Those watching the EV battery metals markets are witnessing history. Never before have battery metals prices reached the levels posted this month. In fact, nickel ripped higher earlier this month to over $100,000 per ton for the first time ever. The move higher was so violent that it created market turmoil, with nickel trading stopped on the world's oldest metals exchange, the London Metal Exchange (LME). When trading resumed last week, things weren't sorted, with contracts halted after the metal traded limit down by 5%. But, that's an LME issue. And more likely than not, much more drama is in store for the nickel market. But the nickel markets volatility, especially its bullish trend, is a friend to Recharge Resources (OTC: SLLTF) (TSXV: RR). And despite its nano-cap size, they are better positioned than some senior exploration companies to deliver potentially massive near and long-term gains to investors. By focusing on its EV metals market opportunities, this small player transform from explorer into a revenue-generating juggernaut faster than many think.
Moreover, if SLLTF is primed to benefit from a soaring EV metals market now, imagine how they will benefit from an EV industry expected to become a trillion-dollar market by 2035. And the better news is that there will be plenty of business to go around, with both junior and senior exploration and mining companies able to cash in on the market likely to rival that of the oil markets a hundred years ago. During that time, investors understanding the impact of oil needed to power combustion engines made early investors vast fortunes from being early to the trade. It's an investment opportunity too significant to ignore. And better yet, it excludes no one. Opportunities to find low-priced exposure to this booming sector are in plain sight. Recharge Resources included.
And here's the best part. Expecting the EV industry to be a trillion-dollar market in a little over a decade may be shortsighted. At an anticipated CAGR of 18.2% over the next eight years, breaching the trillion-dollar mark could happen years before the ball drops in 2030. Thus, while some investors look to crypto as their lottery ticket to riches, the more prudent play would be investing in a tangible company with assets ready to perform. After all, with contracts signed and exploration ongoing, SLLTF valuations could surge from a single geological survey showing a stock of proven reserves. The company wouldn't even need to mine the metals; they could lease the space and potentially earn billions.
Thus, those that think SLLTF needs a massive bank account to reap its rewards are somewhat misguided. While there's an advantage to going it alone, there's also a lot to be said about having that "bird in the hand." In this case, proven metals in the ground can be what transforms this company from a nano-cap explorer to one delivering a potentially massive return to its investors.
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EV Metals Markets Soar
Indeed, there's no argument saying that SLLTF is not in the right markets at the right time. That's because they are. Not only that, they are positioned to capitalize on record-setting demand and prices from a lithium and nickel market that, in the U.S. market alone, could account for a more than 16X increase in the need for EV batteries by 2035. And that's just the U.S market. Adding the global market demand, that number is significantly higher.
The proof is in plain sight. Since 2017, EV sales have been soaring, reaching more than 17 million vehicles sold, which amounted to over $140 billion in revenues for manufacturers and components suppliers. But, here's the best part for those considering exposure to the sector- over that same period, those EV sales accounted for only about a 3% share of the total vehicles sold. That signals that the industry, and the companies contributing to its growth, are still in the earliest stages of maximizing near and long-term opportunities. Better yet, companies drilling into the opportunity today are likely to benefit from a friendly regulatory tailwind that is prioritizing all things electric. In other words, companies large and small are being incentivized to find as much battery metal as possible and may even get some government help funding that mission.
Biden's infrastructure package is already set to provide billions to fortify an EV infrastructure to support a shift to green energy. And those grants, awards, and contracts aren't only for a selected few. Junior exploration companies like SLLTF can also benefit from the investment programs. In fact, that's likely, especially as the domestic demand for critical EV battery metals continues to grow at a record pace. And remember, while having sales exposure to the U.S. market can be significant, these same companies are positioned to benefit from the global market interest that is skyrocketing as well. Even better, metals markets have no borders for companies like Recharge Resources (SLLTF). Thus, they can sell their metals worldwide into the demand that is not even close to slowing.
