Lithium and REE Investment Manifesto and Next Big Thing in action:
San Francisco notes.
CS. "Risk comes when you do not know what you are doing" - Warren Buffett says and he knows thing or two about investing.
Do not trust anybody and do not let other people to make investment decisions for you - this what life has taught us. Kick the tires and relax with our investment approach: nobody to blame - you are in charge. That is why you can never find any investment advice on this website, any solicitation to buy or sell particular stock, but only our shared map and travelling experience.
Time for us is to hit the road and meet people who are followed by others, whose opinion is valued by fellow brothers - investment crowd. Time is always an essence, we can not afford to live a life of an artist, when she will be admired long time after her time. Money as all particles, which come and go, have a dual nature inhibited in their reality: Money love to test your patience as much as they are impatient themselves. They refuse to grow without a catalyst, even in the most fertile environment. They are always searching for the Trend: they like to come early and enjoy when others will be piling in.
Here we must share another secret tool and a big hope from quantum physics: enough attention and Intention could create particle itself in the space continuum. If it could happen with the money as well - we must be very close to it on this blog, on another hand you should never underestimate Lithium contamination in our morning coffee.
Something is telling us that we are close to the right Time again, like
Warren Buffett was spot on the money last Fall buying into BYD with 250 million and now, one year after and almost an eternity passed in investment world of slow motion crash video, he is sitting on 1 billion stake in the company and has made BYD founder the China's richest person along the way. This something could be coming Copenhagen Climate Change conference or Nissan Electric Leaf on North American Tour or even this article about GM Volt anxious to be on time on the road.
Time is to test our Trend and
Next Big Thing:
Exploiting Chaos by Jeremy Gutsche could be your guide as well: just brilliant - full stop. "Disney, CNN, MTV, Hyatt, Burger King, FedEx, Microsoft, Apple, Gillette, AT&T, Texas Instruments, 20th Century Fox, IBM, Merck, Hershey’s, IHOP, Eli Lilly, Coors, Bristol-Myers, Sun, Amgen, The Jim Henson Company, LexisNexis, Autodesk, Adobe, Symantec, Electronic Arts, Fortune, GE, and Hewlett-Packard. These iconic companies were all founded during periods of economic recession. Dramatic change and simple evolution give birth to a new set of market needs. Identify those needs and enjoy remarkable success" - reminds us author and we are in the same Vibe. Early this year we refused to get into our cave with all gold and silver accumulated just to watch the world coming to its end. We have found our
Next Big Thing and
Bull market and we are riding it from
there.
In order to grasp the idea where are we going we should share where from we are coming. We call it the "Big IF" theory - some people afraid of it, we are searching for this situations as catalyst for value creation and Trend starters. To get it right you need to be in the same Vibe: La Roux "Quicksand" will be a good start - it needs to be romantic and electric at the same time for a start, followed by Black Eyed Peas "The E.N.D. (Energy Never Dies)" - we will need energy, a lot of it to make our dreams happen. Now we can get into more intensive message mode to lay out our travelling map to the
Next Big Thing.
- "Big IF" was in Gold in 2002, later in gold Majors and now in gold Juniors.
- "Big IF" was in Tenke Mining with war in Congo and almost 4% grade Copper in the ground spiced by Cobalt, war was over and stock ride was impressive from below 0.9CAD to over 20.o CAD.
- "Big IF" was in Silver Standard Resources when they were buying all they can with silver in the ground, when silver was below 7 USD/oz and stock below 5, buy 2007 it was over 40 USD.
- "Big IF" was in Sterling Mining, when legendary Sunshine mine could not save people from corrupt decisions and company was driven into the ground - a very good reminder to keep your eyes on the ball once it in play.
