dude are you serious about what you said? you're locking up your money to a penny stock that MIGHT pay off (most likely not) in 2014 !? you know if another recession starts and markets sink you have a good chance to loose all your money because little companies will not survive ? it will not matter what they make when shorts step in
Originally Posted by PMREdmonton
Yes, I will be patient with this one. My time frame is 2014 and I may buy some dips and sell some peaks with it.
I don't think it'll trade too much with the broad market because it is a specialty stock but it will be hurt in the risk off modes just like all stocks are but probably more so.
There are a few resources which I see as being incredibly important in the future. One is hydrocarbons, one is uranium and one is Ti. I am quite comfortable going long in these positions even when they are being pounded by the market because we fundamentally need those things. PPG has a huge R&D program ongoing right now with a goal of decreasing TiO2 use by 4-6% per year because they envision the shortage coming but it is hard to meet these targets without sacrificing product quality. There are only four decent Ti deposits in the world and Argex has one of them. They also potentially have a way of increasing the amount of TiO2 that can be yielded from ilmenite from 60% to 90-95%.
I had wanted to play this market with a current producer and the best one I found leveraged to TiO2 was Kronos (KRO) but I didn't buy because of corporate governance issues. The CEO has about four main companies but one of them is a holding company traded publically where he owns about 95% of the stock. He then began using KRO's extra FCF to buy stocks in his own holding company effectively transferring money from KRO's shareholders into his own pockets. I just couldn't accept this. This is the same reason I would invest in Shaw (SJR) and the same reason I've avoided Chesapeake (CHK) even though now is tempting with the rumours of McClendon being ousted.
So I'm relegated to placing my bets (and it is a bet) on RGX because of its advantages of owning rare mining assets and owning a technology that may increase current yields by a substantial margin from existing producers. If they really can increase yields of high-grade TiO2 from low-grade ilmenite ore as they have suggested they can probably collect large licencing fees from CTL of which they own 50.1%. They have partnered up with the giant in the field in PPG and they should be able to act as deal-makers with the other miners and help alleviate the current shortage in TiO2.
Anyway, the PEA suggests the miining assets with CTL technology have a PV of $2.2B and company has a market cap of about $90M right now so you can see the potential value here and that was based on a TiO2 price of $2.8K per tonne and it is already over $4K per tonne and currently forecast to be $6K per tonne by 2015. Again, the PV calculation does not give them any credit for licencing out CTL which is another potential revenue stream which is being explored. They are getting ore samples now and have to prove they can improve yields with CTL compared to current technology. They have already done so with samples from LaBlache and LaBrule.
Disclaimer: This stock is extremely risky. It has gone down from 1.20 to .83 in the past week. It may go down a lot more for all I know. There may need to be a secondary offering as HP has suggested which would further dilute present shareholders. The costs to get he mine and plant up and running may be more than the engineering firms have forecasted. The CTL process may not work on other ilmenite samples from around the world.
Thanks everyone for all your contributions. I think you have shed a lot of light on the downsides of this investment.
I did ask about the refining operations and the rumours are it may be in a place called Benancour, Quebec which has good access to St. Lawrence River as well as the Great Lakes. There is an issue with lack of gas supply by the mine and it would make sense to have operations close to major waterways if they see themselves refining deposits from other mines.
This has all been considered within the cost structure of producing TiO2 as the CEO talked about cost issues in a small article in a French newspaper.
Has moved up in the past few days on news:
Rumours are they may try to divest the Ti mines and become solely a processor of Titanium ore. If there process works as well as they claim it will increase the value of the mining deposits which will be strategically located next to the processor of the ore for the interested mining company.
This plan would certainly be a way to unlock the value of CTL much more quickly than if they wanted to start a de novo mining operation to obtain the ore.
yup when they can get timmie's to pour 6 XL coffees into 12 reg cups in a box for the XL price, this is a "milestone breakthrough" for argex.
they're kinda slow
up in baie comeau
Pavlov's dog comes to mind for some reason.
pavlov's dogs, exactly. One of those dubious penny stocks gives a twitch of life & bingo the doggies salivate.
I don't consider it all that dubious.
It has an amazing technology which it is attempting to monetize. There will be some bumps along the ride so you pay the volatility price to get the return. I really believe strongly in the Titanium market and I think this is the best stock levered to this due to the ability to increase yield of high grade Titanium from the increasingly prevalent low grade ores that are left to harvest. If you don't believe that these things are true (i.e. that their process will be revolutionary, that a Ti crunch is coming, that high grade Ti is becoming scarce) then I can easily see why one would not see value in the stock.
All I see lately is one news report after another of confirmation that their new process is working very well at producing high grade TiO2 out of low grade ore at higher yields and lower cost than any known process. They continue to show progress in upscaling their process as they prepare to build their extraction plant.
This stock has overall been very, very strong over the past year with the exception of one short period after a parabolic upspike lasting about six weeks in total so the market seems to disagree with you.
Even if the stock is moving nowhere I have played the volatility to my advantage and am up 10% even though the stock is down from when I first invested in it so it is working very well for me as an investor.
Up again today to $0.94 or about 50% from its low a month ago.
Here are some thoughts on why this company may be running up right now:
Here is a very recent interview with the CEO of Argex. It is interesting that they discuss the possibility of using tailings from neighbouring mining companies as the source of Ti to initially use in the processing plant that they are going to build. This is what the recent Jefferies report was speculating about with an estimated cost of $1000/tonne to produce TiO2 from such tailings and current spot price of TiO2 being in the $4500 range. They are aiming for 50 000 tonnes a year of production which suggests profits of $175M per year. If you want to put a 15 multiple on that company you would have a market cap of $2.6 Billion. Now add in the properties with La Blache's NPV placed at $2.2B and drilling about to begin on LaBrule and the CEO believing the higher ore content of this deposit works even better with CTL than the lower grade LaBlache deposit suggests even more possible value to be unlocked. Then, of course, there is the issue of putting up plants around the world to process other miners' low grade ilmenite ore to feed a very hungry market. So we are looking at a company that can be extremely profitable in the future but currently having a market cap of $100M or so.
Here is the interview for those who are interested: