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Mining Legend Ian Slater Sees A Bright Future for Copper

Source: Streetwise Reports   10/26/2021

Streetwise Reports recently caught up with Ian Slater about his career trajectory from a chartered…

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This article was originally published by Streetwise Reports

Source: Streetwise Reports   10/26/2021

Streetwise Reports recently caught up with Ian Slater about his career trajectory from a chartered accountant to mining mogul whose companies include Libero Copper & Gold Corp., Zacapa Resources, and Outcrop Silver & Gold Corp.

 

Ian Slater is pushing ahead in the global mining industry in Canada, the U.S., and South America. The mining entrepreneur is currently involved in several copper mining projects. Slater sees a bright future for copper mining as electric vehicles and renewable energy industries boom. Unlike some in the sector, Slater didn’t launch his career as a geologist or engineer.

Slater started his career as a chartered accountant at Arthur Anderson and Ernst & Young. The entrepreneurial dream bit him early. “After working in the mining office in Vancouver, I transferred to Moscow, Russia. It was an entrepreneurial experience to recruit staff, develop contacts, and manage a steep learning curve,” Slater shared in an interview.

While in Russia, Slater started to develop the skillset that opened the door to many opportunities in the mining industry. “I transferred to Central Asia and started to help major mining companies negotiate stability agreements with the government of Uzbekistan,” he shared with Streetwise Reports.

Breaking new horizons for Andersen in Central Asia provided some essential learning experiences. “Entering a country and starting a business from scratch taught plenty of lessons. First and foremost was the importance of hiring a great team. Once you have the key people in place, everything else was much easier,” he recalled.

From Accountant to Legendary Explorer

By 2007, Slater was ready for a new challenge. He retired as a partner from EY and started his first mining venture.

By the mid-2010s, Slater’s mining ventures were starting to take off in several countries. Today, Slater’s companies have developed multiple successful mining ventures in Colombia. In addition, Slater has found mining opportunities closer to home in British Columbia. He is the founder
and chairman of Libero Copper and Gold Corp. (LBC:TSX.V:, LBCMF:OTCQB), a mining company developing copper projects in South America and British Columbia.

In addition, Slater is executive chairman of Zacapa Resources, which is focused on copper mining projects in Arizona and Nevada. Adam Melnik, CEO of Zacapa Resources, has worked at several resource companies, including Pembridge Resources and Vedanta Resources. Timothy MacIntyre, VP Exploration, has a PhD from the Colorado School of Mines and joined the company from Rio Tinto, with previous experience at First Quantum and Ivanhoe.

The company’s Red Top copper mine is located nearby several significant copper mines such as Pinto Valley (Capstone Mining) and Resolution and Superior East (Rio Tinto and BHP). The Red Top project will be drill tested in 2021.

Developing New Mines In Northern British Columbia

Slater’s Libero has recently found a significant mining opportunity in Big Red, a mining property located in British Columbia’s Golden Triangle. “We optioned the property in 2019 and started to explore it. Some prior exploration work had been here back in the 1960s and 1990s. All of those old records had to be digitized to guide our 2020 drilling efforts,” Slater commented.

In December 2020 Libero discovered a new porphyry copper deposit. In contrast to less developed opportunities, Big Red should be relatively economical to develop. The mining site is already connected to the local road system, is at a low elevation of just 700 meters and has relatively low snowfall.

Big Red is a set of 20 continuous claims covering 26,000 hectares (64,247 acres) in the northwest of British Columbia. In July 2021, the company started a 5,000-meter (16,404 feet) drill program to develop the mine further. The Big Red mining site is located approximately 833 kilometers (517 miles) north of Prince Rupert, BC.

Colombia: The Next Frontier in Mining

For years, investors had mixed feelings about Colombia. The country’s reputation for instability and violence is starting to fade away.

In reality, Colombia has become much safer in recent years. A 2020 ranking of the world’s most dangerous cities by murder rate includes multiple cities in Mexico and Brazil. By betting on Colombia’s improving reputation, Slater has found promising mining opportunities.

“We’ve been working in Colombia for more than a decade, and we’ve had no security issues. Yet, investor perception of Colombia has lagged behind the reality we see,” Slater commented.

“As the Chairman of Outcrop Silver & Gold Corp. (OCG:TSX.V; OCGSF:OTCQX; MRG1:DE), I’m excited about our recent silver discoveries in Colombia. Santa Ana was the largest colonial silver mine in Colombia, and so far we have mapped 65 kilometers of silver veins and drilled up to 10 kg/t silver. Jesus Velador, VP Exploration, recently joined from Fortuna to progress the Santa Ana project after making multiple high grade silver discoveries in Mexico.”

In recent company news, Outcrop announced that its four core holes extended Santa Ana’s Megapozo shoot by 100 meters, with hole 72 intercepting 2.18 meters of 1,098 grams equivalent silver per tonne and hole 73 intercepting 1.42 meters of 3,151 grams equivalent silver per tonne.

Navigating The Ups & Downs of Mining

The mining business is highly cyclical as commodity prices move up and down. That’s not the only challenge Slater had to overcome as a new mining entrepreneur. “When I started, it was right before the 2008 financial crisis. We acquired options on some projects to do exploration in Kazakhstan and were ready to go. When the financial crash happened, nobody returns your calls to finance grassroots exploration in Kazakhstan,” Slater commented.

Developing Mines in a COVID World

Fortunately, the COVID-19 pandemic has had a limited impact on Slater’s mining companies so far. “We had established teams in Colombia and BC, so closing international borders didn’t affect us. The main problem we’ve faced recently is long delays with lab work. The mining labs in British Columbia were backed up for months for much of 2020,” he recalled. These bottlenecks continue in 2021.

Earning A Social License

Running a successful mining business takes more than labs, geologists, and market demand. “In our projects, we’ve been focused on earning a social license. It is only possible to operate when the local community benefits from the mine and supports the project,” Slater commented. “Ian Harris, CEO of Libero Copper & Gold, has spent much of 2021 in Colombia meeting with people in the local community to understand and address their concerns,” Slater explained. “Ian  Harris was SVP and Country Manager for Corriente and was instrumental in obtaining a social license to develop the Mirador copper mine in Ecuador.”

The social license concept goes beyond running the occasional listening tour. Libero Copper & Gold also focuses on hiring local geologists and workers to develop the mine. Earning a social license to operate is part of the company’s success.

 

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Disclosure:
1) Bruce Harpham compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor/employee. He or members of his household own securities of the following companies mentioned in the article: None. He or members of his household are paid by the following companies mentioned in this article: None. His/her company has a financial relationship with the following companies referred to in this article: None.
2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: Outcrop Silver and Gold Corp. Click here for important disclosures about sponsor fees. As of the date of this article, an affiliate of Streetwise Reports has a consulting relationship with Zacapa Resources. Please click here for more information. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
3) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
4) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the decision to publish an article until three business days after the publication of the article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Outcrop Silver & Gold Corp., a company mentioned in this article.

 

( Companies Mentioned: LBC:TSX.V:, LBCMF:OTCQB, OCG:TSX.V; OCGSF:OTCQX; MRG1:DE, )

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Energy & Critical Metals

Capstone Green Energy Bags 3.4 MW Renewable Energy Contract In California

Capstone Green Energy Corporation (Nasdaq: CGRN) shared today a renewable energy project secured by its distributor, Cal Microturbine. The contract
The…

Capstone Green Energy Corporation (Nasdaq: CGRN) shared today a renewable energy project secured by its distributor, Cal Microturbine. The contract seeks to provide a 3.4 MW microturbine-based system for an unnamed customer in California.

No financial details have been shared but the firm said the system will consist of three Capstone Green Energy C1000S Signature Series microturbines and one C400S Signature Series microturbine, and are expected to use 100% renewable fuel.

“This order is indicative of the shift we are seeing to more renewable fueled energy projects in recent years,” said Capstone VP of Marketing and Distribution Jen Derstine. “In fiscal 2019, renewables made up 7% of our overall business and in fiscal 2021 they made up 13% of our business.”

The company also said that the customer “initially considered leveraging reciprocating engines” but eventually went with Capstone’s microturbines “for low emissions and low life cycle costs.”

