Scandium, Cobalt, and Water Purification: CleanTeQ Holdings

By hendrixnuzzles, February 6, 2017

A Microcap Teaser Solution In Advance !!
(Australian stock exchange CLQ, OTC pinks CTEQF).
CleanTeQ is sure to be the answer to future teasers you will be reading about from resource gurus, To save you all the trouble of solving them, I decided to write this article.
My portfolio was grotesquely overweight in gold and silver positions, and in moments of anxiety I thought it would be a good idea to diversify and take a few positions in something other than gold mines, royalty companies, Mongolian exploration companies, and small-cap copper miners with major operations in the Democratic Republic of Congo.
Thus I made a small speculation in CleanTeQ, solely on the basis that mining titan Robert Friedland was the Chairman, and CleanTeQ was the only resource company I could find that seemed to be in a position to mine scandium, a very rare metal that sells for a couple of thousand dollars a kilo.
My due diligence was so slight that I was embarrassed to emphasize my position to the readers at Stock Gumshoe. We are supposed to study these things a little more than I did for CleanTeQ. And after entering at 50 cents, the stock promptly dropped to 35 cents or so, making me glad that I did not look foolish by publicizing my position.
As the weeks went by, I started to find more information on the company that I should have found out beforehand. This was partly accidental, partly from other Gumshoe readers, and partly from new announcements and company news that occurred after I took a position. But the findings were all very positive, and because the company is so interesting I thought it warranted its own thread apart from the hard asset thread which I moderate.
I have a full long position and high hopes. And I thank Secretsquirrel, Griffin, Larry McKenna, and several others who helped fill in the missing pieces of the puzzle.
Below are my findings, opinions, and summary on CleanTeQ Holdings:
BUSINESS MODEL CleanTeQ is a hybrid company based with three bases: scandium mining and production, cobalt mining and production, and water purification. This seems like an odd combination, but as you will see, it is not. It is a stroke of genius. And I will explain why we should care about scandium and cobalt.
(1) The company is starting production of the Syerston mine, the world’s only scandium mine;
(2) The company will also produce significant amounts of cobalt as a co-product to the scandium;
(3) The company has a large-scale water purification technology, which will target municipalities,
Industrial operations with waste water problems, and mines, which also have water problems

PROSPECTS FOR THE THREE SEGMENTS
(1) Scandium is a very rare metal that usually occurs in only small amounts that are not economical to mine. It is mostly available as a by-product and the market is opaque, usually between private parties. Scandium has very beneficial applications in aerospace, aviation, and technology, but has not been widely applied because there is not a sufficiently reliable supply of it.
(2) Cobalt is essential in many batteries. Lithium gets all the investment press, but a majority of the battery formulations need cobalt, which is rare compared to lithium. Cobalt has a similar supply situation as scandium, it is mostly a by-product and is not commonly a prime mining target in and of itself. But demand for the electric energy market is growing rapidly and cobalt demand is growing and will continue to grow accordingly. Supply chains on cobalt are iffy.
(3) Water purification is a pressing need throughout the world. Cities with lots of people, industrialized places with lots of factories, or mines with waste water, all have a real and pressing need for large scale water purification. I think most people can accept this premise of widespread demand without a lot of documentation.

HOW DO THESE SEGMENTS RELATE TO EACH OTHER ? I cannot get too technical about the water purification technology, but I will try to explain what I understand, and how it relates to the scandium and cobalt operations. They call it Continuous Flow Ionization. Ionization is not a proprietary technology per se, but CleanTeQ has developed a way to implement ionization in a continuous feed, automated loop that improves volume, improves economics, is reasonably priced for installation, and can be custom-modified to specific waste problems. It can be used in conjunction with other filtration techniques. Further, it can be modified TO EXTRACT CERTAIN SUBSTANCES from the feed waste water. This is done by modifying the resins that are used in the ionization process.

Now it so happens that CleanTeQ has developed resins that can extract scandium and cobalt from waste water. So they potentially will have commercial sources of rare metals from the by-product waste of their water purification process !

HOW CLOSE IS THE WATER THING TO REALLY HAPPENING ? It is happening. CleanTeQ has signed a memorandum of understanding with a major Chinese municipality to implement their technology. There is a joint venture, 55% Chinese/45% CleanTeQ. Once the first one is up and working, China has a mind-boggling potential for water purification. For their teeming urban centers and for their mining and industrial locations, shall we say the potential is very large ?

