THE GREAT NAMAZU ON THE ROLE OF LITHIUM IN FUTURE TECHNOLOGIES AND SOME INVESTMENT THOUGHTS
Helios Ruehls, Inc. Science Report NO. 4
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| THE GREAT NAMAZU RETIRED JAPANESE DEMI GOD< TURNED ANALYST |
Greetings Bipeds!
Pretty much everyone in Saudi Arabia and Houston knows that the world runs on petroleum. But here at Helios Ruehls, Inc we know a lot of other things that are being done with Petroleum that don't involve burning it as fuel. Petroleum is at the heart of the "Materials Revolution" new composites are being created annually far different from the original petroleum based materials of plastics and fiber glass resins. Parts of the International Space Station are made up of these composites. We have been encouraging the increased production of petroleum. We are acutely aware of the resulting effects that increased American oil and natural gas production has been having on the American economy of late, However, we know that in the long run, the stuff is too valuable for other purposes to simply burn it as fuel indefinitely. Other sources of energy are coming on line every year. Hi-bred technologies are being introduced to reduce petroleum consumption, particularly as fuel. Here at Helios Ruehls we continue to work on one of the most promising concepts in solar thermal energy, the fractal lens, While the Obama left overs in the DOE and elsewhere continue to be interested only in "solar energy" from one form or another of photo-voltaic cell, progress continues in corporate and university labs on a wide variety of alternative energy solutions. One that appears ready to take off involves a mineral known as Lithium Carbonate .
Lithium Carbonate crystals in their natural state are thought to store far more energy than refined gasoline, indeed per unit of measure this mineral dust is thought to be 1,693 times more powerful than refined gasoline. If we had an automotive engine capable of being directly fueled by Lithium Carbonate dust , or more probably Lithium brine, some scientists estimate that such an automobile would get about 42,325 miles per gallon. Such an automobile powered by such a fuel would have to produce some spectacular mileage to gain traction in the market, the cost of such fuel is estimated to be about $50 a gallon. But some automobiles are already running in part on Lithium, specifically Lithium batteries. These are the batteries found in the hi-bred models that run on battery powered electric motors, recharged during operations by a periodically kicking in gasoline engine that runs the vehicle while recharging the battery. Lithium is also the basis for the batteries in most of the presently rare "plug in" hi-breds. Lithium looks to be the great hope for the major component in the yet to be developed ultimate battery.
While a little Lithium may ultimately go a long way, it does appear to be a rare commodity. Presently we know of only two ways it is produced. When dwarf stars collide with certain cosmic rays in a process known as stellar nuclosynthesis a fine powder is formed , Lithium Carbonate. Fortunately the same process is repeated here on earth in a much slower collision but one that generates comparable heat. Along the ever shifting margins of the Earth's crustal plate, as one Teutonic plate over rides the other Lithium Carbonate is ground out. Here and there over time it sometimes rides hot water plumes , seeps, or geysers to the surface as a brine. In arid climates the brine evaporates and leaves surface deposits of dust like Lithium Carbonate. It is mined by rather traditional surface methods and sold to the ever increasing users.
There is a lot of hype in the market just now over Lithium, we don't doubt that the Lithium Carbonate has a future place among alternate fuels and certainly a major role to play in battery development. But a few "investment advisers" appear to be making claims about incredible profits to be made in lithium mining stock. You may recall that when we wrote about petroleum related stocks a year or so before the shale oil and tight sands finds started to come into production that we predicted a drop in oil prices and even something of a drop in gas prices at the pump, At that time we suggested ( we'd never "advise" we're not financial advisers) to pass on oil producer stocks, and instead concentrate on oil processing, refining, and transportation stocks. Our reasoning was simply that oil producers are dependent on the price of oil. When oil is in super abundance the price per barrel falls and they have little choice but to step up production to keep up revenues which in turn tends to continue to drive oil prices down. While the oil producers are struggling, those who transport the oil to the refinery, the refiners and processors still charge about the same. Oil transport and processing revenues remain fairly stable oil as a commodity is always on something of a roller coaster ride, When its not dying fields, or big new discoveries, its often national and international politics driving the unstable petroleum market. Sometimes we wonder why any one would want to be in the oil drilling business, But lithium we think is not going to follow the oil model.