- "Big IF" was in our waiting for the Big Disaster to happen from 2006, when our PUTs were bleeding all the way up with the market, who knows no mercy even to the people with a common sense, but on the wrong side of the trade. Juniors in Gold and Silver made our insurance payments for PUTs on Tech, Home builders and Banks barely noticeable. We had our fun with Google and its valuation, money was made, money was lost - company has defined all laws of gravity. "Big IF" happened and Big Disaster last Fall has driven Google to the low of 250, it allowed us to take profit with other PUTs and embrace our Next Big Thing few months later. Disaster effect was different then we anticipated: "
It was a long year for this company and it passed so fast...One year ago bottom fell out of all Junior mining sector: US Dollar, contrary to expectations, did not collapse with the financial system, but performed for the last time its "Safe Heaven" status. A lot of good people were wipe out from investment surface." We have survived, but do not like just to retire on our holdings of Gold and Silver juniors - even more strange thing happen: we have become bullish and ask "What IF?" again.
Google? - we are in love with the company, yes - we visited the campus, yes - they made it possible to invest with information at our fingertips, when potential fraud could be exposed and questions asked before it happen even with some
Lithium plays build on Hype part of the story. But we are not bullish on Google now, we have found another new and coming Thing.
- "Big IF" was in 2003 when James Dines pronounced bull market in Uranium and we made an easy killing on basket of Uranium Junior miners, some of them going from low 0.2 to over 1.0 AUD on Chinese money coming into the sector in less then a year. James Dines is in the picture again and this May he moved the REE market with value doubled and tripled with his announcement of the first
Major Bull market after 2003 Uranium call in Rare Earth Elements. It will be our first take out from San Francisco Hard Assets conference last week - meeting hall was full of crowd and Master energised by attention proclaimed:
In 70s he told to his followers Buy Gold and he was a Gold Bug. He was stared down but refused to retreat. (This phrase followed every of his bullish calls.)
In 80s he told to Buy China and he was China Bug. He was...you know what happen next.
In 1997 he told to Buy Internet and he was an Internet Bug.
In 1999 he told to sell Internet stocks.
He told that it will be era of raw materials in 2000.
2002 he announced Uranium Super Bull.
2005 he told Sell Real Estate.
In November 2008 he told that it is Not the End of the world and mining stocks will double again.
In May 2009 he told about coming Buying Panic in Rare Earth Elements, announced Super Major Bull market in REE and became a Rare Earth Bug. They (REE) will be on front pages and Goldman Sachs owns Molycorp - private company which owns last past producing mine in USA. (We did not verify this information.)
- James Dines, John Kaiser and Jack Lifton are all extremely bullish on Rare Earth Elements and Jay Taylor has picked up recently
TNR Gold / International Lithium for his Watch List. James Dines called it "The One Best Area to Buy Now", John Kaiser worried about "Security of Supply in a Changing World" and Jack Lifton reported on "In 2010 What will be the Best Plays in Rare Earths for Small Investors As Well As Large". Reasons sighted are the same as we have discussed before here:
China controls more then 97% of the market now.
All other REE metrics like 36 kg of REE in every Prius and 300kg of Rare Earth magnets per 1 mW of Wind Tubines.
