by Travis Johnson, Stock Gumshoe | July 12, 2012 2:31 pm
The latest pitch from Jeff Siegel[1] for his Power Portfolio[2] newsletter (that’s the one that replaced the old Green Chip[3] service) has gotten a lot of attention from Gumshoe readers — and a few of you have even sent in suggestions for the answer (correct suggestions, for the most part … never let it be said that there’s a smarter group of folks in cyberspace than you and your cohort).
The idea is that there’s a company in Vancouver that has a handle on “safe nuclear power” that will create a global monopoly. And if you think that sounds a little bit familiar, you’re right on this is a stock we’ve looked at before, and it’s exactly the kind of unique microcap stock that the newsletter guys absolutely cannot resist (it’s got a chance to be big if their little niche really takes off … and perhaps more importantly, they can make the stock price go up just by talking about it).
Here’s the tease to get you revved up:
“Over the next six months — thanks to an unprecedented discovery — one company is about to create a global energy monopoly by releasing…
“Safe Uranium
“It alleviates safety concerns, reduces radioactive half-life and saves billions in operating costs. More importantly, it could triple shareholder value….
“At this very moment, on the ninth floor of a Vancouver office building, a (currently) $0.13 metals company is preparing to revolutionize the global nuclear power industry….”
With memories of the Fukushima collapse and the horrific aftermath in Japan[4], saying you’ve got “safe uranium[5]” certainly gets attention. So what are they talking about?
“It’s a unique hybrid that, when easily mixed with standard uranium:
- Instantly makes power plants operate 25% to 50% more efficiently, saving billions upon billions of dollars in operating costs every year
- Prevents any Chernobyl-like meltdowns from ever happening again
- Drastically slashes the radioactive life of spent uranium…
“… this $0.13 company didn’t just create this hybrid metal.
“They also control the world’s largest deposits of the minerals required to produce it.”
Siegel teases that this company could grow from 13 cents into a $25 giant “over the next several years” … which would be a gain of almost 20,000%. Seems worth waiting a few years for, no?
He also tells us that sales are up 5,000% in the last five years, and that this company could control the nuclear fuels business within ten years … which, for an industry that moves as glacially as nuclear power, seems a bit of a stretch.
The alloy that they’re talking about is Beryllium Oxide, which was discovered a few years ago to have great properties for controlling the fission of uranium in nuclear reactors. And it was discovered, as we’ve heard teased before, “off the beaten path” and far from the halls of MIT:
“In fact, it wouldn’t be until this company funded the joint research venture with Texas A&M and Purdue that the world would find out how the right mixture of beryllium[6] oxide with uranium could revolutionize the soon-to-skyrocket nuclear power industry.
“You see, their mixture gives the uranium fuel pellets a ‘skeleton’ of beryllium oxide…
“This ‘skeleton’ sucks the heat from the uranium core, creating — for the first time — a much longer, smoother, and safer reaction.
“Now, thanks to the hybrid’s unique formula, power plants across the globe that incorporate this creation suddenly won’t just save billions of dollars every year by making the uranium work 25% to 50% longer, but…
“This Unique Metal — which puts an end to accidents like Chernobyl — is about to return 3x your money”
The metal is apparently so cutting-edge — lightweight and strong — that this company’s engineered materials are also in demand from high tech manufacturers …
“… using this one-of-a-kind material, engines could run hotter, cars would travel further, computers could process faster, satellites could aim straighter, and drones[7] could carry heavier payloads than ever before…
“All while saving companies vast amounts of time and money…
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“And that has corporations from every industry lining up at the door of this currently tiny outfit”
And that monopoly bit?
“This $0.13 company already holds the worldwide monopoly on BeO
“That’s right!
“Even before test phases are completed, this little-known outfit has already secured the world’s largest deposits of beryllium oxide.
“In other words, they’re going to be the first and sole suppliers, from the ground up, to the nuclear market from the moment their product is operational!”
OK, so I’ve made you wait enough — who is this? This is the little tiny advanced materials and mineral exploration company IBC Advanced Alloys (IB in Toronto, IAALF on the pink sheets).
And it’s not a 13 cent company anymore — it’s now an 11-cent company, though the price bounces around quite a bit because it is ridiculously, absurdly, foolishly tiny. The market capitalization is only about $20 million and the stock often trades less than $50,000 worth of shares in any given day. So if you (yes, YOU) rush out and place a market order for shares right now, you’ve got a good chance of impacting the price.
