Top execs who say their shares’ gains might be ahead of themselves get a gold, or in this case, a lithium star, in my book.
Thus is the case with Kerry J. Knoll, the veteran mining executive who recently took over the captain’s seat at Canada Lithium (TSX: V.CLQ, Stock Forum). The tiny developer of the Quebec Lithium Project sealed a pact with Japan’s Mitsui & Co. for laboratory tested lithium concentrates for batteries and other industrial uses.
Canada Lithium’s shares, at a two-bagger 40 cents Canadian, are outpacing gains of most, if not all, lithium carbonate hopefuls that trade publicly.
“There is some stuff going on (at the company),” Mr. Knoll tells me from Toronto, “but I don’t think it warrants the action in the stock. It seems that lithium is at the top of the queue right now for speculators.”
The trading action in scores of small miners, wanna-be producers of lithium, moly, gold/silver or rare elements tantalum and niobium, is animated this summer. One can catalogue a hundred significant gainers on Stockstream -- flashing green, evolving 30% and 40% higher each day.
Matters not where these exploration companies are staking their 1-in 10,000-claim to mining reality: Wyoming, Nevada, Ghana, Colombia, Mongolia, Mexico, Indonesia. They are all swelling on volumes 30% to 300% greater than their 30-day averages.
I asked Mr. Knoll: Why the doubling of stock price in short order on little news? This just after a hullabaloo about Canada Lithium board’s terminating of now former CEO Judy Baker? Whom does he respect among the multiplying lithium ranks? (Lithium One (CNY) was the answer. He owns shares of the James Bay Lithium Project owner.) What’s next for tiny Canada Lithium and its impeccable Japan connection? How long to production at Quebec?
The 50-something executive has engineered more than a few success stories at gold and lithium miners. He knows his molybdenum economics, and Kerry Knoll also was a journalist at Northern Miner magazine and Canadian Mining Journal. (See previous article.)
Mr. Knoll says he never has worked with a junior that did not eventually become a producer. “The odds of finding them are 1 in 10,000,” he says.
His associated companies spanning three decades include Glencairn Gold Corp., which is now B2GOLD Corp. (TSX: T.BTO, Stock Forum); Wheaton River Minerals Ltd., which is now Goldcorp (TSX: T.G, Stock Forum); Blue Pearl Mining Ltd., which acquired Thompson Creek Metals; Thompson Creek Metals; and Golden Goose Resources.
Possible events that are triggering Canada Lithium’s moves higher, Kerry says, includes an imminent naming of new board members, a timeline to production of 1 million tonnes of lithium-laden ore by 2012 and the granting of more than $2 billion of USA government money to research lithium ion technologies for powering vehicles.
“People also may be coming aware that within lithium deposits you have spodumene, which is used in glass and ceramics,” he says. Spodumene is also known as lithium aluminum silicate.
I will add to Kerry’s list: articles naming the company and rare element wanna-bes as stock picks: like this one from the other day. (Some of these companies, such as TNR (TSX: V.TNR, Stock Forum) and Commerce Resources (TSX: V.CCE, Stock Forum), are actively pursuing their respective rare element fields with veteran verve and not a little savvy. Still, this in Mr. Knoll’s view, and my own, does not guarantee they ever will see light-of-production day.)
Above all, Canada Lithium has the advantage of sharing its lithium carbonate concentrate samples from Quebec with a manufacturer, Mitsui, that is willing “to give us its own customers’ specifications for what they need from the element’s properties,” Mr. Knoll points out.
Plain speaking terms: All lithium carbonates are not created equal among ever-evolving technologies for electric-powered vehicles and rechargeable devices.
Where does this leave you and me? With the reality of mining. Going from paper to rock takes 5 to 8 years, almost anywhere in the world with the possible exceptions of Wyoming, Mexico and Russia. That is, unless you are Red Laker Rob McEwen, in which case you can divide that number in half an make friends with all of the town’s folk, and your workers to boot … or you are Robert M. Friedland, in which case you can multiply that number by 1.5 or even two, frighten half the population of a hungry nation with your bold underground intentions yet still raise money from London and Dubai and Geneva participants, and still manage to reduce the jobless rate in a 50-square-kilometer patch of the mining district by 40 percent or more.