EV Stalls Without Battery Metals
But, here's the catch for EV manufacturers- without the batteries required to power the vehicles, even the best of breed stalls. That's no secret to companies like Tesla (NASDAQ: TSLA), who are public about securing as much of these precious battery metals as possible. Moreover, they don't care if the supplier is a billion-dollar market cap miner or a developing company like SLLTF. Those that can supply the goods get the contracts. Tesla CEO Elon Musk is saying that nickel is their biggest concern for scaling lithium-ion cell production. He needs it so badly that he said, "Tesla will give you a giant contract for a long period of time- if you mine nickel efficiently and in an environmentally sensitive way." Knowing that should incentivize SLLTF to move even quicker on its projects.
Keep in mind that TSLA is just one player. Over the past five years, more than 20 manufacturers and components suppliers have earned the badge calling them "major" players. And despite having different agendas, the vital thing they share in common is that they all need the same lithium, nickel, cobalt, and other metals to power their creations. They understand the inevitable of not securing a power source- their cars become nothing more than pricey showroom pieces or sit in a lot waiting for battery supplies to meet demand so they can sell their vehicles.
That reality is creating a call to action. And despite its nano-cap size, Recharge Resources is up to the challenge and getting itself positioned to sell into that surging demand. Like others, they are well-positioned to earn a share of the billions of dollars at stake and create significant shareholder value in the process. Remember, valuations for exploration companies are generally conservative ahead of a find or dig. But once they prove to have viable resources, valuations can change overnight; with exponential moves higher, not out of the ordinary.
Seizing Its Opportunities
That's part of the plan at Recharge Resources. And they may have made the right moves at the right time to make it happen after positioning themselves to become one of the early and important resources for lithium and nickel in North America. Of course, SLLTF's transition from explorer to miner would be significant. But that goes without saying. And its also worth repeating that just proving its assets in the ground could drive shareholder value considerably higher. That could happen faster than many expect, with SLLTF periodically updating investors on its site surveys that could at any time confirm its sitting on a pile of lucrative EV battery metals.
What's more, demand will be around for a long time. Even if the EV industry succeeds in only reaching its 50% growth objective, it would need a more than 1600% increase in battery manufacturing. And that's just to keep pace. To support inventory builds and help eliminate production delays on a global scale, it's more likely that a ramp toward a 2000% increase in production is warranted. Of course, that means demand for the metals soars as well. And here's some better news on that front. In the face of a global green economy, battery metals will always have a market. Thus, while the EV industry is a primary value driver, SLLTF will also have other clients from other sectors. That's good to know.
Also good to know is that investors have a chance to catch in on another generational trade.
Lithium, Nickel, And Cobalt- Not Oil
This time around, it's not about oil. Lithium, nickel, cobalt, and several other metals will be the assets creating new fortunes. And investors in exploration companies like Recharge Resources, Ltd., which have their mission set around unearthing those metals, could be a beneficiary to those life-changing fortunes. Metals buyers certainly won't discriminate based on size. On the contrary, small companies like SLLTF could be ideally positioned to contract ahead of the dig. Or, as noted, even lease its assets to a more senior miner for a significant share of the haul. In either case, SLLTF and its investors become winners.
In addition, investors may not realize that SLLTF, despite its small size, is capitalizing on its market opportunities by being one of the very few early-stage resource exploration companies actively developing lithium and nickel resources in North America. In addition, investors may be surprised to learn that in addition to its revenue-generating shots on goals from lithium and nickel, SLLTF has added a third asset to its business pipeline potential- cobalt.
It, too, is a critical metal needed for EV battery production. But more valuable to SLLTF's value proposition is that virtually no cobalt production is happening in North America. Whether that's due to its fractional use compared to other necessary battery metals is up for debate. What isn't, however, is that cobalt's need is no less critical than other battery metals. That's apparent from its spike in price, too, with cobalt selling at a premium price due to its domestic production scarcity.
Thus, with its exposure to the cobalt markets adding yet another appreciable revenue-generating asset to its product mix, Recharge Resources is again in one of the right markets at the right time. And since they may be one of only a handful of North American suppliers, it's not out of the question for SLLTF to earn a sizable market share after reporting already being in the early stages of proving its cobalt resources. Once confirmed, they could potentially become one of the first North American cobalt resources brought into commercial production. If so, the SLLTF market cap of today would be quickly extinct.