They are headquartered in Vancouver — and yes, they’re on the ninth floor of one of the buildings there, though their advanced alloys (Beryllium-Aluminum alloys) are primarily being developed only an hour or two from Gumshoe Mountain, over in Wilmington, MA.
And yes, they’ve been teased before both by the Angel Publishing[8] folks starting way back in 2010 (that’s them behind this Power Portfolio teaser) when they called it “Monster Metal” and by Byron King[9] for his Agora[10]-published Energy and Scarcity letter last Fall when he called it the fortune-making “Fourth Element.” (which it is — fourth, that is, not necessarily fortune-making … Beryllium is the second-lightest metal after the third element, the also oft-teased Lithium).
Those teases all served to help the share price pop up for at least a little while, but this is still really a research lab that’s proving its products — so they haven’t put together much of anything in the way of revenues growth to backstop their share price. They have managed to cut down on debt over the past couple years and to clean up their balance sheet after some merger and acquisition activity, but they will have to raise cash again sometime soon — they’ve been running through a bit more than a million bucks a quarter in cash, they’ve made more commitments to sponsor research at Universities (now including MIT[11]), and they have only about $3 million in cash on hand (they still have about $5 million in debt, too).
The unusual thing for such a small firm is that they’re a mineral exploration company as well as an advanced materials company — they’re trying to develop a few Beryllium deposits even as they research and pitch new Beryllium-based materials for the nuclear, space and other industries. The next catalyst for the company, other than the fact that they’re again being teased by a pretty big mailing list, will probably be their assay results if they stand out as particularly good or bad — as of the first quarter report they expected the results from their drilling in Utah to be available in “early July.”
But really, this is neither a manufacturing nor a mining stock — this is a story stock. It could take off, certainly, particularly if they get some kind of big commitment from NASA or a nuclear power company to build something using their materials or to use their Beryllium-laced uranium technology for a reactor, but any guesses as to the timeline of that happening would seem to be just that, guesses. The MIT research is being conducted by a professor who holds a chair sponsored by TEPCO (that’s Tokyo Electric Power), which is an interesting connection to the country that is both the most nuclear-resistant and among the most nuclear-dependent right now, but things move so, so, so slowly in nuclear power that it’s really hard to forecast a brand new technology being widely adopted in a hurry.
So … cool company, fascinating science and materials, but a pretty limited market for them to generate revenue unless their science breaks through with some major customers and gets beyond the research contracts, technical awards, and positive commentary that we’ve so far seen. You can decide for yourself whether that’s worth a gamble or not — just remember that it’s hard to change the world when you start with a $20 million market cap, their technology is certainly compelling to a layperson like me but clearly the nuclear and space industries are waiting to see some more proof of effectiveness and future promise, otherwise many of those companies could have swooped in and bought up IBC without even asking Lucille in Accounting for access to the petty cash drawer.
We’ve written about IBC several times in the past few years, and I know many of you have traded the stock, so if you’ve got an opinion or think you see a good catalyst on the horizon, by all means, share with the group by tossing a comment on the pile below. Thanks!
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Assuming we’re still in the same universe this will be the same Beryllium Oxide that the defense industries spent a fortune removing from designs a few years ago because it’s so toxic it was a risk to the military personnel. Couldn’t make it up.
Ah, there’s always a catch, eh? Don’t know if there new alloys make it any safer or not.
Now isn’t that a question that could be directed to the MIT professor who holds a chair sponsored by TEPCO (that’s Tokyo Electric Power)?
I’d be happy to do that in exchange for his name.
Actually, there are many variations – pure beryllium metal, Beryllium oxide, and beryllium hydroxide. Beryllium oxide is a ceramic, beryllium hydroxide is further refined to produce beryllium copper or pure beryllium metal. The “toxic” concern is related not to “solid” beryllium or beryllium oxide but rather to very fine dust or fumes. So it is quite easy to handle these materials safely. Also, remember there are many materials that are “toxic” if not handled correctly including chromium to name one common metal that is used everywhere. Finally, defense industries still use beryllium and beryllium alloys in many applications because it is a very unique material with excellent vibration dampening properties, high stiffness, and very lightweight.
However, I do work for IBC so maybe I am biased!
