Could One of the Market’s Safest Sectors Also Be the Most Profitable?

(Roberto Sorin/Unsplash)

For a long time, gold, and somewhat silver, have been used as protection from inflation and hard economic times.

Today, with the proliferating need for the integrating of EV’s and ESG mandates, battery metals are dominating the market as far as resources go. So much in fact, that there are already companies surpassing $1 billion market caps trading on junior exchanges. 

Gold has always been a popular choice to protect one’s portfolio from inflation, as gold is known to hold its value incredibly. Now, if you look at historic gold returns and compare them to newer assets such as Bitcoin, you get a lot of people in the new generation of investors looking to crypto for stores of value instead. 

As far as precious metals go, silver has been getting a lot of attention lately. Unlike the dollar, it too, has intrinsic worth, holds its value long-term and tends to fare well when interest rates are low, and the fixed-income investment market isn’t doing too much. 

Cheaper and more accessible than gold, silver functions similarly to gold, playing a “safe haven” role. While gold and silver remain relevant, nothing is booming these days as much as battery metals.

The global battery metals market was valued at $11.3 billion in 2019, and is projected to reach $20.5 billion by 2027, growing at a compounded annual growth rate (CAGR) of 8.2% from 2020 to 2027.

The surge of EV initiatives amongst nearly every automaker in the globe is partially to thank for that. Being able to reduce the use of limited resources like oil by switching automobiles, which are one of the biggest uses of fossil fuels, to electric battery-powered energy source are the biggest catalyst for the rising demand of lithium, nickel, copper, graphite… the list goes on.

A few leaders in the resource game include:

Millennial Lithium Corp (TSX-V: ML) (OTC: MLNLF) – $445.3 Million

Millennial Lithium is focused on developing its flagship lithium brine project in Salta, Argentina, within the world-renowned “lithium triangle.” Right in the heart of this triangle lies over 20,000 hectares of land owned by Millennial. This famed area lies several other projects, including SQM, Albemarle (NYSE: ALB), Livent Corp. (NYSE: LTHM) and Orocobre (TSX: ORL).

The company recently entered a definitive agreement of arrangement to be acquired by Lithium Americas Corp. (NYSE: LAC) in a US$400 million deal consisting of a mix of common shares of $LAC and cash. Millennial Lithium shareholders would effectively own 9.1% of Lithium Americas.

Nouveau Monde Graphite Inc. (TSX-V: NOU) (OTC: NOUV) – $480 Million

Nouveau Monde Graphite has been a prominent part of the sustainable energy revolution lately.  The company is developing a fully-integrated source of carbon-neutral battery anode material in Quebec, Canada.

As the lithium-ion and fuel cell markets continue to grow, Nouveau Monde’s low-cost operations and ESG integration help them strive to become a strategic supplier to the world’s leading battery and automotive manufacturers.

American Lithium Corp. (TSX-V: LI) (OTC: LIACF) – $927.2 Million

Having recently surpassed the coveted $1 billion market cap milestone, American Lithium is in southeastern Peru, advancing in their large-scale Falchani hard rock lithium deposit, along with the Macusani deposit; known as one of the most prolific uranium deposits in Latin America. 

The company recently acquired Plateau Energy Metals. Their safe and secure supply of battery metals and energy metals is proving to be more important as the months pass, as the US government has introduced “critical mineral” initiatives to lock down a secure domestic supply, along with the supply of friendly nations, such as Peru.

The fact that we have leaders in the resource market such as Millennial Lithium Corp, Nouveau Monde Graphite, Inc., and American Lithium Corp. is a great sign of the strength of the resource market today. However, early investors in these companies have already reaped fortunes. This leads us to the question, how can we detect these opportunities before they skyrocket into industry leaders?

We’ll tell you one thing. You never really know. All we can do is gather the info that is available to us and strive to find the best opportunity within all of the noise… Which is exactly what we did.

Here are our top 3 small-cap resource movers:

South Star Battery Metals Corp. (TSX-V: STS) (OTC: STSBF) – $25.87 Million

Perhaps the most attractive early-stage resource opportunity we’ve seen so far, South Star is based within the second-largest flake graphite-producing region in the world. The company aims to harvest industrial minerals and battery metals from their property in Bahia, Brazil, in order to satisfy the clean energy revolution.

One of the premier battery metals jurisdictions globally, the region has been producing graphite steadily for the last eight decades. But perhaps the biggest draw for this stock, other than its impressive jurisdiction, is its volume. 

$STS has been averaging over a million shares traded within the TSX Venture Exchange and the over-the-counter markets, far surpassing their peers. This tells us the stock is well-supported with ample interest from both the Canadian and the U.S. markets.

Since their $2.7 million financing at $0.11 back in October, the stock surged as  high as 250%, before settling down in the high side of the $0.20-$0.30 range, with a $25.87 million market cap. The healthy chart, outperforming share volume and young market cap are considerable reasons why $STS looks destined for stardom.

Ameriwest Lithium Inc. (CSE: AWLI) (OTC: AWLIF) – $40.35 Million

The Clayton Valley region is well-known in the lithium world for a reason. Ameri-west Lithium’s peer producers Cypress Development Corp (TSX-V: $CYP), Pure Energy Minerals Ltd. (TSX-V: $PE) and most notably, Albemarle Corporation (NYSE: ALB) all share this highly sought-after jurisdiction.

Leading the way for clean energy exploration, the opportunities in store for Ameriwest lie not only in the Clayton Valley, but in 3 other important regions, Railroad Valley, Nevada is widely referred to as “the next Clayton Valley,” and sprawls through Nevada twice as big as Clayton.

Edwards Creek Valley is a playa that resides within a hydrologically closed basin in north-central Nevada, which means the water converges to a single point. This site is only two hours east of Tesla’s Gigafactory, and two and a half hours north of Albemarle’s  Silver Peak operation.

Finally, Thompson Valley in Arizona is a prospective lithium sedimentary deposit with lithium-bearing clays exposed near the surface. The historic grades of these clays resemble those found in the highly-acclaimed Clayton Valley.

Scotch Creek Ventures Inc. (CSE: SCV) (OTC: SCVFF) – $18 Million

A true early-stage opportunity, Scotch Creek just finished a $0.50 financing with a $0.75 warrant. Raising around $12 million, the company is narrowing in on acquisitions and developments in good ol’ Clayton Valley. 

Scotch Creek holds 100% interest in two lithium projects within Clayton Valley. Highland’s West borders Albemarle’s Silver Peak mine and Pure Energy’s lithium project, while Macallan East also borders Pure Energy. The company plans to quickly and effectively capitalize on this interest within one of the world’s hottest lithium jurisdictions.

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