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Fall 2019 The Official Magazine of the MicroCap Stock Market Since 2006

Issuer Direct Corporation NYSE American: ISDR Jaguar Health, Inc. NASDAQ CM: JAGX

12 16
Page Brian Balbirnie, CEO Page Lisa Conte, CEO
www.issuerdirect.com www.jaguar.health

Theta Gold Mines Limited ASX: TGM / OTCQB: TGMGF SolGold PLC LSE & TSX: SOLG / PINK: SLGGF

26 20
Bill Guy, Chairman Page Nick Mather, CEO
Page
www.thetagoldmines.com www.solgold.com.au

FEATURED ARTICLES
24 The Information and Reliability Void 46 The Quiet but Dramatic Revolution in 56 How Medical Industry is Applying Advances 76 Coloring Apps and Match-3 Games; Taking
Delicious Flickr Twitter Retweet

By Robert Kraft, MBA Mining….. By Jamie Strauss in Artificial Intelligence and Data Generation Facebook
Mobile Apps to New Levels
MySpace StumbleUpon Digg
By David Weinstein, MD By Ralph Garcea, P.Eng, MBA
30 The Key Raw Materials Needed for 52 Inaccurate Negative Blog Articles Creating
the Rise of the Lithium Ion Battery Opportunity for Long-term Investors 64 How to Spot the Best of the Undiscovered 90 When To Sell
Slash Dot Mixx By Mathieu Martin
Skype Technorati

Megafactories By Robert Colbourn By Sam Namiri, MBA By Brandon Mackie


40 Q&A with Brent Cook, Exploration 54 A Nuclear Winter for Value Investors 66 Three Principles for Thriving Public Markets Reddit FriendFeed YouTube LinkedIn

Insights By Shelly Kraft By Tobias Carlisle By Cromwell Coulson


Newsvine SlideShare Google Google Talk

42 The Critical Materials Age


www.stocknewsnow.com 70 Mining Industry 2019-Q&A with Rick Rule
By Jon Hykawy, PhD, MBA
74 Awesome Aussies By Richard Revelins Yahoo Yahoo Buzz Netvibes AOL
sEE aRTiclE on pagE 72

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E D I T O R I A L

In Loving Memory of Our Precious Daughter,


and Sister, Sammi Kane Kraft
W elcome to the Fall/Winter 2019 issue
of the MicroCap Review and thank
you for your support, readership and loyal fol-
the author notes that additional liquidity,
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ity for shares to trade for longer periods  of
Published Since 2006 lowing. It is our pleasure to continue to provide time due to exchanges operating in different
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CONTENTS
STOCKNEWSNOW.COM

F E AT U R E D A RT I C L E S
fall 2019

24 The Information and Reliability Void: Filling the Gap 64 How to Spot the Best of the Undiscovered
for Investors By Robert Kraft, MBA By Brandon Mackie

30 The Key Raw Materials Needed for the Rise of the 66 Three Principles for Thriving Public Markets
Lithium Ion Battery Megafactories By Robert Colbourn By Cromwell Coulson

40 Q&A with Brent Cook, Exploration Insights By Shelly Kraft 74 Awesome Aussies: “The Upside to Down Under
Stocks” By Richard Revelins
44 Why Young People Should Love Gold Stocks
By Lobo Tiggre 82 A Case Study: Using SEC Filing Information
Arbitrage to Protect Your Portfolio
46 The Quiet but Dramatic Revolution in Mining….. By Maj Soueidan
By Jamie Strauss
86 Give it Away - The Million You Never Made: You
52 Inaccurate Negative Blog Articles Creating Are a Product By Sean Peasgood
Opportunity for Long-term Investors By Sam Namiri, MBA
90 When To Sell: 8 Reasons To Put A Stock Up For
54 A Nuclear Winter for Value Investors By Tobias Carlisle Sale By Mathieu Martin
56 How Medical Industry is Applying Advances in 94 Is Gold About to Lose It’s Luster?
Artificial Intelligence and Data Generation By Steven M. Shelton, MS, MBA, CFP®, CLU,
By David Weinstein, MD CHFC, TEP, CIMA®, CMT

Profiled Companies 34 Phoenix Copper Limited 60 AmeraMex International, Inc.


8 BioHiTech Global, Inc. AIM: PXC / OTCQX: PGMLF OTCQB: AMMX
NASDAQ CM: BHTG
35 Westwater Resources, Inc. 61 Clear Cannabis, Inc.
12 Issuer Direct Corporation NASDAQ CM: WWR PRIVATE COMPANY
NYSE American: ISDR
36 Graphite One, Inc. 63 Helix BioPharma Corp.
16 Jaguar Health, Inc. TSX-V: GPH / OTCQB: GPHOF TSX & FSE: HBP
NASDAQ CM: JAGX
38 First Cobalt Corp. 78 Kuuhubb Inc.
20 SolGold PLC TSX-V: FCC / OTCQX: FTSSF TSX-V: KUU / PINK: BCDMF
LSE & TSX: SOLG / PINK: SLGGF
48 CBD Unlimited, Inc. 80 KneoMedia Limited
26 Theta Gold Mines Limited PINK: EDXC ASX: KNM / OTCQB: KNEOF
ASX: TGM / OTCQB: TGMGF
50 Newrange Gold Corp. 96 First Vanadium Corp.
32 Lake Resources N.L. TSX-V: NRG / OTCQB: NRGOF TSX-V: FVAN / OTCQX: FVANF
ASX: LKE / PINK: LLKKF
51 Westgold Resources Limited
ASX: WGX

Critical Materials Corner Accounting Corner Gaming Corner


42 The Critical Materials Age 68 Judged By the Company You 76 Coloring Apps and Match-3
By Jon Hykawy, PhD, MBA Keep Games; Taking Mobile Apps
By Corey Fischer, CPA to New Levels
Family Office Corner By Ralph Garcea, P. Eng, MBA
58 Family Offices are Creating Resources Corner
Value in MicroCaps 70 Mining Industry 2019-Q&A with Asia Corner
By Karl Douglas Rick Rule 92 Hong Kong’s Summer of
By Robert Kraft, MBA Discontent Overshadows
Market Maker Corner Growth Stocks
62 What is the Difference Data Corner By Leslie Richardson
between a Specialist and a 72 What’s Your Privacy Worth?
Market Maker? By Chris Miglino, CEO, SRAX
By Eric Flesche
www.stocknewsnow.com MicroCap Review Magazine 7
P R O F I L E D C O M PA N Y nasdaQ cm: BHTg

BioHiTech global, inc.


Providing cost-effective technology solutions that reduce the
environmental impact of the waste management industry

Municipal waste being processed at BioHiTech’s fully enclosed HEBioT facility

a gREEn TEcHnology countries like China, India, and Malaysia


sERvicEs company, FoundEd are banning the importation of our plastics,
By EnviRonmEnTal sERvicEs paper, and other recyclables. These factors
indusTRy EXpERTs, THaT is are creating an environmental crisis that is
on a mission To cHangE THE resulting in rapidly escalating US disposal
way wE THink aBouT man- costs. In other words, the status quo is now
aging wasTE. unsustainable.
Finding solutions to these problems has
For decades now, the United States has dealt proven to be just as complex. Shipping recy-
with its trash problems in two simple ways; clables overseas is becoming increasingly
bury it in the ground or ship it to another difficult and has been linked to the plastic
country. Yet, the simple way is becoming a pollution crises in our oceans. Composting
lot more complicated. facilities and costly alternative food waste
As US Landfill capacity declines, more diversion projects have also been ineffective
municipalities and businesses are demand- and in some cases, have even  made things
ing sustainable waste management solu- worse1.  BioHiTech Global is a New York-
tions that reduce landfill usage and associ- based technology company led by environ-
Frank E. Celli, CEO
ated greenhouse gas emissions. Additionally, mental service industry experts, taking a

8 MicroCap Review Magazine www.stocknewsnow.com


different approach to solving these prob- facturing process. The Company expects the
lems. BioHiTech has focused on deploying Martinsburg facility will generate $7 million
cost-effective, sustainable technology solu- in annual revenue, mainly from tipping fees
tions that can be easily integrated with tra- charged to waste haulers, with over 40%
ditional disposal methods. The Company’s EBITDA margins. That means this facility
CEO, Frank E. Celli, who has spent over a makes dollars and cents as well as environ-
quarter of a century in this industry, thinks mental sense.
this practical approach to waste disposal will BioHiTech currently controls the exclusive
lower costs and help save the environment. development rights to the HEBioT™ technol-
“Our Company is deploying two unique HEBioT plant in Martinsburg, WV ogy in 11 states in the Northeast US as well as
proprietary technologies; one that elimi- the District of Columbia. The Company has
nates food waste at the point of generation leader Waste Management has seen a  20 plans to build a second facility in New York
and another that processes mixed municipal percent increase in the amount of card- that is already in the permitting process and
waste, including non-recyclable plastics, into board discarded over the last decade2, large- has several other locations in the planning
an EPA recognized renewable fuel,” said ly attributable to online shopping services. stage. The Company anticipates commenc-
Celli. “When used in tandem, these technol- Additionally, the mounting problems result- ing construction of its New York HEBioT™
ogies can reduce landfill usage by as much as ing from China’s recycled materials ban has facility in 2020. When completed, the new
90% while potentially lowering the disposal led to a growing number of municipalities facility is expected to add $12 million in
costs for both businesses and traditional that are  reducing or suspending their recy- revenue in its first full year of operation with
waste service providers.” cling programs3.    That means a great deal EBITDA margins of over 50%. BioHiTech
The market size for BioHiTech’s solutions more than just household trash ultimately believes it can drive future revenue growth
is significant. The Company estimates the ends up in landfills.  with the addition of at least one new facility
annual revenue potential of its target market BioHiTech’s HEBioT™ Resource Recovery to its HEBioT™ fleet each year.
is more than $2.5 billion, and that is assum- Facilities are poised to reverse that trend.
ing a very modest percentage of the overall This patented technology processes munici- Revolution Series™
addressable market. pal solid waste, including non-recyclable Digesters: A smart tech-
So far, BioHiTech appears to be on the plastics, into an EPA recognized renewable nology that eliminates
right track. Revenues are increasing with fuel and can deliver an 80% reduction in food waste on-site while
the Company expecting more rapid rev- landfill usage. The renewable fuel can be providing powerful supply
enue growth in the years to come. Given used as a cleaner-burning alternative to coal. chain data analytics.
the tailwind created by the drive to reduce The facilities are fully enclosed, ensuring
the overall environmental impact of waste that the outside environment is not exposed
disposal, BioHiTech is poised to capitalize to any waste, harmful gases, or foul odors.
as the technology leader in the sustainable Equally as important, deploying this tech-
management of this country’s waste. nology will result in no additional cost to
states, municipalities or their residents.
HEBioT™ Resource Recovery BioHiTech recently opened its flagship facil-
Facilities: Reduces landfill ity in Martinsburg, West Virginia. This 56,000
usage while processing square foot facility is capable of processing up
municipal solid waste and to 110,000 tons of municipal solid waste each BioHiTech Seed® digester in kitchen
non-recyclable plastics year. At full capacity, the Martinsburg facility
into renewable fuel. will achieve an annual savings of over 2.3 mil- BioHitech’s Revolution Series™ Digesters
lion cubic feet of landfill space and eliminate are robotic biological digestive systems that
When companies like Amazon ushered in a the greenhouse gases associated with landfill- eliminate food waste at the point of genera-
new way to shop online and deliver every- ing that waste. Additionally, all of the alterna- tion. These machines can be as small and easy
thing right to your door, the volume of tive fuel produced at the Martinsburg facility to install as a dishwasher and use a simple
discarded packaging significantly increased is under contract for the next ten years by a biological process that converts food waste
the amount of curbside trash. According local cement manufacturer for use as a partial into a liquid that is safe to discharge down
to a report from  BuzzFeed News, industry replacement for coal in the cement manu- an ordinary drain. This process can result

www.stocknewsnow.com MicroCap Review Magazine 9


in a substantial reduction in costs for cus-
tomers like restaurants, grocery stores, and
hotel/hospitality companies by eliminating
the transportation and logistics costs associ-
ated with food waste disposal. As a result,
with fewer trucks on the road using less gas,
the environment benefits as well. BioHiTech’s
smallest unit, the Revolution Seed, is capable
of processing up to 500 pounds of food waste
every 24 hours. Operating that unit at full
capacity 5 days a week, could save the equiva-
lent of 5,100 gallons of gasoline each year and
eliminate any greenhouse gases associated
with rotting food waste in a landfill.
The software engineers at BioHiTech have
taken the Revolution Series Digesters one
step further. They have built a proprietary
cloud-based data analytics platform that
helps companies improve efficiency through BioHiTech Seed® digester in use
real-time data. This patented process of
weighing and categorizing waste turns every impact they are having on the environment FoRwaRd looking
digester into a smart cloud-connected device by diverting their food waste from landfills. sTaTEmEnTs
that provides a unique insight into the waste CEO Frank E. Celli thinks that makes a big
stream. Businesses can use that informa- difference and is one of the things that sets This article contains certain forward-looking
tion to make supply chain modifications to BioHiTech apart from other solutions pro- statements within the meaning of Section
reduce waste generation and further improve viders. “We don’t just say it, we verify it,” said 27A of the Securities Act of 1933 and Section
bottom-line results. Celli. “Our digesters can tell you how much 21E of the Securities Exchange Act of 1934,
Typically, BioHiTech leases its digesters food waste has been diverted and what that as amended. These statements are based
and smart technology to customers creat- means in terms of landfill space and CO2 on many assumptions and estimates and
ing a valuable high margin recurring rev- emissions. Many of our customers make a are not guarantees of future performance.
enue stream that can build each year. The point of advertising that information to show Actual results may differ materially from the
Company also sells its digesters to certain they are making a difference. ” results anticipated in these forward-looking
domestic customers as well as in foreign mar- Mr. Celli has had success in this multibil- statements due to a variety of factors, includ-
kets where leasing is less common. lion-dollar industry before, selling a waste ing, without limitation those set forth as
management services business he started “Risk Factors” in BioHiTech’s filings with
wHy BioHiTEcH: THE RigHT from scratch for over $200 million in 2006. the Securities and Exchange Commission
appRoacH aT THE RigHT TimE. He believes the industry is now ripe for (“SEC”). BioHiTech Global, Inc. assumes no
change and that BioHiTech’s cost-effective obligation to update any forward-looking
Sometimes, the best way to achieve posi- technology-driven solutions can deliver that statements as a result of new information,
tive industry change is to understand how change by leading the way to a more sustain- future events or developments, except as
the current system works and what changes able future for our environment. required by securities laws. n
the industry will easily embrace. BioHiTech
has taken this approach, and that is why its Please visit the company’s website for more informa-
tion: www.biohitech.com
technology solutions work just as well for
business and municipal customers as they do
1 https://www.bizjournals.com/columbus/news/2019/10/02/columbus-composter-fights-for-his-business-
for waste management services companies.
amid.html
It is also why BioHiTech’s data analytics 2 https://www.buzzfeednews.com/article/nicolenguyen/environmental-impact-of-amazon-prime
platform is designed to provide customers 3 https://www.environmentalleader.com/2019/05/in-depth-cities-struggle-with-curbside-recycling-as-
china-ban-affects-infrastructure/
with tools to see and show others the positive
The company paid consideration to SNN or its affiliates for this article.

10 MicroCap Review Magazine www.stocknewsnow.com


IN THE
BUSINESS?
How do we spend more
time on the business?

IS OUR TEAM
Scale-ready?

DO WE HAVE
All of the right people
in all of the right
seats?

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HOW CAN I
GET MY TEAM
To deliver better results?

10
HOW
QUESTIONS
THAT KEEP CEOs
UP AT NIGHT

HOW DO DO WE
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All of our priorities
effectively?

MUCH WE FIND HAVE THE HOW DO I


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www.stocknewsnow.com MicroCap Review Magazine 11
P R O F I L E D C O M PA N Y nysE american: isdR

issuer direct corporation


Technology Company Focused on the Needs of Corporate
Issuers…and Investors!

I ssuer Direct’s vision is to be the trusted platform that


brings the issuer and investor together.
ovERviEw over 4,000 public companies and private
companies in more than 18 countries.
Issuer Direct® is an industry leading com- “The Company’s mission is to be a high
munications and compliance company quality, cost effective provider of communi-
focusing on the needs of corporate issuers. cation and compliance workflow technolo-
Issuer Direct’s principal platform, Platform gies to customers around the world”, stated
id™, empowers users by thoughtfully inte- Brian Balbirnie, Founder and CEO.
grating the most relevant tools, technolo-
gies, and services. Thus, eliminating the BEginning
complexity associated with producing and
distributing financial and business com- Issuer Direct®, founded in 1988, is a public
munications. company listed on NYSE American, Ticker:
The Company is headquartered in Raleigh, ISDR. Early in its history, the company iden-
North Carolina. Issuer Direct® has served tified an opportunity in the public company

summary

COMPANY 5-year GAGR


• Founded in 2006 • Transitioned business to higher margin,
• 88 + Employees reoccurring subscriptions.

• NYSE American listed: ISDR • Platform & Technology

• Insider ownership: 25%+ • +40% - 5yr. CAGR


• 64% of overall revenues
• Goal of 70% end of 2019
• Higher margin business (73% Q2)
Q2 2019 CUSTOMER COUNTS
• Services Business
• 1,440 public customers
• -12% - 5yr. CAGR
• 997 private customers • 36% of overall revenues
• Goal of 30% end of 2019
• YoY customer growth 27%. Driven by • Market average margins (58% Q2)
private communications business.

