The Colombian sun rises for Auxico Resources with a mining permit for its rare earths and PGM project

A pleasant surprise is always a nice thing. These days it seems that any time you see the S&P 500 or the Nasdaq in positive territory on the day it’s considered a pleasant surprise. But that’s not what I’m talking about. What I’m referring to is a situation where you are a junior mining company in hot pursuit of a valuable and globally in-demand commodity, like rare earths, and you come across decent grades of gold, platinum and titanium, at surface no less. I believe that is what you call “having your cake and eating it too”, if you are at all familiar with that expression. If that phrase means nothing to you, then let’s stick with a pleasant surprise.

The company that looks like it’s blessed with an abundance of riches is Auxico Resources Canada Inc. (CSE: AUAG), a Canadian company engaged in the acquisition, exploration and development of mineral properties in Colombia, Brazil, Bolivia, Mexico, and the Democratic Republic of Congo (DRC). They are a combination project generator, miner, processor and marketer all rolled up into one, with a focus on the production of critical minerals and high-value metals, including niobium, tantalum, platinum group metals (such as platinum and iridium), and rare earth elements. Additionally, Auxico is the exclusive trade agent for rare earth concentrates from the DRC. The Company owns directly or through joint ventures, mineral rights in Colombia, Bolivia, and Brazil, with access to close to 4 million tonnes of critical minerals and rare earth elements – the largest deposits outside of China.

But today we are going to focus on their Minastyc Property in Vichada, Colombia, where Auxico recently announced the granting of a mining permit (specifically a Work Plan Authorization) from the National Mining Agency of Colombia. This is a very significant development for the Company because Auxico will now be able to move forward with the formal purchase of the Minastyc Property from its current owner. The approval of the Work Plan was the last condition in the purchase agreement. This leaves one step left, a site visit by representatives of Corporinoquia (the Colombian environmental agency), before the Company will be able to move equipment on site, including heavy machinery for bulk sampling and a processing facility, which will enable Auxico to move towards making a production decision for small-scale mining operations.

In the meantime, Auxico has been busy at the Minastyc Property having previously announced a NI 43-101 Technical Evaluation Report on March 28th of this year with highlights including a 3.2 tonne bulk sample from two locations of the Area 50 pit resulting in a 7.7 kg fine concentrate returning Total Rare Earth Oxides (TREO) grading 68.32% and 65.67% respectively from the two locations. Back in October 2021 the Company reported the discovery of platinum group metals (PGM’s) in samples including Sample 1 with 42.8% titanium, 25.4% niobium, and 8.3% tantalum while Sample 2, found in a different zone on the property, originating from a rock sample containing 30.4% tantalum, 23.3% niobium and 24.5% titanium.

But the fun doesn’t end there. The latest results published by Auxico show gold, platinum, titanium, zirconium and hafnium test results on samples taken from the Area 50, TA Area and two other areas from the Minastyc property. At this point, it’s almost easier to talk about what metal or mineral they don’t have on this property. All joking aside, highlights from the latest fourteen samples, taken from pits in the first metre from surface in these areas, gave an average head grade of 9.5 g/t of gold, and 13.5 g/t of platinum from 8 of the 14 samples that returned grade. Additionally, the Company reported the discovery of 24.5% titanium, 7.8% zirconium, and 2.4 kilograms of hafnium. And if those grades aren’t enough to get your attention, then perhaps the fact that the Company suggests that based on these field observations and from the satellite interpretation, an estimated minimum of 250,000 tonnes of material is represented by this Ferricrete layer in the first metre from surface at Area 50 and the TA area.

All this explains why Auxico is presently coordinating the site visit with Corporinoquia and expects the visit to occur near term. With these kinds of grades literally at surface they could be generating a decent revenue stream in short order to help finance further exploration, a preliminary resource estimate or whatever they determine is the best use of funds.

With a market cap of C$55 million, this isn’t one of those undiscovered companies that provides an almost free option on their exploration. However, with almost every valuable hard rock commodity on the planet concentrated in one spot with pretty impressive grades, any expansion in size could be a boon to shareholders. And I didn’t even touch on the myriad of other interesting opportunities going on at Auxico Resources that you can explore on your own at their website.

With technology for the real world, Zentek’s graphene nanotech masks are now on store shelves

At the start of the year, I was asked to pick a name that I thought could be the “stock to watch in 2022”. Naturally the tendency is to step a little further out the risk curve because where’s the fun in picking something like Enbridge, Inc. (TSX: ENB | NYSE: ENB) and being up 15% year-to-date plus dividend when you could be up 130% over that same time period with a stock like Ensign Energy Services, Inc. (TSX: ESI). In reality, I would have been a hero if I had picked either of those in light of what the majority of the market has done since the start of 2022. However, I went down the technology route (or should I say rout) and the name I picked has been swept lower in a market beating up anything resembling tech. On top of that, the company I selected was also the focus of a short report, although that appears to have been addressed in March and seems to be a non-issue. But technology stocks are still seeing some pretty unpleasant days here and there, and the pain may not be over yet.

Nevertheless, until the year is over, I still have time to be vindicated with my 2022 pick – Zentek Ltd. (NASDAQ: ZTEK | TSXV: ZEN), which is certainly doing better than Shopify, Inc. (TSX: SHOP | NYSE: SHOP) but sadly that’s not setting the bar too high. Reader’s will recall that Zentek is an IP development and commercialization company focused on next-gen healthcare solutions in the areas of prevention, detection, and treatment. Zentek is currently focused on commercializing ZenGUARD™, a patent-pending coating shown to have 99% antimicrobial activity, including against COVID-19, and the potential to use similar compounds as products against infectious diseases.

