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Argex (RGX)

22K views 80 replies 10 participants last post by  junior minor 
#1 ·
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?
 
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#3 ·
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. :rolleyes2:
 
#4 ·
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.
 
#5 ·
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 ...
 
#6 ·
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.
 
#7 · (Edited)
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.
 
#9 ·
This is a possible - there will be losses.

But the company has two massive high grade Ti deposits in Canada.

They have a patented process to produce higher grade Ti than is possible by any current known extraction technique. They do it with no created tailings ponds. They produce lots of Fe (45%) and Vanadian (0.4%) as byproducts which can be sold and decrease the cost of producing the Ti.

They have a customer lined up in PPG with deep pockets.

They have proven they can upscale their production technique.

Now all they need to do is build their processing plant and sell the Ti into a very supply constrained market.

Of course, anyone who invests here can lose their shirt - that is a given in this neck of the woods.

However, you're not investing in a dream. I believe the patent on the process is worth more than the company's net worth by a large factor. Then they have the two high grade Ti deposits with a 25-year mine life. Look at all the Ti producers in the last couple of years - they have skyrocketed. There just aren't many good TiO2 deposits to mine. It is a scarcity story and a technolgy and an environmental play all rolled into one.
 
#10 ·
I enjoy your posts about these little known companies! I have learned alot from the way you explain their potential, earnings, liabilities, market position, competiton etc etc...
I also allocate a small portion of my investment dollars to "gambling", hoping to hit that homerun...
Lots of successful companies started as penny stocks, like this thread:

http://canadianmoneyforum.com/showthread.php/11337-The-top-performing-stock-of-the-last-25-years

Don't let the naysayers and potatoes dissuade you from putting the time you do into your interesting posts! Just because someone posts a photo of a water pump in response to your thread, doesn't mean others aren't benefitting from them.
Good luck with this stock! Hope you get rich.
Peace.
 
#13 ·
I didn't buy it at 1.19 - bout at 1.01. It is a small loss right now for me but a large gain for many others. There is some big profit taking going on amongst the early investors.

There is profit taking going on after a large move up - that is what happens to stocks. Look at Apple right now from 640 to 580. But those who bought at 310 like me aren't complaining - I was one of the profit takers.

This is a highly volatile stock coming off a big run up. The big payoff won't come until 2014 when they are in full production of Ti.

You get a company with two great things - Titanium deposits and a new metallurgy technique to get 99% high grade TiO2 which is very scarce.

You have to remember that when you invest you are buying a portion of the company. They have already done amazing things and am very happy to own this one and buy on the dips. I have an order right now at 0.85 to buy if it drops some more. If you don't like volatile, penny stocks (and most don't) then don't invest in this space. I didn't put a gun up to anyone's head. I was just alerting the board about a very innovative Cdn company and what they have accomplished and what I think they will soon have accomplished. The mine is real and the tech to produce the TiO2 is real. This isn't a pie in the sky story. Buy at your own risk (or reward) just like the rest of the market.
 
#14 ·
i'm all up for finding a start up company that will make you rich, do what you have to do... reading too much into what they are doing and falling in love with a stock might turn out ugly (from personal experience), and you can't compare apple pullbacks to unknown company pullbacks, good luck
 
#15 ·
Thank you for your kind words.

The Apple analogy I drew was about stocks that have big gains in a short period of time will undergo a consolidation period as some investors will choose to lock in gains and sell at that point. The share price will then drop a bit and new investors will pile in and the market will balance itself out. The same thing is happening with RGX which has tripled in the last year - some people will take gains now.

This story won't be complete until they produce which is 2014. Until then the stock will fluctuate and then move as affirmations come in about execution of the business plan. If you buy this one you have to understand that you are talking about a 3-year time horizon to see the gains of them executing the business plan complete to frution with their 15 000 tonnes of TiO2 in the first year of production.