Brian Balbirnie, CEO All rights reserved © 2019 Issuer Direct Corporation

12 MicroCap Review Magazine www.stocknewsnow.com


Platform history
EDGAR/SEDAR Filings, Whistleblower, and
ownership Reporting.
$14.232M Its Communications Module, includes
WE HAVE SUCCESSFULLY TRANSITIONED FROM A $12.628M Conference Software Newswire, Webcasting, IR systems and web-
DECLINING ANNUAL REPORTS PRINTING BUSINESS
TO A HIGH-MARGIN, GROWTH SAAS BUSINESS.
sites, Shareholder targeting and analytics.
Investor Network Investor Network
Other add-on products are: Stock Transfer
$11.619M Targeting Targeting
and annual meeting management services,
ACCESSWIRE ACCESSWIRE ACCESSWIRE Conference services including: 1-1 software,
and on-site webcasting.
$4.305M ARS ARS ARS
“We have successfully transitioned from
$3.860M Transfer Agent Transfer Agent Transfer Agent Transfer Agent
a declining annual reports printing business
Proxy Proxy Proxy Proxy Proxy to a high-margin, growth SAAS business”,
IR Websites/ IR Websites/ IR Websites/ added Brian Balbirnie, Founder & CEO.
$1.425M IR Websites IR Websites Webcasting Webcasting Webcasting
The Company’s flagship product , Platform
Compliance Compliance Compliance Compliance Compliance Compliance
id™, is a cloud-based subscription platform
2006-2008 2009-2010 2011-2012 2013-2015 2016-2017 2018
that manages the events of customers to dis-
tribute their messages to their constituents,
All rights reserved © 2019 Issuer Direct Corporation
investors, markets, and regulatory systems.
A catalyst for customer adoptions and
shareholder interest is due to its well-round-
space by building technologies to assist with being disjointed, there must be others with ed additions to now include: news dissemi-
complex regulatory filings, document con- similar issues. nation, media outreach services, an updated
version, and shareholder communications. webcast solution that is a cloud-based earn-
Today, the Company is focused on tire- soluTion ings webcast, webinar, training platform that
lessly working to help tell their customers delivers live and on-demand streaming of
story to the world. Issuer Direct Product Suite consists of two events to audiences of various sizes, as well
well defined ecosystems, Compliance and as allows customers to create, produce, and
pRoBlEm Communications. deliver events.
Its Compliance Module includes Blueprint: The Company provides SEC document
The problem that the company was looking
to solve was really a solution for themselves. Platform id.
As a fully-reporting public company, and as
CEO, it is your fiduciary responsibility to
make sure that your company is within com- Modules

pliance for all your communications in order • Compliance module


- Blueprint (EDGAR/SEDAR)
to make sure you are complying with all the
- Whistleblower
rules and regulations set forth by the SEC or - Ownership Reporting
governing body.
• Communications module Simple Flat Rate
However, you also need to make sure - Newswire
- Webcast, earnings
you are effectively communicating with
your shareholder base. Issuer Direct, being
- IR Website
- Hotline
- Shareholder Targeting
$6 - 12K /yr.
a public company themselves, realized that
there wasn’t a one-stop solution for all their • Add-on
backend compliance needs: their necessary
- Stock Transfer
vendors were across the map – from trans- - AGM (Print & Proxy)
fer agent, press release company, EDGAR
Filings and more. Management thought that
if they are having an issue with vendor
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www.stocknewsnow.com MicroCap Review Magazine 13


Corporate Vision
cuRREnT pERFoRmancE and
gRowTH plans

The end of the 2019 second quarter the


PUBLIC PRIVATE CONFERENCE
COMPANIES COMPANIES ORGANIZERS INVESTORS Company had 1440 public company custom-
(1440) (997) (-20) ers and 997 private company customers.
! Communications ! ACCESSWIRE ! 1-1 Software ! Webcasts
summaRy and conclusion:
! Compliance ! Newsroom ! Webcasting ! Conf. Transcripts

! Stock Transfer ! Media Targeting ! ACCESSWIRE ! Company Alerts Operating in a complex regulatory environ-
! AGM ! Webcasting ! Mobile Options ! Historical data ment can be a scary place, let alone under-
! Insight* ! Trends & Insights standing what to share, when and how. Issuer
Direct® is a leading platform technology
$12 - 18K $3 - 5K $25 - 50K $ TBD
company that understands this, and the life
cycle of a message. Its platform subscription
removes the pains, burdens, and high costs
by elegantly combining the entire workflow
All rights reserved © 2019 Issuer Direct Corporation
into one flat fee – an incredibly easy solution.
It also has a business unit poised for con-
siderable growth.
conversion and editing such as: XBRL tag- Issuer Direct® serves: corporate issuers, Fair disclosure for public companies many
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ery, telecommunications, printing, press investment banks, mutual funds and profes- companies are increasingly wanting to tell
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rials or annual reports. legal communities. all major exchanges – its story telling plat-
The Company operates under its corpo- form and subscription business has consid-
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brands ACCESSWIRE and Direct Transfer. of the market. n

Please visit the company’s website for more informa-


tion: www.issuerdirect.com

This material contains forward-looking statements. In addition, from time to


time, we or our representatives may make forward-looking statements orally
or in writing. We base these forward-looking statements on our expectations
and projections about future events, which we derive from the information cur-
rently available to us. Such forward-looking statements relate to future events
or our future performance, including: our financial performance and projec-
tions; our growth in revenue and earnings; and our business prospects and
opportunities. You can identify forward-looking statements by those that are
not historical in nature, particularly those that use terminology such as “may,”
“should,” “expects,” “anticipates,” “contemplates,” “estimates,” “believes,” “plans,”
“projected,” “predicts,” “potential,” or “hopes” or the negative of these or similar
terms. In evaluating these forward-looking statements, you should consider
various factors, including: our ability to change the direction of the Company;
our ability to keep pace with new technology and changing market needs; and
the competitive environment of our business. These and other factors may cause
our actual results to differ materially from any forward-looking statement.
Forward-looking statements are only predictions. The forward-looking events
discussed in this document and other statements made from time to time by us
or our representatives, may not occur, and actual events and results may differ
materially and are subject to risks, uncertainties and assumptions about us. We
are not obligated to publicly update or revise any forward-looking statement,
whether as a result of uncertainties and assumptions, the forward-looking
events discussed in this document and other statements made from time to time
by us or our representatives might not occur.

The company paid consideration to SNN or its affiliates for this article.

14 MicroCap Review Magazine www.stocknewsnow.com


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MicroCap Review Magazine 15


www.stocknewsnow.com issuerdirect.com | sales@issuerdirect.com | 877.481.4014
P R O F I L E D C O M PA N Y NASDAQ CM: JAGX

Jaguar Health, Inc.


From the Rainforest to an FDA-approved Drug with
Multiple Potential Follow-on Indications

J
aguar Health is a commercial stage for the symptomatic relief of noninfectious
pharmaceutical company focused on diarrhea in adults with HIV/AIDS receiving
developing novel drugs and new modal- antiretroviral therapy.
ities of providing symptomatic relief for gas-
trointestinal diseases on a global basis. The A PIPELINE WITHIN A PRODUCT
company’s wholly-owned subsidiary, Napo
Pharmaceuticals, focuses on drug discovery Mytesi is in development for multiple pos-
and development by leveraging the knowl- sible follow-on indications including: can-
edge of traditional healers working in the cer therapy-related diarrhea, orphan-drug
Amazon rainforest. A number of Jaguar and indications for infants and children with
Napo team members have been together for congenital diarrheal disorders and short labelled for acute treatment, to encourage
more than 15 years. Dr. Steven King, Jaguar’s bowel syndrome, and potentially for sup- safe use. Unlike anti-motility products such
executive vice president of sustainable sup- portive care for patients with inflammatory as Imodium and Lomotil®, which are opioids
ply, ethnobotanical research, and intellec- bowel disease, irritable bowel syndrome, and that work by slowing movement through
tual property, and Lisa Conte, the company’s idiopathic/functional diarrhea. In addition, the GI tract and often cause constipation—
founder, president and CEO, have worked Jaguar’s second-generation proprietary anti- Mytesi is a non-opioid, non-antibiotic drug
together for more than 30 years. Together, secretory agent, lechlemer, is in development that modulates and normalizes the functional
the Napo team has successfully developed for providing symptomatic relief of diarrhea imbalance of intestinal fluid and electrolytes
crofelemer, a novel drug purified from the from cholera infection. in the gut and is approved for chronic use.
bark latex of the Croton lechleri tree, into Jaguar, through Napo, holds extensive Mytesi is minimally absorbed and is also the
Mytesi®, a natural, sustainably harvested, global rights for Mytesi. The company is first oral drug approved by the FDA under
first-in-class drug approved by the U.S. FDA seeking business development partnerships botanical guidance. This provides a barrier
to provide non-dilutive funding for the mul- to entry from potential generic competition
tiple clinical opportunities, and Jaguar is because currently there is no pathway for a
currently in discussion with a number of generic product to be developed for crofele-
prospective partners. mer under botanical guidance.
Commercial manufacturing of Mytesi
DISTINCT COMPETITIVE is being conducted at two FDA-approved
ADVANTAGES locations (under GMP). Several additional
Mytesi clinical applications are backed by
Mytesi is the only FDA-approved, first-in- Phase 2 and/or proof of concept clinical
class anti-diarrheal drug studied specifi- evidence from human trials. Jaguar also
cally in adults with HIV/AIDS in a chronic holds a portfolio of approximately 141 issued
therapy setting. worldwide patents, with coverage in many
On September 20, 2019, the FDA cases that extends until 2031, along with
announced that it has set packaging limits approximately 24 pending patent applica-
for the anti-diarrheal (anti-motility) medi- tions worldwide.
cine loperamide (Imodium®), which is only
Lisa Conte, CEO

16 MicroCap Review Magazine www.stocknewsnow.com


The protocol for this study called for ate the effects of crofelemer on reduction of
an interim analysis for futility when the diarrhea (measured by frequency of watery
study enrollment reached 50%. Georgetown stools) induced in healthy dogs following
University’s Data Safety Monitoring oral dosing of a therapeutic dose of a select
Committee has reviewed the interim analysis TKI over a 28-day period. The top line
and notified the Principal Investigator that results of the study showed that crofelemer
the interim analysis requirement has been demonstrated superior benefit for “respond-
met and the study is allowed to enroll to com- ers” (p<0.05). A “responder” was defined as
pletion. As of mid-November, enrollment in any dog having <7 watery stools per week for
Cancer Therapy-Related the study exceeded 85%, and the treatment at least two out of the four weeks of the study.
Diarrhea (CTD): The Primary period for each patient is 3 months. The results of this study (funded by a third-
Focus of Jaguar’s Pipeline Earlier this year Napo met with the FDA party manufacturer of an FDA-approved
Development Efforts to discuss a new protocol for the company’s TKI) provide additional scientific rationale
planned pivotal Phase 3 clinical trial in and support for the use of crofelemer for
Targeted cancer therapy agents, such as epi- cancer subjects to evaluate the effects of cro- symptomatic relief of noninfectious diar-
dermal growth factor receptor antibodies felemer in providing symptomatic relief of rhea in human patients receiving TKI-and/
and tyrosine kinase inhibitors (TKIs), with diarrhea in adult patients with solid tumors or-other targeted cancer therapy-containing
or without concomitant cycle chemotherapy receiving targeted cancer therapy with or regimens in clinical investigations.
agents, may activate intestinal chloride secre- without cycle chemotherapy. The meeting
tory pathways, leading to increased chloride resulted in several key agreements between Jaguar’s Legacy Animal
secretion into the gut lumen, which, coupled Napo and the FDA. These agreements Health Business Supports
with significant loss of water, results in secre- included support for the conduct of a pivotal Focus on Human Health
tory diarrhea. A novel antidiarrheal drug Phase 3 trial, lack of additional requirements Benefits
like crofelemer holds promise for treating for nonclinical toxicity studies, no additional
such diarrhea, and would support long-term manufacturing studies, and a waiver on any While Jaguar’s commercial and development
cancer treatment adherence as well as patient new drug interaction studies. For clarifica- efforts have evolved to focus primarily on
comfort. tion, this pivotal trial is not dependent on Mytesi and human pipeline indications since
According to a publication in The American the completion or result of the HALT-D trial, its merger with Napo, the company is continu-
Journal of Hematology/Oncology in 20151, the which is investigator, not company, initiated. ing limited initiatives related to Canalevia™,
incidence of diarrhea with cancer treatments Jaguar’s planned clinical study for CTD is its drug product candidate for treatment of
has been reported to be 80%, with 20% of analogous to the successful clinical studies chemotherapy-induced diarrhea (CID) in
patients having severe diarrhea. for Mytesi’s currently approved HIV indica- dogs. Jaguar believes the experience, such as
tion, and as part of risk mitigation efforts, the aforementioned TKI study in dogs which
Ongoing Investigator- Jaguar intends to use the same formulation achieved results similar to the ADVENT trial,
Initiated Trial of and dosing of the currently commercial- the human pivotal trial resulting in regulatory
Crofelemer at ized Mytesi product. Napo’s next steps are approval of crofelemer for its current approved
Georgetown for CTD to refine and finalize the protocol for the indication in HIV/AIDS patients, may be
pivotal trial with the FDA, and the company predictive of the effectiveness of crofelemer
Enrollment is ongoing for an Investigator- submitted a package in September 2019 to in human patients suffering from CTD. Upon
Initiated Phase 2 study of crofelemer in breast support the regulatory discussions. receipt of conditional approval for CID from
cancer patients. The study, titled HALT-D: the FDA/CVM, Jaguar expects the product to
Diarrhea Prevention and Prophylaxis with Significant Top Line Results be commercially available for this indication in
Crofelemer in HER2 Positive Breast Cancer Achieved in Preclinical dogs in the first half of 2020.
Patients Receiving Trastuzumab, Pertuzumab, Study Evaluating
and Docetaxel or Paclitaxel with or without Crofelemer for CTD Pursuit of Pediatric
Carboplatin, is sponsored by Georgetown Orphan-drug Indications
University and funded by Genentech As announced in August 2019, significant
(Roche). The final study report is expected top line results have been achieved in a The company plans to evaluate a liquid
to be available in mid-2020. preclinical pharmacological study to evalu- formulation of crofelemer for the possi-

www.stocknewsnow.com MicroCap Review Magazine 17


ble orphan-drug indications of diarrhea in ten public offering of units for gross proceeds See full Prescribing Information at Mytesi.
infants and children with congenital diar- of $16.56 million. This included the full exer- com.
rheal disorders (CDD) and/or with short cise of the underwriter’s over-allotment option
Jaguar Health, Inc. authored this article and paid
bowel syndrome (SBS). The incidence of to purchase additional shares and warrants,
a fee to SNN to publish and distribute the article. n
CDD and SBS is much more prevalent in prior to deducting underwriting discounts
regions where consanguineous marriages and commissions, and offering expenses pay- Forward-Looking
are part of the culture. Napo has accepted a able by Jaguar. Several long-term investors Statements
request for an Investigator-Initiated trial of dedicated to expanding access to Mytesi par- Certain statements in this press release constitute
crofelemer at Sheikh Khalifa Medical City in ticipated in the financing. The company has “forward-looking statements.” These include state-
ments regarding the development of possible Mytesi
Abu Dhabi for CDD in children, and Jaguar no anti-dilution or reset provisions in any of follow-on indications, the belief that crofelemer may
is seeking potential business development the securities on its balance sheet. hold promise for treating secretory diarrhea, and
therefore also support long-term cancer treatment
partners focused on rare diseases to support adherence as well as patient comfort, in cancer
efforts to pursue these possible indications. Important Safety patients, the expectation that the final report for the
Information HALT-D study will be available in Q1 2020, Jaguar’s
plans to use the same formulation and dosing as
Possible Cholera-Related the current commercialized Mytesi product for the
Priority Review Voucher Mytesi is not approved to treat infectious proposed CTD indication, Napo’s plans to refine and
finalize the agreement for the single pivotal trial for
Opportunity diarrhea (diarrhea caused by bacteria, a CTD with the FDA, the belief that the results of the
virus, or a parasite). Before starting you on dog TKI study provide additional scientific rationale
Cholera is an acute diarrheal illness, with an Mytesi, your healthcare provider will first and support for use of crofelemer in providing symp-
tomatic relief of noninfectious diarrhea in human
estimated 3-5 million cases and over 100,000 be sure that you do not have infectious diar- patients receiving TKI-and/or-other targeted cancer
cholera deaths occurring each year globally. rhea. Otherwise, there is a risk you would therapy-containing regimens in future human clini-
cal investigations, the expectation that Canalevia, if
Jaguar’s drug product candidate lechlemer, not receive the right medicine and your conditionally approved for the indication of CID in
which has the same mechanism of action infection could get worse. In clinical studies, dogs, will be commercially available for this indica-
as crofelemer and is significantly less costly the most common side effects that occurred tion in dogs in the first half of 2020, plans to evaluate
a liquid formulation of crofelemer for the possible
to produce, may support efforts to receive more often than with placebo were upper indications of diarrhea in infants and children with
a priority review voucher (PRV) from the respiratory tract (sinus, nose, and throat) CDD and/or SBS, the belief that lechlemer may sup-
port efforts to receive a PRV for a cholera indication,
FDA for a cholera indication. PRVs, which infection (5.7%), bronchitis (3.9%), cough and the expectation that the company’s pipeline will
are transferable, are granted to drug devel- (3.5%), flatulence (3.1%), and increased bili- fuel long-term value creation for investors and pro-
opers as an incentive to develop treatments rubin (3.1%). vide funding opportunities for partner collaborations
around the world. In some cases, you can identify
for neglected diseases and rare pediatric forward-looking statements by terms such as “may,”
diseases. In recent transactions by other “will,” “should,” “expect,” “plan,” “aim,” “anticipate,”
“could,” “intend,” “target,” “project,” “contemplate,”
companies, PRVs have sold for $67 million “believe,” “estimate,” “predict,” “potential” or “con-
to $350 million. tinue” or the negative of these terms or other similar
expressions. The forward-looking statements in this
article are only predictions. Jaguar has based these
Multiple Opportunities for forward-looking statements largely on its current
Growth expectations and projections about future events.
These forward-looking statements speak only as of
the date of this article and are subject to a number
Jaguar and Napo are committed to their of risks, uncertainties and assumptions, some of
mission of expanding access to crofelemer which cannot be predicted or quantified and some of
which are beyond Jaguar’s control. Some of the fac-
across disease states to patients globally. tors that could affect our actual results are included
“The depth of our pipeline provides in the periodic reports on Form 10-K and Form
10-Q that we file with the Securities and Exchange
potential supportive care therapy for large Commission. Except as required by applicable law,
patient populations across multiple disease Jaguar does not plan to publicly update or revise
indications, and we believe this pipeline will any forward-looking statements contained herein,
whether as a result of any new information, future
fuel long-term value creation for investors events, changed circumstances or otherwise.
and provide funding opportunities for part-
Ustaris F, Saura C, Di Palma J et al. Am J Hemat/
1
ner collaborations around the world,” Conte Oncol, 11:13-22, 2015
commented.
Croton lechleri tree in the Amazon rain- Please visit the company’s website for more informa-
In July 2019, Jaguar closed on an underwrit- forest tion: www.jaguar.health
The company paid consideration to SNN or its affiliates for this article.

