Lithium, Cobalt, Graphite, and other “Electric Metals” focused companies are generating immense buzz as of late. For investors who have positioned themselves accordingly in this space the profits have already been substantial. However, we believe this initial move is only the first leg in what may prove to be a prolonged bullish uptrend for these equities. Prosperity Stock Report has a track record of successfully identifying under the radar micro cap opportunities. We have turned our attention to the energy metals space and have expended considerable effort in identifying top candidates that are setting themselves up for potential success in this booming sector of the market.
The EV Revolution – Welcome To The New Paradigm
Another hard day at work has just come to an end. You reach for your cell phone — the screen lights up. You swipe to dismiss the notification informing you that your self-driving electric car is arriving now. You hop in the car and feel that dull dread of having to cook after such a long day, so naturally, you order delivery through UberEATS. The food arrives just as you get home. The timing is perfect. You finish eating and decide to stay in and watch a movie tonight. You turn on your television — it bursts with colour as you navigate through Netflix’s recent releases. Overcome with a craving for popcorn, you head to the kitchen, to your great disappointment; you are completely out! Not to worry however, you reach for your phone and with a few swipes and scrolls you order your favourite brand of popcorn pouches from Amazon. Half an hour later, you hear the distant aerial buzz of a drone dropping off the goods at your doorstep before it disappears into the night sky.
This scene represents a combination of a present reality and future hope. Disruptive technologies shape the future and revolutionize industries. Uber radically disrupted the taxi industry with their ride-sharing app, and continues to alter the future of the logistics business with UberEATS — a meal-delivery service. Blockbuster Video’s empire collapsed at the hands of Netflix who redefined the way we watch content on television, while Tesla continues to innovate and revive the commercial automobile industry.
Elon Musk is single-handedly leading a revolution in transportation. In March of 2016, Stephen Carlisle stated: “We see the future of automobile and vehicle ownership being far different than it is today. Vehicles will be electric, connected, self-driving and shared.” Elon Musk, in the same month, was quoted as saying “we need to absorb the entire world’s lithium-ion production. To give you a sense of scale, the Gigafactory will have the largest footprint of any kind anywhere. It will make more lithium-ion batteries than any other factory combined.” This is obviously an extremely bold and boisterous statement that could have easily been taken out of context. However, it should not be entirely disregarded considering Tesla sold 276,000 pre-orders of its Model 3 in only 48 hours. The fact of the matter is that Tesla’s planned Gigafactory, combined with increased Electric Vehicle demand globally are but two avenues that point to the increased requirement for abundant (and steady) sources of Lithium, Cobalt and Graphite.
Projected “Electric Vehicle” Sales (Source: Bloomberg New Energy Finance)
On the consumer electronics side, smart-phones, tablets, drones, cordless power tools, and so on all require energy metals. These technologies, some revolutionary, some we have come to accept, all have one thing in common. None would be possible without energy metals; Lithium, Cobalt, Graphite and other key niche materials that are the unsung heroes powering our daily lives.
Everything boils down to Supply and Demand. On the Demand side – growth in portable consumer electronics along with increased acceptance and appetite for Electric Vehicles; and on the Supply side – infrastructure bottlenecks and geo-political concerns surrounding surety of raw material product combine to result in one thing. Price ascension.
Some estimates have pegged input prices attributed to battery manufacturing tripling by the year 2020. Looming supply shortages will result in intensified competition between manufacturers and we believe the near-term producers and strategic players in the industry will benefit substantially.
“The Lithium market is in a deficit, according to Roskil – 181,662t of Lithium Carbonate (LCE) demand was offset by only 171,050t of supply in 2015”
Bigger Batteries = More Lithium
Although the demand for LCE will continue to be dominant, the demand for LiOH (Lithium Hydroxide) is predicted to grow at a faster pace. The supplies for LiOH are scarce, and the majority of the new stream coming online is in early stages of pilot plant production. Any mistakes or hindrances could further increase LiOH prices. Seemingly, all forms of lithium are currently experiencing a shortage in supply with battery demand continuing to ramp; the confluence of factors suggests a continued bullish energy metals market.
Cobalt – Awakening the Sleeping Giant
In reality, there is no Tesla without Cobalt. Although Lithium has garnered much of the press attention over the past 18 months, the market is awakening to the fact that Cobalt is an absolutely VITAL supply component of the “lithium-ion” battery revolution.
The vast majority of worldwide Cobalt production (estimates range between 95% – 98%) is as a result of by-product mining of Copper and Nickel deposits. Recent slow downs and curtailments of base metal production over the preceding years have in turn hindered Cobalt production. What’s potentially even more important is the fact that approximately 60% of global Cobalt reserves and production come from the Democratic Republic of the Congo (“DRC”) where corruption, child labour and other such atrocities have been noted in connection with Cobalt mining. As consumers and manufacturers alike become more socially aware to the realities of how and where this Cobalt is produced, surety of supply and supply chain recognition are becoming vitally important.
Recently, President Trump has been discussing the possible implementation of a new rule that would require increased transparency in the supply chain and disclosure by manufacturers of products that contain any “conflict minerals” (for example “Blood Cobalt” from the DRC). When assessing companies in this space, this fact alone vaults candidates with Cobalt projects in stable geo-political jurisdictions to the top of our list.
As a result of these various supply concerns (coupled with increased demand) Cobalt prices have risen drastically over the past year. Up from around $11 USD/pound last March, prices are currently sitting in the $24 USD/pound range.
Cobalt – 1 Year Price Chart (Source: InfoMine.com)
Profiting From the Energy Metals Boom
When we first launched ProsperityStockReport in 2016, we had a strong conviction that we were in the early innings of a major move in Lithium equities. We profiled a company called Nemaska Lithium (NMX – TSX) when it was trading at approximately $0.295 per share. Today, at the time of writing, Nemaska trades at $1.36 per share with a market cap in excess of $300 million. ProsperityStockReport subscribers who capitalized on the NMX entry at $0.295 could have turned a modest $10,000 investment into over $46,000! We identified the trend, got in early, and reaped the rewards.
NMX – Stock Chart (Source: StockWatch)
The Time is NOW!
Bloomberg New Energy Finance has forecast that 35% of automobiles sold in 2040 will be Electric Vehicles. Currently, EV’s represent approximately only 1% of global sales!
The time to take advantage of the Next Wave in the Energy Metals Boom is now. We will be featuring a series of companies in this space and are planning to capitalize again on the tailwinds of the electric revolution with fresh new ideas. We have identified exciting companies that are poised to benefit from this rapidly evolving sector. We believe, like NMX was last year, these new companies are still in their infancy, under the radar, and are poised for big gains.
The Prosperity Stock Report Team
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