The focus on ZenGUARD™ is paying off with an announcement last week of the sales and distribution of ZenGUARD™ Masks through Mark’s, a member of the Canadian Tire Family of Companies. Mark’s, which operates over 380 stores across Canada, has placed an initial order for ZenGUARD™ coated masks to be sold at select stores and online. Mark’s VP Iain Summers is quoted as saying “We are relentlessly focused on innovative new technologies and products that help keep Canadians safe and comfortable. Zentek, and their ZenGUARD™ masks are a great made-in-Canada innovation using a technology that, when applied to essential masks, provides ultimate protection, while maintaining comfort and breathability. It’s the right fit for our customers.” This news helped Zentek stock rally 14% on the day.

It was the progress the Company was making with ZenGUARD™ and their other unique IP opportunities that led to Zentek being my stock to watch. Other technologies under development include an icephobic coating that can potentially be used to improve aircraft and drone safety and sustainability. The Company anticipates applications for aircraft, wind turbines, ocean vessels, and building structures to increase safety and efficiency outcomes in ice-forming weather conditions. The Company recently reported excellent results in three rounds of testing of its icephobic coating, including laboratory tests, real-world flights and applications related to drone operations in adverse weather. Next steps include testing its coating for sand and rain erosion, and other tests are being planned that will evaluate the coating as part of a hybrid ice protection system, where the icephobic properties are combined with a heated de-icing system with the aim to improve efficiency of current ice protection methods used in general and commercial aviation.

In April, Zentek provided an update on a previously awarded R&D test contract through the Innovation Solutions Canada (ISC) Testing Stream to test ZENGuard™ coated HVAC filters with interest from 3 different units within the National Research Council of Canada. After completion of Phase 1 testing where its ZenGUARD™ coating was successful in reducing airborne organisms from passing through coated filter material while not inhibiting air flow, it will now proceed to Phase 2 testing within its ISC Testing Stream contract. Phase 2 testing in a real-world classroom environment is aimed to generate additional safety and efficacy data. The importance of indoor air quality and improving health is a top priority for numerous organizations globally, including the Canadian and U.S. governments, and could be an important commercialization milestone for Zentek in this critical area.

Sure all these initiatives were already on the go at the start of the year, but in my opinion, the Company is making great strides in pushing these projects to the revenue generation stage. In fact, ZenGAURD™ actually started generating revenue in the final quarter of 2021. Additionally, Zentek raised C$33 million in January and have a quarterly cash burn rate of roughly C$2-C$2.5 million per quarter (and no debt), so they should be fine for available capital. With a market cap of roughly C$247 million there are plenty of creative and unique opportunities being developed to propel this Company into the future and vindicate my selection.

In a week of losses the market seems to think Westward Gold might be on to something

It’s not often that you see a junior mining company release a general corporate update, with no new drill results, that sparks a 45% rally in the stock with a dramatic and sustained increase in daily volume. Especially over the last two weeks, which hasn’t exactly been a “risk-on” type of market. Naturally, I was inclined to have a look and see what all the fuss was about.

It may come as no surprise that I had no idea what most of the somewhat technical press release was trying to convey. My commerce degree and business experience have not blessed me with the ability to interpret geologic concepts. I can grasp oz/tonne, true width, depth, inferred resource, etc. but that’s all just math (which my degree and business experience did equip me to comprehend). But when it comes to hyperspectral imaging, induced polarization survey, or the role of compressional structures on stratigraphy, you might as well be speaking another language, specifically one I don’t understand. However, the market has spoken and the market is always right, so even though I may not understand it, it appears that it is pretty good news.

The company that has generated this recent buzz is Westward Gold Inc. (CSE: WG | OTCQB: WGLIF), a mineral exploration company focused on developing the Toiyabe, Turquoise Canyon, and East Saddle Projects located in the Cortez Hills area of Nevada. They’ve assembled a 3,830 hectare land package in the heart of Nevada’s Battle Mountain-Eureka Gold Trend, one of the most prospective mining districts in the world, approximately 10 kilometers southwest of Barrick Gold Corp.’s Cortez Hills mine and adjacent to Barrick’s past producing Toiyabe-Saddle Mine.

The press release that caught the market’s attention was a seemingly run-of-the-mill corporate update, but I guess the devil is in the details. I’ve already stated that a lot of the technical information was over my head but I’ll try and interpret what made this particular update a little more special. It was a very thorough summary of the last year’s activity, but there wasn’t a lot of news that hadn’t already been disclosed. As near as I can tell, only the IP Survey, possibly reinterpretation of legacy geophysical data, and the combination of this data, with previously disclosed information, to come up with new stratigraphic findings are new to the public domain. So the excitement must lie somewhere within there.

Highlights from the 17 line-kilometer IP Survey point to the main host rock at the Historical Resource at Toiyabe (~173 koz at 1.2 g Au/t) being interpreted to also be present at Turquoise Canyon, under only 150-250 meters of cover. The chargeability model confirms two near-term step-out targets at Toiyabe and further informs priority targets at Turquoise Canyon. Reinterpretation of legacy geophysical data confirmed the IP findings related to the presence of favorable Lower Plate carbonates below the Upper Plate cover at Turquoise Canyon and further understanding of the geometry of the carbonate window and associated structures at Toiyabe. Certainly, positive news but even a layman like myself is struggling to find anything market-moving here.