18 MicroCap Review Magazine www.stocknewsnow.com


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MicroCap Review Magazine 19
www.stocknewsnow.com
P R O F I L E D C O M PA N Y lsE & TsX: solg / pink: slggF

solgold plc
An Emerging Copper Gold Major

completed over 250,000m of drilling, spent the project through to feasibility stage.
US$180 million and established Alpala The PEA established the following key
as a Tier 1 copper-gold project with the aspects:
announcement of both a Resource Estimate • Net Present Value estimates range from


solgold and AdminPreliminary
10/8/19 9:50 PM
Economic Assessment US$4.1Bn to US$4.5Bn (Real, post-tax, @
Deleted: [SolGold logo]
AN EMERGING COPPER GOLD MAJOR (PEA). In terms of size, there are only two 8% discount rate, US$3.3/lb copper price,
LSE & TSX: SOLG


SolGold is a leading exploration company other copper discoveries globally that are US$1,300/oz gold price and US$16/oz
SOLGOLD
focussed on the discovery and definition comparable to the Alpala deposit, which silver price) depending on production
SolGold is a leading exploration company focussed on the discovery and definition of world-class
of world-class copper and gold deposits in continues to grow with every drill hole.
copper and gold deposits in Ecuador. SolGold isn’t a one project company – it is at the forefront of
its overall strategy to become to Ecuador, what BHP was to Australia. With its first mover advantage,
rate scenario.
Ecuador. SolGold isn’t a one project com-
SolGold has recognised the province scale opportunity presented in the unexplored section of the
Andean Copper Belt and is working toward becoming an Ecuadorian copper gold major. The progress SolGold has made, and the
Microsoft Office …, 10/1/19 1:35 PM
Deleted: . • Internal Rate of Return (“IRR”) estimates

pany – it is at the forefront of its overall strat- magnitude of the Alpala project has been range from 24.8% to 26.5% (Real, post-
ALPALA

egy to become to Ecuador, what BHP was endorsed by major mining companies – with
SolGold owns 85% of the Alpala project through the local subsidiary Exploraciones Novomining S.A.
tax, US$3.3/lb copper price, US$1,300/
toa Tier
Australia. With with its first mover of both advantage,
a Resource Estimate and BHP and Newcrest Mining currently hold- oz gold price and US$16/oz silver price)
Since 2013, SolGold has completed over 250,000m of drilling, spent US$180 million and established
Alpala as 1 copper-gold project the announcement
Preliminary Economic Assessment (PEA). In terms of size, there are only two other copper
SolGold has recognised the province scale ing major shareholdings in the Company
discoveries globally that are comparable to the Alpala deposit, which continues to grow with every
drill hole.
depending on production rate scenario.

opportunity
The progress SolGold has made, presented
and the magnitude of inthe Alpala
the project
unexplored
has been endorsed by • Pre-production Capex estimated at
major mining companies – with BHP and Newcrest Mining currently holding major shareholdings in
section of the Andean Copper Belt and is Significant logistical advantages deliver
the Company approx. US$2.4B to US$2.8B, and total

working toward becoming an Ecuadorian CAPEX savings that differentiate Alpala
[INCLUDE IMAGES OF BHP & NEWCREST LOGOS]

Capex including life of mine sustaining
copper gold major.
Significant logistical advantages deliver CAPEX savings that differentiate Alpala as a
Tier 1 project [IN A STAND OUT BOX]
as a Tier 1 project Capex of US$10.1B to US$10.5B depend-
3 hour drive from Quito
180km from a deep water port at Esmeraldas, 100km from port at San Lorenzo • 3 hour drive from Quito ing on production rate scenario.
international Hydro Power network 30km: 5–8c/kwh
alpala
Local work force
Excellent sealed, multi lane roads
• 180km from a deep water port at • Payback Period on initial start-up capital
Esmeraldas, 100km from port at San - Range from 3.5 to 3.8 years after com-
Fresh water adjacent

SolGold owns 85% of the Alpala project Lorenzo mencement of production depending on
through the local subsidiary Exploraciones • international Hydro Power network production rate scenario.
Novomining S.A. Since 2013, SolGold has 30km: 5–8c/kwh • Preferred Mining Method - Underground
• Local work force low-cost mass mining using Block Cave
• Excellent sealed, multi lane roads methods applied over several caves
• Fresh water adjacent designed on two vertically extensive Lifts.
• Elevation 600 – 1,800m
pan-EcuadoRian sTRaTEgy
Advancing toward development
The resource at the Alpala deposit boasts a
Elevation 600 – 1,800m SolGold is the largest tenement holder in
high grade core, which will target early cash- Ecuador.
Advancing toward development
flow and an accelerated payback of initial SolGold used its successful and cost effi-
The resource at the Alpala deposit boasts a high grade core, which will target early cashflow and an
accelerated payback of initial capital. SolGold is currently blueprint
capital. SolGold is currently investigating cient established
investigating at and
development Alpala, to
financing
development and financing options to bring explore for additional world class copper
options to bring the project through to feasibility stage.

Nick Mather, CEO




20 MicroCap Review Magazine The PEA established the following key aspects: www.stocknewsnow.com
• Net Present Value estimates range from US$4.1Bn to US$4.5Bn (Real, post-tax, @ 8%
discount rate, US$3.3/lb copper price, US$1,300/oz gold price and US$16/oz silver price)

and gold projects across Ecuador. SolGold


first entered Ecuador in early 2013, and has
created and developed a successful explora-
tion blueprint for in-country geology, social
initiatives and environmental programmes
which are being replicated across the 13
other priority projects that have been identi-
fied.
SolGold formed four wholly owned sub-
sidiaries that are actively exploring the coun-
try. These subsidiaries are focussed on [LOGO’S FOR EACH SUBSIDIARY – Carnegie Ridge, Cruz del Sol, Green Rock, Valle Rico]
[MAP OF PRIORITY PROJECTS]
the thirteen high priority gold and cop- [INFOGRAPHIC WITH LIST OF ALL 13 PRIORITY PROJECT NAMES:
per resource targets, several of which the A HIGHLY
Blanca EXPERIENCED AND enable the delivery of ore grade intersections
Company believes have the potential, to be Nieves
ACCOMPLISHED TEAM from nearly every drill hole at Alpala.
Cisne Loja
developed in close succession or even on a Rio Amarillo
more accelerated basis from Alpala. Each SolGold employs a staff of over 650 , 98% 2019 AND BEYOND
Salinas
subsidiary has its own technical and com- Chillanes
of which are Ecuadorean. We expect this
Sharug
munity relations teams. to grow significantly as the opera- SolGold currently has 12 active rigs on
numberCisne Victoria
tions at Alpala, and across the country Alpala, and plans to move three of these to
Timbara
TOP REPRESENTED expand.Porvenir other high priority regional projects. The
SHAREHOLDERS One of the fundamental elements to remaining rigs at Alpala will focus on con-
SolGold’s continued success is its highly verting Inferred to Indicated, and contribute
Newcrest International Pty Ltd 14.79%
experienced board and management team to the release of MRE#3, which is expected
DGR Global Ltd 11.06%
that bring together a wealth of knowledge to be announced by year end, 2019.
BHP Billiton Holdings Limited 11.14%
and skills. The management team, in con-
Cornerstone Capital Resources 9.22%
junction with SolGold’s 86 geologists on SOLGOLD’S SUSTAINABLE
Tenstar Trading Limited 6.43%
Blackrock 6.07%
the ground, are 11% female. SolGold has APPROACH
Samuel Holdings Group (Mather) 4.87% engaged an increasingly skilled refined and
experienced team of geoscientists using state SolGold’s 100-year vision for the Ecuadorean
of the art geophysical and geochemical mod- mining industry has been built on strong
elling applied to an extensive data base to foundations, with sustainability and respon-

www.stocknewsnow.com MicroCap Review Magazine 21


sible mining at the heart of all activities.
Since first stepping foot into Ecuador,
SolGold has created and nurtured relation-
ships with local communities and people in
the surrounding communities to ensure the
Company is operating with complete trans-

parency. Each conversation, job opportunity
and community initiative has highlighted
the symbiotic relationship SolGold aims to SOLGOLD’S SUSTAINABLE APPROACH

institutionalise both locally and nationally. SolGold’s 100-year vision for the Ecuadorean mining industry has been built on strong foundations,
From responsible water management, to with sustainability and responsible mining at the heart of all activities. Since first stepping foot into
strong recycling programmes, to the mil- Ecuador, SolGold has created and nurtured relationships with local communities and people in the
surrounding communities to ensure the Company is operating with complete transparency.
lion trees initiative, SolGold’s environmental Each conversation, job opportunity and community initiative has highlighted the symbiotic
programme for Cascabel is at the highest relationship SolGold aims to institutionalise both locally and nationally.
of standards and will be replicated, like the
From responsible water management, to strong recycling programmes, to the million trees initiative,
exploration blueprint, across all regional SolGold’s environmental programme for Cascabel is at the highest of standards and will be
projects. replicated, like the exploration blueprint, across all regional projects.
Education is also a key aspect to SolGold’s
Education is also a key aspect to SolGold’s sustainability programme and has recently built an on-site
sustainability programme and has recently lecture room to facilitate the wide variety of classes SolGold offers school children, university
built an on-site lecture room to facilitate the students, and community members.
wide variety of classes SolGold offers school
It is clear, through the continuous addition of new social, educational, and environmental initiatives,
children, university students, and commu- SolGold places upmost importance on ensuring its impact is positive, and supported by all
nity members. communities.
It is clear, through the continuous addi-

tion of new social, educational, and environ-


mental initiatives, SolGold places upmost

importance on ensuring its impact is posi-


tive, and supported by all communities.
SolGold is a unique investment oppor-
tunity within the copper and gold sector.
In addition to its Alpala project, SolGold is
strategically exploring a pipeline of potential
Tier 1 projects which provides investors an
opportunity to see multiple re-ratings in an
emerging mining jurisdiction, supported by
a focussed government. The strong outlook
for copper with the added short-term ben-
efits of gold rich deposits will see SolGold
develop its ultimate vision to become a cop-
per gold major in Ecuador. n

Please visit the company’s website for more informa-
tion: www.solgold.com.au This material contains forward-looking statements. In addition, from time to various factors, including: our ability to change the direction of the Company;
time, we or our representatives may make forward-looking statements orally our ability to keep pace with new technology and changing market needs; and
or in writing. We base these forward-looking statements on our expectations the competitive environment of our business. These and other factors may
and projections about future events, which we derive from the information cur- cause our actual results to differ materially from any forward-looking state-
rently available to us. Such forward-looking statements relate to future events ment. Forward-looking statements are only predictions. The forward-looking

or our future performance, including: our financial performance and projec- events discussed in this document and other statements made from time to
tions; our growth in revenue and earnings; and our business prospects and time by us or our representatives, may not occur, and actual events and results
opportunities. You can identify forward-looking statements by those that are may differ materially and are subject to risks, uncertainties and assumptions
not historical in nature, particularly those that use terminology such as “may,” about us. We are not obligated to publicly update or revise any forward-looking
“should,” “expects,” “anticipates,” “contemplates,” “estimates,” “believes,” “plans,” statement, whether as a result of uncertainties and assumptions, the forward-
“projected,” “predicts,” “potential,” or “hopes” or the negative of these or similar looking events discussed in this document and other statements made from
terms. In evaluating these forward-looking statements, you should consider time to time by us or our representatives might not occur.

The company paid consideration to SNN or its affiliates for this article.

22 MicroCap Review Magazine www.stocknewsnow.com


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Source: TSX/TSXV Market Intelligence Group and S&P Capital IQ. As at December 31, 2018.
www.stocknewsnow.com MicroCap Review Magazine 23
©2019 TSX Inc. All rights reserved. The information in this ad is provided for informational purposes only. Do not sell, reproduce or modify this document without TSX Inc.’s prior written consent.
Listing on Toronto Stock Exchange or TSX Venture Exchange does not guarantee the future performance of a security or an issuer. TMX, the TMX design, TMX Group, Toronto Stock Exchange,
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F E AT U R E D A R T I C L E

The Information and


Reliability Void Filling the Gap for Investors
I
don’t think anyone would disagree when investors would go to another source for And yet, in order to save time and to make the
I say that there are more than enough information, analysis and insights. These process more efficient, I think all would agree
information resources available for are observations I’ve made from seasoned that if there was a reliable source that had all
investors. In fact, there are some really good investors, who have their routines, how- the data, insights, information they needed
ones. I personally use many of them: my ever inefficient, have their processes in place. for their due diligence, this would make inves-
own website, StockNewsNow.com, LDMicro. Despite that fact, those seasoned investors tors’ lives much, much easier.
com, MicroCapClub.com, SEC.gov and are still interested in looking for new ways to The biggest issue that both new and sea-
SEDAR for filings. Yet, why do new inves- improve their due diligence process. soned investors have expressed to me in our
tors still feel there is an information void? When I speak to new investors about conversations is that discovery and reliabil-
I speak with investors on a daily basis and investing and the resources they use, it’s a ity is very difficult – finding new ideas to
I’m always asking what resources they use, completely different story. I recently finished research is hard. I’m a subscriber on a very
where they go for information. I’ve found getting my MBA at Pepperdine University, well-known platform for investors, and one
that investors use on average 5-10 resources and most of my peers, even those who invest of the topics is, “List of Useful Websites to
to get the information they need for their due and/or interested in the stock market, are so Gather Information”, and I find this thread
diligence process. For the most part these overwhelmed by the amount of resources fascinating. All the websites listed on there
5-10 resources are online, and most of these available that its debilitating; not only finding are very, very useful – I use most of them.
online destinations requires you to have an a resource that seems like it’ll accomplish the The part that confounds me is why isn’t there
account with them to have access to their task they need, then the question of reliability a place that takes the most useful and reliable
platform. Is this a new phenomenon? No. comes into play. How do I know that all the aspects (or what most people find to be most
Although at the height of Yahoo Finance’s information on this website is accurate? How useful) all consolidated in one place? Another
popularity, which may have been everyone’s do I know that this analyst, blogger, or fund thought I had is: can a website like that exist
first destination, most information seeking manager are providing an objective perspec- which is user-friendly and not feel cluttered
tive on a particular stock or industry? or overwhelming? The answer lies in trying
Based on my conversations with well- to distill down to an age-old question, what
known seasoned and new investors, my thesis information do you need as an investor that
is that there is so much information and that will help you make the best investment deci-
you have to go to so many different places sion possible? My team and I are hard at work
to get the information that you need, this in gathering this information with the hope of
process creates the perception that there is an creating a platform that will help investors of
information void - when in fact, there isn’t. all levels by providing reliable data and infor-
There’s a consolidation and reliability void. mation for discovering potential new invest-
There are countless blogs, podcasts, research ment ideas, insights from well-known finan-
reports, informational websites - this can be cial influencers, and to allow you to research
overwhelming not just for new investors, but ideas all from one resource. Stay tuned… n
those who have been doing this for a long
Note: This article is not an attempt to provide invest-
time. There’s no substitute for putting in the
ment advice. The content is purely the author’s per-
time and effort to read everything you can on sonal opinions and should not be considered advice
a potential investment idea, and that could of any kind. Investors are advised to conduct their
own research or seek the advice of a registered invest-
require scouring the internet to consume ment professional.
n BY ROBERT KRAF T, MBA every last bit of information that can help.

