Uranium Superstar Goes All-In On Impending Nickel Crunch
Utilizing a top-down approach, he first performs detailed analysis on a given commodity.
If a supply crunch is imminent, he will hunt down the cheapest projects and acquire them. He believes that prices must reflect scarcity.
In early 2005, Mike identified the gaping supply crunch in uranium. Prices had been beaten, but a decline in supply was on the horizon. Accompanied by extraordinary lead times to new production, Mike saw an opportunity and began consolidating assets with his partner Stephen Dattels.
UraMin was birthed in 2005, and soon had developing mining projects in Namibia, South Africa, and the Central African Republic—to the tune of roughly 170 million pounds of uranium.
Time proved Beck’s thesis was dead on. Over the next two years the Uranium price would sky-rocket, from $20.54/lb in January 2005 to $136.22/lb by June of 2007.
The company listed on the TSX in December 2006. A property package stiched together by Mike’s group for a mere US$4 M was acquired by French uranium company Areva in June of 2007— for US$2.5-billion.
Since then, Mike has kept a fairly low profile, researching ideas and searching for his next thesis.
And it appears he found it. Beck is convinced that this next market sensation will not just trump uranium’s move a decade ago; he believes this could be the biggest move in a commodity since the invention of tin foil in the early 1900s!
When the electric vehicle revolution blipped on his radar, he immersed himself in the numbers, contacting his vast network of industry insiders and institutional analysts for information. After literally years of research, he readied for his next big trade.
Different commodity, yet the plan remains consistent: avoid exploration risk by identifying a known deposit which is out of favor, but poised to come roaring back.
Mike’s EV thesis can be summed up as follows:
– Governments around the world are cracking down on emissions, which will lead to a drastic decrease in conventional vehicles sales
– Electric vehicle batteries are becoming cheaper and cheaper. In fact, by 2024, it will be cheaper to own an EV than an ICE-vehicle in the EU, United States, and China.
– EVs are faster and easier to build than internal combustion engines. EV factories have half the footprint, thus require half the capital investment. They are also 30% more efficient, and can easily be scaled and reconfigured to support demand.
In short, it is inevitable that the EV market will overtake the personal vehicle market.
Currently, lithium, cobalt, and nickel are the key ingredients in the lithium-ion battery. Mike found the best way to leverage each in the coming supply crunch.
Mike’s Lithium Play – LSC Lithium Corporation (TSXV:LSC)
This includes six major development properties: Pozuelos (Salta), Pastos Grandes (Salta), Salinas Grandes (Salta), Salinas Grandes (Jujuy), Rio Grande (Salta) and Jama (Jujuy). The acreage is on high-quality salars in the provinces of Salta and Jujuy, and is being fast tracked to production.
LSC Lithium was formed in 2016, and listed on TSX Venture in February 2017 via RTO. In conjunction with the RTO, LSC raised $40 million, and recently closed another $20 million. The company is currently working to develop a Preliminary Economic Assessment (PEA) and define mineral resource estimates for its flagship properties.
The company is spending around $1M per week to advance their lithium projects towards a resource. This is a serious operation, backed by lots of capital and serious brain power.
It is underpinned by C$170 million of physical cobalt, but is also looking to grow through streaming and royalty acquisitions. The company currently holds 7 cobalt royalties.
And since Mike believes that Cobalt will blow through $100 per pound, it’s no surprise he sees this as a great way to play.
In Giga Metals, Mike found the 2nd Largest undeveloped nickel-cobalt sulphide deposit in the world! The 100%-owned Turnagain Project contains a resource of 1.8 billion tonnes, which is based on less than 25% of the prospective geology, meaning there is significant exploration upside with minimal drilling. Turnagain has the potential to become the world’s largest undeveloped nickel cobalt-sulphide deposit, and one of the largest cobalt producers outside of the Congo.
The optionality on Turnagain is significant. We cannot forget that the market once valued the company at C$150 million when nickel prices were rising:
It has the same storyline as Giga, a completely mispriced and forgotten asset in two near-surface open-pit deposits, Mayville (Cu-Ni-PGM), and Makwa (Ni-Cu-PGM-Co).
The projects have had C$40-50 million in past exploration and development expenditures, with PEA level economics. Like Giga, the economics were calculated in a more favorable nickel environment – at one point in time Mustang boasted a ~C$100 million market cap:
Both stocks have already performed incredibly well in 2017, but the nickel narrative is just beginning to play out. We expect to see a greater run-up before some very large, sophisticated pools of investment capital take positions to finance these emerging stories. Nickel will be in deficit in the coming years; we believe Giga and Mustang are the best vehicles out there to lever the bet on nickel.