written by reader 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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mmdwacjm
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LONG CTEQF . I just came across an interview of Sam Riggall on Oct 21, 2015 by Kevin Michael Grace from the Gold Report. Very interesting information in it. You can access it on seeking alpha under CTEQF. Sam states that the ion technology works for desalination of water. Also Sam states that there are existing agreements with CTEQF, Airbus and KBM. These agreements have been in place for at least two years. Just like you gentlemen thought. By the way , thanks for all you guys do for all of us. The quality of your analysis is excellent and… Read More Β»

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arch1
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De salting water by the means of cleanteq is so new it is hard to get reliable information as to how well it will compete against existing methods. Following is link that may help; http://pubs.acs.org/doi/abs/10.1021/acssuschemeng.6b02455?src=recsys&journalCode=ascecg Using this statement,,,To reclaim cooling water at thermoelectric plants in the United States, a huge amount of energy usage (∼400 GWh/day) can be saved, if resin wafer electrodeionization was applied instead of commercial reverse osmosis. A just on power generation need for boiler feed water and applying a cost of $0.10 per KWH, about 1/4 of solar cost, that would yield a saving of .10… Read More Β»

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hendrixnuzzles
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hendrixnuzzles

Water desalinization…no matter where CleanTeQ would come in as a competitor in water desalinazation, if I were in their positon
I would focus on the aspects where they have no visible competition at all. Just like they are doing.

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hendrixnuzzles
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hendrixnuzzles

Alanh, et al…enthusiasm for CleanTeQ…in this open forum we have a very wide field of expression, and I have gotten immense pleasure from the interadctions with all of you. I am wildly bullish about CleanTeQ. But there comes a point where my personal conviction or enthusiasm becomes irrelevant and distracting, and contributes nothing to the conversation of the subject. I think that I have reached and passed that point. The vital facts that are available to us have been presented by various readers, and subsequent developments will tend to confirm or deny the main threads of our analysis. For every… Read More Β»

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jjamms6
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jjamms6

Timing on the flip side of the Hendrixnuzzle Effect – I have benefitted and am nicely up in $SSL (large), $IVN (large), and $CTEQF(small to moderate) positions – so thank you hendrixnuzzles for bringing them to my attention. Also holding $PVG, $CXO, $CN, sold $SEA.

hendrixnuzzles
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$CleanTeQ..one more subjective comment I stated recently that I think it best to restrict my comments going forward to factual developments related to the company. I have already spent a a lot of ink in speculation and hypothesis; but here is one more thought that I would like those of a short-term, trading mindset to consider when contemplating putting money into CleanTeQ. I have listed a number of potential price catalysts that could send the stock price of Cleanteq to new levels. What is very unusual about the list is the relatively short time frame they might be expected to… Read More Β»

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renbycage
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renbycage

Without any weird bad luck, this investment will be a huge winner. I love owning this company, and will enjoy watching all these aspects of the business unfolding. And at some point, the stock price is going to explode upward, and it’ll be ecstatic.

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alanh
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OK HN (or anyone) given that we are moving to fundamental valuations (albeit the cobalt etc is still in the ground….I hope), what ‘reasonable’ present sp would you place on each company we are following? We may never buy at the bottom, but if we buy at fair value (or less πŸ™‚ ) sooner or later it will play catch up. Meanwhile we can sleep soundly and wake to find water treatment/scandium contracts have added to that value.

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alanh
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HN: You are posing the eternal questions. Should I be a long and ignore all the noise? (Ive still got a boat load of ‘hot’ bios just waiting for their resurrection day…..Hmmm? ) Should I day trade and jump ship to steal a few $ ? No ! For my part, being long is a mindset…….but that doesnt mean sitting on my hands. Surely the trick is to buy low, sell high and buy back lower….wash rinse, repeat. Its the nature of the market that it will rise AND fall…..the market is a sea of people, and seas always have… Read More Β»

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Alan, old friend (which I consider you even though we have not met).Let’s move away from general trading strategies for a moment. Consider the following fact about Ivanhoe: It has three deposits which are at the very top of their respective mineral contentsworld wide: copper, zinc, and PGM metals. There is no problem financing and management is excellent. There is ZERO discovery risk. There is no financng risk. Their third best deposit, Platreefs, which has six high value metals and an outrageous percentage of platinum, has already been given an established value by a real buyer of $ 3 billion… Read More Β»

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hedy1234
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AMEN!

alanh
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Hey, not so much of the ‘old’ …..My good friend (and I class anyone thats done me a favour to be a friend….the list of favours youve done me is v loooong.)
As I say above, theres more than one way to play and theres risk/reward associated with each…..I guess the choice comes down to a personality thing.

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hendrixnuzzles
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hendrixnuzzles

Alan…For sure. A long-term investor and a short-term trader will often do the opposite in the same situation.

alanh
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πŸ‘4086

BTW: Long (obese!) Ivanhoe and Cleanteq and Ive done v well…iou one when we hit my Caribbean island
Also condor and PVG….. more porky than obese, but happily green. No question, mining has done me a lot more good than bio thus far.