24 MicroCap Review Magazine www.stocknewsnow.com


www.stocknewsnow.com MicroCap Review Magazine 25
P R O F I L E D C O M PA N Y asX: Tgm / oTcQB: TgmgF

Theta gold mines limited


A 6 Million Ounce Gold Resource with Near Term Production Profile

T
heta Gold Mines Limited (ASX: The Transvaal Gold System is located on the
TGM, OTCQB: TGMGF) is a sus- eastern side of the Bushveld Complex, which
tainable gold miner in the making. is the largest igneous intrusion on earth. The
Theta boosts a hefty 6 million-ounce JORC prolific gold field established around the sys-
Resource in a proven and prolific gold region tem is highly prolific, having produced over
of South Africa, controlling 9 Mining Rights 6.7 million ounces of gold since 1880.
spread across 62,000 hectares. The com- Theta holds a large landholding of permit-
pany has a well-defined strategy in place to ted tenements through its subsidiary com-
produce 100,000 ounces of gold per annum pany, Transvaal Gold Mining Estate Limited
through open pit mining of multiple mines (TGME). The TGME project portfolio covers
and ramp up towards 150,000 ounces with more than 43 historical mines. In addition
underground ore supply. to its large mineralized estimated resource,
With a primary listing on the Australian the area has a number of underexplored
Securities Exchange and OTCQB status in old mines and shallow exploration targets
the US, Theta controls 74% of the East containing gold-bearing ore left over from
Transvaal Goldfield, where South Africa’s nearly a century of mining. Theta believes
gold mining industry began around 130 significantly more gold can be found in its
years ago. The company is focused on current tenement suite.
reawakening a giant goldfield, situated in Unique from other gold explorers, Theta
South Africa’s East, by bringing modern, has more the 130 years of detailed mining
open pit mining to a large and historically data to guild its resource/reserve drilling
recognized underground mining region. programs. Over the last 24 months, Theta’s
The Transvaal Goldfield sits 230 miles per Indicated Resource ounce discovery cost
Northeast of Johannesburg. The major city is approximately USD $12 per ounce; our
is only a four-hour drive by highway and drilling hit rate exceeds 95%, which puts
Bill Guy, Chairman provides a solid base for Theta’s operations. Theta at the very bottom quartile of discov-

26 MicroCap Review Magazine www.stocknewsnow.com


tal raisings, project acquisition (European
Zinc) project development (Cockatoo Island
Fe), project discovery (Mt Ida (Fe), and large
scale JV (Newcrest JV (Au)), in both the cor-
porate and technical roles. Most notably, Mr.
Guy was Chief Exploration Manager of ASX-
listed, African focused manganese developer
Jupiter Mines Limited (ASX: JMS). At Jupiter
Mines, he developed exploration protocols
that enabled projects to progress from grass-
roots to a viable resource.
Managing Director, Mr. Rob Thompson, a
highly experienced mining engineer, has held
multiple senior roles over a 35-year career.
During this time, he
has been instrumental
in taking eight explora-
tion projects through
to mining operations
including the Finder’s
Wetar 28,000 ton per
annum copper cathode Rob Thompson,
ery cost when compared to our peers. (MRE) of 6 million ounces gold (44.8Mt project in Indonesia, Managing
Historically, the region was so rich in @ 4.18 g/t Au). This includes an open cut Kingsgate’s 125,000+ Director
resources that early miners would only focus resource of 1.3 million ounces (13.08Mt @ ounce per annum, Chatree open-cut gold
on easy targets. When mining became dif- 3.12 g/t AU) and a 4.5-million-ounce under- mine in Thailand, and Climax’s Sepon
ficult, miners left the region to pursue other ground resource 26.3Mt @ 5.4 g/t Au). 100,000+ ounce per annum in Laos.
areas. Theta now stands to benefit from this, These favorable mineral resource esti- Finn Behnken, Non-executive Director, is
as modern mining techniques and high- mates have led Theta to release a feasibility a mining engineer with considerable South
powered machinery, coupled with resource study for the Theta Hill Starter Pits project. African mining operation experience. He
modelling and modern processing technol- The study was for initially recovering was previously the CEO of Tshipi e Ntle
ogy allow for the exploration and develop- 200,000-ounce starter project, highlights a Manganese Mining (Pty) Limited, during
ment of old prospects and mines. low capex project (US $34m) with strong the construction and initial product phase
Theta also has the benefit of owning an cashflow, and an average all-in-sustaining of the major Tshipi Borwa Manganese Mine.
existing carbon in leach (“CIL”) treatment cost of US $764 per gold ounce. The company Tshipi is currently 49% owned by Jupiter
plant. The company will refurbish and add envisages a nine-month construction period Mines. Prior to his CEO role, Finn was an
new components, so it can rapidly scale up and a plant upgrade to 500,000 tones per investment banker with South African based
production across the whole project. annum, allowing for a cumulative EBITDA Nedbank. He has also served as a Director to
While Theta’s past focus was on under- over Life-of-mine of US $99.6m and a 1.2- a range of listed mining companies, includ-
ground mining, the company has delineated year payback period, all based on USD $1257 ing AIM listed Gemfield PLC. Mr Behnken
a strategy to bolster high grade and open per ounce gold price assumption. is a resident of South Africa.
cut resources, inevitably unlocking value for Project construction will be underpinned Non-executive Director, Mr.Bill Richie
investors. by a highly experienced and technically Yang is an experienced company Director
Over the last three years, management has savvy Board and management team, all of with a strong resources background. Mr.Yang
more than doubled the Company’s mineral which have considerable experience in South has nearly two decades of corporate finance
resource (JORC Resources, which compares Africa and the mining sector more broadly. experience and has assisted a range of pub-
to Canada’s NI43-101). Through focused and Theta’s Chairman, Mr. Bill Guy has over lic and private companies with business
highly systematic exploration, Theta boost a 25 years’ experience in resource exploration development, capital raisings and corporate
JORC compliant Mineral Resource Estimate and development globally. Inclusive of capi- structures.

www.stocknewsnow.com MicroCap Review Magazine 27


2.5Mw ball mill purchased from ex-Glen-
core operation

ex-Glencore operation, which demonstrates


management’s strategic planning and execu-
tion capabilities. This ball mill can process up
to 1Mtpa which doubles the earlier feasibil-
Theta’s Board is also well supported by an is aiming to attract $100 billion in foreign ity study production rate, further reflecting
experienced senior management team. Mr direct investment by 2023. management’s commitment and confidence
George Jenkins is a qualified extraction met- Buoyed by bullish commodity tailwinds, towards ramping up the operational scale.
allurgist with 30 years industry experience a credible and experienced Board and man- The Company is sufficiently funded to prog-
in South Africa and Australia. He has held agement team and a supportive government, ress projects with A$8 million in cash, and
a range of executive, operational, and busi- Theta will implement a stringent work pro- receivables available to unlock further value.
ness development roles with companies such gram that will unlock value for investors and Theta recently secured an agreement through
as JCI, Vale Australia, and Anglo American ensure the company delivers on its produc- a group of specialist global resource investors
Coal. He has considerable experience in tion profile starting from 50,000 ounces, and for the placement of 53.3m shares at $0.15 per
delivering construction, commissioning, and then scaling up to 150,000 ounces per annum. share (trade-restriction until December 2020).
recommissioning of several plants. George The Board and management team will In summary, Theta has the ability to tran-
is focused on the delivery of Theta’s project continue to dissect and digitize the com- sition from an explorer to project developer,
from concept through to production. pany’s geological database, compiled over to a gold producer in the near term. The
RSA Director of Social Corporate Services decades; including data from over 100,000 company has outlined a low capital expendi-
Terrence Mokale is an admitted attorney underground channel samples and circa 900 ture starter project, defraying financial risk
of the High Court of South Africa and has drill holes to further assist in the design of and requiring less funding. It also delivered
been working in the mining environment as each drill program. a feasibility study characterized by low oper-
a Social Facilitation Consultant for a number The next phase of exploration will include a ating expenditure and a rising gold price to
of years. His clients include Glencore and number of open pit targets and converting the boost profit potential. ■
Gold One, for which he engaged community 1.3 million-ounce resources to an Indicated
Please visit the company’s website for more informa-
stakeholders and representatives to work (JORC) status. Theta will also further drill
tion: www.thetagoldmines.com
constructively with mining operators to cre- test a number of targets in its tenement suite.
This material contains forward-looking statements. In addition, from time to
ate the best outcome for all parties. Theta recently completed an internal engi- time, we or our representatives may make forward-looking statements orally or
in writing. We base these forward-looking statements on our expectations and
A strong, African focused Board and man- neering study to maximize the use of its projections about future events, which we derive from the information cur-
rently available to us. Such forward-looking statements relate to future events
agement leaves Theta well placed to capital- existing permitted plant footprint. The new or our future performance, including: our financial performance and projec-
tions; our growth in revenue and earnings; and our business prospects and
ize on the opportunities available in South metallurgical plant layout position creates the opportunities. You can identify forward-looking statements by those that are
not historical in nature, particularly those that use terminology such as “may,”
Africa’s established mining jurisdiction. The flexibility to materially increase the company’s “should,” “expects,” “anticipates,” “contemplates,” “estimates,” “believes,” “plans,”
“projected,” “predicts,” “potential,” or “hopes” or the negative of these or similar
country has produced more gold than any- gold production potential and will be impera- terms. In evaluating these forward-looking statements, you should consider
various factors, including: our ability to change the direction of the Company;
where else in the world, at over two bil- tive to drive Theta’s production targets. our ability to keep pace with new technology and changing market needs; and
the competitive environment of our business. These and other factors may cause
lion cumulative ounces. Recently the Fraser To date, only 17% of open-cut resources our actual results to differ materially from any forward-looking statement.
Forward-looking statements are only predictions. The forward-looking events
Institute ranked South Africa No.43 out of have been included in reserves due to the discussed in this document and other statements made from time to time by us
or our representatives, may not occur, and actual events and results may differ
83 global mining jurisdictions. plan to expedite production. Theta has out- materially and are subject to risks, uncertainties and assumptions about us. We
are not obligated to publicly update or revise any forward-looking statement,
The country has a supportive government, lined a number of targets to drill, which will whether as a result of uncertainties and assumptions, the forward-looking
events discussed in this document and other statements made from time to time
with a new pro-mining President elected as dramatically increase reserves and underpin by us or our representatives might not occur.

the head of the African National Congress. even more favorable project economics. Theta
Cyril Ramaphosa is a former businessman, a recently announced the purchase of a ball
former miner and ex labor union leader and mill (capacity 0.5Mtpa to 1Mtpa) from an
The company paid consideration to SNN or its affiliates for this article.

28 MicroCap Review Magazine www.stocknewsnow.com


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in precious metals
investing™
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who have access to objective guidance.
Meet Mishka vom Dorp. He is one of our resource specialists committed to
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Sprott Global Resource Investments is a U.S. broker-dealer focused on the natural


resources sectors including precious metals, base metals, oil & gas, agriculture,
water and alternative energy.

This content is intended solely for the use of Sprott Global Resource Investments Ltd. for use with investors and
interested parties. The intended use of this material is for information purposes only and is not intended to be an
offer or solicitation for the sale of any financial product or service or a recommendation or determination that any
investment strategy is suitable for a specific investor. Investors should seek financial advice regarding the suitability
of any investment strategy based on the objectives of the investor, financial situation, investment horizon, and their
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advice since such advice always requires consideration of individual circumstances. The investments discussed
herein are not insured by the FDIC or any other governmental agency, are subject to risks, including a possible
loss of the principal amount invested. Generally, natural resources investments are more volatile on a daily basis
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F E AT U R E D A R T I C L E

The Key Raw Materials Needed


for the Rise of the Lithium Ion
Battery Megafactories

T
he world is undergoing a global Without battery megafactories, the EV but it illustrates growing of battery produc-
energy storage revolution in which industry would not be capable of challenging tion globally.
the advent of electric vehicles (EVs) and displacing the auto industry’s internal A more likely scenario is that only 70%
and the emergence of energy storage has combustion engine. of battery megafactories go into production,
sparked a wave of lithium ion battery mega- Since Tesla announced the first Gigafactory producing at 70% of their capacity by 2028.
factory construction. in 2014, Benchmark Mineral Intelligence has Either way, the current plans for battery
A megafactory is a battery factory capable been tracking the global development of bat- production will not yield enough batteries
of producing 1 gigawatt hours (GWh) or tery megafactories. At that time, Elson Musk for EVs, energy storage, and mobile technol-
more of battery cells per year. Right now, said of his Nevada battery factory plans: “it’s ogy. As a result, we expect the global battery
each GWh equates to approximately 15,000- not just going to be the biggest lithium ion arms race will continue to intensify and so
16,000 electric vehicles (EV) with an average battery factory in the world, but it will actu- will the pursuit of the raw materials needed
battery pack size. The number of megafacto- ally be bigger than the sum of all lithium ion to fuel it.
ries in production and planned for produc- factories in the world.”
tion continues to increase at a growing rate. This sparked a worldwide battery arms BaTTERy Raw maTERials
race.
Almost five years ago, in Q1 2015, there Naturally extracted through mineral-rich
were only three megafactories planned for brine resources or traditional, hard rock
development. As at the end of August 2019 mining operations- lithium is the most well-
there were 99 plants in the pipeline across known of battery raw materials.
four continents. If all of these megafactories Chile, Argentina, and China are currently
are built, by 2028 they would have a total the leading sources of lithium brine whereas
capacity of over 2,000 gigawatt hours. the world’s major source of hard rock lithium
Batteries are becoming a fundamental production is in Australia.
aspect of the 21st century’s economy. But In 2018, Australia was responsible for 46%
batteries have complex and global supply of lithium raw material supply, Chile pro-
chains, with a number of raw materials duced 28%, China and Argentina produced
required. The key raw materials being lithi- 13% and 11% respectively. This is the first
um, cobalt, graphite and nickel. stage of lithium production.
Chart 1 below shows the theoretical raw However, the next step in the lithium
material demand from megafactories in the supply chain, where the raw material is pro-
pipeline at 2018, 2023, and 2028. It assumes cessed into battery grade material - China
a 100% utilisation rate where each and every takes a prominent role as it produces 51% of
plant is constructed and operated at full lithium chemical supply, with Chile provid-
planned capacity. In reality, these factories ing 29% and Argentina 11%.
n BY ROBERT COLBOURN won’t all produce at 100% of their capacity For the past 5 years, China’s leading lith-

30 MicroCap Review Magazine www.stocknewsnow.com


ium companies have locked up the world’s world’s cobalt, it lacks significant processing In 2018, China was responsible for 56%
best lithium assets, struck long term supply capacity. Processing of cobalt is dominated of the world’s flake graphite supply. Over
agreements for EV batteries, and funded by China in the next stage of the supply half of global supply comes from China in
a significant portion of lithium’s explora- chain and the country was responsible for the provinces of Heilongjiang, Shandong,
tion and development cycle - especially in 62% of cobalt chemical supply in 2018. and Inner Mongolia. Notable volumes of
Australia. A major driver for this is China’s As lithium ion battery manufacturers natural graphite are also mined in Brazil and
lack of high quality domestic lithium reduce the amount of cobalt used in bat- Mozambique.
resources. tery cells, nickel consumption is set to soar. China also dominates the next stage of the
Cobalt is a key raw material in battery Batteries containing higher nickel content supply chain as 100% of the world’s uncoated
cathodes and acts as a critical safety compo- offer greater energy density, although this spherical graphite supply, which is the pro-
nent. However, auto makers are seeking to have come greater safety concerns. cessed anode material that is used in lithium
reduce their consumption, to reduce their The trend is to move towards high-nickel bat- ion batteries.
reliance on it, and to boost energy density tery cathodes and this is set to put extra demand These four raw materials will play a piv-
using nickel. But it is our opinion that cobalt on the nickel to EV battery supply chain. otal role in the development of batteries
will continue to play a role in lithium ion This means the 2.2 million tonnes-a-year needed to power widespread electrification.
batteries for the foreseeable future. nickel industry has to re-gear to supply bat- It would be worth following them closely. n
Another factor we do not see changing is tery grade nickel for the world’s megafacto-
Robert Colbourn holds the position of Manager
the reliance on the Democratic Republic of ries. Out of the four materials we’re looking
– Benchmark Membership at Benchmark Mineral
Congo (DRC) as the world’s primary source at in this article, the nickel market is the Intelligence, a London based research and consul-
of cobalt, produced 69% of global supply in largest but currently has the lowest demand tancy firm focusing on critical raw materials and
disruptive supply chains. Robert’s primary role is
2018. from batteries. However, nickel demand editor of Benchmark Minerals’ quarterly review,
The DRC is a potential bottleneck in the from EV batteries is set to grow by between covering the lithium ion battery supply chain, criti-
cal minerals and metals, disruptive technologies and
supply chain, especially considering that it 30-40% a year.
emerging markets.
is amongst the poorest and most politically Graphite is used in battery anodes and it can Benchmark Mineral Intelligence (Benchmark
unstable countries globally. Another ongo- be either mined or synthetically made. Flake Minerals) is the world’s leading voice and most
trusted provider of prices, data and advisory services
ing concern facing battery manufacturers are graphite is the mined material which is used to in the lithium ion battery and electric vehicle (EV)
the questions surrounding the ethical supply manufacture lithium ion battery anodes. supply chain.
Benchmark Minerals, a Price Report Agency
of cobalt sourced from the DRC through China dominates both the mining and
(PRA), is globally known for setting the IOSCO-
artisanal mining. refining side of the flake graphite to anode compliant, lithium reference price which is relied
While the DRC produces most of the supply chain. upon to negotiate contracts between lithium extrac-
tion operators, cathode manufacturers, battery cell
producers and automotive OEMs.

Robert Colbourn
Manager - Benchmark Membership
rcolbourn@benchmarkminerals.com
M: +44 77 666 49448
www.benchmarkminerals.com

Note: This article is not an attempt to provide invest-


ment advice. The content is purely the author’s per-
sonal opinions and should not be considered advice
of any kind. Investors are advised to conduct their
own research or seek the advice of a registered invest-
ment professional.

Chart 1 Lithium ion Battery Megafactory Raw Material Demand (tonnes) at 100%
Utilisation Rate

www.stocknewsnow.com MicroCap Review Magazine 31


P R O F I L E D C O M PA N Y
asX: lkE / pink: llkkF

lake Resources n.l.


Why new projects are essential to supply the EV revolution
Lake Resources: Why new projects are essential to supply the EV revolution

higher depending on policy and technology


advances.
Globally, battery makers have commit-
ted US$300 billion in building around 100

A
“megafactories” by 2028, with EV makers
America’s newfound love for electric vehicles (EVs) saw more than 1.1 million hit the road
merica’s newfound love for electric “The lithium industry is looking to having invested a further US$250 billion to
by the end of 2018, which was led by Telsa. However, the EV revolution would have stalled
vehicles (EVs) saw more than 1.1 increase supply by five to eight-fold in the expand production of EV’s over the same
long ago without supplies of key battery minerals, principally lithium.
million hit the road by the end of next five years, simply to meet the rising period.

