August 25th, 2022 | 10:38 CEST
Rock Tech Lithium, Globex Mining, XPeng - Time to act
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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
Rock Tech Lithium - Capital increase puts the brakes on
"Canada is committed to building a strong and reliable automotive and battery supply chain here in North America to help the world meet global climate goals," Francois-Philippe Champagne, Canada's Minister of Innovation, Science and Industry, announced in a press release. The GreenTech company Rock Tech Lithium is in the right place at the right time, having just announced a strategic partnership with Mercedes-Benz to supply the carmaker with high-quality lithium hydroxide. Thus, the German-Canadian company led by the go-getting CEO Dirk Habecke has agreed to supply up to 10,000t of the planned production annually to the premium manufacturer and its partners starting in 2026.
Rock Tech Lithium's share price fell sharply in recent days. The reason was the announcement of a further capital increase. A total of about CAD 50 million should be flushed into the coffers. According to the Company, most of the proceeds will be used for constructing the planned lithium hydroxide converter plant in Guben, Brandenburg, and for developing the Georgia Lake lithium mine in Canada. The Company will issue a total of 11,349,743 units for total proceeds of approximately CAD 39.7 million at a price of CAD 3.50 per unit. Each unit will consist of one common share in the capital of Rock Tech and one-half of one common share purchase warrant. Each warrant will entitle the holder to purchase one common share for a period of 36 months from the date of issuance of the warrant at an exercise price of CAD 4.50.
In connection with the underwritten offering, the Company will additionally complete a non-brokered private placement of units for an aggregate amount of not less than CAD 9,037,500 pursuant to subscription agreements to be entered into directly between Rock Tech and the purchasers, all of whom shall be existing shareholders of Rock Tech.
After bottoming at EUR 2.70, the positive news allowed the stock to open with an upside gap to EUR 3.49. However, profit-taking contributed to the title having to give up almost all of its gains in the course of the day. Currently, the share price is at EUR 2.94. The price gap is closed at EUR 2.78.
Globex Mining - Best equipped
Picking the best individual stocks from the commodity universe is difficult for most investors. One popular tool is to buy commodity funds or ETFs. Canadian company Globex Mining offers an attractive alternative. In total, the incubator Globex Mining, which was founded in 1983 and has been able to grow without major dilutions in the shareholder structure, owns over 210 projects in the US, Canada and Germany. The experienced management around founder and CEO Jack Stoch focuses on precious metals projects as well as base metals such as copper, zinc, lead and nickel and speciality metals and minerals.
Globex Mining, which holds approximately USD 20 million in cash, generates revenue by optioning land parcels from its holdings for cash and shares. As a result, the Company receives recurring royalties, and the partner assumes the exploration risk. In addition to acquiring and optioning land, the Company also invests approximately CAD 1.5 per year in the exploration of its own properties.
The most recent achievement is the complete acquisition of the Pointe-Aux-Morts dolomite deposit, located approximately 5 km west of Havre St-Pierre in Quebec on the north shore of the St-Lawrence River. Previous work by QIT Iron and Titanium in 1980-1981 included 56 drill holes outlining a historic, non-NI 43-101 compliant resource of +23,405,000t grading 20.5% MgO, 30.5% CaO and 0.92% SiO2. In addition, the property is said to have a market for 400,000t p.a. of crushed 3/16-inch material. Globex Mining will be reassembling historical information and reviewing what work should be done going forward.
The Company has a market value of EUR 39.87 million and is a highly attractive investment in times of exploding commodities. In addition, Globex Mining is secured by its high cash position as well as recurring revenues.
XPeng - Disappointing outlook
The electric car industry is booming. According to McKinsey, due to the transformation of the transport sector away from the internal combustion engine and toward battery-powered cars, over 6.5 million e-cars were sold in 2021, double the previous year's figure. In addition to sales, the market share of battery-powered vehicles also doubled from 4.7% in 2020 to 9.5% in the past year. China was by far the largest market, with sales of over 3.3 million units, representing over half of global sales. Behind market leader BYD and Tesla, SAIC-GM-Wuling and Geely, XPeng ranked 5th in the e-car charts for the half-year.
With the publication of the figures for the second quarter, the Chinese company was only partially convincing. Compared to the same period last year, sales figures and revenue almost doubled, but the loss also increased more significantly than forecast.
In the second quarter, 34,422 units were shipped, which meant an increase of 98%. Accordingly, revenues in the second quarter of 2022 amounted to around EUR 1.1 billion. Net loss grew to about EUR 395 million in April-June, compared with EUR 174 million in Q2 2021 and EUR 249 million in the previous quarter. XPeng expects to deliver 29,000 to 31,000 vehicles for the third quarter, well behind analyst estimates of 45,865 units and second-quarter deliveries.
The mounting losses and the cautious forecast were met with double-digit discounts on the stock market. At USD 19.30, the stock is trading near its all-time low of USD 17.11, which could cause another sell-off if it falls below.
The western world urgently needs raw materials to cope with climate change. Rock Tech Lithium could report a milestone in this regard. Globex Mining is well positioned with its portfolio. At XPeng, the somewhat cautious forecasts are disturbing.
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