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hendrixnuzzles
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Alan, I answered your query with reference to Ivanhoe instead of CleanTeq but the same priciples apply. Trading willl give you potential ptofit you might not get otherwise but the unpredictability of news and market reaction to it pose risks to an in-an-out approach. These guys are very well organized and when the news hits it is very big.

hendrixnuzzles
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hendrixnuzzles

With every positive announcement the opposite position could be taken…buy MORE because the thesis is being proven step-by-step, but Mr. Market is stll somewhat skeptical and severely discounting the potenrtial.

I will gain more confidence with continued positive releases and will consider the bet at better odds with each positive announcement.

secretsquirrel
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http://www.reuters.com/article/us-aerospace-composites-analysis-idUSKBN18P1X0?feedType=RSS&feedName=businessNews

New Russian jet heralds carbon manufacturing shake-up

Doesn’t mention scandium specificially but in the background it’s possible?

arch1
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ss Yes Russia is using Scandium in their new generation of military aircraft for ,fittings, whatever that comprises. I ran across that info a year or more ago while researching Scandium. That could be the attachment structures for carbon/graphite fiber wings and body panels Cannot give citation reference right now. Plane you mention is essentially like military transport.

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Russian military strategy re: aircraft…the Russians make pretty good warplanes, and one thing I read was that their strategy is to develop very good body designs and sink the new development costs into improving the insrtrumentation and weapons devlivery packages, which can be retrofitted into the existing frame designs. This makes a lot of sense eonomically as opposed to US strategy, which is typically to develop completely new aircraft that have new everything…fusillages, wings, instrumentation, and weapon platforms. Good for Lockheed and Grumman, I suppose; but the Russian approach makes a lot of sense. It is cheaper to improve the… Read More Β»

hendrixnuzzles
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CTEQF…scandium…the potential upside in scandium is there for sure but a lot of things have to happen before the market will really pay attentition and give credit for it: Syerston has to go into production at good prices. There need to be off-take agreements. Big users have to have confidence to develop real products using scan-alu alloys. So it is going to take a while even though the aerospace industry has known about the benefits of scandium for a few decades. And the current market is miniscule, a couple of dozen tons per year. These relatively far-off developments for scandium… Read More Β»

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hendrixnuzzles
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hendrixnuzzles

Carbon fiber is a fascinating material about which I know very little. However as a main component for large transport vehicles I believe it has some very important disadvantages compared to aluminum, and specifically scandium/aluminum alloys. I will gladly accept any knowledgeable rebuttal of this assertion. The scandium/aluminum alloys will have many practicale advantages over carbon fiber and will be far easier to implement compared to carbon fiber. Carbon fiber has some attracctive charaxct=eristics but in total I think that scan/alu alloys will be far more dominant in the transport sector.

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arch1
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HN The weight is comparable but the properties are not . Carbon fiber is very flexible so it is used in golf club shafts, fishing rods and the like which must endure extreme stress bending without breaking.
Airplane wings droop at the ends when on ground but rise when bearing weight of plane in flight. Carbon fiber withstands that flex as long as it is suitably covered by coating etc.
Scandium alloy is strong and rigid and is suitable for airframes and wing attachments, panels and etc where stability is needed

alanh
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Arch1: How come they dont use CF for body/wing parts yet….is it because it can shatter on impact?

arch1
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πŸ‘7795

Russia is leader in using carbon fiber for wings. No it does not shatter per se but it does not hold up to abrasion without coating. Body of plane needs to be rigid and strong to encase cargo/passengers. Boeing and Airbus are still using aluminium wings as flexibility of carbon fiber has its own problems that counter advantages. That may change with experience and cost/longevity. Metal develops stress cracks over time much more than CF.

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hendrixnuzzles
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I do not understand all the technical differences but remember that aluminum is plentiful and cheap and there are many reliable sources for it. The manufacturers are already used to it. So a totally new material has some exstremely difficult problems to overcome regardless of whatver maginal advantages it may have,

This is a dramatic contrast to using a small fraction of scandium to make an aluminum alloy that significantly improves the performance of the material that is already dominating the market.

renbycage
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renbycage

We are going to do great with this scandium. It’ll get piled in to 3-D printers, and everything will come out from beach chairs to baseball bats to bullet trains. Its going to be worth a lot of $$$$ one of these days.

renbycage
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renbycage

It won’t take 10 years either, the market and technology is already in place, just waiting for the supply on the material. http://www.technology-licensing.com/etl/int/en/What-we-offer/Technologies-for-licensing/Metallics-and-related-manufacturing-technologies/Scalmalloy-RP.html

rubberworm
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rubberworm
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rubberworm

Good vol. in Aussie market. Last time at .60 there Friedland showed up for a small buy at 60 cents and it held at that price. Wonder if FR was buying again today. It will be interesting to see. If so very positive.

alanh
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All: I was watching a v looooong $3k teaser re Rick Rule and mining/metals last night. Most of it was blather, but two things made me frown. https://pro.moneymappress.com/p/RULLCH/ERULT610/?email=runningrep%40btinternet.com&src=d1&a=8&o=41616&s=61109&u=1632257&l=1336432&r=MC2&vid=rSEkBy&g=0&h=true Once upon a time, Uranium was v cheap, went ballistic, then fell back massively in price. I can only think of one reason for this: either we are getting much better at re-processing it or theres too much being discovered/mined. Either way its created a supply and demand imbalance making it a buyers market. Ricks maps are a bit scary…looks like we are digging up the world leaving no stone unturned!. Ive… Read More Β»

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