2018, which was led by Telsa. However, the demand for EVs,” says Stu Crow, chairman
A soft, silvery-white metal, lithium is used to make batteries for smartphones, laptops and Benchmark Mineral Intelligence predicts
EV revolution would have stalled long ago of Argentina-focused lithium miner, Lake lithium supply will need to increase at a
EVs. Demand has soared in recent years, with global output having increased threefold since
2005 to reach more than 300,000 tonnes last year.
without supplies of key battery minerals, Resources. compound annual growth rate of 19 percent

principally lithium. “This is hard to comprehend when you through to 2025, simply to meet demand. Yet
Yet with miners’ expansion plans now falling short of expectations amid current sluggish
A soft, silvery-white metal, lithium is used think there’s never been a commodity ramp even at the height of the market, the industry
prices and weak investor sentiment, automakers and battery companies are now scrambling
to make batteries for smartphones, laptops up supply so quickly.”
to secure supply. only managed an 11 percent annual expan-
and
EVs. Demand has soared in recent years, sion, from 2015 to 2018.
“The lithium industry is looking to increase supply by five to eight-fold in the next five years,
with global output having increased three- a wall oF dEmand is coming Lithium is currently produced as “hard
simply to meet the rising demand for EVs,” says Stu Crow, chairman of Argentina-focused
fold since 2005 to reach more than 300,000 rock” spodumene in countries such as
lithium miner, Lake Resources.
tonnes
last year. Analysts have projected that a “wall of Australia and Canada, and “brine” in the so-
Yet with miners’ expansion plans now demand is coming for lithium from the EV called “Lithium Triangle” of South America,
“This is hard to comprehend when you think there’s never been a commodity ramp up
falling short of expectations amid current sector,” and judging by the latest news, it is including Argentina. All types of lithium will
supply so quickly.”
sluggish prices and weak investor sentiment, easy to see why. be needed however, according to Benchmark.
A wall of demand is coming
automakers and battery companies are now The global electric car fleet exceeded 5.1 “The question in the lithium market is no

scrambling to secure supply. million as of 2018, up 2 million from the longer whether spodumene or brine resourc-
Analysts have projected that a “wall of demand is coming for lithium from the EV sector,”
previous year. However, the International es will be developed – both are needed to
and judging by the latest news, it is easy to see why.
Energy Agency has forecast that EV annual take us anywhere near the growth estimates
The global electric car fleet exceeded 5.1 million as of 2018, up 2 million from the previous
sales could reach 23 million by 2030, or even of the next two to three years,” Benchmark
year. However, the International Energy Agency has forecast that EV annual sales could
reach 23 million by 2030, or even higher depending on policy and technology advances.

Globally, battery makers have committed US$300 billion in building around 100
“megafactories” by 2028, with EV makers having invested a further US$250 billion to
expand production of EV’s over the same period.

Benchmark Mineral Intelligence predicts lithium supply will need to increase at a compound
annual growth rate of 19 percent through to 2025, simply to meet demand. Yet even at the
height of the market, the industry only managed an 11 percent annual expansion, from
2015 to 2018.

Steve Promnitz, Managing Director




32 MicroCap Review Magazine www.stocknewsnow.com


said in its July 2019 report, “Lithium’s price
paradox.”

aRgEnTina: HomE To THE


woRld’s lowEsT cosT liTH-
ium

Lake Resources sees its lithium brine proj-


ects in Argentina as part of the answer to
the looming supply challenge. Based in the
heart of the Lithium Triangle, home to the
world’s lowest cost lithium output, Lake’s
projects are adjacent to multi-billion dollar
producers.
With the added upside of a potentially
revolutionary technology solution straight
from Silicon Valley, the company is quietly
confident of delivering results. including a US$280 million investment by ponds are not required and any water used
With four wholly owned lithium brine Korean giant Posco, the implied acquisition is reinjected into the aquifer. Amid concerns
projects comprising Cauchari, Kachi, Olaroz cost is around US$55 million to US$110 mil- over the level of water extraction and its
and Paso in its portfolio, Lake has assem- lion per million tonne of lithium carbonate potential impact on the ecosystem, such
bled one of the largest lithium exploration equivalent. solutions will be crucial in ensuring the
plays in Argentina, spanning more than 700 “Doing the numbers on our projects and lithium industry’s sustainability.
square miles. we’re looking at some potentially very valu- For Lake, the next step towards produc-
Already, Lake has identified a top 10 able operations, still 100 percent owned by tion is building a pilot plant on-site to test
global lithium brine resource at its flagship Lake,” Promnitz said. Lilac’s technology, a process expected to be
Kachi project, equivalent to 11 times the size completed in late 2019.
of Manhattan Island, however the company The company then expects to be ship-
has even bigger targets ahead of it. TEcHnological soluTion ping product samples to potential partners
Lake’s managing director, Steve Promnitz could HElp savE THE planET and offtakers in early 2020 - confirming its
points to the company’s upcoming prefea- ability to produce a high quality, low impu-
sibility study (PFS) for Kachi and recent A new technology developed by U.S.-based rity product capable of attracting premium
high-grade discovery at Cauchari as poten- Lilac Solutions, Inc based on direct extrac- prices. n
tially transformative, with added potential tion could get the whole industry excited.
For more information on the company, visit
at Olaroz. A Phase 1 engineering study completed
www.lakeresources.com.au
with Lilac showed the potential for pro-
This material contains forward-looking statements. In addition, from time to
puTTing a valuE on lakE’s duction costs at Lake’s Kachi project to time, we or our representatives may make forward-looking statements orally or
in writing. We base these forward-looking statements on our expectations and
pRoJEcTs be slashed to among the lowest globally. projections about future events, which we derive from the information cur-
rently available to us. Such forward-looking statements relate to future events
Importantly too, high lithium recoveries or our future performance, including: our financial performance and projec-
tions; our growth in revenue and earnings; and our business prospects and
A pointer to the value of Lake’s projects of 85 to 90 percent were confirmed from opportunities. You can identify forward-looking statements by those that are
not historical in nature, particularly those that use terminology such as “may,”
comes from the prices paid for nearby opera- multiple brine samples tested by Lilac, with “should,” “expects,” “anticipates,” “contemplates,” “estimates,” “believes,” “plans,”
“projected,” “predicts,” “potential,” or “hopes” or the negative of these or similar
tions. concentrates produced in just three hours. terms. In evaluating these forward-looking statements, you should consider
various factors, including: our ability to change the direction of the Company;
Chinese producer Gangfeng Lithium This compares to traditional brine opera- our ability to keep pace with new technology and changing market needs; and
the competitive environment of our business. These and other factors may cause
invested a combined US$397 million to tions, which have lithium recoveries below our actual results to differ materially from any forward-looking statement.
Forward-looking statements are only predictions. The forward-looking events
acquire a 50 percent stake in its Cauchari 50 percent and a lengthy nine to 24 month discussed in this document and other statements made from time to time by us
or our representatives, may not occur, and actual events and results may differ
project, which was followed by a 10-year waiting period for evaporation to produce a materially and are subject to risks, uncertainties and assumptions about us. We
are not obligated to publicly update or revise any forward-looking statement,
supply agreement with German automaker suitable concentrate. whether as a result of uncertainties and assumptions, the forward-looking
events discussed in this document and other statements made from time to time
Volkswagen. The technology also has an environmental by us or our representatives might not occur.
Together with other recent transactions, benefit too, since traditional evaporation
The company paid consideration to SNN or its affiliates for this article.

www.stocknewsnow.com MicroCap Review Magazine 33


P R O F I L E D C O M PA N Y aim: pXc / oTcQX: pgmlF

phoenix copper limited


P
hoenix Copper Limited “Phoenix” high-grade underground mine. A total of sists of 5,717 acres representing a number
is a London AIM listed, New York 413 holes have been drilled into the open of significant exploration targets including:
OTCQX traded, base and precious pit area, generating an NI 43-101 compliant the strike extension to Empire (which con-
metals explorer and developer. Phoenix Measured & Indicated resource contain- tains three more former mines – Horseshoe,
focused on reopening the past-producing ing 74,000 tonnes copper, 30,000 tonnes Bluebird and White Knob), the high-grade
Empire Mine located in the mining friendly zinc, 139,000 ounces gold, and six million underground resource, the recently discov-
jurisdiction of Idaho, USA, where it holds ounces silver. A bankable feasibility study is ered high-grade Red Star lead and silver
10.8 square miles of claims on areas of past scheduled for completion during 2020, and zone, the recently staked Navarre Creek
producing mines. first production scheduled for late 2021 / Carlin-type, Nevada-style gold zone.
Phoenix is developing an open pit heap early 2022. There are no apparent environ- Phoenix also owns two cobalt proper-
leach copper mine on resources calculated mental or permitting obstacles – Empire is ties on the Idaho Cobalt Belt, Bighorn and
following the Company’s 2017 and 2018 a brownfield site with no legacy issues, and Redcastle, totalling 1,180 acres; in addition
drilling programs; the company also plans no known flora, fauna, indigenous tribal, to located close to projects being advanced
to fund further exploration from the Empire migratory fish or water issues. Much of the by Canadian junior miners, including eCo-
Mine cash flow to minimise shareholder project is on patented land. Cash flow from balt Solutions and First Cobalt.
dilution while searching for a world class the mine will be utilised to evaluate and The Phoenix management team has suc-
copper, gold, silver deposit. explore the high-grade underground poten- cessfully constructed, commissioned and
Idaho is a mining friendly jurisdiction tial as well as the surrounding area, and to operated mines in various jurisdictions
ranked first equal for least perceived risk by pay dividends to shareholders at the earliest worldwide. Management represents one of
the Mining Journal Risk Report 2018. The opportunity. the larger shareholder blocks and is thus fully
local community of Mackay wholly supports The Company’s exploration upside is sig- aligned with shareholders. With this objec-
the re-opening of the mine, which will revive nificant. The underground ore body, which tive, the Empire open pit mine is the first
a town originally established to support the was historically mined at copper head grades stage in a potential world-class mine, sur-
historic mining activity. of 6-8%, is open at depth and along a 3.2 rounded by significant exploration potential,
Near-term production is targeted from a mile strike length. The Company’s consult- offering exposure to high value metals with
significantly de-risked low capital cost open ing geologist considers that only 1-2% of compelling demand and supply fundamen-
pit ‘starter mine’ sitting above the old Empire the total regional ore systems are currently tals, and playing a major role in a new world
understood. The Empire property now con- order of clean energy and electric vehicles.
Phoenix Copper Limited (AIM: PXC / OTCQX:
PGMLF) – www.phoenixcopperlimited.com. n
This material contains forward-looking statements. In addition, from time to
time, we or our representatives may make forward-looking statements orally or
in writing. We base these forward-looking statements on our expectations and
projections about future events, which we derive from the information cur-
rently available to us. Such forward-looking statements relate to future events
or our future performance, including: our financial performance and projec-
tions; our growth in revenue and earnings; and our business prospects and
opportunities. You can identify forward-looking statements by those that are
not historical in nature, particularly those that use terminology such as “may,”
“should,” “expects,” “anticipates,” “contemplates,” “estimates,” “believes,” “plans,”
“projected,” “predicts,” “potential,” or “hopes” or the negative of these or similar
terms. In evaluating these forward-looking statements, you should consider
various factors, including: our ability to change the direction of the Company;
our ability to keep pace with new technology and changing market needs; and
the competitive environment of our business. These and other factors may
cause our actual results to differ materially from any forward-looking state-
ment. Forward-looking statements are only predictions. The forward-looking
events discussed in this document and other statements made from time to
time by us or our representatives, may not occur, and actual events and results
may differ materially and are subject to risks, uncertainties and assumptions
about us. We are not obligated to publicly update or revise any forward-looking
statement, whether as a result of uncertainties and assumptions, the forward-
looking events discussed in this document and other statements made from
time to time by us or our representatives might not occur.

Dennis Thomas, CEO


SNN did not receive any compensation for the publication of this profile.

34 MicroCap Review Magazine www.stocknewsnow.com


P R O F I L E D C O M PA N Y
nasdaQ cm: wwR

westwater Resources, inc.


ing plant for construction in 2022-2023.
• Produce cash flow from the sale of battery

W estwater Resources, Inc. (NASDAQ:


WWR) is a Nasdaq listed company
headquartered in Centennial, Colorado.
graphite in 2023.
• Expand production from cash flow in 2026
to 15,000 metric tonnes per year.
Westwater Resources “Westwater” is an • Build a mine on the Coosa Graphite the US and Canada, and has, for the last ten
energy materials company focused on the Project site in 2028 from internally gener- years, led public companies listed in the US and
development of the Coosa Graphite Project, ated cash flow. Canada. He has a B.S in Mining Engineering
a battery graphite business in Alabama. The Westwater plans to develop this business degree from South Dakota School of Mines
company holds over 40,000 acres of mineral utilizing project finance instruments including and an MBA from Colorado State University.
rights in the Alabama Graphite Belt, an area project-level debt, equity, and offtake financing. Jeff Vigil, Vice President Finance and CFO,
known for historic production of graphite Why Graphite? Each battery we use, whether has worked for over 40 years with energy
materials prior to World War Two. for a conventional automobile, a flashlight or and manufacturing companies, with extensive
Westwater has already achieved these mile- smoke detector, a phone or electric vehicle, needs experience with US and Canadian listed com-
stone developments: graphite to increase its performance. In the case panies. Jeff is a graduate of the University of
• The company has produced all three of of Lithium Ion batteries – graphite is essential Wyoming with a B.S. in Accounting.
its intended products in the lab: Purified in making the electricity flow from and to the Dain McCoig, Vice President of Operations,
Micronized Graphite (ULTRA PMGTM), battery. With the growing market for all types has extensive experience in the energy sector,
Delaminated Expanded Graphite (ULTRA of batteries, the market for graphite is increasing. with particular with the design, construction
DEX-DGTM), and Coated Spheronized Why Alabama? First and foremost, the and operation of production facilities and has a
Purified Graphite (ULTRA-CSPGTM). Alabama Graphite Belt is relatively unique in B.S. in Mechanical Engineering from Colorado
• All three products are at prospective cus- hosting some of the highest quality graphite School of Mines.
tomers for testing deposits in the United States. Graphite from our Cevat Er, Vice President of Technical
• One battery manufacturer has asked for a Coosa Deposit has been shown to produce high Services, has more than 30 years of experience
one metric tonne sample – the final stage quality electrochemical results – just the sort of as a technical professional earned B.S. and
of prequalification testing properties that battery manufactures require. M.Sc. degrees in Geological Engineering.
• Westwater has secured a graphite concentrate Alabama is also a business-friendly jurisdiction, Westwater’s experienced team, a supportive
supply agreement that will provide all the graph- with several automobile factories sited within and experienced board of directors are fast-
ite it needs until the mine is ready to produce. easy driving distance of our proposed facility. tracking development of the battery graphite
The plan for development of the Coosa Electric automobiles, such as those soon to be business. We welcome inquiries at:
Graphite Project is to: built at a Mercedes factory in Alabama, are info@westwaterresoruces.net, or please take
• Build and operate a pilot plant in 2020 for important markets for our products. a look at our website (www.westwaterresources.net)
the production of bulk samples of battery- Westwater Resources was originally incor- for more information. n
ready graphite to: satisfy customer demand porated in the late 1970’s to mine uranium in
This material contains forward-looking statements. In addition, from time to
for qualification, provide important design Texas, and ultimately processed some 9 mil- time, we or our representatives may make forward-looking statements orally
or in writing. We base these forward-looking statements on our expectations
and operations information for Westwater’s lion pounds of uranium for the nation’s nuclear and projections about future events, which we derive from the information
currently available to us. Such forward-looking statements relate to future
graphite processing plant. power companies. The current team has been events or our future performance, including: our financial performance and
projections; our growth in revenue and earnings; and our business prospects and
• Finalize the design of the graphite process- in place since 2013, and has been successful in opportunities. You can identify forward-looking statements by those that are
not historical in nature, particularly those that use terminology such as “may,”
diversifying the company into lithium explo- “should,” “expects,” “anticipates,” “contemplates,” “estimates,” “believes,” “plans,”
“projected,” “predicts,” “potential,” or “hopes” or the negative of these or similar
ration in Nevada and Utah, and now, battery terms. In evaluating these forward-looking statements, you should consider
various factors, including: our ability to change the direction of the Company;
graphite in Alabama. our ability to keep pace with new technology and changing market needs; and
the competitive environment of our business. These and other factors may cause
The Westwater Team is made up of seasoned our actual results to differ materially from any forward-looking statement.
Forward-looking statements are only predictions. The forward-looking events
operations professionals with experience in discussed in this document and other statements made from time to time by us
or our representatives, may not occur, and actual events and results may differ
growing successful businesses in several min- materially and are subject to risks, uncertainties and assumptions about us. We
are not obligated to publicly update or revise any forward-looking statement,
eral commodities, energy and manufacturing: whether as a result of uncertainties and assumptions, the forward-looking
events discussed in this document and other statements made from time to time
Chris Jones, President and CEO, has worked by us or our representatives might not occur.
Chris Jones, President and CEO for 40 years in various mining businesses in The company paid consideration to SNN or its affiliates for this article.

www.stocknewsnow.com MicroCap Review Magazine 35


P R O F I L E D C O M PA N Y TsX-v: gpH / oTcQB: gpHoF

graphite one, inc.


