May 6th, 2024 | 07:00 CEST
Canopy Growth, Globex Mining and Rock Tech Lithium with strong signals
Now that the precious metals gold and silver are taking a breather after a rally, other markets are becoming the focus of investor interest. In addition to copper, which is likely to reach new highs in the medium term due to supply shortages, lithium, an industrial metal essential for electromobility, continues to work on bottoming out. However, the highlight of the past week in terms of volatility was cannabis stocks, which are expected to remain in focus in the coming weeks.
time to read: 3 minutes
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Author:
Stefan Feulner
ISIN:
CANOPY GROWTH | CA1380351009 , GLOBEX MINING ENTPRS INC. | CA3799005093 , ROCK TECH LITHIUM | CA77273P2017
Table of contents:
"[...] We have a clear strategy for neutralizing sovereign risk in Papua New Guinea. [...]" Matthew Salthouse, CEO, Kainantu Resources
Author
Stefan Feulner
The native Franconian has more than 20 years of stock exchange experience and a broadly diversified network.
He is passionate about analyzing a wide variety of business models and investigating new trends.
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Canopy Growth - Rollercoaster ride continues
Looking at the weekly chart, the Company, which focuses on the production of medical cannabis, gained "only" 12%. But what happened between the last three trading days was almost criminal. On Tuesday at 7 pm, the starting signal was given, and Canopy shares started a rally in the last three trading hours with a performance of almost 80% to CAD 20.45, only to lose over 32% in the next two trading days.
How did the ups and downs in the cannabis sector come about? The reason for the strong intraday rally was reports that the Drug Enforcement Administration, or DEA for short, had decided to downgrade the risk classification of cannabis. The DEA has previously assigned cannabis to the Schedule I risk category, in which LSD and heroin are also classified. For some time now, at the request of the US Department of Health and Human Services, the DEA has been examining the possibility of reclassifying cannabis to the less stringent Schedule III category.
So far, the DEA has not made any statement, but if there is a positive response to the downgrading, a final decision is still not expected overnight. In addition to public hearings, judicial decisions are likely to follow. Nevertheless, the final implementation and legalization of cannabis at the federal level in the US is expected to fuel the rally in cannabis stocks. Currently, however, high volatility is likely to remain.
Globex Mining - Diversification pays off
Jack Stoch, who has been at the helm of the streaming and royalty company Globex Mining for decades, is likely to be jumping for joy when he looks at his broadly diversified portfolio. Not only are the precious metals gold and silver in rally mode, but copper has also continued its upward trend after a lengthy correction phase. In addition, other metals such as lithium and nickel are forming sustainable bottoms, which could subsequently also lead to a strong move northwards.
The debt-free company has a total of 247 projects in its portfolio, divided into 123 precious metals, 68 base metals and 56 specialty metals and industrial minerals. In contrast, the market capitalization of CAD 54.68 million appears low, considering Globex Mining also holds more than CAD 25 million in cash, shares and marketable securities.
In addition, recurring cash flow is generated by income from license fees, the leasing of mining rights and the pro rata collection of minerals sold by currently around 100 partners.
In addition to recurring income, the Company also generates a continuous news flow. For example, Globex Mining announced the sale of a sodium sulphate-alkali property in the Canadian province of Saskatchewan to Edison Lithium. The price amounted to CAD 200,000 plus an equivalent value of CAD 50,000 in Edison Lithium shares. A gross royalty of 2% on commercial production was also agreed for the future.
Rock Tech Lithium - Bottoming out on the horizon
Positive signals are coming from another industrial metal. The price of lithium carbonate has literally imploded since mid-2022 due to weakening demand for electric vehicles and overcapacity, losing around 80% from its peak. A bottom has been forming for several months now, which could herald a new upward trend.
The leading lithium producers, Ganfeng Lithium and Albemarle, are also in the starting blocks and are on the verge of breaking a prominent horizontal resistance. Albemarle reported quarterly figures last week that beat analysts' estimates. The German-Canadian cleantech company Rock Tech Lithium also reported positive news, bringing the final financing of the most advanced lithium converter in Europe ever closer.
The subsidiary RTT Lithium SA announced the conclusion of a contract for the supply of raw materials with C&D Logistics, a supply chain company of the C&D Group, which is ranked 69th on the Fortune Global 500 list.
C&D Logistics will provide the total amount of spodumene concentrate required for the operation of Rock Tech's lithium refinery in Guben, Brandenburg. The agreement is set to begin with the ramp-up of the facility as early as next year. Rock Tech has thus gained one of the largest trading and logistics companies and one of the largest lithium traders in the world as a strategic partner.
Like the major producers, the Rock Tech Lithium share is about to complete its bottoming phase. A breakout above the horizontal resistance at CAD 1.45 would generate a striking buy signal with a short-term price target of CAD 2.00.
The cannabis industry has been on a rollercoaster ride over the past week and will likely remain highly volatile. The intrinsic value of Globex Mining's portfolio should have risen further in recent weeks. Rock Tech Lithium reached a milestone with the signing of an offtake agreement with the C&D Group.
Conflict of interest
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