Clean Energy Boom 2.0 – Get Ready! (June 30, 2017)

by FI Fighter on June 30, 2017

in Clean Energy, Cobalt, Graphite, Lithium

This feels like 2006/2007 to me… Everywhere you look, ain’t nobody really got a smartphone (electric vehicle)… Sure, your rich boss owns a Blackberry (Tesla Model S), but outside of the affluent, how many of your family, friends, neighbors, co-workers, etc. have one?

Perhaps a few… but mass adoption?

Not by a long shot…

And anyone own a house equipped with solar panels and grid storage?

Even less likely…

But that’s all about to change… and like a thief in the night it will literally be — Blink and you’ll miss it.

The clean energy/Electric vehicle (EV) paradigm shift is fast approaching…

Either tag along for the ride, or get the hell out of the way!

Regardless, this unstoppable force cannot be stopped.

To get the party started, we all have the following announcement to look forward to this weekend.

Original source.

Elon Musk and Tesla (TSLA) are all the hype and rage in North America, but let’s be real here — China Is About to Bury Elon Musk in Batteries.

See here.

And here.

Oh, and don’t forget this!

As Terrell Owens once famously asked — “All I wanna know is if you got yo popcorn ready?

From Sports Illustrated.

Lock and loaded.

 

Here’s my own clean energy stock portfolio.

Critical Elements (CRE.V/CRECF) is my favorite lithium idea. The company’s got an advanced-stage hard rock lithium project located in Quebec (one of the best addresses in the world for mining), arguably the strongest offtake agreement (partnership with Helm AG) in the business for a junior, and an outstanding management team (lots of ex-Rockwood Lithium guys in key positions). Further, the share structure here is very tight and thus shareholder friendly (minimal dilution due to excessive shares outstanding and in-the-money options/warrants); management deserves to be commended for a fabulous job done over the years maintaining a tight registry in the face of a most difficult commodities bear market. Lots to like here with this story and I’m expecting the share price to climb steadily higher from this point forward as the clean energy boom really starts to take flight and investors look for a high quality name to ride the wave up.

Birimian Limited (BGS.AX/EEYMF) has got to be the most undervalued lithium stock on the market. The company looks to be sitting on a world class hard rock lithium project in Mali that keeps getting larger and larger (better) with each subsequent drill program. Unfortunately, the old management team was comprised of a bunch of buffoons who many would argue did nothing more than create shareholder destruction (earlier this year they wanted to pawn off the prized Bougouni lithium asset for an insulting figure of only A$107.5 million). Luckily (for shareholders), a new board and management team has been put into place to rectify the mess the old crew left behind (shout out to the RM guys, MB/CA/others for making this happen!). The share price could go up 4x from here… and still be considered cheap relative to some of its peers (e.g. Altura Mining (AJM.AX/ALTAF).

eCobalt Solutions (ECS.TO/ECSIF) is my current favorite cobalt idea because like Critical Elements, the company owns its flagship asset, the Idaho Cobalt Project (ICP), in a very safe and secure jurisdiction (Idaho). When it comes to cobalt, most of the world’s supply comes as a byproduct of copper and nickel mines, but what makes eCobalt Solutions unique is that their cobalt project is a primary cobalt deposit (byproduct being copper and gold). Also, unlike most juniors out there who are only now beginning to explore for cobalt, ICP is very far along the track (it was put on care and maintenance a few years back due to declining cobalt prices that made the project uneconomical, ironically enough), and the pathway to commercial production is not that far away (around 2020 timeframe). The knock on ICP (and thus the stock) is that it’s a really, really small project, so investors don’t really get the “scale of economies” with a rising cobalt price. Still, I think the pros outweigh the cons and the leverage that this stock should provide to investors is plenty enough for me. Quite frankly, I’d rather go with a “smallish” project located in Idaho as opposed to chasing after massive elephant deposits that are based in the Democratic Republic of Congo… I’m generally a risk-taker, but in this instance, since I already own a few shares of Ivanhoe Mines (IVN.TO/IVPAF), I’d prefer not to “double dip” in the Congo…

Black Rock Mining (BKT.AX) is my “go to” name for a spec graphite stock. Unlike lithium and cobalt, graphite has lagged behind quite badly and the entire sector is pretty much in despair right now… Shares of BKT.AX have gotten CRUSHED so far this year, but to no fault of the company. Black Rock owns an extremely high grade + high purity + good size graphite project, so if they can’t make it, I really doubt many other juniors will. The major red flag with this stock is that the deposit is located in Tanzania, which has become sort of a basket case in mining in recent months due to proposals to change the mining laws in the country, which could alter existing contracts… The bad news is starting to scare away investors and who really knows how much worse things will get? For myself, I invested into shares of BKT.AX before all this news hit… I’ve only got a spec position, which is plenty good enough for my goals. I’m not selling, but I’m certainly not adding any more shares either.