What people have to understand is the company has a value due to tech, patents, trained workers, industrial agreements and mining assets. The market will argue what they are worth but they have considerable assets and I am very confident that if they wanted to go private they could be bought out at a large multiple today. Because it is public they won't get the large gains until they produce TiO2 profitably.
 
#17 ·
indexxx it is interesting that you should mention these links.

"nawar alsaadi" is the internet's best-known gasfrac stock pump. His numerous touts infect seeking alpha as well as yahoo finance.

as for your other link, one could be ashamed of this. Stockhouse is, as i have mentioned recently in another thread, a charnel house populated by stock pumps, bashers, pimps, touts & whores. You do your name no service by promoting this brothel on cmf forum.

i'm an old gasfrac hand myself. One might even note that i'm the member who began the gfs thread, not long after the company commenced trading. Since you say you are a new investor, indexxx, presumably that was when you were still a plain bartender & nary a single publicly-traded share had yet entered your life.

i sold most of my gfs holding prior to the husky oil explosion at robb, alberta. I still own 1300 shares & am hoping that the recent penetration into new york state will inaugurate a new era of expansion for this historically dogged-by-trouble company.

in the meantime i'm sticking to my knitting. Red flags pop up for me when i see internet posters flogging marginal, penny or distressed stocks with words like "desperate" & "loving."
 
#18 ·
Points taken. Just passing on info- no need for personal comments; 'plain bartender' is an offence to my craft. Stop by and I'll make you the very best Old Fashioned you've ever had, if you're so inclined.
 
#23 ·
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.
 
#24 ·
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:

http://www.argex.ca/investors/overview/


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.
 
#25 ·
for highly misleading posts, one has only to look at pumps by pmrEdmonton on gasfrac, catchthewind & argex. High-flown language followed by average drops of 20-30% over 7 or 8 weeks in all 3 stocks. Bizarre, distressing stories.

the argex news release yesterday clearly states that the ores being tested are from old 2005 stores mined by previous management.

the news release further states that testing will involve "concentrates selected from existing feedstock producers from around the world."

the 2nd part of the news release focuses only on the lac brulé flyovers. These are early-stage exploration studies whose resources are not yet officially approved. As required, the news release states this.

yesterday's argex price plunge was precisely related to yesterday's news release. It is written in advanced spin-doctorese, so it is not easy to read through the fluff in order to examine the above-mentioned troublesome issues. Nevertheless, many are succeeding.

stock is down again this morning. Mister market is not sharing edmonton's enthusiasm. I for one believe that the enthusiasm is misplaced.
 
#26 ·
Why are you so concerned about when the mining sample was collected - either they can get high grade TiO2 out of it or not. Age doesn't matter to the process involved.

They have shown they can extract TiO2 in a scalable process now for both of their mines from the samples they have done.

They have proven reserves of 30.8M tonnes from LaBluche. They have not yet verified the 3.8M tonnes at LaBrule by N43-101 standards.

The stock price will do what it does - I'm just talking about the company.

I am not pumping - just reporting the news.

Stocks do go up and down. You can't talk about the performance of stocks in a meaningful manner over such short periods of time. These are risky plays as they are microcaps.

Although you don't like the penny stocks, I do like talking about penny stocks with an environmental bent - GFS, RGX, CTW. It is a passion of mine and I look for opportunities to invest in such promising companies as I think it is the way of the future. Maybe I'm wrong but that is why I write about them - because I am passionate about the cause and look for companies that will decrease waste and these companies can all do it. I do try to look at these stocks as bets for the future - 2 to 3 years is the timeframe to execution for them so I'm not so concerned about day to day performance of the share price. Anyone who does should not invest in these type of stocks.

If the company is so bad why is PPG already signing agreements to secure supply in 2 years. Obviously they believe in the company and as they are the giant in the field and have been working side by side with them for a few months I trust their judgment that this company has a very bright future ahead of it.

Basically, I resent the notion that I am pumping them in any way. I don't sell any financial products. I am not hired by the company. I am just informing people who are interested in it what the company is about and what they are doing and what the potential of the market is. I will confine most of my remarks to news releases. Please let the subject drop as I don't want to discuss it anymore.
 