Capstone Green Energy last traded at $3.28 on the Nasdaq.


Information for this briefing was found via the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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Energy & Critical Metals

Quantumscape Could Be Cheap Here From Stationary Energy Battery Sales

Quantumscape (NYSE:QS) is now well off of its highs, trading at $17.30 per share as of Thursday, Jan. 20. A month ago when I wrote about QS stock, it…

Quantumscape (NYSE:QS) is now well off of its highs, trading at $17.30 per share as of Thursday, Jan. 20. A month ago when I wrote about QS stock, it was at $23.57 per share. As a result, Quantumscape has fallen by $6.27 per share to $17.30, a drop of 26.6% in the last month.

The entrance to QuantumScape Headquarters QS stockSource: Tada Images / Shutterstock.com

At the time I wrote that Quantumscape, the lithium metal battery maker, was a bargain. As a result, that makes it an even better investment find this month. After all, since closing at $22.19 on Dec. 31, QS stock is already down 22% since the end of 2021.

As a result, QS stock is likely to be fairly volatile, especially until the company starts booking revenue.

Where Things Stand For Quantumscape

Investors still seem to be concerned that Quantumscape won’t start making any revenue until 2024 with its existing solid-state battery technology. This is based on page 28 of the company’s September 2020 investor presentation.

Based on these projections, which don’t seem to be in its August 2021 investor presentation, the company will have just $14 million in revenue by 2024. Next, in 2025, its projection is for $39 million.

In fact, it’s not until 2026 that Quantumscape will make any really significant revenue. The 2020 presentation shows its forecast for that year predicts sales of $275 million. The problem is that this is still five years from now.

That is a long time for investors in Quantumscape to wait for any kind of financial prospects for the company. That likely accounts for the high volatility in QS stock, at least in the past several months.

Moving Into Stationary Energy Uses

On Jan. 13, Quantumscape announced a new partnership that will allow it to produce batteries for more than electric vehicles (EVs). Its deal with Florence Energy (NASDAQ:FLNC) will allow it to introduce its solid-state batteries for stationary energy storage applications.

This is a whole new area that will open up large markets for Quantumscape, including utilities (battery-based storage on the electric grid.) The two companies will validate and test QuantumScape solid-state battery cells to be used in Fluence’s stationary storage products.

As Barron’s points out, batteries are also being used by utilities to help make renewable power generation available 24/7 by storing wind and solar energy.

Moreover, based on recent studies, the market for stationary energy products could be as much as $385 billion by 2030. If the company can garner even a 1% share in that business, its annual revenue will be $3.85 billion. That goes a long way toward justifying Quantumscape’s $8.24 billion market capitalization as of Jan. 20.

Valuing QS Stock

For example, let’s say it can produce $5 billion in sales from stationary energy by the end of 2030. Including 2022, that is nine years from now, and at a 10% annual discount rate, the present value factor is 42.4%. That implies the present value of $5 billion nine years from now is $2.12 billion today.

As a result, that puts the stock on an adjusted price-to-sales (P/S) multiple of just 3.88 times. This also does not include its expected revenue from EVs by the time.

According to its 2020 slide deck, the company expects EV revenue of $6.49 billion by the end of 2028, or seven years from now. With a present value factor of 51.31%, the present value of that EV revenue is $3.33 billion. So, including the $2.12 billion in stationary power revenue,  the total present value is $5.45 billion.

As a result, the present value P/S multiple is just 1.5x revenue. That is a very cheap price. Granted, this involves a lot of forecast revenue and major assumptions.

For example, if we set the discount rate to 15%, the present value of both streams of revenue works out to $3.86 billion ($1.42 billion for the stationary energy part and $2.44 billion from EVs.) That raises its P/S ratio to 2.13 times. This is still very cheap.

Where This Leaves Investors in QS Stock

The bottom line seems to be if you can stand the volatility, QS stock looks pretty cheap here. The fact that the company is now expanding into a new line of revenue could help it bring forward revenue earlier than from EVs.

That could also help reduce the volatility in the stock going forward. Nevertheless, investors in QS stock are going to have to be patient. They should expect a bumpy ride, but at least the company is trying to make its future revenue sources look more secure.

