The Global Technology Metals Markets: A Conference Primer
InvestorIntel is starting a regular series of summits in Toronto beginning on Wednesday, October 14, 2015 designed to allow individuals as well as institutions to identify and highlight the metrics for investing in the production of natural resources. Speakers, company presentations, and panels will focus on the results of the application of those metrics in order to allow you, the listener, to select the most probable success stories among new ventures. This first conference is entitled “The Technology Metals Markets,” and I’d like to tell you why I think it’s an important event for natural resource ventures and their investors.
The supply of natural resources does not create demand it is, rather, a response to a demand or a result of speculation upon an increase in demand. Investing in such supply projects is risky, because no return is guaranteed on the investment and, of course, speculation upon future demand may well be just speculation. But is a mistake to assume that all investments in new ventures to produce natural resources have the same risk or even the same degree of risk. The question is: How can you differentiate among the ventures seeking your investment?
The Global Technology Metals Markets summit is going to identify for you specific currently active areas in natural resource supply and outline and highlight for you both the general risk metrics for those areas and, more importantly, the detailed risk profile for specific types of natural resources ventures such as mining, refining, and specific product fabrication.
The InvestorIntel Summit will consist of industry expert speakers; company presentations, and expert panels discussing investment opportunities and metrics for making investment decisions.
The general metrics for any and all investments of this type start off with highly subjective criteria such as:
- The capability and competence of project management; I call this metric “credentials and competence,” and it applies to the boards of directors as well as the operational mangers, (The key to sector competency is the answer to the question: Are the company’s managers and board aware of the total supply chain for their resource, and thus aware of where in the supply chain their products must be placed in order to achieve both acceptance and profitability??)
- The objective of the original promoters, i.e., a.) Selling stock and vanishing or b.) bringing the project into production, and
- If the objective is b.) above then what is the detailed knowledge of the management of the contemporary and future markets and supply chain that their project will serve,
- What is the knowledge, experience, and skill of the technical management of the venture, and
- What is the company’s detailed marketing plan for its products?.
Specific metrics, exemplified here by one of the most complex set of natural resources to attempt to produce, the individual rare earths, that apply only to the choice of natural resource to be produced include:
- Which specific rare earths are to be produced, and which rare earths that have no market MUST be produced in order to get the desired ones,
- In what forms will the specific desired rare earth products be delivered by the venture to the market,
- What are the markets for those rare earth forms today and in the future,
- What technological processes to produce the rare earth forms to be delivered must be implemented and maintained for the venture to be profitable,
- What is the prognosis for the prices of the rare earths now and in the next ten years,
- Are the present and predicted rare earths’ prices sufficient for the company’s target production level to be profitable,
- Are all of the technologies necessary to bring the selected rare earth products to the chosen markets well-known and/or well understood, used commercially, and/or applicable to the deposits mineralogy,
- Does the company plan to outsource any aspect of rare earth mineral processing prior to delivering its chosen final product,
- If so, who among the venture’s management is qualified to make such technology partner choices and manage the outsourcing, and
- Has the venture taken into account the time required for a new vendor of rare earth forms to be approved by their markets especially if the chosen markets are downstream of mineral extraction and purification?
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In the current period of processing technology innovation (accompanied by fears of disruption and markets’ turbulence for rare earth refining and fabrication none of the above list of specific metrics is trivial.
The sourcing of technology metals has become a focus of natural resource development in just the last generation and although exploration geology has until now dominated the news about sources of the rare earths, lithium, and graphite it has now become time to sharpen the focus on technology metals in order to examine the economics of traditional methods and technologies for extracting and refining and fabricating technology metals in contrast with new and newly applied technologies.
Economics dictates that there are three sources of technology metals
- Mineral deposits,
- Primary deposits-Those mined primarily for the technology metal, and
- Secondary deposits-Those primary deposits of common metals from which technology metals may be recovered as by-products
- Residues from prior mineral deposit workings of both types listed above, and
- Scrap from which economic recovery of one or more technology metals is possible.
Any project using one or more of the above sources must be judged by the same general metrics as listed above and even, in the case of the rare earths, for example, by all of both the general and specific metrics listed above.
The result of a thorough study of the “metrics” is to be able to estimate the probability of success of a natural resource production venture. No projects are or can be risk-free, but many are just too risky for any but the gambler with the deepest pockets or a government, using other people’s money, to pursue.
InvestorIntel hopes that you will learn by reading articles on its web site, by independent research, and by attendance at its summit series enough information on the ventures and service companies that present to be able to assess the probability of success for those of them in which you are interested. Your questions and your comments are welcome. None of us at InvestorIntel is too old to learn and none of us knows it all. We will be asking a lot of questions to presenters and to panelists also.
Industry conferences are always advertised as great places for companies to “network” with investors. InvestorIntel conferences are meant to give networking opportunities not only to institutional investors, but also to individual investors.
This article is meant to help you formulate the tough questions for those who want you to risk your capital. Don’t be bashful.
Jack Lifton is the CEO for Jack Lifton, LLC and is a consultant, author, and lecturer on the market fundamentals of technology metals. Technology metals ... <Read more about Jack Lifton>