Toiyabe-Saddle Mine North Pit. Source: Company website

That suggests it’s all down to the new stratigraphic findings (or I’ve completely missed the boat on this one, which is entirely possible). Cross-section analysis provided for a new understanding of the role of compressional structures on stratigraphy, the dip of mineralization, and a potential link between mineralization at surface in the Toiyabe-Saddle open pits and at depth at Toiyabe. Repetition of favorable lithologies (stratigraphic duplex) appears to occur beneath the Historical Resource. The Company believes this confirms that gold mineralization is hosted in the Horse Canyon and Wenban Formations, which are documented gold hosts at the nearby Pipeline, Cortez Hills, Goldrush, and Fourmile deposits.

If that is the good news, I will always be late to the dance because I look for something more understandable (to me), like drill results, to get me excited. To that end, the Company is proceeding with a 12-15 hole, 4,000 meter drilling campaign scheduled to begin in June, focusing on several of the targets noted above. This initial drilling program is budgeted to be roughly US$1 million, which leaves ample funds for Phase 2 drilling later in the year following the Company’s recent C$2.5 million financing, which closed in February.

At the end of the day, the market has spoken and people a lot more knowledgeable than me are suggesting Westward Gold might be on to something in Nevada. With a market cap of only C$10 million, this is another example of an almost free option on a company with an interesting next couple of months ahead of it.

Nanotechnology value hunters look at Sixth Wave Innovations

After the last few days and weeks, it seems almost pointless talking about any company that is publicly traded as it is probably getting crushed, or if you are lucky, only moderately beaten up. However, in times like this you have to look past what the market is doling out on a day to day basis and think about the bigger picture. Perhaps you don’t want to be buying today, trying to catch the proverbial ‘falling knife’, or maybe we are close to a bottom. I don’t have a clue. What I do know is that what has happened year to date is not going to prevent me from buying stocks in the future, so I always want to have a giant ‘watch list’ that I can prioritize when everything goes on sale. Even though it may seem like this is the sale that never ends.

That’s why, when there’s a broad market sell off like the one we are currently enduring, it’s fun to go looking for stocks that are almost free. In this case I’m talking about a company that is trading at an all time low stock price, below $0.10/share, and market cap of roughly C$11 million, both of which suggest there could be potential for plenty of upside should any of its several business lines gain traction. I’m talking about Sixth Wave Innovations Inc. (CSE: SIXW | OTCQB: SIXWF), a nanotechnology company with patented technologies that focus on extraction and detection of target substances at the molecular level using highly specialized Molecularly Imprinted Polymers (MIPs). The Company is in the process of a commercial rollout of its Affinity™ cannabinoid purification system, as well as, IXOS®, a line of extraction polymers for the gold mining industry. The Company is in the development stages of a rapid diagnostic test for viruses under the Accelerated MIPs (AMIPs™) label. Sixth Wave can design, develop and commercialize MIP solutions across a broad spectrum of industries for which the Company has products at various stages of development.

Given where we currently stand in the pandemic, the name of the company is a little coincidental, but we need to look beyond that to the investment thesis. Like many companies at the onset of COVID-19, they transitioned to pursue a better way of detecting the virus. In December, 2021 the Company announced it had successfully demonstrated selective binding and detection of live SARS-CoV-2 virus in saliva samples using its patent-pending AMIPs™ technology, which could lead to a handheld breathalyzer system. This might have you thinking, “who cares, the pandemic is over”. But the development and learning from this process has led to a partnership with TraceSafe Inc., to use patented MIPs for imprinting, capturing, and detecting substances at the molecular level to provide an effective and proactive prevention and containment strategy for deadly viruses and pathogens in animals. If you think about the Avian Flu resulting in the culling of tens of millions of chickens and turkeys across the U.S. and Canada at present, there could be plenty of opportunity here. In fact, a widespread bird flu outbreak in 2005 raised alarm bells and prompted the US Senate to allocate US$4 billion to prepare for a possible influenza pandemic.

Another active business line is the Affinity™ Extraction Process, an extraction solution specifically designed to extract THC and/or CBD from cannabis/hemp crude for the production of pure THC and CBD compounds. For Cannabis Producers, the Affinity™ unit is designed to capture and extract Cannabinoids to ensure the purest end product. The system replaces antiquated processes including winterization, distillation and chromatography. The highly scalable Baseline unit is designed to produce approximately 20 kg of cannabinoid distillate or full spectrum distillate per day and each unit is capable of generating gross revenues to Sixth Wave of up to $100K/month. Agreements are in place for the delivery of four machines, with the first of the three systems to Green Envy Extracts before the end of fiscal Q3 2022 (May) while an MOU for the fourth unit was signed with Quantum Labs of New Mexico in January, 2022.