- With Lithium picture was more muted and we found that a lot of analyst and letter writers are out of the picture on technological advance and recent developments in Lithium-ion battery space and are taking figures from TRU that stated that all current producers will easily meet Demand in years to come. Apart from cynical observation that they could be paid up by SQM, FMC and ROC, who do not like to change their cosy environment, we must state that here is the place for our "Big IF":
- General public is very interested, but definitely lack the knowledge of technological advance in Electric cars and lithium-ion batteries, too many technical details about
Lithium brines and hard rock deposits are not helping and story is not as beaten down for average investor as we thought before. Grandmother has not invested yet, we are still in
Stage two of the Bull market. Gold and Silver was around for 5000 years and only now public is allocating some portion of their portfolio and still thinks whether it will stay above 1000 USD/oz. With technological metals we need a shift in perception of value and that Electric Cars are serious this time. And it is
coming fast with billions invested in
Lithium-ion technology and Electric Cars and you are welcome explore it here on this blog. For those interested we will provide a a few important mile stones for your DD:
Where and how to invest? Here is where you have to make a decision. You will find a number of Investment Research notes in links provided. Basket of Lithium and REE plays could be a good thing for a start. Be careful with very small companies just coming in with one or two projects in the very early stage. On another hand big ones - Majors like SQM, FMC and ROC are only part Lithium play with 15-20% of revenue related to this product. We have never seen Steve Jobs talking about Zune (have you ever seen this thing?) and there are rumours that Bill Gates does not allow iPhones and iPods on his grounds. With Canadian stock exchange rules we must be explicitly accurate and will state one more time: do not take, please, anything as an investment advise and/or solicitation to buy any particular stock, but for us our heart is where our money now. Our "Big IF" on a company level in our Bull is whether Gary Schellenberg from TNR Gold was able to buy at rock bottom prices the right properties in Lithium and REE before market recognition of this bull and as COO of the company Mike Sieb stated in his
interview for Jay Taylor's Watch List multiple projects of brines and hard rock properties provide the most risk balanced approach for value building from historical results and into confirmation of economic potential.
International Lithium spin out from TNR Gold will provide another catalyst on a company level.
Nissan Electric Leaf on the roads and GM Volt delivered on time will bring that necessary macro catalyst for market perception shift, when people will realise that Electric Cars are for real this time and this news from Detroit are very encouraging.
We will give another "Big IF" today - what if people will decide that it is just Cool not to kill environment any more? All articles about Electric Cars polluting more then conventional ones are showing us the pain of change and that we are on the right way and it is serious to consider as a threat to conventional wisdom.
"
How it Works
Anyone who read the earlier article about the Chevy Volt, or who is following all the talk of future propulsion around the Detroit auto show this week, might reasonably be a little confused as to what is or isn't an electric car by now.
'Pure' electric cars, such as the original GM Saturn EV1, or the forthcoming Tesla Roadster are driven by an electric motor that is fed by batteries charged up from mains electricity (they are plugged in). A 'hybrid' electric car, such as Toyota's Prius, is a car which uses two forms of propulsion - in the case of the Toyota, a small petrol engine coupled to an electric motor.
The Volt is a hybrid too, but of a different kind. Like the Prius it has a petrol internal combustion engine, an electric motor and a set of batteries. Here the similarities end. In the diagram, I've tried to clearly identify the major aspects of the Volt's drive train. It works thus:
1 – Car is ‘plugged-in’ (orange) to mains electricity, this charges up the battery pack (blue).
2 - Battery pack (blue) provides energy to drive electric motor (red), which turns the wheels.
3 - For 45 miles (approx) of driving after each charge, car works solely thus, until the batteries (blue) reach a certain level of ‘discharge’.
4 - At this point, a small, petrol internal combustion engine (yellow) starts. Unlike a normal internal combustion engine car, or indeed the Prius hybrid, this petrol engine cannot drive the wheels. Instead, it drives an on board generator (green) to continue to power the electric motor (red), which continues to provide drive to the wheels.
5 - When mains electricity is available again, car is plugged in once again (orange), to charge the batteries (blue), and the process starts over again.
This sounds quite complicated, and in a way it is. Critics, particularly fans of pure electric cars will point out that this is a very complex system, using more than one engine, which fundamentally still uses petroleum. Although this is true, the Volt could provide a realistic way forward, at least in the medium term, for two reasons:
• The primary concern (according to the auto makers) of most people about electric cars is the limits of their range. Lithium-Ion batteries as used in the Volt have good range properties, to the point that the Tesla roadster (which uses the same kind of batteries, albeit a lot more of them than the Volt) claims to get 250 miles off one 3-hour recharge. The problem is that, good though this is, it still precludes people from embarking on that great American road trip. The Volt's small internal combustion engine and generator basically provide it with unlimited range. Like current cars, one simply keeps filling up with petrol until mains electricity becomes available again to recharge. This ‘compromise’ smooths the path for people to adopt vehicles that they become used to plugging in, whilst allowing them to continue to use their car as they do currently.
