world’s leaders needed something that they could pour HUGE money into to stimulate economies,

That something is The Green Revolution.

The entire world is now on board with going green, even the good old USA with Biden in office and the Democrats controlling both the White House and Congress.

The Green Revolution is the one thing every EVERY GOVERNMENT on the planet agrees is worth spending on in 2021.  There is so much money that is going to be poured into renewables —— all of which require more copper. 

Spend to stimulate the economy.  Spend to create jobs. Pick a country and you can bet they are spending big money on green.
  • Joe Biden’s Climate Plan entails spending $2 trillion.  Copper benefits from all of that spending.
  • British Prime Minister Boris Johnson is the leader of the U.K.’s Conservative Party, which is the group least interested in pushing a green agenda.  Yet he just announced a COVID economic renewable plan based completely on transitioning the U.K. to green.  Johnson’s policy is big news for copper.
  • South Korea, France and Italy have declared billions in subsidies for rooftop solar panels.  More demand for copper.
  • Oil-rich Colombia just announced a recovery plan that will spend $4 billion on wind, solar, geothermal and hydropower energy.  Morocco’s government plans to adopt legislation to incentivize investments in green energy.  Even the developing world is going green and creating more demand for copper.

New Zealand, Australia, India, Germany, China, Canada…similar green plans.

I can go on and on. Even Nigeria’s COVID-19 stimulus plan includes $620 million for a program to install solar home systems for 5 million households.

When we look back 10 years from now, it will be very clear that COVID-19 was the turning point when renewables went from zero to 60 mph in the blink of an eye.

It was also the moment that copper entered its ULTIMATE SUPER CYCLE.
 

Copper Supply Is Tight, Tight, Tight…For All Time Horizons
 

Remember the equation.  Renewable growth equals demand growth for copper.

Nothing makes that clearer than Electric Vehicles.

Understanding why is very simple–building electric car batteries, motors and inverter/converters requires a lot of copper.  A conventional combustion engine vehicle uses 20 kilograms of the metal. The average battery-powered electric vehicle requires 80 kilograms —— four times as much copper .  (I’ve seen statistics as high as 6X regular cars!)

Today there are 1.2 billion automobiles on the road.    Almost none of them are electric.  Governments across the world are now rolling out complete bans on the sale of combustion engine automobiles……that means that electric vehicles on the road will go from a few million to hundreds of millions and eventually to a billion.

Every one of those EVs required 4 times as much copper.

But —— that copper supply growth isn’t coming.  Certainly not without a major increase in copper prices. 

That creates a very bullish DOUBLE WHAMMY, exploding demand and no supply growth ready to meet it.

On the supply side copper has three big challenges:

1 – Years of underinvestment by companies forced to live within cash flow as the access to capital dried up since the last copper peak.  The reduction in spending is in the tens and tens of billions.  In 2013 the 35 largest producers of copper had combined capital expenditures of $104 billion.  By 2016 that number had dropped to only $41 billion and has shrunk further since then. (2)

According to CRU Group (2) only six major new projects to produce copper were completed by 2020 against a global slate of 80 planned developments.  A lack of money has resulted in all kinds of projects pushed to the back-burner.

2 – Virtually zero no discoveries for a decade —— check out the chart below.  The last decade has had 2!!!  That means that the long term copper cupboard is empty.   
  

3 – The industry has a problem with grade.  The average grade of copper reserves (the source of future production) keeps falling.  As does the average grade of current production.
 

You know what this means — if ore falls from 1% copper grade to 0.5% copper grade, then twice as much ore must be mined and milled –a doubling of effort and the time to produces. 

The supply challenges are serious and they cover all time spans.

Back to Goldman Sachs…who say that going into 2021, the copper market is already facing the tightest market conditions in a decade, owing to a substantial inventory deficit (327kt).   

So there are definitely short term supply problems.  You can already see it in the price of the commodity.  The medium and long term supply picture however is much, much worse.
Even as the copper price keeps rising coming up with the amount of new production needed is going to be a challenge.

Bringing new production on-line requires a significant amount of time.  We are talking about massive capital projects that can require anywhere from 6 to 10 years from the time the project is approved until when we see first production.