The third potential revenue stream could come from IXOS®, a line of extraction polymers formulated for deployment in the gold mining industry for the extraction of gold from cyanide leach solutions. It is designed to be more selective, more efficient, have higher capacity, and offer environmental benefits compared to current processing methods. Sixth Wave’s recent patent award and previous work with lithium, nickel, cobalt, rare earth elements, and platinum group metals point to similar potential that has proven successful in gold and silver mining. To that end, the Company has been engaged by Champlain Mineral Ventures to develop a “green” mining process for lithium from its Brazil Lake deposit. The Company has also submitted proposals to government entities and commercial mining companies to exploit its intellectual property for these critical metals with non-dilutive grants and contracts. This success is translating into a stream of small revenue generating contracts as mining companies move to test IXOS® in the Company’s laboratories as well as with on-site pilots.

As you can see, Sixth Wave has a lot of opportunities percolating, with some potentially reaching a level where they could be providing the Company with revenue in the not too distant future. Sixth Wave just raised C$2.6 million in March, which should buy them a little more time to achieve that goal. In the meantime, the stock is on sale, along with almost every company that has anything to do with technology. Not to say the stock price can’t go lower, but it is almost free right now.

Cash rich Ur-Energy is getting ready for America’s day of reckoning to replace Russian uranium

Ever expanding sanctions and Western resolve to further restrict cash flowing into Russia to finance Putin’s war in Ukraine have made it apparent that domestic supply of just about everything should be racing to the top of the priority list. We’ve seen numerous steps taken in the U.S. in the last several weeks to shore up the sourcing and supply of uranium for its nuclear industry. Department of Energy (DOE) Secretary Granholm said in public testimony April 28, 2022, that the DOE anticipates initial requests for proposal for the purchase of domestically produced uranium will be issued in June 2022 for the establishment of a national uranium reserve.

The Infrastructure Investment and Jobs Act, signed into law in November 2021, contains a number of provisions supporting nuclear energy including a $6 billion Civil Nuclear Credit Program designed to prevent the premature closure of nuclear power plants. Nuclear power plants utilizing domestically sourced uranium products will be given priority funding under this program. An RFI was issued on February 15, 2022, with the expectation that a request for proposal will follow as early as mid-year 2022.

In April 2022, Senator Manchin (D-W.Va.), introduced a bipartisan bill titled The International Nuclear Energy Act of 2022 with the stated goal of establishing an Executive Office for Nuclear Energy Policy to promote engagement with ally and friendly partner nations to develop a civil nuclear export strategy and offset China and Russia’s growing influence on international nuclear energy development. Additionally, numerous states have passed legislation supporting nuclear power.

To me this is a giant billboard saying investors need to take a closer look at domestic uranium producers. Particularly those who are currently producing uranium or could be within 6 months. Especially given that the U.S. is the largest consumer of uranium in the world, and according to the EIA, in 2020 the U.S. purchased 22% of its uranium from Kazakhstan and 16% from Russia. 20% of U.S. electricity is generated by nuclear power with 2021 uranium requirements in the United States to power nuclear reactors at 17,600 tonnes (38.7 million pounds). Meanwhile, the EIA reported domestic production of uranium concentrate (U3O8) in the first quarter of 2022 at a paltry 9,946 pounds. Maybe a giant billboard isn’t enough, perhaps I need to buy a social media company to get the message out there.

All joking aside, at or near the top of the list of domestic uranium companies has to be Ur-Energy Inc. (NYSE American: URG | TSX: URE), and its uranium mining, recovery and processing operations, as well as the exploration and development of uranium mineral properties all within the friendly confines of the United States of America. The Company boasts a cash position as of April 28, 2022, of $45.8 million plus roughly 284,000 pounds of finished, U.S. produced U3O8 inventory, worth $16 million at recent spot prices. Ur-Energy operates its flagship Lost Creek in-situ recovery uranium facility in south-central Wyoming, as well as having all major permits and authorizations to begin construction at Shirley Basin, the Company’s second in-situ recovery uranium facility in Wyoming.

But what moves Ur-Energy to the top of the list is the work they’ve been doing to prepare for uranium’s day of reckoning. Guidance from the recently released Q1 Results states Lost Creek operations can increase to full production rates of an annualized run rate of up to 1.2 million pounds in as little as six months following a “go” decision, simply by continuing the development work within the fully permitted MU2 (mine unit). A production ramp up will include further development work in both of the first two mine units, followed by the ten additional mining areas as defined in the Lost Creek Report. The Lost Creek facility now has the constructed and licensed capacity to process up to 2.2 million pounds of U3O8 per year and sufficient mineral resources to feed the processing plant for many years to come.

Ur-Energy is cash rich and optimally situated to take advantage of the “on-shoring” of uranium supply. The Company has adequate funds to maintain and enhance operational readiness at Lost Creek which also allows them to preserve existing U3O8 inventory to sell into higher prices. With a market cap of US$311 million as of yesterday’s close, investors need to decide what the value of 1.2 million to 2.2 million pounds per annum of domestically produced uranium is worth.

Murchison counting on critical materials close to home with 2 deposits and camp scale potential

Vladimir Putin’s attack on Ukraine has reinforced the need for countries around the world to accelerate their efforts to reduce reliance on fossil fuels and cut greenhouse gas emissions, leading to clean energy technologies becoming one of the fastest growing segments of the economy. Some of the main inputs in these new technologies are critical metals like copper, cobalt, nickel and zinc. The World Bank forecasts that production of critical minerals and metals must increase by as much as 500% to produce the raw inputs necessary to meet projected demand. Analysts are expecting that over the next two decades nickel and cobalt will see a 20 fold increase in demand, with zinc and copper seeing an effective doubling in demand. That tells me inflation isn’t easing anytime soon but that can be a discussion for another day. In order for the world economy to meet this increasing demand in energy metals, discoveries of deposits will need to be made in the near term and as we watch sanctions mount against Russia, the location of those deposits becomes increasingly important.