• Secondly, the car functions purely on its battery and electric motor combination for the first 45 or so miles after each recharge. According to GM, that means that in this mode alone, the car should meet the needs of 78 percent of people - the average American drives only 29 miles each day. Therefore, assuming that one is able to plug the thing in each night, many people might find themselves never having to put petrol in their Volt.
As a road map to the future, the Volt therefore makes a lot of sense, not just for America, but potentially, more densely populated and urban Europe."
This technical explanation is taken from...2007 blog article! It shows our point one more time - it is not a fashion of the day - it is serious this time. It took a lot of time, capital and commitment to build electric cars ready for the road. Nissan spent 5.5 billion in investments in its electric car program and now Leaf is on the road on North American tour, GM is busy fine turning Volt up to production and Tesla is going public. Time has come for Electric Car.
DETROIT FREE PRESSSaturday, November 28, 2009
From charging the Chevrolet Volt's revolutionary power system to washing the car, everything about the extended-range electric vehicle is new, but Volt owners must find it familiar and easy to use.
Racing to meet those twin goals on an unprecedentedly tight schedule, the engineering team working on the Volt has 25 to 30 of them on the road at all times. The deadline is the Volt's on-sale date in about a year.
"There's still a lot to do, and not much time," chief engineer Andy Farah said recently. "It's all part of the natural evolution of any engineering program, but at warp speed."
Every system, every part must be double-checked and idiot-proofed. Volt engineering manager Nate Fitzpatrick sent his 10-year-old son out to plug the Volt in for charging. "I didn't give him any directions. I wanted to see if we'd made it easy for the owner," Fitzpatrick said. "He figured it out right away."
The rush program to get the Chevrolet Volt extended-range electric car on sale in a year has become a 24/7 job for engineers charged with developing the car that's intended to revolutionize the auto industry and reinstate General Motors as a leader in advanced technology.
"We're learning all the time," Volt chief engineer Andy Farah said as seven of the team met for a breakfast debriefing at Athens Coney Island in Royal Oak, Mich., on Monday after driving the cars all weekend. The Volt has a 40-mile range on battery power and a small engine that serves as a generator of electric power for longer trips.
"I've been bustin' around all morning, and the engine hasn't started yet," Farah said. "The trip computer said I got 260 miles a gallon over the weekend." Farah recharged the car at home between drives, allowing it to operate nearly entirely on battery power.
The Volt should get a 210-mpg Environmental Protection Agency fuel economy rating in city driving.
GM built about 80 Volt test cars. Most of the Volts in Athens' parking lot were built to test a specific system, so the engineers compared notes.
"You've got the good aerodynamic package," Volt engineering manager Nate Fitzpatrick said to controls manager Chris Kinser, whose Volt had a nearly invisible air dam below its bumper. "That reduces four counts of aerodynamic drag. I'd give my little finger for four counts of drag," he said, waving his hand over the table.
"They call me 'Stubby,' but it's a great car."
Over the laughter, Rob Bolio, lead development engineer, described the crisis of the car wash. The cover for the Volt's charging port kept falling off.
"The guy who runs the car wash came up to me with a box of parts and said, 'You might have a problem here,'" Bolio remembered. After a quick design revision, Bolio and a designer engineer spent four hours taking Volts through the car wash with no damage except to their patience.
"We're easygoing," Fitzpatrick said. "When there's an issue, we give them 24 hours to address it."
With the first test cars, Bolio woke up two or three times a night to check to see whether they were charging in his driveway. Since then, they've added a light to signify the car is plugged in and charging, a subtle "charging now" beep and a timer.
"Owners can set the car to charge whenever they like," Farah explained."