Being that you work for IBC Do you think it’s worth the investment?
You can see that we have a lot of good things underway. What most people don’t talk about is our strong and growing core business of copper alloys. The exciting parts of the business are nuclear research, mining, and aluminum beryllium alloys. In the mean time while those are developing, we are growing our core copper alloys business more than 20% per year.
That’s good to know as I find the company interesting and I am thinking about buying some shares.
Beryllium oxide may have been removed from use, but the military uses a crapload of beryllium copper contacts in just about everything electrical. I know because I’ve made millions upon millions of said contacts. Yes, there are dire warnings on coils of BeCu alloys we use to make contacts with the mention of breathing dust being particularly hazardous.
My concerns about buying such energy related stocks, other than the fact that this is a non profitable penny stock, is that another much safer nuclear power source may be released upon the public as early as 2013. Yes, some think it is a scam, but there are way too many famous scientist’s risking black marks attached to their careers for there to be no truth to this discovery. As Forbes Magazine has said, this will be a real game changer if true. Just Google “ecat” or “e-cat”, read everything for yourself, and draw your own conclusions as to whether now is a wise time to jump into energy companies. Personally, I’m waiting until the end of 2013 for a clearer view of the energy horizon.
Yes I’m familiar with BeO. When machining it you need to do it underwater so none of the dust escapes.. Not easy,
Sure it is toxic, but the uranium and its fissioned remains in the nuclear reactors are even more toxic. Heck, they’re radioactive. Even outside its radioactivity plutonium is extremely toxic. The issue here is not detoxifying reactor contents, it is preventing nuclear disasters. However, this company is not an investment, a speculation, or even a gamble. It is like tossing money into a well and wishing.
Well put!
Have done some machining of Beryllium and Berylliumcopper and was warned of the dust being toxic. If worked on in EDM (electric discharge machining) under dielectric oil or water the gas given off from the process is also very toxic !
It sounds as if they really need a very wealthy partner if they expect to ever become productive. IE: Generate cash flow. As they stand now the flow seems to be in the wrong direction.
now 9 1/2 Cents
Not for long — they’re out touting it again with DeHaemer saying it’s “one of the worst undervaluations” he’s ever seen, so it spiked up again this morning.
This is definitely a “jackass or genius ” stock. If their technology catches on it will certainly fall into the ‘genius” category for those like me who had the courage to take a small stake early.
Yes it is a small company in relative terms, but so were IBM, Microsoft, WalMart, Dell, McDonalds and a host of other companies that keep getting touted as “wouldn’t you like to have invested in these companies when you could pick them up for under a dollar”? I knew about RIM, Research in Motion much in the news lately, when it was a $5.00 company before numerous stock splits and reaching well over a hundred, so based on TIMING many fortunes were made or lost based on peoples perception of the companies prospects. I never bought the stock as it seemed as if I had “missed the boat” and usually seemed too expensive, but there were many points were a fortune could still have been made. Maybe I will buy when it again becomes a $5. stock?
True enough, though we also need to be aware of a heavy dose of “survival bias” when folks tease us about names like these and don’t mention the thousands of companies in their same sectors that have gone out of business in past decades. I don’t think that any of those were available to the public before they were successful businesses. Walmart was almost exactly the same nominal size as IBC Advanced Alloys when they went public in 1970 with a market cap of about $20 million, but they were also already comparably profitable (on a PE basis) to Kmart and Sears at the time they went public, and they still had a devil of a job convincing Wall Street that they had a different model and different prospects than the dozens of other small southern discount chains they were competing with (and of course, inflation means that $20 million back then would be really more like $120 million now).
For a company that has a large addressable market, buying it after the market is much more proven doesn’t necessarily have to cost a lot — buying Walmart in 1985 would have been almost as good as buying it in 1970, and by 1985 small retailers around the country were already starting to be afraid of Walmart and they were quite well known.
Not that this means much of anything when it comes to IBC, which is a teensy company whose prospects depend almost entirely on highly regulated industries (defense and nuclear energy) and on a proprietary material science that may or may not end up being used heavily by those industries. Since I have no particular insight into the decisionmaking of nuclear regulators — other than to observe that they’re obviously risk-averse — I have a hard time justifying a fundamental investment argument for the company. Which isn’t to say that it can’t be a great trade based on the “story” that moves the stock or on the vast amount of attention it can get as a unique little company.