Domestic supply and processing of these minerals and materials will become an increasingly crucial component to any nation looking to have a realistic ability to achieve emissions targets. That’s why junior mining companies, such as Murchison Minerals Ltd. (TSXV: MUR | OTCQB: MURMF), play a significant role in the discovery of the minerals needed for the quickly evolving clean energy revolution. Murchison is focused on the exploration and development of the 100% owned HPM (Haut-Plateau de la Manicouagan) project in Quebec and the exploration and development of the 100%-owned Brabant-McKenzie VMS zinc‐copper‐silver deposit located on the Brabant Lake property in north‐central Saskatchewan. The Company also has an option to earn 100% interest in the Barraute-Landrienne zinc-silver-gold project in Quebec. These are two of the best mining jurisdictions in Canada and arguably the world. Additionally, these projects are surrounded by excellent, established infrastructure.

The HPM property is located between Baie-Comeau and Fermont, Québec, about 20 km from an all-season road connecting the two communities, 8 km to railroad, and about 225 km to the deep water Port of Sept Iles. In December, 2021 the Company acquired the majority land position in the eastern Haut-Plateau region. With the newly acquired claims, Murchison has now increased the size of the HPM project area by a factor of 4, from 13,897 hectares to 57,586 hectares. First assay results from the inaugural drill program at the PYC Target include Hole PYC21-007 drilled to a depth of 158 m intersected three broad zones of Ni-Cu-Co-bearing sulphide mineralization totaling 62.21 m of composite thickness including 25.5 m grading 0.30% Ni Eq and 27.4 m grading 0.23% Ni Eq while Hole PYC21-008 drilled to a depth of 182 m intersected five broad zones totaling 69.9 m of composite thickness including 39.5 m grading 0.24% Ni Eq and 13.0 m grading 0.27% Ni Eq. Assay results for the remaining six holes, released two weeks ago, confirm the presence of broad zones of near surface low-grade nickel, copper, cobalt mineralization across the drilled portion of the target.

The PYC Target is only one of multiple Ni-Cu-Co prospects on the HPM Project where historical work and prospecting completed at Barre De Fer, located only 1.5 km away, resulted in the best historic results from HPM-08-03 of 43.15 m at 1.73% Ni, 0.90% Cu, and 0.09% Co. The Company also completed prospecting at the Syrah Target, located just 350 metres from the Barre de Fer prospect, during the 2021 fall drill program. Syrah results confirm Ni-Cu-Co sulphide mineralized outcrops and sub-crops over approximately a 375-metre strike length, within the footprint of an approximately 600- metre-long conductive geophysical anomaly. Newly discovered mineralization to the northeast extending the surface strike length by approximately 200 metres and assaying as high as 0.69% Ni Equivalent. Syrah is considered a high-priority exploration target, making it a priority for drill testing during the summer 2022 program.

One can be excused for focusing solely on the HPM Project with so much going on and prospect after prospect showing potential. But we can’t forget about the Brabant McKenzie deposit that already has an established resource of Inferred: 7.6 million tonnes @ 6.29% ZnEq and Indicated: 2.1 million tonnes @ 9.98% ZnEq. There are 10 highly prospective VMS targets, with VMS style mineralization already intersected at Main Lake and Betty target areas. But for now, the Company is focused on the HPM project with the recently completed recompilation and modeling of holes drilled at the Barre de Fer zone indicating significant potential for expansion of high-grade nickel-copper-cobalt zones. A VTEM survey covering all of HPM, commenced on April 21st, 2022 with Murchison moving forward with preparations for a summer drill program on the HPM property focusing on Barre de Fer and Syrah.

The completion of an early warrant incentive program has resulted in the addition of C$1.3 million in cash to go with the C$1.8 million the Company finished 2021 with. This capital will go a long way towards funding the 2022 summer program. With a market cap of only C$18.8 million there is plenty of leverage for investors looking for exposure to zinc, nickel and copper in a stable, mining friendly part of the world.

Geologically Newfoundland has it all, and York Harbour Metals is looking to join the fun with their copper-zinc-silver project

I quite enjoy the opportunity to write for InvestorIntel as it allows me to look at some interesting stories that wouldn’t otherwise be on my radar. There are thousands of publicly traded stocks out there and I certainly don’t have the focus or the drive to actively try and review all of them. And with being more or less locked down for the last two years one could also safely travel the world from their armchair while reviewing the plethora of small cap stocks listed on Canadian exchanges. I’ve explored parts of Fiji, Columbia, Indonesia and Chile to name a few but it seems I’m heading back to Newfoundland & Labrador fairly regularly. Ironically, I’ve actually visited “The Rock” numerous times and would highly recommend it to anyone interested in spectacular, rugged scenery, icebergs and super friendly people. But it’s the wonderful geology that the region is blessed with that has me returning time and again on behalf of InvestorIntel.

