I recently bought a tranche of this penny stock for 1.01 on Monday and it is already 1.20 today.
This is a company in the TiO2 field. They have a titanium mine from which they will get tonnage to refine into TiO2 which they can sell to chemical firms which use it in pigments. This is a market that is facing supply side constraints and also quality constraints as the amount of high quality mineable supplies has been in decline.
What this company has done is find a new way to take lower grade supplies and then chemically produce higher grade TiO2 which they can then sell for a higher price. So not only are they a miner and a refiner but they can buy other firm's supplies and upgrade it to a value added product which they can sell to the major chemical firms in a tight supply market. If you check the market you'll see the stocks in this space have really gone up this year and the firms have had significant pricing power in the last couple of years.
This company hasn't had much revenue and they just became operational but the technology side is proven already and patented. They just signed a deal with PPG to supply for them and I see this company becoming a big player in the field. The buyers are putting tremendous pressure on this stock price and are gobbling up all the available shares on the market and making the chart go parabolic. Even though I am normally contrarian and a bottom fisher I see the huge potential here and just missed out on getting a tranche at 1.06 this morning and the stock ran up to 1.20 on me. It seems to be showing breakaway gaps everyday recently which to me suggests how confident the market is in its current undervaluation.
Do any of you guys have thoughts on this company?
penny stocks = a sure way to loose money
Originally Posted by PMREdmonton
They do own a mine - actually 3 mining properties.
They have a new proprietary means of extracting 99.8% TiO2 from the tonnage and at a much better cystal size meaning it is higher grade than what other producers are able to make from most stocks.
They have signed an exclusivity agreement with PPG to supply them with TiO2.
They have demonstrated full upscalability of their new processing plant. The byproducts of their new extraction technique will be iron and vanadium which they can also sell.
The TiO2 market is very tight right now and they both have ample supplies of mining resources as well as an advanced technique of extraction.
But thanks for your insight.
One of the reasons I like this one is because of all the success Kronos has had recently. I so desperately wanted to buy this one during the summer sell-off but there are so many concerns about corporate governance as the CEO may be using the company's excess FCF to buy shares in another less valuable company of his and thus I assume transferring his losses to the shareholders of Kronos.
I really loved what the company was doing but have learned to stay away from crooked management.
I see this one as the chance of fulfilling my investing thesis in the same space but now with a start-up instead of an established player.
it is not quite right imho to post up a series of messages that read like resounding pumps for a penny stock, then to visit the party later, as soon as bad news strikes, to dump disclaimers all over one's previous utterances.
yesterday's argex news release is a nifty piece of spin doctoring. However, a careful look at the news release can discern what spooked shareholders.
in the first place, the ores the company is trialling at the Ortech facility are old ores stored since 2005 that were mined by the mine's previous management, not by argex.
testing will continue on " higher grade TiO2 ilmenite concentrates selected from existing feedstock producers from around the world," the news release continues recites. Again, not argex-mined ores.
the news release also describes, in somewhat inflated language, the results of a flyover survey conducted at lac brulé for argex' current management. According to the survey, certain orebodies are thought to be present. But the news release continues:
" Such tonnage is however not confirmed by the recent NI 43-101 report.
" A qualified person has not done sufficient work to classify the historical estimate as current mineral resources or mineral reserves and Argex is not treating the historical estimate as current mineral resources or mineral reserves."
so these are a couple of reasons why argex shareholders panicked & sold sharply yesterday.
Actually I don't view this as bad news at all.
They used their CTL technique on samples from their second mining site and the process worked to near perfection - actually better than it had on the previous mineral sample from LaBlache.
They do have significant inferred resources of TiO2 and no one disputes this - they just have to formally quantify it. Regardless, I have always viewed this one as a technological company who happens to have mining resources. So to me showing their CTL process works on a different metallurgy leads increasing credence that they could become a refiner of TiO2 for other companies with significant deposits.
In terms of the NI 43-101 reports you are misleading people here, HP. LaBlache has always been the main deposit with 30.8M tonnes compared to the estimated 3.8M tonnes at LaBrule:
In June 2011, Argex completed a National Instrument 43-101-compliant Mineral Resource Estimate (“MRE”) on its La Blache Property. This MRE includes 30,888,000 tonnes in the measured and indicated categories, with in situ grades of 18.78% TiO2 (titanium dioxide), 63.29% Fe2O3 (iron oxide) and 0.45% V2O5 (vanadium pentoxide). This MRE also includes 13,013,000 tonnes in the inferred category, with in situ grades of 18.67% TiO2, 63.06% Fe2O3 and 0.43% V2O5. Argex has only drilled 2 of the 3 known lenses on its La Blache deposit. In 2010, a 20,934-metre drilling campaign was conducted at West Hervieux and East Hervieux; there was no drilling at Schmoo Lake. As per Met-Chem Canada, who authored this Technical Report, both deposits are open at depth.
Here is the Argex website explaining their resources:
Now I view the recent decrease in price as just a parabolic spike blow off into a phase of consolidation until more information becomes available and they get closer to large scale production which is slated for 2014.