#28 ·
oh, but i think we cannot let the issue drop, because there are too many marginal stocks that are suddenly being promoted.

too frequently.
in language that is too purple.
shorn of all the cautions & concerns that should be present.
in a forum like this one, which normally is propaganda-free.
where there are many new investors,
who are not yet able to analyze the risks inherent in these marginal stocks.
but some of whom are being egged on to buy dangerous stocks.
even though they should not.

with respect to the argex/PPG trials ongoing at this moment, i do not believe the deal is done. I believe it is a trial to determine if the titanium dioxide pigments that could be produced, ultimately from the argex quebec mines, can be used by PPG industries. If the trial fails the deal will not close.

moreover, the way i read the argex news release of 3 april/12 is that one important engineered & environmentally-friendly new procedure involved in the trial belongs uniquely to PPG. Argex is or will be the supplier of titanium dioxide. The procedure has been loaned to argex strictly for the Ortech trial in Mississauga. If the trial fails, the procedure will remain 100% in the hands of PPG.

therefore i would not agree with your claim that argex is "a technological company who happens to have mining resources." The way i see it, argex will be valued by PPG, if the trial succeeds & the deal goes through, strictly as a mining resource company.

lastly, it is not appropriate for you to make remarks as to whether i like penny stocks or not. I might like a few. I might exchange PMs with other investors here in this forum. We might wish to avoid influencing new investors, who are not yet able to handle the risks. Therefore we might not say anything in public.

save & except for the very rare times, perhaps once or twice a year, when we are more than sure that we have stumbled into a situation that is phenomenonally interesting.

once or twice a year is a far cry from several times a month.
 
#29 · (Edited)
I will only reply with news as you are the one spreading misinformation which I must correct again:

http://www.argex.ca/investors/overview/

Proprietary Metallurgical Process

In conjunction with the principals of Canadian Titanium Limited (“CTL”), Argex has developed a proprietary metallurgical process to separate the TiO2 from the ore. On October 18, 2011 Argex acquired a 50.1% interest in CTL, and thereby own and control this technology.


It is important to note that this process produces a TiO2 product that ranks very high in terms of purity, brightness and colour. These are important criteria for eventual customers of Argex’s TiO2. Argex believes that its process will enable it to command premium prices for its product.

Thus Argex has complete control over the technology and has named itself as the sole licensee of the CTL process in North America.
 
#30 ·
won't you please look again at the argex news release of 3 april/12 concerning the PPG agreement.

this refers to a technical collaboration agreement between argex & PPG industries to:

"develop and optimize PPG's technology for titanium dioxide pigment for paints and coatings applications to be produced by Argex, intended to make Argex's TiO2 pigment compatible with various end-use applications for PPG."

this technical collaboration, in which the "technology" is specifically referred to as belonging to PPG, is the collaborative experience now being trialled in ontario.

the ctl procedure, which you mention so frequently, is an innovative earlier-stage processing procedure in the manufacture of titanium dioxide that belongs exclusively to argex & is carried out entirely by argex.

as far as i know, the ctl procedure is not an issue at present nor is it even in the news. What is in the news is the pigment trial with PPG industries.
 
#34 ·
No, I'm kidding.

I'm long MQL and have been trying to buy on the dip to 1.25 but keep missing. I think the company has a very bright future but all the junior energy companies are getting crushed right now and it doesn't help that they don't have a dividend to put a floor under the stock. However, they are right to pour their cash flow into capex to build up the company.
 
#39 ·
Yes, it is a US listed ADR for the Spanish telecom Telefonica (TEF).

Spain has a 21% dividend withholding tax if you want to invest here which can't be claimed in a taxable account FYI. Some Spanish companies like STD (soon to become SAN) have been letting foreigners have shares equivalent to the dividend to avoid the withholding taxes. It is like a drip in essence. You can then choose to monetize the share dividend by selling them. I'm not sure if TEF is going to do this as I have not yet received an offer from them.
 
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