Categories: Energy / General Market Commentary
Topics: General Energy / General Market Commentary

Ignore the Posers, Here's the Real Deal...

July 25, 2017

A week ago Outsider Club founder Nick Hodge penned a timely article about “posers” who pretend to bring quality private deals to accredited investors.

Posers who, in the words of Mr. Hodge, “have neither the network nor the ability for the diligence I do to deliver a consistent stream of high-quality private placements.”

These aren’t just meaningless words that add up to empty promises.

Nick’s Notebook is the best public vehicle for exclusive access to private deals in public and private companies in the newsletter publishing business.

Don’t take it from me. Here’s a few of Nick’s wins in his own words.

“One of the first deals we did in 2015 was in an up-and-coming lithium company. It was before the lithium mania of 2016, and it was being backed by several mining entrepreneurs with previous exits in the hundreds of millions or billions of dollars.

"We financed Lithium X (TSX-V: LIX)(OTC: LIXXF) at $0.15 when it was still a private company, knowing it would IPO just as the lithium story was hitting the mainstream. Its IPO dovetailed perfectly with a sharp rise in lithium prices and investor interest, and we were able to sell our shares for $2.37 each — a gain of 1,480%.

"We financed K92 Mining (TSX-V: KNT)(OTC: KNTNF) in early 2016 at $0.35. It was also a private company with a clear path to IPO. It had a large gold mine in Papua New Guinea that it bought for pennies on the dollar in the mining downturn, and it was on the verge of production, with exploration upside as well. Its shares began trading in May 2016, and by August we were able to exit at $2.21 — a gain of 531%."

"You get the idea. We’ve closed six other triple-digit winners as well. We are sitting on six additional triple-digit winners in the open portfolio.”

Unfortunately, but not surprisingly, the publishing business isn’t the only business where “posers” try to leverage a successful model and pick up whatever crumbs are available.

A couple of years ago the very obvious clean energy mega-trend inspired many juniors in the resource space to rebrand themselves as lithium explorers.

In reality, most of these juniors didn't have the network or the ability to explore and develop quality assets.

Let me be clear: the growth of electric vehicles and battery storage is very real and will drive demand for lithium, graphite, copper, etc.

Lithium demand alone is expected to climb 39% in 2018. By 2025, demand is projected to increase by 73%.

 

 

The global lithium-ion battery market is projected to grow to US$77.4 billion by 2024 from US$29.7 billion in 2015, according to a report by Transparency Market Research.

Despite the real demand and the clear trend, most juniors will never mine anything but shareholder pockets.

The initial euphoria seems to have subsided and many of the wannabe lithium juniors have either managed to go through their treasuries without any meaningful progress or have packed up their bags in search of the next flavor of the month.

One exception is my favorite junior in the lithium space, Advantage Lithium (TSX-V: AAL) (OTC: AVLIF).

Advantage holds a 75% interest in the Cauchari project, which is an advanced lithium exploration project in Argentina.

The company also holds a 100% interest in five other lithium properties totaling 85,543 Hectares.

Orocobre holds the remaining 25% of Cauchari and is Advantage’s joint venture partner, as well as its largest shareholder.

Orocobre is the first new independent lithium brine producer in 20 years, having constructed the 17,500 tpa Olaroz Lithium facility as well as having built up extensive technical and in-country experience while operating in Argentina since 2007.

The technical team is led by Callum Grant and Orocobre’s former VP of exploration, Miguel Peral. Callum is an engineer with broad experience from exploration to production focusing on South America and, in particular, Argentina.

There are currently two drills turning at Cauchari and initial results are expected in late August.

The objective of the work programs at Cauchari is to rapidly advance the property through exploration and towards development by 2018/2019.

The company has approximately C$20 million in cash and a market cap of approximately C$65 million.

The company’s ability to leverage Orocobre’s expertise and infrastructure is a key differentiator that gives Advantage Lithium a clear path to production.

Like many of its lithium junior peers, shares in Advantage have seen a pullback this year.

To continue reading please click link https://www.outsiderclub.com/ignore-the-posers-here-is-the-real-deal/2400