First, no one knows just how much lithium there is in the world, nor how much we will eventually need. There seems to be more than enough discovered and presently being mined to assure lithium battery production until at least the end of the century. The few mines so far being worked are being worked with traditional surface mining equipment and the mines are located near good quality roads leading to rail and ship connections. No transportation infrastructure particularly designed for lithium transport appears to be evolving at this time. But all sorts of new uses for Lithium Carbonate appear to be being developed in the labs of the world. Some published investment advisers are claiming that certain big automobile manufacturers are planning on making 35% or more of their fleet "lithium powered" in the coming decade. We think that's hype for the planned increase in hi-breds and even plug in hi-breds. We seriously doubt that anyone is directly making that kind of progress on Lithium Carbonate fuel or engines designed to run on it. Even if such a technological development was about to come out of the labs, just as in the early days of the gasoline powered automobile the full marketing potential of such cars will have to await the development of the filling stations, repair technicians and similar supporting personnel and infrastructure.
We think that if you want to own a piece of the growing lithium industry, direct investment with the miners is about as good as any other bet just now. However, don't expect the returns being hyped in some quarters, and know that the real prospects for a great investment at the moment are rather limited. We are aware of three producers presently. The leading producer Albemarle Energy (NYSE: ALB ) has both deposits that they are mining and we understand, refining, and distribution capacity. They have been around a while and show the ear marks of an established company that may well fit the definition of a buy and hold stock. Like most established companies with a good performance history and reliable proven management their individual stock price is a bit high at about $109.05 per share the last we checked. That price actually represented a tiny fall from the prior week's trading and might be a bargain. While we view Albemarle as the industry leader and a relatively safe investment (common stocks are not bank deposits, they are only ever worth what you can get for them at any given moment), we think there will be room for solid growth as Lithium Carbonate uses continue to increase. As a buy and hold stock this company could show significant growth over the next decade. In the interest of full disclosure, our internal "endowment fund" runs exclusively on a "buy and hold" basis and we are firmly entrenched in the philosophy that any stock not worth holding for ten years is not worth holding for ten minutes.
That brings us to another Lithium Carbonate producer; OROCBRE ( Orocobre Ltd. is registered at the Australian Securities Exchange or ASX, symbol ORE and on the Toronto Stock Exchange ,TSX as ORL,and is included in the S&P / ASX 300 index. OROCBRE is newer producer ( stock traded since 2007) whose stock when last we checked was rising in price to about $3.31 a share. The rise has been typically about 15 cents a share for a few weeks now (May 8, 2017) Far less than Albemarle energy's price per share but rising. Orocobre Limited is a mineral resource company based in Brisbane Australia. The company presently focuses on lithium carbonate and borax operations with major holdings in Argentina. For reasons expressed in previous posts we consider Argentina an unstable nation , so one has to have some reservations about any company heavily invested there. This company has some interesting partnerships with some typically far thinking Japanese concerns, but we could find no holding outside of Argentina. Argentina is to our maritime based way of thinking a basket case formally aligned with Russia. We would have a lot more confidence in this company if it wasn't so deeply vested in Argentine mineral deposits. If it does run afoul of the Argentine proclivity of nationalizing private property it could well grow into something more on the order of industry leader Albemarle.
The company that is drawing the bulk of the hype from certain alleged "market analysts" right now is Lithium X (CVE: LIX) Which in the two weeks we've been tracking it (this was written May 8, 2017) has risen in price from $1.87 to $2.09. A few "analysts" are treating this as the Penny stock of the decade and predicting its eventual rise to over $1,000 per share. This is the kind of stock price increase than can make millionaires out of small investors. But we advise you not to bet the farm on this company.
The recent stock price increases could be nothing more than the result of over hyped publicity. The facts behind this company are perhaps less concerning than the less hyped OROCBRE. Lithium X does have control of new massive Lithium Carbonate reserves, but at least half of their holdings are in Argentina. The plus side to both is the proximity of the deposits to transportation and refining infrastructure. So Lithium X appears to have the lithium carbonate deposits , including enough American deposits to assure survival in the event of an Argentine nationalization and they possess these deposits at a time when there is clearly rising demand for the product. The hype that appears to indicate fantastic new inventions poised to emerge from the labs and onto the market appear to be the work product of stock analysts who may be as interested in selling their services and publications as they are in buying stocks. We monitor labs and skunk works, indeed Helios Ruehls,Inc. is a sort of skunk works and we do see growth in the utilization of Lithium Carbonate related technologies but certainly no revolution in the next 36 months as some would have potential investors believe. We think Lithium X should be viewed as a somewhat promising penny stock . If it takes off due to its own merits vice hype we feel it has a potential of eventually going in excess of $100 per share, an impressive return. But it has some latent issues not the least of which is heavy investment in Argentina, and competent competition. We may actually take a small position in this stock for our internal endowment fund, but we understand it to be highly speculative, we will not risk "serious money". We see some potential here but not at all in line with the hyped expectations.