Jez, an unusual quantity of Travis comments for this one. Is it a slow night for TV or are the wife and kids away on a camp trip. 🙂
Ha! Didn’t realize I was that transparent … I do like to pitch in when actual questions are asked, but yes, Mrs. Gumshoe’s out of town and the little Gumshoes off at camp, quiet night at Castle Gumshoe. 🙂
We love you, Travis 🙂
From this latest tease :-
” Hitachi and Toshiba and GE are co-developing a new nuclear fuel…………….”
Is this related or a different animal.
Yes Robert, this is the same animal! It is precisely because of major players like this being involved “” Hitachi and Toshiba and GE are co-developing a new nuclear fuel…………” in addition to government contracts for metal alloys that have unmatched qualities that tips the scales in favour of a “small stake” (not betting the farm) so that when the major move comes you will be on board, rather than being caught flat footed and missing the first 25% to 50% move. I have held some of their beryllium aircraft parts in my hands and the reported strength in relation to weight is unprecedented, and in my view may have as big or bigger potential as the uranium fuel additive.
Its proprietory knowledge, patents etc. make it a primary takeover target and they have openly claimed to be at the stage Neo Material Technologies was 10 years ago, a company I was first to write about a couple years ago and was taken over by Molycorp at nearly double my entry point. They added a NEM executive to their Board just before the Moly takeover, so basically NEM had its run and i moved on to other companies.
Don’t know what actual efficacy VestorVest opinion of IAALF is, but they claim it is worth all of six cents and thus is way overvalued now and rates a hold. Meanwhile in comparison, they value Silver Wheaton at $36.49 a share, which is quite a bit higher than current stock price and of course silver about 50% off its highs.
Today IAALF was triple normal volume. I took a small position at 0.094. It was just touted again. Wonder what is up but news is scarce. Not that news seems to mean very much I suppose. African Oil dropped on news of deal with Marathon and others.
Byron King has been declaiming the special virtues of beryllium for several months. He advocated the utilization of ber in nuclear facilties. Not so much lately. Easy to get dizzy trying to watch the circles and cyces of all of these get rich proposals. I’m surprised that we have so many investors that haven’t become millionares by now. Caveat Emptor.
Looking at the “technical solutions” nuclear fuels white paper on the company website, one learns that the increase in efficiency of uranium usage, whether by duration or consumption, is estimated at 4%, not the 25 to 50 percent indicated by Siegel.
From a nuclear engineering perspective – this is junk science. Jeff Seigel has no clue on how nuclear energy works. The basic cyle he shows is elementry but understand – nuclear fuel pellets do not break apart and the addition of this metal will not change the themal yield from fission or the half-life or radioactive fission byproducts. It just ain’t so.
BeO has been used in parts for quite some time in aerospace and others and is an excellent stiffener/hardener. That said -the advantages of BeO touted by Mr Seigel in nuclear fuel are non-existent. They sound wonderful to a lay person and are laughable at best to those of use who have been in the Nuclear Industry fo the past 30 years. They are just not true in any respect.
Jeff Seigel wants people to invest in this stock so that it has a short term move up. He then sells his position at a handsome profit while the investors causing the move just lose. It helps that this is a small cap so only a few people need to fall for the ruse and he makes big money. I am a nuclear engineer and am telling you this is junk. Buy it at your own folly and you help him get richer at your expense.
I have no position in this stock so this is not posted for personal gain in any way.
Jeff said that Jim Malone who is also a member of Lightbridge (LTBR) will meet with the CEO of KEPCO next April in Singapore. Is there any incompatibility with being the VP Nuclear Fuels & Chair of IBC Nuclear Fuels Advisory Board.?
Thank you.
I think a small investment is well worth it if just for the mines, not counting the proprietary tecnology. I have held this stock for serveral years and added to my position earlier this year. Just by chance, it could be a wealth builder later!!! SUCH A SMALL PRICE TO PAY, FORTUNES ARE OFTEN MADE WITH SMALL CAP COMPANIES!! YES SOME COMPANY MAY JUST OPEN THEIR SMALL POCKET BOOK UP AND PAY GOOD MONEY FOR THIS COMPANY..
Stay with the SAFE plays in this SECTOR: CCJ, DNN and USU. Anything less is a risky bet.