On the date of publication, Mark R. Hake did not hold any position (either directly or indirectly) in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Mark Hake writes about personal finance on mrhake.medium.com and runs the Total Yield Value Guide which you can review here.

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Energy & Critical Metals

Lucid Stock Still Looks Like a Bargain Here as Its EV Production Ramps up in 2022

Lucid (NASDAQ:LCID) has declined quite a bit from its peak price of $55.52 on Nov. 16. LCID stock is now down slightly over 30% to $38.72 per share as…

Lucid (NASDAQ:LCID) has declined quite a bit from its peak price of $55.52 on Nov. 16. LCID stock is now down slightly over 30% to $38.72 per share as of Jan. 20.

A Lucid (LCID) Air displayed in its own vitrine in Madison Square Park in New York. Lucid Motors started trading on the NASDAQ exchange via a SPAC merger.Source: rblfmr / Shutterstock.com

But the good news is that LCID stock has risen since its special purpose acquisition corporation (SPAC) merger deal closed in July 2021. That is effectively when the luxury electric sedan maker went public on the NASDAQ through a reverse merger with the SPAC.

Now that the company is public it has a lot of cash on hand to help finance its electric vehicle (EV) production ramp. For example, Lucid had over $4.8 billion in cash at the third quarter’s end. It also raised an additional $1.75 billion in convertible senior notes on Dec. 9.

So, depending on how much cash it burned in the fourth quarter, the company could have about $6 billion in cash or slightly more at the end of 2021. Based on its cash burn rate forecast, there will be plenty of cash left for its production ramp up over the next two years.

Where Things Stand With Lucid

For example, Lucid expects to deliver 49,000 EVs in 2023, up from 20,000 in 2022, according to page 65 of its slide deck presentation. That will produce $2.219 billion in revenue in 2022 and $5.532 billion by the end of 2023.

Moreover, page 9 of Lucid’s earnings slide deck shows its cash burn rate was $1.044 billion in the last nine months. It’s probably higher than that now, as production has started to ramp up in Q4. In addition, Lucid’s chief financial officer has indicated that its capital expenditure (capex) spending will be much higher in 2022. In fact, it will “pull forward” $350 million of future capex spending in 2022.

As a result, the CFO said it will have enough cash to get through 2022. This is probably because the ramp-up process will eat up a lot of cash, although revenue will still not be profitable in 2022 and at least part of 2023.

Moreover, the company will likely have plenty of opportunities during 2022 to raise additional debt capital. This is what Tesla (NASDAQ:TSLA) did when it first ramped up its production five years ago. So analysts are probably not worried about the company’s ability to survive in the near term.

Where Analysts Stand on Lucid

Most analysts on Wall Street are positive about LCID stock. For example, a survey by Seeking Alpha of five analysts that cover the stock has an average price target is $42 per share. That is 8.5% over today’s price of $38.72 per share. However, two of these analysts have a strong buy and one has an upper target of $60 per share.

Moreover, the TipRanks survey of six analysts shows an average price target of $41.20, or 6.4% over today’s price. Moreover, Yahoo Finance, which uses the Refinitiv analyst data, has a survey of four analysts covering Lucid. The average price target is $42.75, or 10.4% over today’s price.

What To Do With LCID Stock

Lucid now has a market value of $64.55 billion at $38.72 per share for LCID stock, according to Seeking Alpha. This puts it on a forward price-to-sales (P/S) metric of 11.7 times 2023 sales.

However, given its forecast sales of about $14 billion in sales for 2025, its forward P/S sales metric is 4.61 times sales. On an adjusted basis, the 2025 revenue works out to $8 billion (using a 15% discount rate for four years). That puts it on an adjusted P/S metric of just 8.1 times revenue.

That is not that expensive, especially if you compare it to Tesla which trades at a much higher P/S metric.

Therefore, investors should consider taking a stake in LCID stock now, if they don’t already have a position. Moreover, for those that do have shares, they should probably average down and lower their cost. This is because LCID stock is cheap and will likely produce a good return over the long run.

On the date of publication, Mark Hake did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Mark Hake writes about personal finance on mrhake.medium.com and runs the Total Yield Value Guide which you can review here.

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