To get the copper that is needed to supply the Green Revolution the world is going to need a much higher copper price to incentivize the work.
 

Do Not Miss My E-Mail Tomorrow!!!


We are nine months into this copper rally.  The last two big runs in the metal both lasted more than two years.
 

But this copper bull market is very different.  It is much bigger. The demand for copper that is going to be coming from wind, solar, electric cars, renewable infrastructure is a GAME CHANGER. 

Again the equation is simple:

Renewable Growth = Copper Demand Growth

And renewable growth is headed straight up and to the right for years — perhaps decades to come.

Getting long this trade is a no-brainer and tomorrow I’m going to give you one of the highest leveraged investments to do it with. 

It’s a copper exploration play with a discovery hole already in place.  Further results—due out shortly…could give this company THE MOST LEVERAGE to the ULTIMATE SUPER CYCLE in copper that the green revolution is about to unleash.

Be ready for my e-mail tomorrow morning. 

Plant & Co Is A Top Growth Stock In The Top Growth Sector–Plant-Based Foods

By
Keith Schaefer
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0

PLANT & CO (VEGN-CSE / VGANF-PINK) IS
THE TOP GROWTH STOCK
IN THE TOP GROWTH SECTOR–PLANT BASED FOODS
 

Plant & Co.(VEGN:CSE) is poised to be the next huge breakout company in the scorching hot plant-based food sector.  The market is DESPERATE for quality plant based stocks to own.  I’m convinced that Plant & Co. is the next stock that the market is going to jump on.

2020 was the greatest year of my investing life–specifically because I found the best stocks in hottest sectors of the market.  I’m telling you that right now the market wants nothing more than to own plant-based food companies.

There is a very good reason for that.  Revenue growth for these companies is going to be insane for the next decade.  Brokerage firm UBS projects that the plant-based food market is going to grow from $5 billion to $85 billion by 2030.  Wow………that is the kind of revenue growth you would expect to see from a biotech that just invented a vaccine to stop a pandemic —— not the rate of growth for an entire industry!!!!

The market is incredibly efficient about recognizing a huge trend is all over pure-play plant-based stocks.

Just look at what happened with The Very Good Food Company (VERY:CSE) which went from a 70 cent stock price to over $9 in just months after hitting investor radar.

What a trade…..but here is the thing.  I like the Plant & Co. business model even better.  I understand their business model, their strategy is defined and clear, and I believe that they are about to deliver.

They have said they will be announcing big GROWTH–new products and new distribution channels.

I believe Plant & Co. is going to get big—and do it fast.  There is no bigger catalyst for a stock than that.  They have the team and infrastructure in place to do it.

Even better, I see that the way the incredibly fragmented plant-based food industry is currently structured as being the perfect set-up for the Plant & Co. team to carry out their GET BIG FAST plan.

This should be the fastest growing stock in the fastest growing sector of the market.  What more could an investor want than that?
 

Don’t Blink – This Company Is Starting To Move Fast…
 

There is a “sweet spot” moment to invest in a stock–when you can see that the company has achieved critical momentum but the market hasn’t figured it out yet.

That is Plant & Co. right now.  The business is on the cusp of massive growth.  They just closed their first acquisition. The opportunity is there and CEO Shawn Moniz and his team are seizing it.

Plant & Co. is preparing to execute on a major roll-up strategy in the plant-based food industry.  While many companies in this industry are reliant on one plant-based food product —— Plant & Co. is going to quickly have an entire portfolio full of them.

The market is going to love it.  Instead of having to bet on a stock that has just one product, Plant & Co. will be a stock that gives investors the option to own an entire portfolio of plant-based products.

This will be like owning a diversified ETF stuffed full of the fastest-growing plant-based alternatives. 
Beautiful…….every vertical in the plant-based space has experienced explosive growth over the past year.
 
 
The plant-based food business is just SO PERFECT for a company like Plant & Co. to come in and consolidate some great brands under one umbrella.  The industry is incredibly fragmented today with private companies with niche products all over the place.

These products clearly resonate with the customers that they are able to reach.  But lack of capital / infrastructure / distribution isn’t allowing them to scale up and get their product to market.

This industry literally has very successful brands being made by company owners in their basements or garages.  These great products need to be given a life within a company that can properly get them to market.