I think your post was highly misleading in suggesting they don't have much NI 43-101 reserves as the larger mine deposit has been proven at 30.8M tonnes. The most recent note was only about a mineral sample from the smaller mining deposit which has not been reported yet on NI 43-101. Even if it is less than presently estimated it only represented about 10% of their reserves at the prior estimate.
So I am still very bullish on the stock and any risk tolerant individual who likes the stock will have to do their DD to see if it has a place in the risk part of their portfolio.
do i have any thoughts.
the thought i have is that Edmonton's recent smallcap & microcap venture stock picks like gasfrac & caught-the-windy-thing are doing the trash can dance.
so the hour to rethink the *desperate* venture stock *loving* seems to have arrived.
edmonton if you've really been owning these stocks, you have probably lost a lot of money over the last few weeks. Isn't that telling you something ...
Times have been tough, HP.
My positions in CTW and RGX are small - 0.5% of portfolio - my gambling money if you will. I've been looking more into transformational technology but on company's with real products and innovations that will make a real difference. I fully understand that I am risking and experiencing real losses on some positions but have also gained on others in the micro-cap space (i.e. PSD is a big winner where I accumulated at 1.69 and then waited a year for the payoff or IMUC in immuno-oncology). I am not afraid to hold a stock that is in a losing position if I believe strongly in what the company is doing (i.e. GFS, IMUC - although this one is a winner for me).
I keep my bets small on any of these companies. The only one I bought that doesn't have a real revenue stream is IMUC but they are in phase II trial of a product that will rock the world when it comes out. GBM is a devastating brain cancer that strikes young people and I hvae treated many people with this condition. Their results in phase I were earth shattering - 40% survival at 3 years compared to usual hx of 12 months.
Anyway, it has become a small hobby of mine to search for these transformational tech stories and then hop on when valuation is reasonable. I am hoping to get a tranche of WPT soon with their correction but want it at about 32. I'll probably a close to the money put to secure it and roll over every month until I get there.
I do understand why you are cautioning me and I do appreciate it. I won't risk too much of my holdings in this space - 10% total portfolio only. The rest is mostly dividend paying stable companies (PPL, MCD, VOD, TEF, CSX, NSC, PM, MO, RDS, PBR, NLY, GG, DTV, BNS, BIP, BAM). I just don't talk about those much because there really isn't much to say unless others have questions.
None of you are responding so maybe you don't know much about the company.
This is a Canadian company that owns a mine that has good ore - about 30M tonnes of ore with 18% Titanium, 63% Iron and 0.45% Vanadium. There is a major shortage of quality TiO2 in the world right now. The price has doubled in the past few years and may double yet again in the next few years. Current spot prices are $3700 per tonne.
Right now Argex has developed a proprietary technique of taking ore and with minimal environmental damage and minimal need for high heat or pressure strip out the Iron and Vanadium and leave very high grade TiO2 of very high purity and with very little of the chemical lost in the process. This is what initially attracted me to them - I love companies that find ways to do things with less environmental damage. Argex developed this process with a company called CTL and this process is actually called CTL or . RGX has bought a 50.1% stake in CTL and basically have control of this technology all to themselves but could licence its use to another company. The exciting thing, though, is they control it so they can buy other company's low grade titanium containing ore and then use their extraction technique to add value. They don't need to do this right now as they have their own mine but sometime in the future this could be an avenue of growth for them.
They estimate right now they can do 15, 000 tons a year of Titanium dioxide. They are expanding capacity over time and estimate they will eventually do 195, 000 tonnes a year of Titanium dioxide. At this pace their mine will last 25 years.
So the big kicker is that right now spot price of Titanium dioxide is $3700. Well at 15,000 tonnes a year you get $55.5M revenue plus whatever they can get for the iron and vanadium (about 0.4 tonnes) that is spun off as a byproduct. Now at 195, 000 tons a year you have revenues at $3700 per tonne of $721M. The only thing is that Titanium dioxide is scarce and high quality supplies are even scarcer so the forecast price right now is $6000 per tonne by 2015. Of course, it will take the company some time to scale up operations before they will produce 195 000 tonnes a year.
Nevertheless in year 1 of production (2014) they predict they can produce $55M of TiO2 for which they already have a buyer who will take all the TiO2 they can produce off of their hands. The buyer locked into this agreement to ensure they had access to TiO2 which they need for their chemical business as this chemical is very important in pigments (it makes Oreos white, it is in the white paint they put on roads, it is in most of the car paints) and the supplies of good TiO2 is getting scarcer and scarcer. Due to this scarcity PPG has signed an exclusivity agreement with them to purchase their Titanium dioxide.
In terms of margin right now they estimate the cost per ton of production of TiO2 will be $586. Right now the cost per ton is $4000 so the operating margin will be around 80% at today's prices.
So I see this company as a game changer in that they have a new way of getting the TiO2 with less energy and less environmental damage and with valuable iron and vanadium as by products. They are Canadian and are headquartered in Montreal and are listed on the CVE.
To me the obvious risk is despite all this they still haven't proven they can go to full-scale industrial production and execute. My answer is - of course. If they had they would be much, much more expensive. But if PPG has faith in them to sign an exclusivity agreement then I assume they done due diligence to ensure these guys will be able to execute their process.
Last edited by PMREdmonton; 2012-04-19 at 01:24 AM.