Writing Graphite’s New Chapter

G
raphite’s role in the history of human 25 years, since the last American graphite in the 21st Century. Even more critical is
technology is right there in its mine ceased operations.  Graphite One along with the U.S, strategi-
name:  Graphein, derived from the Graphite One has one of the largest known cally positioning to supply raw materials to
ancient Greek word for “to write,” referring to natural flake graphite deposits in the U.S., Companies in North America to be able to
the early use of the material in the form of what near Nome, Alaska.   meet demand and reducing dependence on
later came to be called lead pencils.  The Company’s graphite resource has foreign supply. n
Yet graphite’s 21st Century contributions unusual morphological characteristics, which
Please visit the company’s website for more informa-
can be described, as the American Resources the Company has labeled STAX: Spheroidal, T
tion: www.graphiteoneresources.com
Policy Network puts it, “Graphite today is at hin, Aggregated and Expanded. STAX makes it
This material contains forward-looking statements. In addition, from time to
the core of more than just your lead pencil less costly to process into the Coated Spherical time, we or our representatives may make forward-looking statements orally or
in writing. We base these forward-looking statements on our expectations and
– it is at the core of 21st  Century consumer Graphite (CSG) needed for the advanced tech- projections about future events, which we derive from the information cur-
rently available to us. Such forward-looking statements relate to future events
technology.” Laptops and LEDs, smartphone nologies mentioned above. As CEO Anthony or our future performance, including: our financial performance and projec-
tions; our growth in revenue and earnings; and our business prospects and
and solar cells, Electric Vehicle batteries, Huston states, “Graphite One is more than a opportunities. You can identify forward-looking statements by those that are
not historical in nature, particularly those that use terminology such as “may,”
drones and satellites, energy storage devices mine; we’re building into our operating plan an “should,” “expects,” “anticipates,” “contemplates,” “estimates,” “believes,” “plans,”
“projected,” “predicts,” “potential,” or “hopes” or the negative of these or similar
– even nuclear reactors:  Each of these and Advanced Graphite Materials Processing Plant terms. In evaluating these forward-looking statements, you should consider
various factors, including: our ability to change the direction of the Company;
many more applications depend on graphite to transform our graphite into CSG and other our ability to keep pace with new technology and changing market needs; and
the competitive environment of our business. These and other factors may
as a key means for the efficient transmission high-value products. We’re a tech company cause our actual results to differ materially from any forward-looking state-
ment. Forward-looking statements are only predictions. The forward-looking
of power.  that mines graphite”. events discussed in this document and other statements made from time to
time by us or our representatives, may not occur, and actual events and results
 As Electric Vehicles achieve higher levels Bringing new natural flake graphite mines may differ materially and are subject to risks, uncertainties and assumptions
about us. We are not obligated to publicly update or revise any forward-looking
of adoption and energy storage technology into production will be critical to meet- statement, whether as a result of uncertainties and assumptions, the forward-
looking events discussed in this document and other statements made from
matures, rising graphite demand will put ing rising tech demand – and with it, the time to time by us or our representatives might not occur.
increasing pressure on supply. As of which ability to sustain advanced manufacturing
the demand spike is dramatic -  according
to the World Bank, demand for graphite is
projected to increase 383% between now and
2050, fueled by the rapid increase of lithium-
ion battery anode production.  
Exploding demand for key graphite uses
is one of the drivers behind the European
Union identifying graphite as a “critical risk”
material, and the U.S. Government including America’s Emerging Tech Graphite Producer of Lithium-Ion
graphite on its Critical Mineral List.   Battery-Grade Graphite
Yet in the U.S., graphite import depen-
dency is 100%, and has been for more than GOT GRAPHITE?
$1 billion NPV | 27% IRR | 63% EBDIT | 40-Year Mine Life

POWERING AHEAD
GraphiteOneInc.com
TSX-V: GPH | OTCQX: GPHOF
Anthony Huston, CEO
The company paid consideration to SNN or its affiliates for this article.

36 MicroCap Review Magazine www.stocknewsnow.com


EMPOWERING LIVES THROUGH SPORT
The Challenged Athletes Foundation (CAF) empowers individuals with physical challenges
through sports. CAF provides grants for adaptive sports equipment, training and competition
expenses to athletes age 4 to 77 across 103 different sports and activities in all 50 states
and 70 countries.

Over the past 9 years our partnership with ROTH capital and the ROTH conference has
raised well over $1.2 million to support our athletes.

Help empower the challenged athletes of tomorrow. Donate today at www.donateCAF.com

www.stocknewsnow.com MicroCap Review Magazine 37


P R O F I L E D C O M PA N Y TsX-v: Fcc / oTcQX: FTssF

First cobalt corp.


Near-Term North American Cobalt Supplier

S
ince its inception in April 2017, First
Cobalt has transformed from a cobalt
exploration company to a near-term
cobalt supplier in North America. Today,
First Cobalt boasts 100%-interest in the only
permitted cobalt refinery in North America,
a partnership with Glencore - the world’s
largest cobalt miner, and a pipeline of highly
prospective projects that could provide a
long-term supply of the critical mineral to
America.

Fcc REFinERy | onTaRio, FCC Refinery: Commissioned in 1996 and on care and maintenance since 2015
canada
Engineering Canada Inc., completed in May the permitting associated with the recom-
The FCC Refinery is a hydrometallurgi- 2019, indicated that the Refinery’s annual missioning and expansion of the Refinery.
cal cobalt refinery in Ontario Canada, production potential can reach over 5,000 Subject to positive results and other terms
approximately 600km from the U.S. border tpa of cobalt with a capital cost of approxi- and conditions, Glencore is also prepared
and accessible by road or rail. On May 21, mately US$45 million. to advance an additional US$40 million to
2019, First Cobalt signed a memorandum of A definitive agreement between First complete the recommission and expansion.
understanding with Glencore AG, whereby Cobalt and Glencore was signed on August This partnership means First Cobalt is on a
Glencore will supply 2,000 to 2,500 tonnes 26, 2019, with Glencore agreeing to provide fully-funded and non-dilutive path to cash
per annum (tpa) of cobalt feedstock and a US$5 million loan facility to First Cobalt flow.
associated financing to recommission the to complete advanced engineering, metal- A Definitive Feasibility Study for the
FCC Refinery. A scoping study by Ausenco lurgical testing, and field work; including refinery expansion is currently underway

Trent Mell, CEO Inside FCC Refinery

38 MicroCap Review Magazine www.stocknewsnow.com


Iron Creek Project located in the Idaho
Cobalt Belt

and is targeted for completion by Q1 2020.


First Cobalt plans to recommission a 12
tpd operation by Q4 2020 then conduct the 50 past producing mines. The Company er, Sherritt International, North American
necessary expansion efforts to increase the intends to conduct more extensive explora- Palladium, and AuRico Gold. He was for-
production profile to 55 tpd by Q3 2021. tion in this highly prospective land package, merly the CEO of Falco Resources, where
with an aim to create a long-term pipeline he led a resource expansion program that
Iron Creek Cobalt Project of cobalt supply to its Refinery in the future. more than doubled the resource estimate
| Idaho, USA to 6.6 Moz AuEq at the former produc-
Outlook on Electric ing Horne VMS mine. Before joining First
The Iron Creek Cobalt Project is located in Vehicle (EV) Market Cobalt, Mr. Mell built a mining division
Idaho, USA, along the most prolific trend of for PearTree Securities to advise issuers
cobalt mineralization in the USA - the Idaho There is a strong case for cobalt in the EV and investors on Canadian exploration and
Cobalt Belt. The property consists of mining market. In 2017, a study by Benchmark development opportunities. During his ten-
patents and exploration claims covering an Mineral Intelligence indicated that 80% ure at PearTree, his team raised $300 million
area of 1,698 acres. Significant infrastructure of Li-ion batteries produced globally uses in equity investment and became the larg-
is in place to support multiple drills and cobalt and the demand from EV batter- est provider of flow-through capital to the
underground activity. Historic underground ies is projected to grow by 34% in 2019 Canadian resource industry.
development includes 600 metres of drifting (Citigroup). With an outlook of 37% aver- “Leveraging the recovering cobalt prices
from three adits and an all-weather road age growth per annum through to 2023, the and the burgeoning electric vehicle market,
connecting the project to a state highway. demand for cobalt is predicted to overtake we aim to position First Cobalt as the go-to
In October 2018, a maiden NI 43-01 min- available supply. supplier in North America,” commented
eral resource estimate was announced for With no significant cobalt refiners in Trent Mell. n
Iron Creek consisting of Inferred mineral North America, the U.S., which is currently
Please visit the company’s website for more informa-
resources of 26.9 million tonnes grading in position to become the second largest EV
tion: www.firstcobalt.com
0.11% cobalt equivalent under a base case battery maker worldwide, is 100% depen-
This material contains forward-looking statements. In addition, from time to
scenario pit constrained and deeper mineral dent on cobalt imports from the DRC or time, we or our representatives may make forward-looking statements orally or
in writing. We base these forward-looking statements on our expectations and
resource. An alternative underground-only refineries in China. projections about future events, which we derive from the information cur-
rently available to us. Such forward-looking statements relate to future events
scenario results in 4.4 million tonnes grading or our future performance, including: our financial performance and projec-
tions; our growth in revenue and earnings; and our business prospects and
0.30% cobalt equivalent. First Cobalt plans FCC Leadership Team opportunities. You can identify forward-looking statements by those that are
not historical in nature, particularly those that use terminology such as “may,”
to prioritize advancing Iron Creek upon the “should,” “expects,” “anticipates,” “contemplates,” “estimates,” “believes,” “plans,”
“projected,” “predicts,” “potential,” or “hopes” or the negative of these or similar
completion of the Refinery expansion. FCC is managed by a leadership team that terms. In evaluating these forward-looking statements, you should consider
various factors, including: our ability to change the direction of the Company;
brings a full spectrum of skills in capital our ability to keep pace with new technology and changing market needs; and
the competitive environment of our business. These and other factors may
Canadian Cobalt Camp | markets, geology, EVs, automotive develop- cause our actual results to differ materially from any forward-looking state-
ment. Forward-looking statements are only predictions. The forward-looking
Ontario, Canada ment, and engineering. events discussed in this document and other statements made from time to
time by us or our representatives, may not occur, and actual events and results
Spearheading FCC is Trent Mell, an may differ materially and are subject to risks, uncertainties and assumptions
about us. We are not obligated to publicly update or revise any forward-looking
First Cobalt controls a significant land pack- experienced mining executive with many statement, whether as a result of uncertainties and assumptions, the forward-
looking events discussed in this document and other statements made from
age covering over 10,000 hectares in the achievements under his belt. Mr. Mell held time to time by us or our representatives might not occur.
Canadian Cobalt Camp, which hosts over senior positions with nickel-cobalt produc-
The company paid consideration to SNN or its affiliates for this article.

www.stocknewsnow.com MicroCap Review Magazine 39


F E AT U R E D A RT I C L E

Q&A with Brent Cook, Exploration Insights

E
ach issue we ask Brent Cook to give are focusing efforts in safer jurisdictions. lions. This sector performs very similar to
us an update on the state of the Australian  mining companies in particular the biotech sector where the suggestion of
junior resource ecosystem; after all have been buying North American deposits. a ground-breaking  medical discovery can
he and his partner Joe are flying the globe move a stock 10x or more. Realize that virtu-
checking out new opportunities in the sec- Are base metal junior resource companies ally every modern convenience  within your
tor. Thanks again Brent for answering our participating in the precious metals rally? view would not be possible without metal,
questions. I imagine you were probably in Why or why not? this demand will not be going away.
an airport or on a plane when you wrote this. A: Base metal companies are struggling. The key to making money in the MicroCap
Safe travels my friend. The trade wars and increasing poten- mining companies is to know what the
tial of a global recession have dampened prize looks like. Stick to honest and person-
Why is this gold rally different from others base metal prices (with the exception of ally invested management that provide all
before? Nickel). Longer term however, viable cop- the information via their website and news
A: I am not sure how different it is, but one per deposits are in short supply and as the releases. Technical due diligence is critical,
thing that sets this gold move apart is a global “greening” of the electric system contin- don’t rely on rumors or some paid promo-
lack of trust and confidence in the US gov- ues, copper will be in high demand. We tional material. Get advice from someone
ernment’s reliability, which directly impacts are focusing on high grade sulfide nickel knowledgeable of geology, mining, and costs.
confidence in the US dollar. The gold price, deposits and high-grade copper deposits in Check your investment thesis against a com-
to a large degree, is the reciprocal of the US safe jurisdiction within the base metal por- pany’s results and sell when this thesis is no
dollar. The current national and international tion of the Exploration Insights portfolio.  longer valid, hoping for something to work
turmoil is weighing on the dollar and we are out usually doesn’t  work. Take the time to
seeing  gold purchases by a variety of coun- It seems the percentage gains of silver learn about geology and mining, it’s a fas-
tries, funds, ETF’s, and individuals pick up.  exploration companies exceeds the gains of cinating and complicated subject. We have
gold companies. How do you explain this? posted many free articles and videos on our
We are seeing more and more projects A: The silver price typically lags the gold website: explorationinsights.com
outside North America. Is this a growing price and is a more volatile metal than gold. Good luck out there. n
pattern? If so, why? Over the past 20 years the gold to silver ratio
A: The current collection of advanced has been between 50 and 90 to 1, averaging For more information about Brent Cook and Exploration
Insights, please visit: www.explorationinsights.com
exploration  to development projects reflect about 65 to 1. It currently sits at around 85
projects  that were acquired three to six to 1. A return to 65 to 1 would require a
years ago, a time when foreign political and continued increase in the silver price relative
security risks were less obvious. However, to gold, or vice versa. Silver “bugs” tend to be
over the past two years, companies have more rabid than gold “bugs” and can take the
become more cognizant of foreign risks and silver price, and more significantly the silver
equities, much higher than seems rational.  

If you could give millennial investors new


to the resource market 3-5 guidelines to
follow, what would they be? Note: This article is not an attempt to provide invest-
A: When speculating in the MicroCap ment advice. The content is purely the author’s per-
sonal opinions and should not be considered advice
explorers and miners, incredible gains (and of any kind. Investors are advised to conduct their
losses) can be made over very short time own research or seek the advice of a registered invest-
ment professional.
frames. One high impact drill hole result
can indicate a company valued in the $10’s
of millions is on a metal discovery poten-
Brent Cook tially worth $100’s of millions or even bil-

40 MicroCap Review Magazine www.stocknewsnow.com


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www.stocknewsnow.com MicroCap Review Magazine 41
CRITICAL MATERIALS CORNER
The Critical Materials Age
H umanity has been through a number of
development periods, from the Stone Age
through the Iron Age and beyond. For some
allurgists developed so-called “superalloys” for
use in the hot boxes of jet engines. These alloys
are made of nickel, iron, chromium, titanium,
filled furniture, car batteries or ammunition, but
importing a more finished downstream product
rather than a raw material does suggest that the
time, I’ve been arguing that we’ve just left the cobalt and a few other metals. Without these products will likely be more expensive and that
Steel Age, when steel alone was largely enough to uncommon metals like cobalt, modern jet at least some American factories and jobs will be
guarantee solid performance and design, and we engines wouldn’t have anything like the power lost. Maybe many factories and jobs. Multiply this
are now firmly in the Age of Critical Materials. fuel efficiency and reliability that they do. potential impact by many times, because there
Critical materials are, for me, defined by the end- This necessity for critical materials to build are several other critical materials where China
user. Generally speaking, though, they are mate- a modern product occurs at all scales, from dominates imports, in raw form, to the USA. It is
rials that probably never comprise the lion’s share personal products to large-scale engineering. precisely this effect, higher costs and job losses in
of the bill of materials for a product, but without Building modern infrastructure projects that the target nation, that you want to create during
which that product wouldn’t have anything like will be cost-effective now sometimes requires a trade war.
the utility or value it was designed to have. stainless steel alloys that contain odd alloying Access to critical materials can be both a sword
Think about something like your cell phone. elements in quantities that would have been and a shield in business, as well. A few years ago,
While we all complain about battery life, there are unthinkable a few decades ago. on September 4th, 2014, the American manufac-
a few of us that still remember cellular telephones Critical materials can also, conceivably, be turer Pratt & Whitney signed a large agreement
with nickel metal hydride (NiMH) batteries (or used in offensive ways, as well. The China-US to buy a metal called rhenium from Molymet of
even worse, the days of plugging disposable bat- trade conflict that exists as I am writing this Chile, one of the world’s largest suppliers. “Large”
teries into a phone). Using a phone with NiMH piece on June 26th , may well get solved at or is a tough adjective to apply to such a small mar-
batteries meant charging a lot more often, having shortly after the G20 meeting in Osaka, Japan, ket in terms of annual weight sold, but rhenium
to treat your battery with kid gloves, and gener- but neither side has really offered the other has outsize importance. Our argument, above,
ally a much poorer user experience than with a way out of this impasse and this conflict that the only way to improve jet engine efficiency
our present lithium rechargeable batteries. If you might well get worse. To date, both sides have is through higher operating temperatures, has
look at a current-generation cell phone, there are generally used self-flagellation as their weapon culminated in the use of what is termed single-
only a few grams of actual lithium in that phone’s of choice, raising tariffs on goods imported crystal nickel-rhenium turbine blades in the best
battery, but without that essential amount of directly from the other side and making it jet engines of today, whether military or civilian.
lithium, your experience with your mobile device tougher for their own citizens and companies Pratt & Whitney bought a very significant chunk
would be completely different. to do business, with the hope that this costs of globally available rhenium. Thus, they not only
Or consider something like air travel. more jobs in the target nation than their own. make sure that Pratt & Whitney are guaranteed
Keeping air travel inexpensive means using However, critical materials offer China some- access to this material, they also guarantee that
the smallest possible amount of fuel to get an thing of an asymmetric response in this fight. their competitors are not. Given their market
aircraft from one place to another, while keep- Without suggesting that this represents China’s share in the space was lower than their share of
ing the ratio of operating to maintenance time best or only foray in this sphere, China is the rhenium purchased, there is a more than fair
on each aircraft at its maximum. There really is source of roughly 60% of the imports of a metal chance that their market share will grow.
only one way to raise fuel economy, and that’s (and related chemicals) called antimony that is There is a lot more to discuss about these
to burn the fuel in the jet engine at higher and imported into the US. About 80% of antimony critical materials and the companies working
higher temperatures. But higher temperatures globally is used to make flame retardant chemi- with them, both junior and senior. I look for-
can result in more damage to the metal in the cals and to harden lead alloys. This strange metal ward to sharing some of that with you in the
engine and more frequent required mainte- is imported in a raw form, predominantly from months and years to come! n
nance. Years ago, materials scientists and met- China, and is used in US factories and by US Jon began industry and company-specific coverage of
workers to make products like the flame retar- critical materials such as lithium, cobalt, the rare earths,
vanadium and tin in 2009 while with a prior firm, and
dants in polymer foam filling that goes into an started his investment industry career as a technology
uncountable number of products like furniture, analyst in 2001. He was a co-founder of Stormcrow
in early 2014, and has expanded this coverage since,
and the lead electrodes that go into lead-acid car
becoming a widely recognized thought-leader in the
batteries or the lead used in ammunition. Now, analysis of critical materials markets and firms. He
if China were to suspend the sale of antimony has also done work on alternative energy, battery and
mechanical energy storage and neutrinos, the latter of
directly to the United States, we are not saying which doesn’t help much with respect to critical materi-
n BY JON HYKAWY, PHD, MBA that Americans would be unable to buy foam- als. Jon holds a PhD in physics and a MBA.

