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In 2011 Peter Epstein, CFA, MBA left a $3 billion hedge fund where he was a senior analyst to help increase awareness of a number of small cap companies in which he's invested in. Please see: On TWITTER: @peterepstein2 Mr. Epstein formed MockingJay, Inc., a consultancy for... More
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  • Pure Energy Minerals Ltd, A Value Stock Deserving More Respect

    Pure Energy Minerals Ltd, a Value Stock Deserving More Respect

    Peter Epstein, CFA, MBA whole article, @peterepstein2

    Anyone following the lithium sector and Pure Energy Minerals (TSX-V:PE) (FRANKFURT:A111EG) (OTCQB:HMGLF) knows that on September 16th the Company announced the signing of a conditional supply agreement with Tesla Motors Inc. (NASDAQ:TSLA). Now that the dust has settled, it's time to take a closer look at Pure Energy Minerals.

    Herein, is a rough comparison of valuations, including of a newly producing company, Orocobre Ltd. Recall that Pure Energy's conditional supply agreement is only the second announced by Tesla, both for lithium. The other is with Bacanora Minerals. The merged Western Lithium & Lithium Americas, is also a useful comparison.

    A simple valuation exercise

    Orocobre reached initial production this year. Its Enterprise Value, "EV" [all figures in C$] is ~ $275 million (Note: Orocobre owns 66.5% of the equity in the producing lithium asset, with Toyota and the local government owning the remainder). Bacanora has an Enterprise value of ~ $135 million. Western Lithium's EV (post Lithium Americas merger) is ~ $72 million and Pure Energy Minerals' EV is ~ $36 million. How does one compare these 4, each at different stages, each with company specific challenges and attributes?

    First off, including the Major lithium producers in the valuation exercise, FMC Corporation (NYSE:FMC), Albemarle Corporation (NYSE:ALB) and Chemical & Mining Co. of Chile (NYSE:SQM) is an impossible task. Each derives substantial revenue from non-lithium activities, i.e. they're not pure-play lithium companies, not even close from an investment perspective.

    Pure Energy Minerals trades at a large valuation discount, warranted?

    Pure Energy Minerals trades at an 87% discount EV to Orocobre, a 73% discount EV to Bacanora and a 50% discount EV to Western Lithium. Are these substantial discounts warranted? On average, that's a 70% discount to the other 3 pure-play lithium companies. In my opinion, Pure Energy is trading cheap vs. these select lithium entities.

    Clearly, I like Pure Energy Minerals. I like Western Lithium and a smaller company with property in both Nevada & Argentina, Dajin Resources. I'm on record proclaiming that lithium demand could double every 3 years. These particular juniors have very strong upside potential over the next 6-18 months. A rising tide lifts all boats. Other lithium juniors could be home runs, however it would take several years for these out-of-the-money junior's ships to come in.

    That's why Pure Energy's 8,000 + acre lithium brine project, containing 816,000 metric tonnes of Lithium Carbonate Equivalent, (NI 43-101 compliant Inferred resource, July 2015) is special. Located next to the only producing lithium mine in North America in Clayton Valley, Esmeralda County, Nevada, halfway between Las Vegas and Reno. Infrastructure, labor, power, roads and equipment are available. This is Nevada, one of the safest and most prized jurisdictions on the planet.

    Continue Reading:

    Oct 01 12:39 PM | Link | Comment!
  • Dynamic, Modern, Small Cap Websites MUST Stand Out


    Dynamic, Modern, Small Cap Websites MUST Stand Out
    Many small cap company websites leave much to be desired….


    In these opening paragraphs I describe an, "Old School" corporate website. It looks like it was made 10 years ago because it was. No one knows much about website design or how to place information in desired locations. Therefore, the homepage is a tragic mess of unorganized, dated material. Articles from 2012-13 are linked, but the links don't work. "Analyst coverage" by analysts who no longer cover the company or by firms that no longer exist. Recent, critically important industry events are not referenced. The latest presentation is from Feb 2014, and capital structure from Sept 2013. Several management changes have transpired and the company's name has changed, twice. Why would anyone invest in a company like this?

    Trading volume in small cap stocks has collapsed, allowing retail investors to buy oversold stocks that bigger investors would never look at. Several sell-side research firms have departed, leaving hundreds of small cap companies unfollowed. This is not necessarily a bad thing. Corporate websites can serve to bridge the gap in a very positive way, or be an embarrassment. A company's website is extraordinarily important as a tool for engagement, attracting serious visitors to seek more information.