So that friends is the story of star dust turned to "gold". The story is really just beginning and the beginning is often a good place to be when a new commodity emerges. Unfortunately no one has an accurate crystal ball. Use caution, star dust is is not always what it seems. And remember Helios Ruehls is a scientific research service, not an investment organization. We are simply sharing with our readers certain insights scientific and commercial that come as a by product of our scientific research. Our stock insights may only be worth what you pay for them, and as always, these insights are a free service.
Lithium Carbonate crystals in their natural state are thought to store far more energy than refined gasoline, indeed per unit of measure this mineral dust is thought to be 1,693 times more powerful than refined gasoline. If we had an automotive engine capable of being directly fueled by Lithium Carbonate dust , or more probably Lithium brine, some scientists estimate that such an automobile would get about 42,325 miles per gallon. Such an automobile powered by such a fuel would have to produce some spectacular mileage to gain traction in the market, the cost of such fuel is estimated to be about $50 a gallon. But some automobiles are already running in part on Lithium, specifically Lithium batteries. These are the batteries found in the hi-bred models that run on battery powered electric motors, recharged during operations by a periodically kicking in gasoline engine that runs the vehicle while recharging the battery. Lithium is also the basis for the batteries in most of the presently rare "plug in" hi-breds. Lithium looks to be the great hope for the major component in the yet to be developed ultimate battery.
While a little Lithium may ultimately go a long way, it does appear to be a rare commodity. Presently we know of only two ways it is produced. When dwarf stars collide with certain cosmic rays in a process known as stellar nuclosynthesis a fine powder is formed , Lithium Carbonate. Fortunately the same process is repeated here on earth in a much slower collision but one that generates comparable heat. Along the ever shifting margins of the Earth's crustal plate, as one Teutonic plate over rides the other Lithium Carbonate is ground out. Here and there over time it sometimes rides hot water plumes , seeps, or geysers to the surface as a brine. In arid climates the brine evaporates and leaves surface deposits of dust like Lithium Carbonate. It is mined by rather traditional surface methods and sold to the ever increasing users.
There is a lot of hype in the market just now over Lithium, we don't doubt that the Lithium Carbonate has a future place among alternate fuels and certainly a major role to play in battery development. But a few "investment advisers" appear to be making claims about incredible profits to be made in lithium mining stock. You may recall that when we wrote about petroleum related stocks a year or so before the shale oil and tight sands finds started to come into production that we predicted a drop in oil prices and even something of a drop in gas prices at the pump, At that time we suggested ( we'd never "advise" we're not financial advisers) to pass on oil producer stocks, and instead concentrate on oil processing, refining, and transportation stocks. Our reasoning was simply that oil producers are dependent on the price of oil. When oil is in super abundance the price per barrel falls and they have little choice but to step up production to keep up revenues which in turn tends to continue to drive oil prices down. While the oil producers are struggling, those who transport the oil to the refinery, the refiners and processors still charge about the same. Oil transport and processing revenues remain fairly stable oil as a commodity is always on something of a roller coaster ride, When its not dying fields, or big new discoveries, its often national and international politics driving the unstable petroleum market. Sometimes we wonder why any one would want to be in the oil drilling business, But lithium we think is not going to follow the oil model.
First, no one knows just how much lithium there is in the world, nor how much we will eventually need. There seems to be more than enough discovered and presently being mined to assure lithium battery production until at least the end of the century. The few mines so far being worked are being worked with traditional surface mining equipment and the mines are located near good quality roads leading to rail and ship connections. No transportation infrastructure particularly designed for lithium transport appears to be evolving at this time. But all sorts of new uses for Lithium Carbonate appear to be being developed in the labs of the world. Some published investment advisers are claiming that certain big automobile manufacturers are planning on making 35% or more of their fleet "lithium powered" in the coming decade. We think that's hype for the planned increase in hi-breds and even plug in hi-breds. We seriously doubt that anyone is directly making that kind of progress on Lithium Carbonate fuel or engines designed to run on it. Even if such a technological development was about to come out of the labs, just as in the early days of the gasoline powered automobile the full marketing potential of such cars will have to await the development of the filling stations, repair technicians and similar supporting personnel and infrastructure.