Pilbara Minerals (PLS.AX/PILBF) has got a world class hard rock lithium project located in a prime jurisdiction, Western Australia. Pilbara is also less risky than my other clean energy stocks because their Pilgangoora project is fully funded, permitted, and ready to start construction any minute now. However, because of all the positives this story has going for it, unfortunately, shares just aren’t all that cheap right now and the market cap is trading close to ~A$640 million fully diluted (already priced at/near fair value, given where Pilgangoora is at in its stage of development). Further, there are just way too many shares out (around ~1.7 billion shares fully diluted, taking into account options/warrants; talk about the opposite of a tight share structure), which further restricts the share price from going hyperbolic anytime soon. In other words, PLS.AX/PILBF is relatively low risk, but the upside is somewhat capped, especially when compared to the other picks in my clean energy portfolio. I don’t mind owning some shares of Pilbara, but it’s not the anchor of my portfolio by any means.

 

So, there you have it.

 

My own personal list of investments and how I plan to play Clean Energy Boom 2.0.

 

Over time, I may look to add/sell positions as I do more research and come up with new ideas.

 

There is certainly room for the addition of another cobalt play in the portfolio and that’ll be my main focus moving forward.

 

Here are some more general clean energy (lithium/cobalt/graphite) mining stocks for you…

 

As ALWAYS, please do you own research and due diligence before putting any of your own capital at risk!

 

Oh, and here’s some more exciting news that hit the wire today!

From Auto Blog.

The next major revolution is nearly upon us!

From Forbes.

Get yo popcorn ready!

{ 9 comments… read them below or add one }

1 HRCNo Gravatar July 3, 2017 at 11:27 am

Critical Elements was my largest holding. I took a big gamble after finding out about it from you but did much research before I actually clicked buy. Up over 130% since last year and free carried now. Thanks for the research and background.

GDQMF took a big plunge today, day to day? Or did I miss something?

Reply

2 FI FighterNo Gravatar July 3, 2017 at 10:35 pm

HRC,

Congrats on the big win with CRE, that’s tremendous! Nothing beats being free-carried in a good idea. 🙂

Yeah, GoldQuest (GDQMF) sold off in the OTC market today… I didn’t see any news so for now I think it’s an anomaly… We’ll find out tomorrow when Canada opens for trading (GQC.V).

Cheers!

Reply

3 No Nonsense LandlordNo Gravatar July 3, 2017 at 12:06 pm

Maybe fuel cells would be the next thing after lithium? Batteries have limitations, but fuel cells will eventually over take batteries.

I stick with my ETFs… No worrying about them, let the dividends come in.

Reply

4 FI FighterNo Gravatar July 3, 2017 at 10:37 pm

Eric,

I doubt fuel cells will catch on at this point… It looks like all the majors are focusing on lithium ion electric vehicles.

Congrats on the ETF… Buy and Hold Forever and collecting rent checks/dividends on a monthly basis is the END GAME for early FI… Unfortunately for many trying to get there and maximize it, it takes a HUGE base before we can call it a day…

Although I could do that right now with my portfolio, I’m being more aggressive and taking large risks to try and turbocharge the cash flow.

Take care!

Reply

5 alNo Gravatar July 4, 2017 at 1:37 am

Fuel cells will never amount to anything substantial. They need a lot of palladium / platinum to be doing their job (several grams per fuels cell). Both metals are very rare and mostly mined in South Africa, who’s busy destroying it’s mining sector (“power to the blacks movement”). To scale fuels cells up, you need mammoth amounts of one of those rare metals, and given that the yearly global refined production is in the 100’s of tons, not 1000’s of tons, they fuel cells are never to amount to much until another metal is found as replacement for the two scarce metals. So simply avoid the FC space, there are enough alternative ways out there to be invested.

Reply

6 TTNo Gravatar July 3, 2017 at 1:28 pm

Hey,
Have you looked in to Cobalt 27? Just listened Palisade Radios newest episode and heard about this for the first time. I think I have read everything that can be found in internet but having hard time assessing if it’s good investment or not.

Cobalt 27 idea is to be the Silver Wheaton to Cobalt and at least the idea sounds good..

