Elon Musk has enjoyed a historic surge in wealth, adding more than $150 billion to his net worth to overtake Jeff Bezos as the richest man in the world thanks to the growth of Tesla Inc. (NASDAQ: TSLA) and his 20% stake in the company. Aside from the relentless brand loyalty, Tesla has proven that the demand for green energy solutions continues to grow exponentially as the commitment to trading in carbon emissions for the likes of solar panels and electric vehicles consumes nations and political agendas.
The controversial phrase “fit in or fuck off” seems applicable for the tireless efforts focused on the preservation of the natural world, and while most remain strongly opinionated on both sides of the conversation, a unique investment opportunity arises amongst several exploration companies currently trading on the venture exchange.
Green Energy
With the focus of 2020 surrounded by the global pandemic and the detrimental impact on economy, the renewable energy sector may actually be able to consider past years events a win. Much of the headlines that excluded COVID-19 related jargon were particulate about discussing the future of energy and the proven ability to survive without fossil fuels.
While much of this hypothesis remains theoretical when considering that fossil fuels are still vital to the extraction of minerals required to support green energy, the opportunity for exploration companies involved in said discovery and extraction is evident. As investors, having the insight to follow trends in the market and make educated decisions before the masses arrive is a necessity for the generation of wealth, and with renewables in mind the precious metals sector should continue to experience growth as we venture into the new year.
Competing with Tesla
Where did this one come from? Having traded roughly 200 million shares in the last week alone, Extreme Vehicle BA (ACDC:CN) and its recent announcement surrounding the upcoming launch of its IoniX Pro Home Smart WallTM (the “Home Smart WallTM“) has enjoyed a stellar run producing 522% gains for its investors since the beginning of the year. The company boats the ability of its product to compete and potentially outperform its rivals, who just so happens to be the worlds richest man and his Tesla Powerwall product.
Having the ability to compete with one of the hottest companies on the planet in the sector will come with obvious attention but being able to provide a superior product carries immeasurable value, especially when considering the projected growth of the Energy Storage System (ESS) market to almost $550 billion by 2035. Having personally missed this opportunity as of late, a few other companies come to mind that very well could offer similar advantages when considering both the production of electric vehicles and the batteries that drive them.
Battery Metals
Chilean Metals Inc. (CMX:TSXV) was solely focused on gold until the recent acquisition of the NISK property in the James Bay region of Quebec has presented the company with the opportunity to potentially produce the next battery metals mine in Canada. Through continued exploration efforts, CMX is focused on expanding the current high-grade nickel copper PGE mineralization resources within the property, with hopes of identifying additional high grade mineralization and following through on the development of processes aligned with the production of nickel sulphates, which can be used to support the electric vehicle battery industry.
Having closed the trading day at $0.255 per share with a market cap valuation of $11.31 million, the opportunities for prodigious growth are obvious, and the risk of investment is further reduced when considering its ongoing gold exploration efforts in Chile and British Columbia and the complimentary support offered to share price.
IF the company is able to provide evidence of the estimated 10 million tonnes of minerals required to advance mining activity, the valuation could find itself adjusted near the $50 million mark in the short term, doubled up in the long term. This of course is only considering the value added by the battery metals market. The company could enjoy further growth if any of its several assays currently awaiting results from a drill program in Chile hit high grade gold. Only time will tell, but the window of opportunity may be closing sooner than later.
Strength in Copper
Deep South Resources Inc. (DSM.TSXV) is heavily involved in the development of copper projects, being the sole owner of the Haib Copper deposit in the south of Namibia in Africa, which is considered one of the oldest porphyry deposits in the world. Having recently disclosed a PEA over the deposit at a price of $3.00/lb. for copper, it generates an after-tax NPV of $950 million and an after-tax IRR of 30%. With the price of copper fluctuating higher as the weeks progress and the demand for copper promptly following, DSM looks well positioned to supply the recent surge in demand.
With reports that copper prices are set to soar due to the increased demand for the integration of electric vehicles in Europe and China, the potential for the 100% recyclable material to reach US $10,000/tonne for just the second time in history is likely. Goldman Sachs has signaled that “we have all the tell-tale signs of a super-cycle” and among its many beneficial uses, the presence of copper in electric vehicles is required 300% more than in traditional vehicles.
Having closed the trading day at $0.19 per share with a market cap valuation of $20.66 million, DSM has the potential to grow immensely in value as its exploration efforts are set to resume upon the closure of its recently private placement funding, which was upsized due to demand. With copper heavily used across several major industries and no signs of slowing as the year progresses, investors should take note and be mindful of this prospective copper company.
Expectations
With the global economy pointed at continued renewable energy growth and no signs of retreat, speculations can be made that investors will likely continue to charge at opportunities within the precious metals sector with ties to EV battery metals. While exploration companies are always escorted by evident risk, the opportunity presented by an increased global demand cannot be ignored and may offer an advantage to providing exponential portfolio growth.