We think that if you want to own a piece of the growing lithium industry, direct investment with the miners is about as good as any other bet just now. However, don't expect the returns being hyped in some quarters, and know that the real prospects for a great investment at the moment are rather limited. We are aware of three producers presently. The leading producer Albemarle Energy (NYSE: ALB ) has both deposits that they are mining and we understand, refining, and distribution capacity. They have been around a while and show the ear marks of an established company that may well fit the definition of a buy and hold stock. Like most established companies with a good performance history and reliable proven management their individual stock price is a bit high at about $109.05 per share the last we checked. That price actually represented a tiny fall from the prior week's trading and might be a bargain. While we view Albemarle as the industry leader and a relatively safe investment (common stocks are not bank deposits, they are only ever worth what you can get for them at any given moment), we think there will be room for solid growth as Lithium Carbonate uses continue to increase. As a buy and hold stock this company could show significant growth over the next decade. In the interest of full disclosure, our internal "endowment fund" runs exclusively on a "buy and hold" basis and we are firmly entrenched in the philosophy that any stock not worth holding for ten years is not worth holding for ten minutes.
That brings us to another Lithium Carbonate producer; OROCBRE ( Orocobre Ltd. is registered at the Australian Securities Exchange or ASX, symbol ORE and on the Toronto Stock Exchange ,TSX as ORL,and is included in the S&P / ASX 300 index. OROCBRE is newer producer ( stock traded since 2007) whose stock when last we checked was rising in price to about $3.31 a share. The rise has been typically about 15 cents a share for a few weeks now (May 8, 2017) Far less than Albemarle energy's price per share but rising. Orocobre Limited is a mineral resource company based in Brisbane Australia. The company presently focuses on lithium carbonate and borax operations with major holdings in Argentina. For reasons expressed in previous posts we consider Argentina an unstable nation , so one has to have some reservations about any company heavily invested there. This company has some interesting partnerships with some typically far thinking Japanese concerns, but we could find no holding outside of Argentina. Argentina is to our maritime based way of thinking a basket case formally aligned with Russia. We would have a lot more confidence in this company if it wasn't so deeply vested in Argentine mineral deposits. If it does run afoul of the Argentine proclivity of nationalizing private property it could well grow into something more on the order of industry leader Albemarle.
The company that is drawing the bulk of the hype from certain alleged "market analysts" right now is Lithium X (CVE: LIX) Which in the two weeks we've been tracking it (this was written May 8, 2017) has risen in price from $1.87 to $2.09. A few "analysts" are treating this as the Penny stock of the decade and predicting its eventual rise to over $1,000 per share. This is the kind of stock price increase than can make millionaires out of small investors. But we advise you not to bet the farm on this company.
The recent stock price increases could be nothing more than the result of over hyped publicity. The facts behind this company are perhaps less concerning than the less hyped OROCBRE. Lithium X does have control of new massive Lithium Carbonate reserves, but at least half of their holdings are in Argentina. The plus side to both is the proximity of the deposits to transportation and refining infrastructure. So Lithium X appears to have the lithium carbonate deposits , including enough American deposits to assure survival in the event of an Argentine nationalization and they possess these deposits at a time when there is clearly rising demand for the product. The hype that appears to indicate fantastic new inventions poised to emerge from the labs and onto the market appear to be the work product of stock analysts who may be as interested in selling their services and publications as they are in buying stocks. We monitor labs and skunk works, indeed Helios Ruehls,Inc. is a sort of skunk works and we do see growth in the utilization of Lithium Carbonate related technologies but certainly no revolution in the next 36 months as some would have potential investors believe. We think Lithium X should be viewed as a somewhat promising penny stock . If it takes off due to its own merits vice hype we feel it has a potential of eventually going in excess of $100 per share, an impressive return. But it has some latent issues not the least of which is heavy investment in Argentina, and competent competition. We may actually take a small position in this stock for our internal endowment fund, but we understand it to be highly speculative, we will not risk "serious money". We see some potential here but not at all in line with the hyped expectations.
So that friends is the story of star dust turned to "gold". The story is really just beginning and the beginning is often a good place to be when a new commodity emerges. Unfortunately no one has an accurate crystal ball. Use caution, star dust is is not always what it seems. And remember Helios Ruehls is a scientific research service, not an investment organization. We are simply sharing with our readers certain insights scientific and commercial that come as a by product of our scientific research. Our stock insights may only be worth what you pay for them, and as always, these insights are a free service.
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