CleanTeQ has 100% of rest of the world. CleanTeQ is closed-mouthed about other commercial sources, but they let on that they have been in contact with the likes of GE, Dow, and other big hitters. They state a pipeline target of $100 million by 2020; I predict they will do much better.

HOW CLOSE IS THE COBALT THING TO REALLY HAPPENING ? Very close. Battery useage is soaring and is the strategic target of many governments, corporations, and environmental groups. Batteries need cobalt.

HOW CLOSE IS THE SCANDIUM THING FROM HAPPENING ? This will take a while because the applications are high tech, with long lead times, and there is only one scandium mine in the world (CleanTeQ’s newly commissioned Syerston mine). CleanTeQ intends to develop the scandium market by being a reliable source of supply, and by driving the price down.
CleanTeQ will have viable margins with scandium prices up to half of current prices.

To give you an idea, the Russians made a few MIGs with scandium/aluminum alloys. They were faster, lighter, stronger. An addition of 0.5% scandium to aviation aluminum strengthens the frame, removes the need for riveting, reduces weight, and makes repairs easier. . The Russians dropped it because of costs; and Boeing and Airbus will not use it without a reliable source of supply. But there is about to be a reliable source of supply: CleanTeQ.

WHAT ABOUT IP PROTECTION ? I believe the IP and know-how moat is sufficient. CleanTeQ holds a perpetual license from a high-level Russian research organization that provided some of the foundation technology. I am not a patent lawyer and a lot of the know-how will be proprietary, not patented. CleanTeQ has been at this for over ten years, I think the barriers to entry are sufficient.

MANAGEMENT Totally a plus. Robert Friedland is the Co-Chairman and CEO, he has 20% of the company, great credibility and clout with the Chinese, and an unbelievable track record in mining. Sam Reggall is the other co-chairman. I know little about him, other than from my observations of him on an Australian investment show that aired last week. He was impressive.

MONEY AND FINANCES I don’t think there is anything at all to worry about. Friedland must be worth billions, the Chinese are in, and the concept has enormous potential.

Sources: as I mentioned, information is scant. My sources were the CleanTeQ website, presentations and and interviews with Friedland and Reggall, and the sketchy information on the brokerage sites. Nothing you cannot find on your own.

Long CleanTeQ

This is a discussion topic or guest posting submitted by a Stock Gumshoe reader. The content has not been edited or reviewed by Stock Gumshoe, and any opinions expressed are those of the author alone.

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chrizcringle
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πŸ‘118

Clean TeQ Says in Talks for Partner in Australia’s Syerston Mine (Bloomberg) — CleanTeQ seeking to reach agreement with potential partner within about six months on investment in Syerston nickel, cobalt and scandium project in New South Wales, Clean TeQ CEO Sam Riggall says in an interview. – Co. holding discussions with interested parties in China, Japan and South Korea, including with battery manufacturers – Talks taking place on offtake agreements and on potential equity investments in project – Co. may seek to add listing on Toronto Stock Exchange – NOTE: Syerston to supply lithium-ion battery makers with nickel and… Read more Β»

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Johnnn
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Johnnn

Can you provide the link to that article Chriz?

chrizcringle
Member
πŸ‘118

I’m sorry, but I don’t know where I picked this up, so I’m afraid not.

hendrixnuzzles
Guest
hendrixnuzzles

$PTNUF Platina Resources…they have spent roughly 21 million on exploration, drilling, permitting, and other development. This is sunk capital. The market cap is 25 million. So you are paying roughly the development expenses, and getting the metal in the ground for nothing. This is pretty good since there is not a lot of question about the deposit.