You’ve probably guessed by now that I’m having a look at junior miner with a prospect located on the western shores of Newfoundland. The company is so fond of this prospect they recently changed their name to reflect this becoming their primary focus. York Harbour Metals Inc. (TSXV: YORK) rebranded from Phoenix Gold Resources Corp. (TSXV: PXA) in February of this year. York Harbour Metals is an exploration and development company focused on the York Harbour Copper-Zinc-Silver Project, a mineral property located approximately 27 km from Corner Brook, Newfoundland. The area is known to be prospective for copper-zinc-silver-gold-cobalt volcanogenic massive sulphide (VMS) deposits. The known mineralization exhibits characteristics consistent with classic mafic-type flow dominated (Cyprus-type) VMS deposits. You’ll have to go to their website to better understand the previous two sentences but they do a decent job explaining it in terms I can understand with links to additional resources if you really want to nerd out.

There are a couple of things about this particular company that I find interesting. The first is the history of this property. This is a classic story of revisiting an old, existing mine site with very little modern exploration having been carried out on the sizeable claim holdings. Copper and zinc massive sulphides were first discovered at York Harbour in 1893 where shaft sinking began in 1897 and mining continued to 1918. Activity resumed in the early 1950’s through to 1970’s where previous owners began a Sea Level Adit to enhance exploration and to become a main haulage level but it was never completed due to lack of funding. A total of 2,134 metres of underground drifting and development have been completed for which documentation is available. Drill core logs and sampling data are available for a total of 19,323 metres of historical drilling that tested eleven lenses or zones of copper-zinc-silver-gold-cobalt-bearing sulphide mineralization. I’m always attracted to companies that have a lot of historical workings they can review to preserve and optimize exploration capital.

The next thing that puts York Harbour Metals on my radar is the stock price action over the last 6 months. Junior mining stocks haven’t exactly been setting the world on fire. They tend to perform even worse when the macro market is looking weak as nervous investors have a habit of dumping their riskier investments first. Since November 2nd, YORK/PXA is up 161% posting higher highs and higher lows along the way, forming a great up trending channel. It also seems to be finding great support at the 50 day moving average. Not to say this is the only junior mining stock doing well, but I can’t say there are many (if any) that are down 25% or more over that same period that I have on my watch list.

Source: StockCharts.com

Lastly, I always like a steady stream of drill results, although I probably didn’t need to remind readers of this fact given how many times I’ve brought it up. York Harbour Metals have been pumping out the numbers over the last 4 months and there are plenty more to come. Phase 1 drill results were released Jan 17th and led to a decent spike in the share price. Highlights from that press release include YH21-06 with 52.2 metres of 0.85% copper, 91.8 g/t cobalt, 0.53% zinc and 1.75 g/t silver and YH21-09 with 11.6 m of 1.41% copper, 202.94 g/t cobalt, 0.10% zinc and 2.41 g/t silver. Results from the Phase 2 program released March 17th and March 26th also saw decent jumps in the share price with the latter resulting in a nice gap up. Highlights include YH21-18 with 25.00 metres of 2.70% copper, 9.04% zinc, 17.78 g/t silver, and 163.6 g/t cobalt and YH21-24, grading 5.25% copper, 436.5 g/t cobalt, 8.97 g/t silver, and 0.801% zinc over a drilling length of 29.0 metres. The latest price spike on April 18th came on an update on the Phase 3 diamond drilling program where the Company confirmed completion of 28 NQ-size diamond drill holes totaling 4,980 metres with visual pyrite, chalcopyrite and sphalerite of varying degrees in almost all of the drill intercepts.

If the assay results are anywhere near as good as the market’s interpretation of the visual estimates of the copper (chalcopyrite) and zinc (sphalerite) indicators we could be in for more good times at York Harbour. The last thing that I like is that it has a relatively tight share structure, with only 48.8 million shares outstanding. That makes the market cap C$62.5 million, which seems a little high to me for a junior miner without a resource estimate. However, the stock action would suggest that those a lot more knowledgeable about geology think this could be the real deal.

Is American Rare Earths sitting on the largest rare earth deposit in the USA?

Commodities these days can be a bit of a fickle investment. They are definitely in demand for numerous reasons, including the world’s move towards a lower carbon future. Putin’s attack of Ukraine has placed further emphasis on security of supply, overall supply chains and the politics of commodities. However, we can’t seem to align all the interested parties into coming up with a cohesive game plan to maximize the production of critical commodities, while optimizing their environmental and social impact.

What do I mean by this? In late February the White House ordered action across the US Federal Government to secure reliable and sustainable supplies of critical minerals and materials just before the first anniversary of Executive Order (EO) 14017, America’s Supply Chains. However, a year after detailed reports of vulnerabilities in the critical mineral and material supply chains were produced by US federal agencies, detailing the over-reliance of the U.S. on foreign sources and adversarial nations for critical minerals and materials, posing national and economic security threats, the U.S. government isn’t exactly walking the walk. In the last year, we’ve seen Rio Tinto’s (NYSE: RIO) Resolution copper project in Arizona and Antofagasta’s (LSE: ANTO) Twin Metals project (copper/nickel) in Minnesota both get the red light from the Biden Administration. It has also taken steps to slow down development of a lithium mine in Nevada from ioneer Ltd. (ASX: INR) to help preserve a rare flower. You could also include Northern Dynasty Minerals Ltd.’s (TSX: NDM | NYSE American: NAK) Pebble mine in Alaska in this list because there is a lot of copper as part of the resource, but to me, it’s more of a gold mine so not necessarily critical.

