August 3rd, 2023 | 08:30 CEST
CleanTech stocks about to rally? Standard Lithium, FREYR Battery, RegenX Tech Corp.
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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
RegenX: Environmentally friendly platinum and palladium extraction
Recycling instead of extracting new resources from the Earth is undoubtedly the best source of raw materials. In the field of platinum and palladium, RegenX Tech is working on an environmentally friendly method. Currently, only 30% of the material is recovered from car catalytic converters, but the smelting furnaces used for this are anything but clean. And diesel catalytic converters are often not accepted at all. RegenX, listed in Canada and Germany, wants to change this. They have developed a chemical and process engineering CleanTech solution to recycle 90% of the platinum and palladium found in catalytic converters. In the process, RegenX has now moved well beyond research work.
In April, the first module of the first industrial-scale plant was commissioned. The recycling plant in the US state of Tennessee is currently being ramped up and should reach full capacity utilization of 2.5 t per day as early as the current third quarter. The initial focus will be on diesel catalysts. RegenX CEO Greg Pendura: "We have developed technology that incorporates modern urban mining while promoting sustainability in a circular economy. We are excited to complete our commissioning phase and expand to a four-module facility".
The potential is huge. Some USD 21.2 billion worth of metals are lost annually from scrapping diesel catalysts. And the market is growing despite the energy transition and electromobility: the total catalyst market is expected to reach a volume of around USD 73 billion in 2025. At USD 39.8 billion, diesel catalysts are expected to account for more than half. In addition to selling the recycled raw materials, RegenX also wants to earn money from trading emission certificates - this has already worked extremely well for Tesla.
While the Company has yet to achieve significant revenues, the ramping up of the industrial recycling plant should change this in the coming months. If successful, the market potential makes the market capitalization of approximately EUR 22.5 million appear anything but high.
Standard Lithium: Strong drilling results, strong price target
Lithium companies show that the mining of raw materials can be lucrative. After the merger of Alkem and Livent, the takeover fantasy is awakening in the industry. One candidate is Standard Lithium. Currently, the stock is trading sideways at around USD 4.50. This could be the calm before the storm when the feasibility study of the Arkansas project is published.
The Canadian company has two exciting projects in the US states of Texas and Arkansas. The feasibility study for the latter is currently underway. Recent drill results have been promising. For example, the Company reported a sample containing 581 mg/L of lithium. To the Company's knowledge, this is the "highest confirmed grade" ever found in Arkansas. The preliminary economic assessment (PEA) for the Arkansas project resulted in an after-tax net present value of USD 1.97 billion (using an 8% discount rate). The partner in the project is Lanxess. When the final feasibility study is available, the German chemical group may acquire a 49% stake in the project company. The last resource estimate from 2021 was around 1.2 million t of lithium carbonate equivalent. Mining an average of 30,000 tons of battery-grade lithium hydroxide monohydrate per year would give a mine life of 20 years.
FREYR Battery: Will the breakthrough happen on August 10?
FREYR Battery has also been moving sideways this year with significant fluctuations. Next week at the latest, things will get exciting again for the battery specialist from Norway. On August 10, the Company will report on its developments in the second quarter. Investors can expect news on the two planned battery factories "Giga Arctic" and "Giga America". Interested parties from Germany can join the conference call at 12:00 PM CET by dialing +49 32 221098334 (login 424929).
Most recently, Battery had reported receiving EUR 100 million from the EU Commission. The sum comes from the EU's EUR 3.6 billion CleanTech pot for funding e-mobility related projects. In the case of FREYR, the construction of a battery cell factory in Norway will be subsidized.
The analysts at Morgan Stanley recommend the stock of FREYR Battery with an "Overweight" rating and a price target of USD 13. Currently, the stock is trading at just over USD 8.
All three stocks discussed are facing important weeks. Already next week, it becomes exciting with FREYR Battery. However, the Company is already valued at USD 1.1 billion. Delays in the construction of the planned factories should therefore be avoided. RegenX is already further ahead - albeit on a smaller scale. The first plant is ramping up, and the market capitalization is a manageable USD 22.5 million. Standard Lithium has two very exciting lithium projects. If these are successfully developed, the first companies should come knocking soon.
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