“There are 50 moly companies in Canada alone,” says Mr. Knoll, who uses molybdenum as an example. “Yet how many of us know that moly prices almost always track with the price of oil? Or that rare elements are peculiar markets with peculiar characteristics?”
Kerry Knoll continues, “There is plenty of lithium in the earth’s crust, but who is really getting it? In the next four years, we’ll see a shortage of lithium concentrate coming out of the ground,” says Kerry Knoll, who adds that investors can make one strong assumption – “Before this is over, there will be hundreds of companies staking claims to the lithium market.”
At the Quebec Lithium Project his company owns. Kerry Knoll’s small team (no public relations or Investment Relations department, he notes) has signed on several contractors who will survey “the old drill holes from the 1960s and twin some of the holes.”
He sees a “full-blown” resource estimate of the property sometime in first-quarter 2010. Then come the feasibility studies for a working mine, the pilot plant, collaboration with workers and community groups at the nearby town of Val D'Or. Of course, along the way are requests for cash in exchange for stock.
Canada Lithium’s last fund-raising was in June for $4 million. We’ll keep following the story.
Sentiment: See Bernie Schaeffer’s second issue of Sentiment magazine, just out. My article on gold sentiment is on Page Zero.
Photo: I took the above photo, and many more, at a mine tour last week on behalf of Ticker Trax. Name the mine or the company in the next 60 minutes following publication of this article and I will send you a copy of the next issue.
Active Trading: David Banister’s Active Trading Partners is now live at www.activetradingpartners.com. We at Stockhouse’s Ticker Trax are discussing collaborating with the New Englander’s Instant Value service.
David A. Banister, as you recall, analyzes price and pattern waves, sentiment, products and people. His track record is verifiably just short of excellent for May, June and July. I have known and followed the analyst since about 2002.
As a real-time test, aside from the 50 selections he examined and selected in a beta-test of his service, I personally went long on one of Mr. Banister’s choices: Medarex (NASDAQ: MEDX, Stock Forum) at approximately $8.15 a share. (Please see previous article.)
Bristol-Myers Squibb (NYSE: BMY, Stock Forum) announced its intention to purchase Medarex, a developer of auto-immune technologies and biologic drugs, some 36 hours later for $16 a share, some $2.15 billion. Mr.
Mr. Banister explains that Medarex’s shares had largely been abandoned in the marketplace. David, who is especially adept at choosing undervalued pharmaceuticals and natural resources companies, also notes that large companies are well aware that half of all top selling drugs in coming years will be so-called biologics, fashioned from living organisms, compared with less than a third of them at present. The typical premium in a cash or stock offer for a biologics company last year was about 80%.
New Orleans: When October rolls around,my calendar slots inNew Orleans as one of North America’s most diversified investment conferences. The New Orleans Investment Conference in previous years has given me great satisfaction meeting colleagues, subscribers and real miners, scientists and alternative economists/technicians. And making money.
I’ll be presenting a down-and-dirty workshop at this year’s gathering; I hope some of you can join me. Brien Lundin of The Gold Newsletter produces the conference, whichruns Oct. 8-11. Many of my trusted colleagues and investment sources attend the show. This year will bring an excellent crop of counter-clockwise and contrary thinkers in the areas of mining, emerging markets, commodities and life sciences.
The tradition of the New Orleans conference goes back to the mid-1970s, when gold was just catching wind at its back from ordinary investors, people in garage lofts who had little idea they could buy gold and silver.
Just as good are the select companies that decide to stake out Brien Lundin’s show with their executives. Several dozen companies in all, nearly all natural resources and about half of them worth reviewing.
If you are interested, please visit this link for registration. The last New Orleans show I went to, and spoke at, gave me at least two leads that changed my portfolio life.
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THOM CALANDRA of Ticker Traxhelps his audience find value in a quagmire of investment choices. Thom co-founded CBS MarketWatch andMarketWatch.com. As the voice of Thom Calandra's StockWatch and The Calandra Report, Thom pegged $300-ounce gold as a long-term hold.
HOLDINGS: Thom’s holdings are listed for all Stockhouse members on www.Stockhouse.com under the “portfolio setting” for user TCALANDRA. It is public and free to view. He and his family own recently minted gold and silver coins. He owns all 8 Planetary Prospects. He does not own Canada Lithium.
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