I’m not saying that these actions to delay or cancel projects aren’t justified for environmental and social reasons. I’m simply pointing out that it’s easier said than done. Investors can’t simply pick all the companies pursuing critical minerals in the U.S. and think it’s going to be a slam dunk. Certainly, there is a renewed focus on addressing the critical minerals and materials supply chain, but it likely won’t come at the expense of the neighbors of these projects. That’s why one has to look a little deeper at any potential investments to ensure the project has a chance to see the light of day. You can’t just have a viable, economic resource, you need to tick a lot more boxes.

That’s my long-winded intro to an Australian listed company with assets in the growing rare earths sector of the United States, looking to help the U.S. diversify away from China’s market dominance of the global rare earth market. American Rare Earths Limited’s (ASX: ARR | OTCQB: ARRNF) mission is to supply critical materials for renewable energy, green tech, EVs, National Security, and a Carbon-Reduced Future. The Company owns 100% of the world-class La Paz Rare-Earth Project, located 200 km northwest of Phoenix, Arizona and the Halleck Creek rare earth project in Wyoming, USA. La Paz is a large tonnage, bulk deposit, that is potentially the largest rare earth deposit in the USA and benefits from containing exceptionally low penalty elements such as radioactive thorium and uranium. The Company is currently drilling in the new Southwest Zone of the project where an exploration target of approximately 742 – 928 million tonnes could be added to the 170.6 million tonne JORC compliant (Australian equivalent of NI 43-101) resource.

The size and the grades at La Paz are impressive, as well as close to surface, but remember it’s not just about an economic resource. The reason I think American Rare Earths should be on an investor’s watchlist, if you have any interest in the rare earths space, is their attention to politics. On March 4th the Company announced it had welcomed a delegation of elected officials from all levels of government to its flagship La Paz project. Key members of the group of 25 federal, state and county officials and staff delivered enthusiastic and encouraging speeches about American Rare Earths and its work underway to help secure the United States’ domestic critical minerals supply chain. Additionally, Company executive Marty Weems will speak to several dozen State Legislators about La Paz at an event held in collaboration with the Arizona Mining Association. That’s the type of proactive effort required to get your project to the finish line in the world of today.

From a macro perspective, there are significant tailwinds for domestic rare earths production from both a market pull and a government push. Additionally, there are several near-term catalysts for American Rare Earths with an on-going drill program at both properties and applications have been filed for 36 additional drill sites at La Paz. The Company is well funded, finishing 2021 with over A$8 million plus having raised another A$1.4 million in the first two months of 2022. With a market cap of roughly A$161 million (US$ 117 million) it’s not your typical junior mining stock, but then again, your typical junior mining stock isn’t sitting on potentially the largest rare earth deposit in the USA.

CubicFarm Systems is putting sustainability back into farming

I’ve always been intrigued by vertical or modular farming. It may have been born out of the massive unutilized office space in downtown Calgary over the last several years as the energy industry went through a very challenging period. Beyond that, there’s the bombardment of climate change news suggesting that there will be droughts and extreme weather impacting all forms of farming globally for the foreseeable future. And while climate change is somewhat uncontrollable, I recall seeing that there is a town in California’s San Joaquin Valley that has sunk as much as 11.5 feet over the past 14 years due to subsidence resulting from all the water required for area farming being pulled from underground aquifers. That doesn’t seem very sustainable to me but maybe I’m missing something.

Perhaps I’m getting a little too dramatic, but you get the picture. Supply chains and food security in an increasingly populous and volatile weather world are something we need to be wary of. Tack on a war encompassing some of the best agricultural lands in Europe and things become even more uncertain. We need to secure our food supply and control our destiny in a sustainable way. One company out there leading the charge is CubicFarm Systems Corp. (“CubicFarms”) (TSX: CUB). CubicFarms is a leading local chain agricultural technology company developing and deploying technology to feed a changing world. Its proprietary ag-tech solutions enable growers to produce high quality, predictable produce and fresh livestock feed with HydroGreen Nutrition Technology.

The Company has two core business segments, the Fresh Division and the Feed Division. The Fresh Division operates using the patented CubicFarm™ System, which contains patented technology for growing leafy greens and other crops. The CubicFarm System addresses two of the most difficult challenges in the vertical farming industry, high electricity and labor costs, by using unique undulating path technology. The Crop Motion™ technology allows hundreds of growing trays to move under LED lights along a path from the back to the front of the modules, getting the right amount of light, water, and air flow to maximize their growth. Every 90 to 120 minutes (depending on the crop), approximately 250 trays of plants will pass by you so you can stand in one spot and do all of your harvesting and planting. The undulating conveyor of interchangeable growing trays is housed within a customized 40-foot shipping container and generates far more yield than any other system because the module brings everything to the worker at the front and you don’t need to leave any access hallways for people.

The Company’s Feed Division operates using the HydroGreen Grow System, the Company’s technology for growing nutritious livestock feed. HydroGreen technology has commercialized two Automated Vertical Pastures™, the DG66 (designed for small family farms of 100 – 500 animals) and the GLS808 (designed for larger commercial farms of 500 – 15,000 + animals). This system utilizes a unique process to sprout grains, such as barley and wheat, in a controlled environment with minimal use of land, labor, or water. HydroGreen Automated Vertical Pastures™ is fully automated and performs all growing functions including seeding, watering, lighting, harvesting, and re-seeding – all with the push of a button – to deliver nutritious livestock feed without the typical investment in land, fertilizer, chemicals, fuel, field equipment and transportation. And some of the statistics are quite astounding. A HydroGreen Grow System can harvest daily and produce up to 365 harvests annually while utilizing 95% less water than conventional irrigated field crops. One HydroGreen Vertical Pastures™ (consisting of 12 grow modules) can grow up to 25 million lbs of fresh livestock feed every year while replacing 500 acres of farmland, equivalent to 380 football fields.

