Disruptive Discoveries Journal

scandium

2016: There's Something in the Air

Chris Berry2 Comments

By Chris Berry (@cberry1)

For a PDF version of this note, please click here.

As is the case this time of year, we start to close the books on 2015 and position for 2016. While we have effectively and indefinitely moved “to the sidelines” with respect to stock picking in the junior mining space, there were some notable successes, in particular with the merger between Western Lithium (WLC:TSXV) and Lithium Americas. This combination positions the new company in a unique strategic light as electrification, underpinned by the lithium ion battery, gathers steam in 2016. Galaxy Lithium’s (GXY:ASX) restructuring is another positive development. We’ll be watching the developments with these two companies closely.

In 2015, there was very little to be cheerful about in the metals markets and to be blunt, we expect this malaise to continue into 2016. China’s RMB devaluation last summer...

Scandium International Mining Corp. Breaks Ahead of the Pack

Chris Berry1 Comment

By Chris Berry (@cberry1)

 

For a pdf version of this note, please click here

 

Could it be that we’re starting to see some signs of life in pockets of the metals space? One such pocket involves scandium, a metal which I have written favorably on many times in recent years. The size of the global market (possibly 10 to 15 tonnes – about $40,000,000) and number of players (fewer than five) has kept investor interest at bay and really led to the chicken and egg problem I’ve discussed.

Fortunately, that may be changing. Recently, I’ve written about a few potential survival strategies for junior mining companies looking to survive what could be a few more years of sideways to down markets. These include embracing technology to lower operating expenditures or creating your own high tech value chain.

The Chicken and Egg Problem with Energy Metals: Scandium as a Case Study

Chris BerryComment

By Chris Berry (@cberry1)

 

For a PDF of this note, please click here.

 

One of the biggest knocks I usually get from investors when discussing energy metals is that it’s too small. Lithium at 160,000 tonnes per year or cobalt at roughly half that are not big enough for the larger institutional money managers to focus on as other, more liquid metals markets are deemed safer (or likely just more familiar).

That said many of these “safer” opportunities are hampered by excess capacity and investor disinterest which continues to cast a pall over the commodities sector in general. The paradox is that despite the smaller size of most energy metals, they likely offer higher rates of return over the long-term as technology advances and quality of life between East and West slowly converges. To be fair, these metals will likely remain in niche status going forward, but avoiding learning about them risks walking away from unique opportunities.

It is this disinterest and general lack of funding availability that presents what I predict will be the seeds of the next bull market. This will be rooted in reliable access to the raw materials necessary to make technology supply chains run smoothly. As the demand for various technologies grows, these growth rates are dependent on the answer to one question:

Company Update: EMC Metals Attains a Major Financing Milestone

Chris Berry

By Chris Berry

 

 

A Major Hurdle Cleared

When I wrote about EMC Metals (EMC:TSXV, EMMCF:OTCBB) last month, the main issue facing the company was clear: raise approximately $2.6 million by the end of June or risk losing control of the Nyngan scandium deposit. This $2.6 million was broken down in two pieces: AUD $1.4 million was due to EMC's former JV partner to complete the buyout of the JV and award EMC 100% ownership of the Nyngan deposit. In addition to this, $1.2 million was outstanding on a promissory note held by investors close to the company which was due at the end of this month and used Nyngan as collateral. Should EMC fail to raise sufficient funds, they risked losing control of Nyngan.

This would have been significant for a number of reasons including the fact that the deposit is truly world class - a phrase I despise, but I can't think of another way to describe it. 

Profiting from Disruption and Unfairness: Critical Metals in an Age of Excess

Chris Berry

By Chris Berry

 

 

There are convincing arguments to be made for both embracing and shunning the junior sector at this point in the cycle. At risk of flip-flopping, our take is more nuanced, but throwing the “baby out with the bathwater” at this stage is an unwise move.

I have said since Q4 2013 that I believe most commodity markets have finally bottomed. This does not mean that we have turned the corner and the commodity super cycle will pick up where it left off. That said, I think it’s worth examining the forces that brought us to this point and determining how to navigate in the current market environment.

 

A Band Aid on an Amputation

Recent attempts by global central banks to “fix” the global economy have clearly failed. One wonders if they can succeed in this task given their present set of tools. Flooding the global economy with excess liquidity thanks in part to a low (or zero) interest rate environment has only masked the challenges we face.

EMC Metals Brings Scandium Front and Center

Chris Berry

By Chris Berry

  • EMC Metals – a company we have covered since May of 2011 and still follow– has recently come back to life.
  • There are several reason for this including recent newsletter coverage and the fuel cell industry being on fire in 2014.
  • Most importantly though, the company has been able to execute on its strategy of focusing on its scandium property holdings and deliver impressive results in an extremely challenging market for critical metals – not to mention junior mining companies overall.
  • An understanding of the disruptive potential of scandium in commerce and electricity production should be a crucial aspect of any resource portfolio. 

 

The More Things Change.....