20. January 2021 | 09:23 CET
Varta, Nevada Copper, Millennial Lithium - Electrified: you can still get in at a fair price!
The growth in the areas of electromobility, renewable energies and the multi-faceted technology industry is leading to a substantial increase in demand for raw materials. If expert forecasts are to be believed, demand will significantly exceed supply in the coming years, which can only lead to the conclusion that prices will continue to rise. Copper and lithium are good examples of this. Linked to the topic of energy are also the challenges regarding new storage media. We present three promising companies for which demand and growth play into the cards.
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ISIN: CA64128F1099 , DE000A0TGJ55 , CA60040W1059
"[...] We knew the world was rapidly electrifying and urbanising and needing significant amounts of copper to do so. [...]" Nick Mather, CEO, SolGold PLC
VARTA AG - Subdued mood
VARTA AG produces and markets a wide range of batteries. The product range includes microbatteries, household batteries, energy storage systems, and customized solutions for diverse applications. Thanks to intensive research and development work, the MDAX-listed group is a technology and innovation leader in many areas.
Its strong market position in microbatteries, which are used in wireless headphones, among other things, has provided the Company with bubbling profits. Earlier this month at the Consumer Electronics Show - one of the world's largest consumer electronics trade shows - Varta unveiled virtually the new A4 generation of lithium-ion button cells. These microbatteries allow for the production of increasingly compact and smaller devices.
In recent days, reports that Samsung and LG will enter the market of microbatteries weighed down. The market is undoubtedly large enough for multiple players, yet this will create margin pressure for Varta. In the analysts' favor, the stock is currently only a 'hold' with an average price target of EUR 116, roughly corresponding to the current price level.
NEVADA COPPER CORP - great investor interest
Nevada Copper is an emerging copper producer and owner of the Pumpkin Hollow Copper Project in the US state of Nevada. The project has significant reserves and resources of copper, gold and silver. An underground mine is in production, and an open-pit project is under development and would noticeably increase output.
On January 11, the Company announced a capital increase of CAD 21.5 million but increased this offering to CAD 33 million just one day later due to a sharp rise in investor demand. 200 million new shares will be issued at a price of CAD 0.165 linked to a warrant with an exercise price of CAD 0.22 and a term of 18 months. The capital increase will significantly improve the equity base. The funds raised are intended to strengthen working capital and contribute to the further development of the project.
The Company is currently valued at CAD 260 million. The share is now the focus of many investors. Ts is evident not only by the strong demand from the capital round but also by the fact that the share was among the most active 20 securities on the TSX-Venture in terms of trading volume within the last 10 days. Analysts believe the stock still has a price potential of around 70%.
MILLENNIAL LITHIUM CORP - Pilot plant to produce lithium this year
Millennial recently made further progress towards lithium production. The Company is advancing two projects covering over 20,000 hectares located in what is known as the "Lithium Triangle." The area straddles one of the world's most prolific lithium deposits between Chile, Bolivia and Argentina.
Both of Millennial's projects are located in Argentina. Efforts are focused on advancing the Pastos Grandes Project. In December, the Company reported that it was going through a permitting process to start up the pilot production plant. The Company aims to produce battery-grade lithium carbonate "early" in 2021. The results and findings from this test phase will then be used to finalize the commercial plant's process design.
It is therefore not surprising that the share price has jumped recently. The Company is currently valued at just under CAD 380 million. According to a profitability calculation, the Pastos Grandes project alone is worth around USD 1 billion. The project's progress will be reflected positively in the share price.