16. April 2021 | 07:33 CET
Almonty Industries, Millennial Lithium, Orocobre- It pays off for investors!
Since 2011, the European Commission publishes a list of critical raw materials in intervals of 3 years. Thereby, the supply risk of the European economy with these raw materials is measured. While the list initially comprised only 14 raw materials, including rare earths and tungsten, it has now grown to 30. Lithium, bauxite, strontium and titanium were added most recently. The EU has formulated a comprehensive plan of action to reduce dependence on China. Any imbalance in supply and demand has an impact on price levels. If you position yourself correctly, this opens up great opportunities for returns. We present three exciting companies below.
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ISIN: CA0203981034 , CA60040W1059 , AU000000ORE0
"[...] 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
ALMONTY INDUSTRIES INC - Use consolidation to enter the market
The EU has classified tungsten as a critical raw material since the first study and in the top ranks in terms of economic importance and procurement risk. Tungsten is the chemical element with the highest melting and boiling point and is therefore used in many important industrial sectors. The market is dominated by China, where tungsten is mined predominantly as the main product. Typical by-products are tin and molybdenum, but also gold, silver and occasionally fluorite or bismuth. The substitutability of tungsten by other raw materials is severely limited.
Almonty is focusing on tungsten with several projects. The focus of activities is currently in Europe, with the Los Santos Mine in western Spain and the Panasqueira Mine in Portugal. However, the music is playing in Asia. Here, Almonty is building the Sangdong mine in South Korea, the largest tungsten mine outside China. The Company also owns the Sangdong molybdenum project. Here, an extensive drilling program will be carried out this year to take an essential step towards resource determination. Molybdenum is also a critical raw material with very high heat resistance and is often used for special alloys in stainless steel.
Recently, the share reached a price level of CAD 1.30. Currently, the shares are consolidating at a level of around CAD 1, valuing the Company at CAD 191 million. The weaker share prices are undoubtedly related to the information that the Company published at the end of March. Almonty was unable to present its annual financial statements for the past fiscal year by March 31, as required by law. The reasons given by Almonty were that the auditors were unable to carry out the required inspection of the production facilities in Portugal due to Corona. Almonty assured that the annual report would be published by April 23. Forward-looking investors are taking advantage of the current favorable share price level for (additional) purchases.
MILLENNIAL LITHIUM CORP - 2022 in focus
The critical raw material lithium is urgently needed for the transition to the electromobility age. Experts estimate Europe will need up to 60 times more lithium by 2050 for e-car batteries and energy storage alone. Millennial controls over 20,000 hectares of prime land in the heart of South America's famed "Lithium Triangle," home to the world's most prolific lithium deposits. The Company is advancing two lithium projects to production in Argentina.
The first quarter of 2021 can certainly be considered a milestone. Millennial was able to attract well-known investors, and a capital increase of CAD 34.5 million was placed. With the inflow of funds, the Pastos Grandes project will be further developed and go into production in two years. Companies operating in the region include SQM, Albemarle, Livent Corp. and Orocobre.
Important newsflow along the way represents the commissioning of the pilot plant to produce battery-grade lithium carbonate. However, further progress on the project will also make the quality and value of the Company visible. After the share price setback, the Company is worth about CAD 300 million at prices of CAD 3. The share is attractively valued given the potential.
OROCOBRE LIMITED - Benefiting from the rising lithium price
Orocobre has also focused its activities on Argentina, with lithium at the center of its focus. The Olaroz lithium plant is located in the Puna region of Jujuy Province in northern Argentina, over 230 kilometers northwest of the capital Jujuy. Also part of Orocobre is Borax Argentina, which operates open-pit mines in Tincalayu and Sijes. Borax Argentina manufactures and refines a range of products, including minerals. The refined products are used in many markets and industries, such as agriculture, but also in the form of different fibers in special applications with ceramics or glass, among others.
Earlier this week, the Company announced that it sold 3,032 tons of lithium carbonate for USD 5,853 per ton in the first quarter. Due to increased demand, this represents a price increase of over 50% from the 2020 shooting quarter. Orocobre also announced that prices for the quarter ending June 2021 are expected to be around USD 7,400 per ton.
The Company has also sold forward all production through the end of 2022, securing a high price level. Additional production will become available as Olaroz reaches new production levels. Orocobre will release full first quarter details on April 21. Currently, at prices around AUD 6, the Company is not too expensive, valued at AUD 2.1 billion.