    I divide sites into two camps, "Old School" and "Dynamic Modern." Even though I'm an Old School person, Dynamic Modern sites are clearly superior. Serving a visitor's needs AND anticipating information that a visitor might seek, these are prerequisites. Dynamic Modern's new features and functionality are completely within my Old School grasp. Dynamic Modern sites are robust, idiot proof. With junior miners, grade is king, sometimes cash is king. On Dynamic Modernsites, Fast is king. By fast, I'm not referring to the speed at which a web page loads, but the speed that information is posted. Websites need to evolve week by week. That means that they must also be Smart. Too much information scares readers away. Bare bones sites require extra navigation, causing viewers to bolt.

    In a fast paced world, a Dynamic Modern website stands out

    Even Fast and Smart are not enough to be at the very top of the heap. The best sites are relentlessly Relevant. Websites that aggregate industry news and press releases are Fast, but lack focus. FAST IS EASY. Smart and Relevant much less so. Fast, Smart and Relevant. This is where things get interesting. A knowledgeable person has to be in charge of Fast, Smart and Relevant.

    That person has to filter relevant information coming through the gigantic Internet pipe. Fancy algorithms aren't the answer. A single person can routinely update a website and presentation. When it comes to incorporating social media, all hands on deck. Social media for Old Schoolers is not intuitive or easy to grasp, it's NOT idiot proof. Therefore, help on the social media side may be required. However, once the social media stuff is bolted on, it usually doesn't need to be changed.

    Continue Reading...

    Sep 28 2:19 PM | Link | Comment!
  • Interview Of Ucore Rare Metals' CEO & Chairman Jim McKenzie

    The following Interview of CEO & Chairman Jim McKenzie of Ucore Rare Metals Inc. (TSXV:UCU) (OTCQX:UURAF) was conducted by phone and email in the week ended September 25th. The reported views, opinions, assumptions and facts are entirely those of Mr. McKenzie. The interviewer, Peter Epstein, believes that the factual information provided by Mr. McKenzie is accurate.

    Ucore Rare Metals Inc. is a well-funded development-stage mining company focused on establishing rare metal resources with near term potential. Ucore's primary focus is its 100% owned Bokan - Dotson Ridge Rare Earth Elements, "REE" property in Alaska. The Bokan project is located 60 km southwest of Ketchikan, Alaska and 140 km northwest of Prince Rupert, British Columbia. It has direct ocean access to the western U.S. seaboard and Pacific Rim, a significant advantage in developing near term production facilities and limiting the capital costs associated with mine construction.

    The Bokan property is particularly enriched with Heavy Rare Earths Elements "HREE," including the critical elements Dysprosium, Terbium and Yttrium. Approximately 40% (by weight) of the REE contained on the Dotson Ridge property are HREE. Please enjoy, Interview of Ucore Rare Metals' CEO & Chairman Jim McKenzie

    Ucore's exciting news from early March has been widely discussed. What's the most important news since then?

    The most important news is the upcoming commissioning of our pilot plant, first discussed at length in our July 8th press release. The pilot plant is slated to commence operations within six months. Many have asked what the throughput will be. We've upgraded our design to accept throughput volumes that will satisfy the feasibility requirements of our flagship Bokan-Dotson Ridge project and projects being evaluated with partners. Some of these projects will require significantly larger capacity. However, the pilot plant will be capable of scaling up to much larger volumes, depending on the input material we're testing and who we're testing it for.

    We anticipate that the, "SuperLig®-One" (pilot plant) will be a high-value asset. The intention is for the unit to be capable of accepting Pregnant Leach Solution ("PLS") and bulk concentrates from prospective REE feed stocks around the world. Ucore has already entered into agreements with a number of feed stock providers. Still, the highest priority source of test material in the near term will be from our own Bokan-Dotson Ridge Project.

    Beyond the pilot plant, perhaps under-appreciated is that our partnership with IBC extends at a global level. Recall that Ucore announced an exclusive agreement with IBC for the use of SuperLig® technology for metals in the tailings and reclamation sectors, as well as processing applications related to REE's. Make no mistake, we're highly committed to the successful completion of the pilot plant for the purpose of refining rare earths. However, we are being approached by a range of parties wanting to discuss alternative uses for MRT, such as other the recovery of other high value metals from process flows and tailings sites worldwide.

    Continue Reading...

    Sep 28 7:40 AM | Link | Comment!
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