“Worse than both the Titanic and Hindenburg Disaster combined…” Exclusive quote from, Peter Epstein, CFA, MBA of EpsteinResearch, for this article, authored by Peter Epstein, CFA, MBA. What is he referring to? The natural resources meltdown. Most commodities are down substantially from 2011 highs. Unsurprisingly, companies in these sectors have been demolished. For instance, the TSX Venture Exchange Index is down 77% from its 2011 high.
Industrial / base metals down the most, please sell chart
This infographic, sponsored by Dajin Resources’ (DJI:CA) (DJIFF) (Frankfurt: A1XF20) grabbed my attention, (the way infographics are supposed to!). I’m a fairly prolific writer about lithium companies. I do CEO and lithium expert interviews. I follow industry news. This infographic is very well done, I’ve seen my share of bad ones. Rule of thumb, if data is 2-3 years, pass…This one has a metric tonne of information in it. Each graph, image and chart is on target. I feel as though the designer effectively summarized several of the articles I’ve written. With limited space in an infographic, herein I follow up with more detail on the actual base metals debacle.
Industrial / base metals such as copper, lead, zinc and nickel are down the most from 1/2/14, or ( ~ 650 days or ~ 450 trading days) ago. In the chart below, the performance of select base metals, and a few others is compiled. One can choose the biggest surprises, I think that copper and oil are most shocking. Who doesn’t love infographics? For another detailed, informative and entertaining look at, “Canadian Venture Market Bottoms, (From 1981 to 2014)” please visit Dajin Resources’ website, more specifically Dajin’s sponsored infographics page. Once there, scroll down about 12 inches ( ~ 30.5 centimeters ) and click on the infographic on the right. The above mentioned infographic is there and 4 or 5 others.
What has caused this devastation?
Is it China’s slowing economy? A slowing of annual GDP growth from 7%-8% down to 6%-7% shouldn’t be the single most significant factor. Although the second largest economy, the combined GDP of the U.S., European Union and Japan is 4 times that of China [IMF, 2014 data]. A list of the top 100 countries ranked by GDP growth does not include the U.S., European Union or Japan. The IMF reports that estimated global GDP growth in 2015 could be the lowest since 2009, an anemic 3.1%. That’s a simpler answer than blaming it on China.
Humans need cleaner energy. Unacceptable air pollution in China, Volkswagen’s diesel emissions scandal, (background story is that burning natural gas is cleaner than coal, but extracting it is fraught with environmental challenges not well publicized by the companies). There’s more, growth in global coal-fired power plants, decade + timeframes for new nuclear power plants, Alberta’s giant, dirty, controversial oil sands industry, these are growing problems looming today. Clean energy and storage of renewable sources REQUIRES Energy Metals.
What is Clean Energy and where can I get some?
Clean energy is our best hope. Some of the more important base metals are known as, “Energy Metals.” These metals are used in the generation or storage of energy. Key energy metals include graphite, cobalt, copper and lithium. Today the predominant battery for giant electrical-grid scale storage applications and Electric Vehicles is lithium-ion.
Strong evidence of the demand for lithium can be seen in its pricing history vs. other commodities. According to Simon Moores of Benchmark Minerals Intelligence, lithium carbonate prices are up 4 years in a row and up again this year. Companies producing energy metals, or looking to do so, are attracting attention. The lithium sector is squarely in the middle of the clean energy imperative. One of the safest jurisdictions on the planet, Nevada, U.S.A is home to one producer and at least 5 public aspirants. Dajin Resources is right in the mix of a land grab in the Clayton Valley area.
Land grab well underway, Dajin sitting on nearly 7,000 acres in Nevada
Royce Resources and Ashburton Ventures recently jumped aboard the clean energy train. Royce Resources is a company worth watching, it has convinced legendary mining mogul Frank Giustra to be actively involved, a clear vote of confidence for the entire Nevada lithium sector. Other public and private companies are staking ground and contemplating ways to get exposure to lithium’s bright future in Nevada. Although early-stage, Dajin is probably 12-18 months ahead of these start-ups, and owns 100% of 6,860 acres (2,776 hectares) right in the heart of the lithium play. With two prospective properties in Nevada, Teels Marsh and Alkali Lake, Dajin has earned a well deserved seat at the table.
Importantly, Dajin has a strong team and Technical Advisory Board, absolutely crucial in any high growth sector. Every company makes that same claim, readers are highly encouraged to view the credentials for themselves. Six of the eight bios demonstrate seasoned executives with vast, global experience, several including backgrounds in lithium, one a globally recognized geoscience expert with more than 30 years experience. Another with his most recent lithium experience as Vice-President of Exploration for Lithium Americas Corp. (acquired by Western Lithium in September). These are explorers, builders, experts in their fields. Dajin is no fly-by night operation.
There’s no way around the fact that lithium demand will grow for many years if not a decade or more. The question is how fast. The dreadful base metals depicted above are all in the same boat, waiting for an announcement of China’s next stimulus package and hoping for a broad sector rally leading up to PDAC in March. In many cases, base metals used widely today can be replaced by substitutes. Largely untrue for lithium, at least at commercial scale anytime soon. Although lithium-ion batteries are centered on lithium, the overall cost of the lithium in the battery is minimal. Therefore, lithium has the hallmarks of a specialty commodity, a metal that is not a commodity by any conventional definition, but an incredibly important specialty metal. Dajin Resources is in the right place at the right time looking for the specialty metal of the future.
Disclosure: Dajin Resources has a small market cap. Stocks with small market caps are highly speculative, not suitable for all investors. I, Peter Epstein, own shares of DJI.V. Mr. Epstein is not a licensed financial advisor. Readers should take that fact into careful consideration before buying or selling any stock mentioned. Readers are encouraged to consult with their own investment advisors before buying or selling any stock, especially speculative ones. At the time that this article was posted, Dajin Resources was a sponsor of: http://EpsteinResearch.com
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