Note: This article is not an attempt to provide investment advice. The content is purely the author’s personal
42 MicroCap Review Magazine opinions and should not be considered advice of any kind. Investors are advised to conduct their own research
or seek the advice of a registered investment professional.
www.stocknewsnow.com MicroCap Review Magazine 43
F EAT UR E D A RT ICL E

Why Young People


Should Love Gold Stocks
I
t’s conventional wisdom in the invest- taught himself how to use technical analysis
ment industry to aim one’s marketing at to generate market signals. Within a year,
older audiences. Older folks, as argued, he was making $10K per month, working
have more money and interest in investing. out of his dorm room. That was in Minsk,
That may be true about the money, if you Belarus, of all places.
look at net worth, but I doubt it’s true if you My favorite part of this story is that my
look at willingness to spend disposable cash. young friend saved 50% of his earnings,
As a person who’s taught entrepreneurship redeployed 40%, and lived on 10%. That still
to college students in many countries, I’m made him the richest kid on the block.
sure that the notion of less interest in invest- But the critical part for any young person
ing is not true. There’s no lack of desire, only reading this is that he started with almost
a common and incorrect belief that one has no money. Instead of buying new clothes or
to wait until one is older to become an inves- spending all his money on beer and video
tor. Show young people this is wrong, and it’s games, he put everything he could scrape
amazing how quickly they leap into action. together into his investments. His timing
After a talk I gave, one former student of was good, as the markets were rebounding
mine got himself a day trading account and after the crash of 2008, but it remains true

n BY LOBO TIGGRE

44 MicroCap Review Magazine www.stocknewsnow.com


that his scrimping for a few months paid off Tech stocks? help you.
in spades. Sure, they like them. They probably For more on the basics of specula-
If a young person can save up for a car or understand them better than I do. And they tive investing, please see my free report:
for a new computer, they can save up cash all know that Amazon, Apple, and Microsoft Speculation 101.
for investing. returned over 100x to early investors. But There are other resources available on my
The real beauty of this is that young they also know that took decades. website, www.IndependentSpecuator.com and
people who have fewer responsibilities and So what else is there? others as well. I encourage you to make use
burdens than older folks can not only Well, as it happens, the resource sector is of them all, so you don’t have to reinvent the
afford to invest, but to speculate. well known for generating extreme gains in wheel.
The trick is to think of speculating as short periods of time. That’s especially so for Whatever you do, don’t miss out on gold’s
spending. Once deployed, the money is junior gold and silver stocks. emerging bull market—that’d be like miss-
spent. Gone. If you can accept that, you can ing out on Bitcoin in 2017.
keep calm, stay out of trouble, and swing Okay, the 100x winners are rare, but 10x
for the bleachers when you’ve found a great to 20x winners happen pretty much every That’s my take. n
opportunity. If you’re successful at it, this year.
“gone” money can come back and change
your life. • Novo Resources (NVO.V), for instance,
Lobo Tiggre, aka “Louis James,” was legendary specu-
One can think of this as being like going was a 10x winner in just a few months
lator Doug Casey’s protégé at Casey Research for
to Las Vegas to spend money having fun during the same year that Bitcoin went almost 14 years, until early 2018. He joined the
gambling (That’s not my idea of fun, but it’s a ballistic. Casey team in 2004. By 2007, he was writing and
making investment recommendations in Casey’s
useful metaphor). The odds are much better, • Great Bear Resources (GBR.V) is a 10x flagship newsletter, the International Speculator.
however, for disciplined speculators than for winner right now over the last year. Tiggre is a now published author, a public speaker,
and an expert often cited by media on matters
gamblers in Vegas. We don’t just throw the • Reaching back a bit, GoldQuest Mining
relating to investments, especially regarding metals
dice; we research our opportunities carefully (GQC.V) was a 50x winner in 2012— a and mining. He brings his experience, his connec-
to stack the odds in our favor. Best of all, win time when gold prices were falling. tions and his deal flow directly to readers of www.
IndependentSpeculator.com, without the barrage of
or lose, each exercise teaches a valuable les- • Further back, I remember recom- marketing hype used by other publishers.
son, improving the odds in the next round. mending First Majestic Silver (AG,
But what to speculate on? FR.TO) at around C$1.80, before Note: This article is not an attempt to provide invest-
ment advice. The content is purely the author’s per-
Young people are well aware of the for- that stock went well north of $20 in sonal opinions and should not be considered advice of
tunes made by some when Bitcoin soared 2011, for better than 20x gains. any kind. Investors are advised to conduct their own
research or seek the advice of a registered investment
20x in 2017—and many are looking for the
professional.
“next Bitcoin.” My point for young people—or anyone
This fact alone spells the end of the idea interested in making a lot of money today, Lobo Tiggre does not own shares of any of the compa-
nies mentioned.
that young people aren’t interested in specu- is obvious: there is a market where 20x gains
lation. are not once-in-a-lifetime events, but rela-
And there’s more. Many, if not most,young tively frequent occurrences.
people I meet don’t believe there’s such a Best of all is that gold and silver are break-
thing as a secure job anymore. That’s why ing out this year. At $1,500 per ounce as I
they’re interested in entrepreneurship and write, gold is still well below all-time highs.
investing. Meaning there’s plenty of upside left, but it
But they’re no dummies. Apart from a has broken out of a multiyear rut that kept it
few fanatics, most concede that Bitcoin’s below $1,400. Silver is just starting to catch
spectacular run in 2017 was likely a once-in- up.
a-lifetime event. Forget the war of words between Bitcoin
So what’s next? Pot stocks? HODLers and gold bugs. Save up some
Sure, many are interested. But I haven’t money you can afford to speculate with and
met any who are convinced they know of a start researching the opportunities in gold
pot stock that will go 20x in one year (as I and silver stocks today. Those of us who’ve
said, they’re no fools). been doing this for a while stand ready to

www.stocknewsnow.com MicroCap Review Magazine 45


F EAT UR E D A RT ICL E

The Quiet but Dramatic


Revolution in Mining…..
H
istorically considered high risk THE pRoBlEm and iTs HisToR-
with a poor execution record and ical conTEXT
complexity with a low regard for
governance and transparency, the mining In 2003, the securities regulators in the
industry has been undergoing a quiet but leading mining jurisdictions of Canada and
dramatic revolution in recent years. On the Australia set up stringent reporting require-
verge of bankruptcy just four years ago, the ments in the form of 43-101 and JORC
leading producers are now recording record codes. These were designed to protect inves-
cash flows, healthy balance sheets, and divi- tors and covered the parameters of reporting
dend yields in excess of 6%. Workers acci- both reserves/resources; as well as economic
dent rates on operating mines have fallen studies in order to progress and finance a
to record lows and environmental practices project. They have without doubt been a
are more robust than at any previous time. success in reducing fraudulent behaviour.
Private Equity, almost extinct form the But despite the original intent to pro-
industry 10 years ago, now dominates the vide better and more transparent informa-
landscape to finance new mines and through tion, these reports now typically extend well
this position have been the driving force beyond 400 pages (often close to 1,000!), cost
of improved returns, risk mitigation, and tens of millions to prepare and are filled with
heightened awareness of the environment such complexity that very few people are
and safety. Even within exploration, the capable of interrogating the information to
odds are improving as techniques improve any real advantage.
through the use of appropriate technology. Other than better policing of the sector
So how does such a positive backdrop of to protect investors, what is the purpose of
the industry fail to inspire investors from these reports if few can understand them?
millennials through to institutions? I am Imagine a funnel where thousands of data
not arguing for across-the-board increases points and assumptions are fed into the top.
in valuation - that is earned based on merit. When all that data is calculated an NPV
What I am striving for is greater recogni- and IRR pops out the bottom of the funnel.
tion of a sector that has fallen out of love, Brilliant, so long as the numbers achieve an
is suffering an extended hangover from the acceptable hurdle, it will prove to the world
supercycle period, and a complete lack of that we have a positive economic study that
confidence in itself. This is a sector that is will attract investors. But 4 out of 5 mines
instrumental to the solutions of the global that progress into development exceed their
environmental crises, critical to the growth budgeted development cost by an average
of many of the world’s leading industries, of over 40% - usually leading to devastating
and yet is a sector that hardly registers in consequences for the shareholders.
most investors portfolios. So there is a missing link… and it can be
The problem comes back to my first sen- found at the top of the funnel. We need to
tence - “...high risk, poor execution, com- better understand the inputs and assump-
n BY JAMIE STRAUSS plexity, and transparency”. tions made, improve the transparency of the

46 MicroCap Review Magazine www.stocknewsnow.com


expert network of mining professionals, at a
significantly reduced cost to the options that
currently exist.
So how does it work and who does it benefit?
Digbee has put together the world’s first
expert network of accredited mining pro-
fessionals - Geologists, Metallurgists and
Mining Engineers. Once approved to write
on Digbee, they select a project to write
on, sign a disclosure form, complete their
Report using a Digbee template and publish
onto the platform. Pricing of the report is
dynamic based on the experience level of
the underlying expert but is expected to
average ~$2,500. Buyers of the Report are
then encouraged to score it. The experts not
only receive 50% of all sales, but in produc-
ing these reports, are given a platform to
raise their profiles within the industry.
At the heart of each Digbee Report will
be a Digbee Score - an objective score by the
Expert author based on three key and stan-
dardised questions relating to the discipline
being reported.
The user base is now able to anonymously
access a library of objective analysis, in
plain language, validate key metrics, identify
opportunities and risks that would not have
been possible before - all at a fraction of the
available data, and become more flexible in we experienced following the end of the cost currently available.
adapting decisions to mitigate risk in min- “supercycle” has been filled by a new breed For those mining companies who accept
ing development even if it results in higher of sophisticated investors - private equity, that development risk exists on any proj-
capital or operating cost. strategic investors, and royalty companies. ect and identifying mitigating impacts
The problem we as investors face is that None of these groups would consider an are a positive process to minimise delays,
data itself, if understood in the first place, investment without some form of appropri- cost overruns and disappointments - then
cannot always be taken at face value, and ate due diligence - a costly and time con- Digbee Research provides value added anal-
yet the cost and time to analyze is usu- suming exercise designed to mitigate risk ysis to a wide audience of investors at no
ally prohibitive to most. For the average and explore opportunities. The negative upfront cost to themselves.
investor, over-confident interpretation of the repercussions of this within the small pool of Digbee’s strength lies in the ability to
Reporting Codes, or of the data itself has investment opportunities is that lower quali- bring all parts of the industry together,
replaced fraud as the investors primary con- ty assets tend to get left behind for those who to improve transparency,find solutions, to
cern. What’s more, existing research focuses do not complete satisfactory due diligence. strengthen due diligence and ensure we
on financial centric opportunities and not Having explained the problem and the accelerate transformation of this critical
the key technical risks that determine a posi- impact, what is the solution? industry for the benefit of all participants. n
tive or negative outcome - if these risks are I launched Digbee (thedigbee.com) ear-
Note: This article is not an attempt to provide
based on unrealistic assumptions then the lier this year with the overriding intention
investment advice. The content is purely the author’s
compounded impact can lead to calamitous to open the sector to a large and growing personal opinions and should not be considered
results as is so often the case. audience through the provision of plain advice of any kind. Investors are advised to conduct
their own research or seek the advice of a registered
The void of capital within the sector language due diligence, by an independent investment professional.

www.stocknewsnow.com MicroCap Review Magazine 47


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P R O F I L E D C O M PA N Y TsX-v: nRg / oTcQB: nRgoF

newrange gold corp.


N
evada is not only the fifth larg- 300,000 data points per second, this leading-
est gold producer in the world edge technology can generate 3D models of
but, for 2019 has been named the underground workings. In addition to
by The Fraser Institute as the best mining aiding with drill hole targeting, every sample
jurisdiction in the world. With this as a taken underground has an identifiable loca-
backdrop, Newrange Gold Corp. (TSXV: tion with sub-centimetre accuracy, such that
NRG; OTCQB: NRGOF) has gone one the results can eventually be used as part of a
step further by acquiring an option to earn NI 43-101 resource.
100% of what was formerly known as one Preliminary metallurgical studies carried
of the highest-grade gold districts in the out earlier this year indicated that the min-
state. From the discovery of gold in 1884, eralization at Pamlico should respond well
the Pamlico District quickly became known to heap leach processing. With a deep
for its high grades and locally spectacular oxidation level of up to 300 metres, highly
visible gold. The district was consolidated in fractured rock that should minimize crush-
1896 and a townsite constructed, followed by ing, and free, non-refractory gold, Newrange
a 20-stamp mill. One of the unique aspects has already confirmed a number of key
of this property is that it has remained in attributes that should attract the attention of
private hands ever since, meaning that it mine developers and producers.
has seen very little in the way of modern mineralization is believed to be open in all The Company is now selling their assets
exploration. directions. in Colombia where they had been previously
The rich mining history at Pamlico has In addition to doing basic exploration focused, which will provide it with a non-
provided Newrange with incredible access such as geological mapping, airborne geo- dilutive source of cash for future exploration
to the gold mineralization via an immense physics, etc., Newrange has been conducting at Pamlico. In addition to continuing the
network of underground workings. Some underground sampling and has followed up underground mapping and sampling, they
300 mine openings, or portals, have been with some preliminary reverse circulation plan to conduct Induced Polarization (IP)
surveyed, leading to an estimated 5 miles (8 (RC) drilling. The sampling has returned geophysics as soon as possible and to follow
kilometres) of underground workings, pri- intervals such as 75.5 metres of 2.97 g/t gold, up with additional diamond drilling. n
marily in the hills known as Pamlico Ridge. 40.0 metres of 13.89 g/t gold, and 24 metres
Please visit the company’s website for more informa-
In all, these mine workings cover an area of of 12.48 g/t gold. Drilling in an area that was
tion: www.newrangegold.com
approximately 1.5 km by 1.0 km, and the never mined returned high-grade intercepts
such as 6.1 metres of 98 g/t gold, including This material contains forward-looking statements. In addition, from time to
time, we or our representatives may make forward-looking statements orally or
1.5 metres of 341 g/t. in writing. We base these forward-looking statements on our expectations and
projections about future events, which we derive from the information cur-
To date, the Company’s drilling has been rently available to us. Such forward-looking statements relate to future events
or our future performance, including: our financial performance and projec-
conducted within a relatively small area tions; our growth in revenue and earnings; and our business prospects and
opportunities. You can identify forward-looking statements by those that are
of only 500 by 100 metres, roughly one- not historical in nature, particularly those that use terminology such as “may,”
“should,” “expects,” “anticipates,” “contemplates,” “estimates,” “believes,” “plans,”
thirtieth of the area of known mine work- “projected,” “predicts,” “potential,” or “hopes” or the negative of these or similar
terms. In evaluating these forward-looking statements, you should consider
ings. While the underground workings various factors, including: our ability to change the direction of the Company;
our ability to keep pace with new technology and changing market needs; and
themselves are like horizontal drill holes and the competitive environment of our business. These and other factors may
cause our actual results to differ materially from any forward-looking state-
provide low-cost access for sampling, they ment. Forward-looking statements are only predictions. The forward-looking
events discussed in this document and other statements made from time to
need to be surveyed prior to new drilling time by us or our representatives, may not occur, and actual events and results
may differ materially and are subject to risks, uncertainties and assumptions
from surface. To do this, Newrange is using about us. We are not obligated to publicly update or revise any forward-looking
statement, whether as a result of uncertainties and assumptions, the forward-
state-of-the-art hand-held laser scanning looking events discussed in this document and other statements made from
time to time by us or our representatives might not occur.
technology. With the ability to collect up to
Robert Archer, CEO
The company paid consideration to SNN or its affiliates for this article.