Plant & Co. management has already done the hard work over the past year, developing relationships with many of the best private brands.  The potential for a fast roll up here is very possible.

As that happens Plant & Co is going to see revenue explode.  As they execute, VEGN-CSE will attract larger and larger investors–who are hungry to buy quality stocks in this sector.

My job is to introduce you EARLY to the fastest growing companies in the hottest sectors…….no question that Plant & Co. fits that bill.


Holy Crap The First Building Block For The Portfolio 


A taste of what is coming can be seen with the “Holy Crap” brand that Plant & Co. acquired in January. It will be one of the cornerstones for growth.

Like so many plant-based products “Holy Crap” has already established a loyal base of repeat customers in its West Coast of Canada niche and is growing like a weed there.  As part of Plant & Co. this brand now gets to step on the gas pedal….the brand will be expanded and distribution will go nationwide. 

I am long this stock because I think management can execute their business plan. As they do that, revenue will grow in multiples. I mean, the whole business model is to GROW! And right now is just the start. There are many, many more companies to bring under the Plant & Co. greenhouse.
 
Plant & Co. already has the manufacturing space to accommodate that growth—so there are no capacity constraints.  The infrastructure has already been completed–and it’s ready to go!

I expect Plant & Co. to repeatedly & continuously acquire great niche brands like “Holy Crap” and give them critical mass. Create a big portfolio to give you retailing power!

I’m convinced that “Holy Crap” is just the first of many acquisitions here. This one is in Canada but I expect them to go across North America.

Plant & Co has a big edge with the incredible distribution reach it has.  The company just signed a partnership for “Holy Crap” with UNFI–which is the single largest distributor of organic and natural food in Canada. 

High quality local or regional brands like “Holy Crap”–which struggle to get nationwide attention–can suddenly get on shelves everywhere. 

That is why this roll-up strategy is going to be so successful….the brands are just so much more valuable as part of a portfolio with distribution reach.

As an investor, I love that this is a premium sector; These are premium brands that are purchased by consumers who are health conscious.  That means much wider profit margins.

This is much like what Starbucks did to the coffee drinker by convincing them that $5 coffee is normal.  That is what “Holy Crap” and these other high margin products are doing.

 

There Is No Growth Model Like A Roll-Up Growth Model
 

I love an organic growth story as much as the next guy…..but organic growth has its limits.  You don’t take revenue up 10X in half a year with organic growth. With a roll-up strategy the sky really is the limit. 

Plant & Co can create that kind of exponential revenue growth and do it in an incredibly accretive way for shareholders.  Buy a company 3-5x EBITDA and get valued in the Market at twice that. With every acquisition value is being created for shareholders.

Add on top of that the huge revenue uplift that all of these brands are going to get with the exponentially wider distribution reach that Plant & Co has……and I think I’ve bought in at the bottom level of a business plan that has YEARS of runway–plant based foods is One Of The Biggest Mega-Trends In The World right now..

That means that we have roll-up style revenue growth on top of the organic growth that these plant-based products are creating themselves.

I’m convinced Plant & Co is on the verge of huge growth. They’re funded. They just completed their first acquisition. This is the bottom level for this stock–and the Market WANTS to buy these stocks now.

Plant & Co has reviewed and sponsored this article. The information in this newsletter does not constitute an offer to sell or a solicitation of an offer to buy any securities of a corporation or entity, including U.S. Traded Securities or U.S. Quoted Securities, in the United States or to U.S. Persons. Securities may not be offered or sold in the United States except in compliance with the registration requirements of the Securities Act and applicable U.S. state securities laws or pursuant to an exemption therefrom. Any public offering of securities in the United States may only be made by means of a prospectus containing detailed information about the corporation or entity and its management as well as financial statements. No securities regulatory authority in the United States has either approved or disapproved of the contents of any newsletter.

Keith Schaefer is not registered with the United States Securities and Exchange Commission (the “SEC”): as a “broker-dealer” under the Exchange Act, as an “investment adviser” under the Investment Advisers Act of 1940, or in any other capacity. He is also not registered with any state securities commission or authority as a broker-dealer or investment advisor or in any other capacity.

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