update from JSL / HaberMe and other members of Stockhouse wanted to wait before we had a chance to discuss directly with JSL before we post it, but since it is taking much longer than expected to reach him and I can feel the frustration growing, here are some updates that we got.
(FYI, I have the same big frustration for not getting any news, update or anything from management…)
That been said, JSL and Haber had a Zoom meeting with Canaccord investment advisors about two weeks ago and a friend of mine had a chance to assist it.
Here is what came out of it. Cannaccord started by saying that CRE is their best play in the lithium sector, a company that they love and that has enormous potential!!! (I hope it is true, but unfortunately, I don’t see them buying too much to support the talk…)
JSL talked about the major shareholders, mostly stuff that we already know.
-Management owns about 10 %,
-Macki owns 15%,
-Raymond James 25 % (I believe these are hold numbers for having seen them before in older corporate presentations. I wouldn’t be surprise if Raymond James owned much more than 25 % as we speak, as we have seen them buying a lot more in the past 2 years.)
- 2 independent investors that own 9-10 million shares
-All together about 65 % of the stock is owned by strong hands according to JSL.
If we do the math that leaves roughly 60 million shares for the open market minus the millions that we own here all the longs together. Some could consider this a tight play and that might explain why JSL was so confident in the past that once it starts moving up it could go up fast. (But we will have to start going up at one point to appreciate it. It would be more than time!!!!)
Haber talked once more about the quality of lithium that we have compared to the rest of the world. He mentioned that Australian hard rock plays have more Mica, Iron and other impurities, that it is hard to make the conversion to hydroxide in China. He said that the low level of impurities that Rose has is a big advantage compared to other producers.
Haber mentioned that everyone in the industry is bullish about the 1 million tone of lithium that will be needed in 2025-2027. He said that the EV market is picking up rapidly, the sales are up, way more than previously anticipated.
He said that there is indeed an oversupply for the lower quality spodumene, but not for battery grade. He reiterated that the Australian product is hard to convert to battery grade, the low impurity that we have is much easier to convert.
He said that the present market conditions are not relevant to CRE, the 2025-2027 anticipated market conditions are what we have to focus on. Out of the 1 million tone that will be needed, 600K could come from existing producer, the other 400K will have to come from new resources such as CRE. Haber talked about the market that is turning around, that there is great value to be added, great opportunities once more to join lithium stock.
JSL or Haber said that Rose is one of the best available source for the glass sector, because of our low impurities.
JSL said that once we start producing 50K T of concentrate will always go to the glass sector, it will not be converted as it is a very high margin product and the demand is there. They will use that money to help finance phase two of the project. (That was a new information to me, I don’t remember having heard that from JSL in the past, but I could be wrong.)
I knew we were able to sell to the glass market and I know we can see the 50 T of tech grade in the corporate presentation, but I didn’t know they would not ever convert it and use it only for glass even once phase two is build.
JSL said that 186K T of concentrate will be converted. (both JSL and Haber keep on talking that Hydroxide is what the market is going for. So, I would only assume that phase two will be hydroxide, but it has not been 100% confirmed yet.)
JSL talked about the cost to produce the spodumene, he said that it is about 420 $ / T for Galaxy vs 344$ / T for us (US $), that Galaxy recovery rate is 65 % vs us that is 85 % (we don’t know if he was referring to the numbers of the Australian Galaxy play or the future one in Quebec. I haven’t done the research, but it could have been a way for him to put things in perspective after what Galaxy had said in their report.)
JSL reiterated that there is lots of potential to expand the mine with many other zones from the big land package CRE has and that are very promising.
JSL said that they already have the permit to move the hydro line and they will be able to work on it as soon as we have the permits for the mine and financing completed.
Concerning the permits, JSL said this:
- That they have completed the last round of question for the provincial, they expect the provincial permit by the end of summer
- They are planning to finish the last round of question from the federal by the end of July (around now) and expect the permit by fall or December.
- They are not anticipating a third round of question
JSL said that construction of the mine is planned for spring 2021 as it will be a better time to start construction instead of starting in the winter. Production early 2022.
JSL and Haber said that the group / groups that they are talking with, want to make sure that no more money will be needed afterward to bring the project to the finish line.
That they are planning to finance the mine with a 50 / 50, dept / equity ratio.
I know the last time we met with JSL in October 2019, he said that he was planning to finance the project by selling equity of Rose, not CRE. He was planning to give no more than 25 % of rose and that he wanted to minimize dilution. If at one point the price was right, they could dilute to get more money, but if that would happen, he would not dilute above 200 m shares. Let’s just hope that it is still the plan and that Covid didn’t change the numbers too much. In the corporate presentation, the Capex is still showing 341M $. Ideally, if we can get around 170 M $ from a partner for let’s say 25 % of Rose and the other 50 % from placement Quebec and / or bank loan, etc, it would be awesome in my opinion. (Many options would be better than this stagnant situation we are in right now…)
JSL mentioned that we expect Primero to release the feasibility study for phase two early 2021.
On a more personal note,
after hearing all of this, I looked once more at the team we have in place and thought of Dr Haber. That guy is a real gem, every time he talks you want to listen to him. I remember him in the last AGM, he really knows is stuff and he is fun to listen too. His reputation is outstanding in the sector as JSL and others keep on reiterating. That guy should be the face of this company. It is a real shame that we don’t hear more of him.
When you look at all the CRE advantages that have been named over and over on this board. Stable jurisdiction, cheap electricity, roads in place, train track not too far etc… Plus Management that keep on repeating that we have such a nice resource of such a great purity, that we are one of the best if not the best available. Add to that the awesome team we have, primary Haber, Brune, Primero… I can’t stop scratching my head when I look at where our stock price is. How easily manipulated this stock is week after week.
There is just not enough people that know this company, barely anybody really talk about us, but we are supposed to be the next best thing out there, go figure…
I know JLS told us in the past that promoting costs a lot of money and they are not considering that it is the time to do it yet. At one point it will have to change, there is promoting like crazy and just having a normal coverage witch we don’t even seem to have. Personally, I find that it looks like as it is almost done intentionally for reason that we can only speculate on, but for which we will never really know.
I find that we should have much more interest from the investment community and we should be much higher if we have such a great play, especially with all that we have accomplished so far. In my opinion, it would be easy to move the stock higher if management really wanted it. Let’s hope it is all about to change and that management floods us with nice PRs very soon, permits, partner, increase of the mine size, etc…
We were supposed to talk to JSL lately, but unfortunately it was not possible, we are waiting for a call back on his part. We will make an update if we manage to have that chat with him and something new comes up.
Take care every one.