Reply

7 FI FighterNo Gravatar July 3, 2017 at 10:39 pm

TT,

Yes, I caught that interview and saw the Cobalt 27 advertisement/press release… Sounds interesting, but it’s too new and I’m naturally a cynic/skeptic, so I’ll give the story time to play out before I form any kind of opinion.

There are some cobalt stocks I like out there right now, so I’m going in that direction until I learn more about other opportunities.

All the best!

Reply

8 alNo Gravatar July 4, 2017 at 1:55 am

“The clean energy/Electric vehicle (EV) paradigm shift is fast approaching…
Either tag along for the ride, or get the hell out of the way!
Regardless, this unstoppable force cannot be stopped.”

It is not because Elon Musk is doing a great promotion job that everyone is convinced of this paradigm shift. It is not because the Chinese are once again investing mammoth amounts of money in a certain sector, that this sector will amount to a lot of stuff down the road …

Let’s see if this unstoppable force could be stopped, when you look deeper down:

1. If 100 000’s of people start to buy heavily subsidised EV’s, the govmint will be forced to cut the subsidies to save their own bank account. If you don’t believe me, just look at green-to-the-bone Denmark, who canceled them all just because of that reason, which immediately led to a >50% collapse of expensive symbol status Tesla sales, and mostly no other EV sales being done anymore in Denmark, because they couldn’t compete anymore with much cheaper fuel efficient ICE engine car proposals (given the pathetic driving range of most EV outside of Tesla’s proposal, compared to their price tag when not being subsidised).

2. If 100 000’s of EV’s start being sold, and all recharge at the same time (early at night) good luck keeping the lights on in the neighborhood if the electrical grid is not improved all over the place. How long before the mass screaming against EV’s start once that happens ? If you don’t believe me, just look at the 1970’s EV “revolution” when oil was extremely expensive and long lines were formed at every gasoline distribution outlet called a “gas station” because of gasoline rationing ….

3. Battery home storage is a luxury item. With 5000 to 10 000 loading cycles before it has to be replaced, let’s see how many idiots will pour their money to buy that 10kWh storage “solution”.

4. With oil “mining” being dirt cheap once again for the next decade or two, good luck competing against cheap gasoline providing 100’s of miles of driving range for a $35 refill done in 2 minutes…

Reply

9 FI FighterNo Gravatar July 4, 2017 at 6:27 am

Al,

Thanks for sharing your thoughts. You’re right, it’s not all about Elon Musk, but Tesla has always been needed to sell the EV story and they have done an amazingly successful job of convincing the masses that this EV paradigm shift is indeed possible. I would disagree in regards to China though, because it is ALL ABOUT CHINA as that’s where the major growth is going to come from.

1. EVs are subsidized for now, but the costs to produce these battery packs is greatly diminishing… With all new technology, it starts off that way but deflation soon sets in as technology improves and refinements are made… Remember how much your first PC cost? Smartphone? The costs will come down, it just takes time… We aren’t even done with the first inning yet of this game; let’s check back in ten years and see where prices are at.

2. Base load power generation and the requirements needed to fill any kind of EV “surge” or demand will work in lockstep… EV adoption will be exponential, but even so, it’s not going to go from 0 to overloading the system all in one shot… The infrastructure needed to support these new vehicles will be implemented in conjunction…

3. Yes, grid storage is a luxury item right now… just like solar cells once were, but look at the cost per kWh for solar… It has declined enormously over the last decade and it’s only a matter of time before it becomes cheaper than fossil fuels, in many parts of the world it already is.

4. It will take time, but we are going the way of 100% electric vehicles… All the major Silicon Valley companies are investing in this space and they are betting big… China needs to go this route for environmental reasons, their air quality is abysmal and must be fixed. Norway has plans to ban new petro vehicles by 2025, and Germany has committed to going all electric as well.

http://www.huffingtonpost.co.uk/entry/german-lawmakers-vote-to-ban-petrol-and-diesel-cars-by-2030_uk_57fcee9ae4b01fa2b9055c11

In regards to range and charging time, again, we are at the infancy stage of the EV revolution… Technology is constantly improving… When the internet first came out, we were all plugged in using dial up 56k that would disconnect and crash all the time… It used to take me like 5 minutes to load a single webpage… but look how far we’ve come since then!

Please see this post I wrote last year:

http://fifighter.com/links/2016/06/disruptive-technology-always-underestimated/

And this video is very informative (albeit pretty darn bullish as welll):

https://www.youtube.com/watch?v=Kxryv2XrnqM

Cheers!

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