September 22nd, 2022 | 12:47 CEST
Allkem, Infinity Stone, FREYR Battery - Nobody can avoid these stocks!
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"[...] China's dominance is one of the reasons why we are so heavily involved in the tungsten market. Here, around 85% of production is in Chinese hands. [...]" Dr. Thomas Gutschlag, CEO, Deutsche Rohstoff AG
Allkem - Planned tripling of production
One of the most important raw materials in the energy transition is the element lithium. It is needed mainly for the production of powerful electricity storage systems. It is, therefore, essential both for electromobility and for the construction of grid storage systems to increase supply security and compensate for production fluctuations in renewable power generation by solar and wind energy.
One of the most important lithium producers is the Australian Allkem Group. The Company, which previously operated under the name "Orocobre Ltd.", has been one of the top 5 lithium producers worldwide since its merger with Galaxy Resources. In the process, Allkem reported a record profit of USD 337.2 million for the 2021/2022 financial year and is planning further major steps: by 2026, production is to be tripled, thus achieving a 10% share of the global market.
Shareholders can be satisfied with the performance: the share has already gained over 76% over the year and is chasing one high after the next. Analysts continue to see upside potential for the stock.
Infinity Stone Ventures - One-stop store for critical raw materials of the energy transition
In addition to lithium, other elements and compounds are critical to the success of the energy transition. For example, graphite is used as anode material in batteries and accumulators, and the production of high-strength steel for wind turbines requires elements such as boron and manganese. Copper, cobalt and nickel are also increasingly in demand.
One company that is positioning itself as a one-stop store for critical elements of the energy transition is Canada's Infinity Stone Ventures. Based in Vancouver, British Columbia, the Company has several projects in the mining-friendly regions of Ontario and Quebéc and is pursuing an aggressive expansion strategy. It recently added 3,850 hectares to its James Bay Lithium Quarter land holdings. As a result, the Company now owns three lithium projects in the region: Taiga, Hellcat and Camaro. The latter is adjacent to Patriot Battery Metals' Corvette lithium trend discovered in 2017.
Recently, Infinity Stone announced that it had contracted Axiom Exploration Group to conduct an exploration drilling program in the Camaro and Hellcat blocks. In addition to mapping and sampling the first 21 identified pegmatites (assemblages of lithium-bearing rocks of igneous origin), the identification of new pegmatites is part of the program. To do this, Axiom, which has specialized experience with so-called LCT pegmatites (LCT: lithium, cesium, tantalum), is relying on a self-developed "exploration toolkit" using artificial intelligence and machine learning models.
Infinity Stone CEO Zayn Kalyan said the Company expects to use Axiom to rapidly develop several lithium properties in the James Bay region and make the most of its exploration budget. Infinity Stone also announced news for its Rockstone graphite project in the province of Ontario. SGS Labs has been contracted to conduct a flotation and hydrometallurgical test program, including the assay of a 2.7 kg sample. The aim here is to investigate the possibility of increasing the purity level of battery-grade material.
Currently, the Company is still in an early stage of its development and is valued relatively low at around CAD 18 million. Positive newsflow and project progress should boost the share price.
FREYR Battery - Sustainable gigafactory from Norway
While materials for the energy transition are in hot demand, what - and above all, how - it is made is just as important. Here, too, sustainability is key. The Norwegian company FREYR Battery shows how to integrate this into its production. The specialist for particularly long-lasting, semi-solid lithium-ion batteries is currently planning to build a gigafactory whose energy supply for production will be covered entirely by hydropower. To this end, an agreement was signed a few days ago with the British Company Mpac for the supply of a production line. Both companies have already worked together in the past.
The Norwegians have also brought competent partners on board on other fronts. For example, a joint venture has been set up with the Japanese Nidec Corporation, a specialist in the manufacture of precision motors for the automotive industry, to build giant electricity storage systems for manufacturing companies so that they can temporarily store regeneratively produced electricity to enable stable, sustainable production.
On the stock market, FREYR Battery has been one of the darlings of recent months, with its share price roughly doubling since June. But analysts see further room for improvement: according to the consensus estimate of seven analysts, the share should still be able to gain around 40% in the next twelve months.
The energy turnaround is inevitable not only from an ecological but also from an economic and political point of view. Even in critical times on the stock market, companies dealing with this issue will likely be among the winners. If you want to play it safe, you can bet on established players such as Allkem, and FREYR Battery is also one of the beneficiaries of the change. However, the most exciting securities are likely to be those of companies still in the early stages, such as Infinity Stone Ventures.
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