Another interesting stat is from a non-binding letter of intent to deliver 96 CubicFarm System modules in an innovative two-level cost-effective building design and controlled environment called a FreshHub, to be installed in Surrey, BC. On 1 acre of land, FreshHub will grow the equivalent of 100 acres of field production. The Company anticipates that the installation of this first FreshHub project will commence in the late part of the 2022 calendar year and be substantially completed by the end of the 2023 calendar year. In the meantime, as of the end of March the Company has a total of 203 modules under binding contract and deposit. The amount of CubicFarm System sales orders that are pending manufacturing and installation is approximately US$27 million.

CubicFarms provides an efficient, localized food supply solution that benefits people, the planet, and the economy. I find the water savings perhaps the most compelling factor behind this story but there are some other pretty interesting numbers. With a market cap of C$183.7 million, the Company isn’t cheap but they are well capitalized (C$21 million as of December 31, 2021) and can sign large contracts like the FreshHub at C$20 million. I am very curious to see how this story plays out over the next several months as I always like to see great IP translate into a profitable business. Especially if it helps create a more sustainable food supply for you and me.

Looking for a port in this investing storm

Today’s article is an exploration of where to potentially park some investment dollars in what one might consider a pretty volatile market of late. The specter (or reality) of a sixth wave of the pandemic, war in Ukraine, seemingly out of control inflation, supply chain issues, rising interest rates and the inter-relation of some of these themes has a lot of my friends asking me what I’m doing right now. I’ll use a term I picked up recently from the crypto investing universe – HODL (hold on for dear life). I’ve raised my cash position to roughly 20% but that means I still have 80% of my portfolio invested (and I don’t hold any bonds or bond proxies). But what is considered a reasonable risk/reward or safe investment these days? I’m sure there are as many opinions as you have time to listen to, but there’s one sector I’ve been adding to in the last few days.

The sector I’m talking about is conservative, profitable, relative low risk, in theory should benefit from rising interest rates, trades at P/E’s ranging from 4x to 10x, most names have 2-3% dividend yields, they just went through Q1 earnings season without hitting too many potholes and are mostly trading at or near 52-week lows. Seems like a great the place to be if you are nervous about the market right now. What sector am I talking about? Large-cap U.S. Banks like J.P. Morgan Chase & Co. (NYSE: JPM), Bank of America Corp. (NYSE: BAC), Citigroup, Inc. (NYSE: C), Wells Fargo & Co. (NYSE: WFC), Goldman Sachs Group Inc. (NYSE: GS), Morgan Stanley (NYSE: MS) and several others. Pretty boring stuff. But that’s the point, at least if you are concerned about where the market is headed.

There are still some potential pitfalls facing this sector. Several companies saw Q1 earnings fall quarter over quarter as a result of lower Investment Banking income given general market uncertainty. J.P. Morgan highlighted some investment risk due to Russian exposure. There was a brief period of time last week where the yield curve inverted, which is a situation where rising interest rates may not benefit banks – generally speaking banks “borrow” short term rates (investor savings accounts) and lend on longer-term rates. And if an inverted yield curve is a harbinger of a recession, then there is likely to be less lending overall for banks. With that said, I don’t see these “risks” having a material impact to overall earnings over the next few months. Technically, many of these stocks look to be forming a bottom or bouncing off support and most have recently hit “oversold” on the RSI indicator. That’s a summary of my thesis, and without getting into a full dissertation on the topic I’ll leave it at that.

This certainly isn’t the only sector I’m looking at right now. I really like oil & gas for the next few years but have a hard time adding to the sector right now with all the uncertainty around the war in Ukraine and sanctions, etc. If there is a correction of WTI prices (into the $80’s) in the event that (hopefully) peace breaks out soon, then I’m likely a buyer. That same logic applies to pretty much all commodities right now. Much of the semiconductor sector is also trading near 52-week lows but they still have huge P/E multiples and with rising interest rates and a potentially challenging Q1 due to the lockdowns in China I think there’s a decent chance I could pick up some of these names even cheaper than they are today. Then there are the profitable large-cap tech stalwarts like Apple Inc. (NASDAQ: AAPL), Microsoft Corporation (NASDAQ: MSFT), Alphabet Inc. (Google) (NASDAQ: GOOG), Amazon.com, Inc. (NASDAQ: AMZN). I’m always looking for opportunities to add to those if there is ever any weakness. But for now, I’ll stick to boring, pillar of the economy stocks while I wait for a clearer direction on inflation, COVID and whatever messed up crap Putin is up to.

This is by no means investing advice. I’m not an investment advisor, nor do I play one on TV. This is merely insight into what goes on in my head when I’m spending too much time in front of CNBC or Bloomberg TV while waiting for it to get nice enough to go do fun things outside. Hopefully, it provides you with an investing idea to think about if you are still wanting to stay invested in the markets but are a little nervous at present.