Johnnn
Guest
Johnnn

Platina need to do a lot more work as there resource is not in the same ‘measured and indicated’ category as Clean Teq. Refer to Australian JORC standards. Platina, like scandium international are also relying on a scandium price of $2000 per kilo v $1500 for clean teq. Plus they have a token 8m tonnes of cobalt v 110m tonnes that cleanteq have, again with clean teq’s all in the ‘measured and indicated’ category. I tend to agree the best hope for the cheap neighbours is to get RF to buy them out. AUZ are interesting as a scandium play… Read more Β»

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alanh
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alanh

CLQ’s having a rough time of it….fallen to Feb support. Any reasons known?

alanh
Guest
alanh

Anything less than good/neutral news could take it to 47. Are they having trouble with partnership deal?

v4t1n4
Member
πŸ‘49

$CTEQF Primary reason would be my buy-in last week at .65. So blame it on Canada, and my overcoming the same AUS reluctance Cleveland cites. Finally pulled the trigger on the basis of the R.F. as Chairman hype. Fingers crossed now he can rein it in.

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Cleveland
Member
πŸ‘6007

I’ve never been able to make any money on any Australian listed company. Gas, Oil, Metals, biotech, does not matter. 30 years. Just a different animal to understand. I even have a son-in-law from Aussie. No help.

The Aussie’s will tell you whatever you want to hear. Their ethics is one notch above the Canadians IMHO.. Population is tiny. Seems like most Aussie companies end up with a BILLION shares fully diluted. Does not matter what industry. Potential is One Billion shares fully diluted TIMES pick a number.

Best of Luck Mates.

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wade3
Irregular
πŸ‘116

(Sigh)…Another one of my Gumshoe speculative stocks which I had high hopes for sinking…Based on what you said, maybe I should get out and transfer to something in New Zealand.

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Cleveland
Member
πŸ‘6007

I thought the same think so I went to New Zealand and rode this oil wave DOWN See Red Graph on right 2011 to today…..Fun https://ca.finance.yahoo.com/quote/TAO.TO?p=TAO.TO Which reminds me of the Oil Geologist who died and went to the pearly gates of heaven….St. Peter told him there were too many Oil Geologists in heaven and he could not enter. Hmmmm He asked St. Peter if he could yell four words? Yes said St. Peter “OIL DISCOVERED IN HELL” With that the Oil Geologists in heaven ran for Hell. St. Peter then told the Oil Geologist there was now room in… Read more Β»

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hedy1234
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hedy1234

$TICKER?

hendrixnuzzles
Guest
hendrixnuzzles

Investment time frames in mining…$PVG, a case study. Attention Alanh.

Below is a link to the PVG webpage showing the timeline from PEA to pouring gold.
This was a fast one. It took three years with no major problems.

http://www.pretivm.com/projects/construction-update/default.aspx

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alanh
Member
πŸ‘4086

Thanks HN. Doesnt look like these guys are dragging their feet or scamming. They mean to pour and theyve spent large and quick to make this happen.

hendrixnuzzles
Guest
hendrixnuzzles

$PVG…Alanh…yes they incurred cost overruns to accelerate production.

I have said that I believe the first production will exceed expectations, but we could still be disappointed with it.

renbycage
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πŸ‘962
renbycage

The pattern with CLQ has been unrelenting selling pressure going on 6 weeks now. Any time the price pops up, almost immediately, it gets pushed back down. End of trading day price decreases have been very common, as if someone lowers their sell price at the end to get a sale through. I don’t know if a single large holder has been just trying to dump his shares, or this pattern represents some other kind of underlying cause. A drop from 1.13 to .70 in 6 weeks is quite notable, on no news, for a company that seems just on… Read more Β»

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alanh
Member
πŸ‘4086

CLQ.A: Doubled my position at 70. I think (hope) I caught the bottom.

Johnnn
Guest
Johnnn

Spoke to CLQ yesterday and they said the only thing that has changed over the last 6 weeks has been that the cobalt price has gone up! So business as usual. What you must understand is that CLQ do not sugar coat or release things that most other conpanies would put up in bright lights and toot their own horns at! MOU’s for eg. They would have quite a few now imo and with some big names that would see this over a dollar again in a flash but that’s not their style. Long, longer than most, CLQ

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rubberworm
Member
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rubberworm

“They state a pipeline target of $100 million by 2020” Is there any link to that comment? I asked Ben about it. He did not know of one. Also there is more then one Sc mine in the world. I’m sure you all know that. Clean TeQ will give the end users the best deal price wise for Sc as I see it. They could corner the Sc market. Friedland is in. But I just got in when that guy worth 1.3 Bil from China loaded up. JMHO China does not take chances. He knows this will be a winner.… Read more Β»

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