“Worse than both the Titanic and Hindenburg Disasters 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
This infographic, sponsored by Dajin Resources (TSX-V: DJI) (OTC: DJIFF) (Frankfurt: A1XF20) grabbed my attention, (the way they’re supposed to!) Who doesn’t love infographics? I’m a fairly prolific writer about lithium companies. I follow industry news closely. This infographic is very well done, I’ve seen my share of bad ones. This one has a metric tonne of information. Each graph, image and chart is on target. I feel as though the creator effectively summarized several of my articles. For another detailed, informative and entertaining look at, “Canadian Venture Market Bottoms (from 1981 to 2014)” please visit Dajin Resources’ website. Once there, scroll down about 12 inches (~ 30.5 centimeters) and click on the infographic on the right. There are another 4 or 5 others worth viewing as well.
What has Caused This Devastation?
Is it China’s slowing economy? A slowing of annual GDP growth from 7%-8% to 6%-7% shouldn’t be the dominant factor. Although the second largest economy, the combined GDP of the U.S., European Union & 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 everything 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 burning coal, but extracting it is fraught with environmental challenges), growth of global coal-fired power plants, decade + time frame for nuclear reactors, Alberta’s giant, controversial oil sands industry…. very serious problems looming today. Clean energy & storage of renewable sources REQUIRES green metals and minerals, most notably, lithium. Lithium and a few other important base metals are known as, “Energy Metals.” Key energy metals include graphite, cobalt, copper & lithium. These metals are used, are essential, in the generation and storage of energy.
What is Clean Energy and Where can I Get Some?
Clean energy is our best hope. The predominant battery for both electrical-grid scale storage applications and Electric Vehicles is lithium-ion based. There are a few different battery chemistries used for select end uses, but lithium is at the heart of most of them.
Strong evidence of the demand for lithium can be seen in its pricing history compared to copper. 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 a lot of attention. The lithium sector is squarely in the center 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 7 lithium juniors. Dajin Resources is right in the mix of an intense land grab in the State.
Land Grab Well Underway, Dajin Sitting on Nearly 7,000 Acres in Nevada Alone
Royce Resources, Ashburton Ventures, Nevada Sunrise and Matica Enterprises recently jumped aboard the clean energy train. Royce is a company worth watching, it has convinced legendary mining mogul Frank Giustra to be actively involved, a clear vote of confidence in Nevada’s lithium hub. Other public and private companies are staking ground, contemplating ways to get exposure to lithium’s bright future. Although early-stage, Dajin is probably 18 months ahead of these start-ups, and owns 100% of 6,860 acres (2,776 hectares) right in the heart of the 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 management team, Board and Technical Advisory Group, 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 VP 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 a long time, probably 10 + years. The question is how fast. The dreadful performance of base metal juniors places them all in the same boat, waiting for China’s next stimulus package, 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.
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 chemical, a metal that’s not a commodity by any conventional definition, but an incredibly important specialty metal. Dajin Resources (TSX-V: DJI) (OTC: DJIFF) (Frankfurt: A1XF20) is in the right place at the right time looking for this 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