Still, it's the combined potential of the Recharge Resources portfolio that should be attracting investor interest. As noted, its valuation could soar even ahead of a dig.
Projects And Assets To Create Enormous Value
Based on SLLTF's working portfolio, that's a possibility. Its Murray Ridge nickel project alone is maybe worthy of dwarfing its entire market cap. In that project, Recharge Resources secured 8,300 total claim acreage on significant nickel discoveries previously reported in 2013. SLLTF currently targets areas where the best nickel ore sampling results were obtained. And if exploration and development objectives post as intended, they could be selling into considerable demand. Indeed, big buyers, like Tesla, are already in line.
Perhaps best of all is that SLLTF's nickel quality could be top-grade, reportedly analogous to the geologically adjacent Decor Nickel project to the southwest. And, remember, SLLTF is going into the Murray Ridge project with some rational exuberance, noting that the location was previously explored, and nickel resource potential was identified through a report issued by Nanton Nickel Corp. That report, by the way, supports the optimistic posture at SLLTF.
Not only that, the bullish pricing trend for nickel plays directly in SLLTF's favor. Over the past five years, nickel prices have been steadily climbing from about $10,000 a ton in 2017 to its current nearly $50,000 price today, a roughly 400% increase. Of course, its recent spike above the $100,000 level may not be an anomaly. Demand and short covering could fuel similar gains in the months to come. While SLLTF may not benefit from spot prices, if they do prove reserves, their assets in the ground would undoubtedly follow the market trends. Just take a look at gold mining stocks as an example.
Avoid A Massive Nickel and Lithium Shortage
But, while the focus above has been primarily on nickel, lithium is also an SLLTF value driver not to be ignored. There, Recharge Resources is expecting to unearth value from its Georgia Lake lithium projects located in the Thunder Bay Mining Division in northwest Ontario. This operation puts lithium discovery well into the revenue-generating crosshairs, which could happen quickly with SLLTF accelerating plans to seize potential value inherent to the dominant RockTech Lithium project.
Recharge landed substantial claims on the north and southwest boundaries of the Georgia Lake lithium trend, which they expect will become a path for developing and monetizing future RockTech production. Incidentally, millions of tons have been estimated to remain underground, supported by a 2018 report that showed at least 144,861 tonnes of measured, indicated, and inferred lithium resources could be potentially monetized.
So, does a calculation of the sum of its parts suggest that Recharge Resources and its stock may be getting ready for a surge in value? In a word, yes. And at current levels, and even higher for that matter, SLLTF appears to be appreciably undervalued. But, it's a valuation disconnect that may get filled sooner than later. Referenced earlier, Recharge Resources could be a single survey report away from moving exponentially higher. Thus, with site surveys ongoing, being timely to this trade is a wise consideration.
A Breakout In 2022
And here's the part that ties the whole SLLTF investment thesis together. For the EV industry to grow at even the low end of its expectations, companies like SLLTF will need to be contributing partners. There's simply too much demand and too much need for battery metals to be filled by just a handful of large mining operations, and few are even suggesting they could come close. So, even if investors theorize that small companies can only fill "niche" opportunities, it still puts multi-billion-dollar revenue-generating opportunities in their crosshairs. For SLLTF and its investors, that would be more than enough to drive share prices exponentially higher.
Already, speculation is swirling that SLLTF share prices could surge above the $1.00 level in the coming quarters. Is that an overly ambitious target? Not necessarily, especially if SLLTF can prove it's sitting on assets. Moreover, with SLLTF operating near proven reserves, chances are for them to tap into some riches. In the mining industry, past performance can be a reliable indicator of future success.
Thus, facts combined with potential make a compelling case for why SLLTF fits nicely into a diversified growth stock portfolio. And at slightly over $0.03 a share, the risk-reward proposition, especially with significant assets in its portfolio, makes that consideration timely. Hence, the bottom line is simple to explain- investor consideration is warranted.
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