50 MicroCap Review Magazine www.stocknewsnow.com


P R O F I L E D C O M PA N Y asX: wgX

westgold Resources limited “Making old mines great again”

W
estgold Resources Limited
as it sits today, is the 7th larg-
est domestic gold producer in
Australia, producing around 300,000 ounces
per annum. All of its mines are in outback
Western Australia in the Murchison Goldfield.
The Murchison Goldfield is the other major
historic gold mining area alongside the famous
Kalgoorlie Region.
Westgold has a long history in the region,
being a producer from the Tuckabianna Gold
Mining Center in the mid 90’s. Westgold was
an independent explorer and developer in the The Tuckabianna Process Plant 1.2 million TPA (Tonnes per annum)
small end of town until it was taken over by a
diversified miner, Metals X Limited in 2013. duo of Peter (Talkie) Newton and Peter Cook. investment is now coming to an end. Westgold
Metals X used Westgold as the parent entity An ex-stockbroker and geologist who teamed has passed the tipping point and is now start-
to establish a gold division. From scratch in up more than 25 years ago, and who have built ing to make more than it spends. It is in the
2013, it began an aggressive and countercycli- a reputation as one of the best buyers, sellers, late stages of transitioning from a developer
cal acquisition trail amassing 5 gold projects and operators of mining assets and projects in to a steady state producer. With that comes
and over 15 million ounces of gold resource. the country. an increase in gold production, a reduction in
Among them was the Murchison projects, Peter Cook or “Cooky “as he is affection- operating costs, and all-in sustaining costs.
which were all closed at the time having suc- ately known in Australia says “Mate, we are Most importantly, that also means a shift to
cumbed to the gold price slump of the early just renovators, we buy low and sell high just generating excess cash to continue its growth.
2000’s. like all our shareholders try to do. We just do The re-rate is about to start as Westgold
Westgold has spent the last 4 years re-build- it in a bigger scale with gold mines and over begins to close the value gap between develop-
ing, re-furbishing, and restarting these opera- a longer period”. What Westgold, and for ers and producers - comparatively against our
tions in what has been a fearlessly executed that matter Talkie and Cooky have done over peers. Cooky says, “seems we got the timing
episode of capital re-investment to re-establish decades, is to buy the underperforming and right here with Aussie gold prices rocketing
gold production and generate long term gold sometimes closed mines at a fraction of their away in recent months which has exploded the
output. Westgold was demerged from Metals capital replacement costs then set about the cash margins of our business.” n
X in December 2016 and now trades as a com- revival and renovation process. Cooky, with Please visit the company’s website for more information:
pletely independent listed gold miner. a style laced with laconic panache says “It’s www.westgold.com.au
This should come as no surprise to Westgold pretty simple mate, you get a pigs ear and turn This material contains forward-looking statements. In addition, from time to
time, we or our representatives may make forward-looking statements orally or
followers as the drivers have been the dynamic it into a silk purse. It’s the bit in the middle in writing. We base these forward-looking statements on our expectations and
projections about future events, which we derive from the information cur-
that is difficult, but our team have travelled the rently available to us. Such forward-looking statements relate to future events
or our future performance, including: our financial performance and projec-
journey many times and they do it better than tions; our growth in revenue and earnings; and our business prospects and
opportunities. You can identify forward-looking statements by those that are
anyone else.” not historical in nature, particularly those that use terminology such as “may,”
“should,” “expects,” “anticipates,” “contemplates,” “estimates,” “believes,” “plans,”
What sets Westgold apart from others is “projected,” “predicts,” “potential,” or “hopes” or the negative of these or similar
terms. In evaluating these forward-looking statements, you should consider
that Westgold has done all this without debt. various factors, including: our ability to change the direction of the Company;
our ability to keep pace with new technology and changing market needs; and
Even in the last 3 years it has managed to the competitive environment of our business. These and other factors may
cause our actual results to differ materially from any forward-looking state-
invest $350m in its Murchison assets. Only ment. Forward-looking statements are only predictions. The forward-looking
events discussed in this document and other statements made from time to
$25million of that coming from the market. time by us or our representatives, may not occur, and actual events and results
may differ materially and are subject to risks, uncertainties and assumptions
The remainder crafted through asset trading about us. We are not obligated to publicly update or revise any forward-looking
statement, whether as a result of uncertainties and assumptions, the forward-
and the re-investment of free cash flow into looking events discussed in this document and other statements made from
time to time by us or our representatives might not occur.
its operations. However, that phase of heavy
Peter Cook, Managing Director
The company paid consideration to SNN or its affiliates for this article.

www.stocknewsnow.com MicroCap Review Magazine 51


F E AT UR E D A RT ICL E

Inaccurate Negative
Blog Articles Creating
Opportunity for Long-
term Investors
E ver have the experience of looking at your own portfolio and witnessing a
particular stock dropping CONSIDERABLY on seemingly no news?
Then after digging deeper, you find out that articles. Short sellers bet on, and profit from
the drop was precipitated by the release of a a drop in a stock’s price. Short selling is a
negative blog or “news” article that alleges very difficult practice because you are gener-
that the company and/or its management ally fighting against the natural tendency of
have been engaging in nefarious activities. inflation and GDP/market growth to drive
Before you dump the stock like many stocks up over time. Some of these short sell-
other investors are prone to do, read on ers or their proxies release these articles to
below to learn why this may not be the juice their gains through active intervention
smartest move in some cases - while remem- or disinformation tactics in certain cases.
bering Warren Buffet’s observation that suc- These negative blog articles, or “short”
cessful investors have the ability to “Be fear- write ups are generally well researched,
ful when others are greedy and greedy when well written, and often voluminous. They
others are fearful.” sometimes find information that is not eas-
Given human nature, it is not surprising ily accessible and that is credible enough
that many investors run first and ask ques- to induce fear and plant the seeds of doubt
tions later. These types of “hatchet job” blog about the company and its management
posts and articles often do a great job of or prospects. As a professional investor
invoking fear and casting seemingly plau- managing a MicroCap fund at Ridgewood
sible aspersions that put doubt into the mind Investments and in my prior roles, I have
of most investors. Even when overblown seen issues such as accounting shenanigans,
or completely inaccurate, these articles can undisclosed related party transactions, and
cause a painful drop in a company’s value even past fraudulent activity by management
that can sometimes create a profitable buy- being exposed in such articles - in many
ing opportunity for patient investors with a cases accurately so.
longer time horizon who are willing to do However, sometimes these articles mis-
the homework to separate fact from fiction. represent or exaggerate allegations to induce
It’s important to understand some of the fear and panic, causing the stock price to
n BY SAM NAMIRI, MBA motivation and goals of these authors and drop rapidly and substantially. In some com-

52 MicroCap Review Magazine www.stocknewsnow.com


this may be a sign of a bottom and create
Be forewarned, however, that even in the situations extraordinary investment opportunities as
a result.
in which we know the company well and have Short-attacks can create opportunity for
long-term investors who can separate the
confidence in our ability to differentiate, it can still signal from the noise remembering than an

be challenging and uncomfortable to second-guess unfounded attack should not permanently


change the intrinsic value of a business.
conventional wisdom and ignore the ambient panic Indeed, smart investors can take advantage
of these situations to improve their overall
induced by these attacks. returns through well executed contrarian
actions. As Benjamin Graham once said:
“In the short run, the market is a voting
panies, especially those dependent on ongo- induced by these attacks. machine but in the long run, it is a weighing
ing access to capital markets to raise addi- A common pattern that we see is the ten- machine.” n
tional capital for operations, even inaccurate dency of write-ups to mention things that
Sam Namiri is a Portfolio Manager and Analyst at
allegations can create a downward death seem worrisome on their face. However, a
Ridgewood Investments, where he concentrates on
spiral that turns fiction into a self-fulfilling little digging and analysis may uncover that managing the Ridgewood Select Value Fund, our
reality. Generally class action lawsuits are they stretched the truth or overestimate the fund focused on investing in small and micro-cap
companies. Ridgewood focuses on implementing
quickly filed by enterprising securities strike significance and impact of the issues raised. intelligent value-oriented investing strategies (mod-
suit firms, who have free optionality by filing The key to seeing through the short-sellers eled after investors like Warren Buffett, Ben Graham,
and Phil Fisher). Prior to Ridgewood, Mr. Namiri
an action, thereby creating even more panic. ruse is to be able to carefully deconstruct
was an analyst at a small cap hedge fund and the
This attention can also influence regula- the negative thesis and assess its true sig- founder of a jewelry television and manufactur-
tors such as the SEC, FTC or other regula- nificance. ing company. Mr. Namiri has a BS in Industrial
Engineering and Operations Research from the
tory agencies to initiate inquiries - lending Some of the considerations that are help- University of California, Berkeley and an MBA from
even more momentum to the attack cam- ful in telling the difference include: Does the Columbia Business School.
paign. Many targeted companies are in more article shed light on anything that is prob-
www.ridgewoodinvestments.com
highly regulated businesses and are often able and that actually affects the financials
singled out for attack, especially if their stock of the company in a significant way? Is Note:
This article is informational in nature and should not
price has appreciated rapidly up to that point the article factually correct or is the author be construed as providing individualized investment
in recent periods. taking a smaller issue and extrapolating advice. Investors are advised to conduct their own
research and due diligence or seek the advice of a
I can remember many times where com- it to make it seem more significant than
registered investment professional. Both the Author
panies that I already had an investment in it actually is? Is the author’s identity and and Ridgewood Investments disclaim any liability
were subject to such an attack! When the motives transparent or hidden? How does from the use or misuse of this information.
stock price of a company gets cheap enough management react to such claims? These are
Note: This article is not an attempt to provide invest-
after an attack has already had its intended all important questions to ask yourself and ment advice. The content is purely the author’s per-
effect, it can help to limit future downside analyze to help decide whether it’s worth sonal opinions and should not be considered advice
of any kind. Investors are advised to conduct their
and make the prospective risk - reward ratio taking a contrarian approach and buying, or
own research or seek the advice of a registered invest-
quite enticing. The key here is to promptly at least holding tight during a panic caused ment professional.
or have the ability to quickly perform exten- by short-seller articles.
sive due diligence on the company to decide There can also be a trading element to
whether the attack is largely justified or these situations. Many instances these arti-
without merit. cles come in a series of coordinated write-
Be forewarned, however, that even in the ups. One option is to be a contrarian and
situations in which we know the company take an opposite position by waiting and
well and have confidence in our ability monitoring the price action of the stock
to differentiate, it can still be challenging during these multiple short “attacks”. When
and uncomfortable to second-guess conven- a short article comes out and finally fails to
tional wisdom and ignore the ambient panic cause the stock to trade meaningfully lower,

www.stocknewsnow.com MicroCap Review Magazine 53


F E AT UR E D A RT ICL E

A Nuclear Winter for Value Investors


V
alue investing is in the depths of a
nuclear winter. It’s a grim scenario.
After outperforming the market for
generations, value investors are now enduring
one of the longest episodes of underperfor-
mance since Benjamin Graham published his
magnum opus Security Analysis in 1928. In fact,
CNBC now wonders if value investing is “dead.”1
The classic definition of “value” in the
academic literature is the value “factor,”
price-to-book value. From 1926 to June
2007, the most undervalued stocks on a
price-to-book value basis returned 30 times
more than the most expensive ones.
Over the past 12 years since June 2007,
cheap book value stocks have trailed expensive
stocks by a cumulative 65 percent. The value
factor has a lot of ground to make up to break Figure 1. Cheap book value massively outperformed to June 2007, but has underper-
formed since (Data Source: Kenneth R. French1)
even with the market and glamour stocks.
Of course, few value investors actually
use book value to value companies outside Cheap cash flow stocks returned 84 times as That view holds low rates, low expectations
financials. Most, following Warren Buffett’s much as expensive stocks from 1952 to April for inflation, and makes future cash flows
guide, undertake a valuation based on some 2014. However, in the 5 years since, cheap cash more valuable now,dwhere near-term cash
measure of cash flow. We can use Ken flow stocks have lagged by a cumulative 61 per- flows are less valuable. Low rates therefore
French’s cash flow data to get a better idea cent—the worst episode in the cash flow data. favor growth companies that don’t earn much
about the average value investor’s perfor- The performance of value stocks has led now but look to generate more in the future,
mance. The news isn’t much rosier. many value investors to do some serious soul over value stocks that earn more now. If rates
The two charts look nearly identical, but searching. Some question whether changes in climb, value should come back into vogue.
they are slightly different because the cash flow accounting and market structure have made
data starts in 1951, 25 years after the start of book value obsolete. The argument goes TEcHnology
the book value data, and the scale is different. that intangible assets are increasingly impor-
tant, and buybacks increasingly significant, Another argument runs that technology has
destroying the information in book value. killed the business cycle and mean reversion.
That’s possible, but it doesn’t explain the Companies that get ahead and establish domi-
underperformance of other value ratios like nance in an industry become unassailable—
cash flow or earnings. What killed value itself? think Amazon versus every other retailer, or
The excuses are myriad, but low rates, technol- Google versus every other search firm. No mean
ogy, and passive indexing get the most press. reversion, no point in finding undervalued
stocks. Just buy the winners in each industry.
low RaTEs and inFlaTion
EXpEcTaTions passivE indEXing

The Federal Reserve’s extended age of ultra- The final justification is the rise of ETFs
n BY TOBIAS CARLISLE
low interest rates has temporarily hurt value. and other passive indexing products. Most

54 MicroCap Review Magazine www.stocknewsnow.com


In each instance, value went on to generate
unusually strong performance in the years
after. Often, the best time to be a value investor
is after such a nuclear winter for value. If that’s
the case, now might be a particularly good time
to start digging for value. That is, of course,
if the Fed, ETFs, technology, buybacks, and
accounting haven’t killed it for good. n

Tobias Carlisle, Founder and Portfolio Manager,


Acquirers Funds, LLC, a deep value investment firm.
tobias@acquirersfunds.com 646 535 8629

1 “Is value investing dead? It might be and here’s


what killed it,” June 23, 2019, CNBC, Yun Li,
https://www.cnbc.com/2019/06/21/is-value-
investing-dead-it-might-be-and-heres-what-
killed-it.html

2 https://mba.tuck.dartmouth.edu/pages/faculty/
ken.french/data_library.html

Tobias Carlisle is the founder and portfolio manager


Figure 2. Cheap cash flow massively outperformed to 2014, but it has also underper- of Acquirers Funds, LLC.
formed since (Data Source: Kenneth R. French) He is the author of the bestselling book The
Acquirer’s Multiple: How the Billionaire
Contrarians of Deep Value Beat the Market
well-known indexes such at the S&P 500, the long interludes of underperformance aren’t (2017), Deep Value: Why Activists Investors
Russell 1000, and the Nasdaq 100—are mar- unusual. In the cash flow data, there have and Other Contrarians Battle for Control of
Losing Corporations (2014). He is a co-author
ket capitalization weighted. That means those been 6 notable times when value stocks of Concentrated Investing: Strategies of the
instruments allocate the largest portions of lagged glamour stocks by more than 20 per- World’s Greatest Concentrated Value Investors
(2016), and Quantitative Value: A Practitioner’s
new investor cash flows to the biggest com- cent over a rolling three-year period: 1957-
Guide to Automating Intelligent Investment and
panies, making them bigger still. The winners 1960; 1969-1972; 1980-1981; 1989-1991; the Eliminating Behavioral Errors (2012). His books
keep winning, regardless of valuation. Dot Com boom from 1998-2000; and the have been translated into six languages. Tobias also
runs the website AcquirersMultiple.com—home of
One ray of sunshine for value investors is latest, and longest one, 2014 to date. The Acquirer’s Multiple® stock screeners. His Twitter
handle is @greenbackd.
He has broad experience in investment manage-
ment, business valuation, corporate governance, and
corporate law. Before founding the precursor to
Acquirers Funds in 2010, Tobias was an analyst at
an activist hedge fund, general counsel of a com-
pany listed on the Australian Stock Exchange, and a
corporate advisory lawyer. As a lawyer specializing
in mergers and acquisitions he has advised on deals
across a range of industries in the United States,
the United Kingdom, China, Australia, Singapore,
Bermuda, Papua New Guinea, New Zealand, and
Guam.
He is a graduate of the University of Queensland
in Australia with degrees in Law (2001) and Business
(Management) (1999).

Note: This article is not an attempt to provide invest-


ment advice. The content is purely the author’s per-
sonal opinions and should not be considered advice
of any kind. Investors are advised to conduct their
own research or seek the advice of a registered invest-
ment professional.

Figure 3. Rolling Three-Year Returns: Cheap cash flow stocks regularly underperform
for years at a time (Data Source: Kenneth R. French)

www.stocknewsnow.com MicroCap Review Magazine 55


F E AT UR E D A RT ICL E

How Medical Industry is


Applying Advances in Artificial
Intelligence and Data Generation

A
example of this is the drug Opdivo, which is
s we approach 2020, I believe that produced by Bristol-Myers Squibb. In 2014
a trend that is highly disruptive to it was approved by the FDA for patients with
the medical industry is applying advanced melanoma. Five months later it
artificial intelligence and data generation was approved for lung cancer. Since then it
to medical industry verticals such as drug has received approval for an additional 14
development, regenerative medicine, and cancers. Last year it generated over $7.5 bil-
wearable technology. Despite the advances lion in revenues1.
in genetics, the pharmaceutical industry has However, as we move forward, the drug
generated the bulk of its profits in oncology development strategy is changing and we
during the last ten years from “blockbuster expect to see new drugs and combinations
drugs”. Blockbuster drugs are defined as of existing drugs target specific sets of gene
drugs that produce in excess of $1 billion mutations within a cancer type. So rather
in revenues. In general, the strategy behind than seeking approval for a new ovarian can-
these drugs is to get them approved for a cer, drug companies are developing drugs
cancer indication and then continue to run that target specific “mutations” occurring
either solo or combination trials to show
1 https://www.genengnews.com/a-lists/top-15-
efficacy for additional indications. A good best-selling-drugs-of-2018/

n BY DAVID WEINSTEIN, MD

56 MicroCap Review Magazine www.stocknewsnow.com


in the ovaries. There are 24 different muta- become dysfunctional. The stem cells then panies. This will result in a new set of win-
tions that cause ovarian cancer. The cur- signal the body to repair itself. Since stem ners within the wearable technology space.
rent approved drugs work well in 4 of the cells are taken from a person and injected In conclusion, personalized cancer treat-
24 mutations. By collecting genetic data back into the same person, it has not been ment driven by artificial intelligence, regen-
from existing ovarian cancer patients and classified as a drug so there really has been erative medicine, and wearable monitoring
using artificial intelligence to gain insight no investment thesis other than investing in will disrupt the current medical investing
into how the patients reacted to different companies that have clinics. This is chang- landscape over the next five years. I believe
treatments, pharmaceutical companies can ing. Vericel (NASDAQ: VCEL) received much of the investment opportunities will
generate predictive models for what types of FDA approval for a product that applies come from smaller, more focused companies
drugs can act like silver bullets to the specific the process of tissue engineering to grow that are not subject to the forces of existing
ovarian cancer mutation. In fact, according cells on scaffolds using healthy cartilage tis- stakeholders. n
to a report by IQVIA™ Institute on Global sue from the patient’s own knee. We expect
Opinions expressed are solely those of the author
Oncology Trends in 2018, over one-third several new drugs + stem cells to enter the
and do not necessarily express the views or opinions
of trials are using biomarkers to stratify clinic in the next few years4. Looking into of his employer. The article is not an attempt to pro-
patients, pointing to even more personalized the future, investors should pay attention to vided investment advice. Investors should conduct
their own research or seek advice from a registered
cancer treatments in the future2. So what is the next generation of regenerative medicine
investment professional.
the disruptive technology investors should which will focus on exosomes. Exosomes
look for that benefit from this trend? are tiny vesicles produced by cells that carry David Weinstein    Managing Director, Investment
Banking
Investments offering a pure play in this genetic information. It is hypothesized that
space are those that have proprietary algo- exosomes instruct the body’s own stem cells Mr. Weinstein has thirty years of experience with
rithms (artificial intelligence) and access to to repair damaged tissue. Unlike stem cells, U.S. securities and investment banking firms. He
has been a Managing Partner of Investment Banking
tumor response data. The most noteworthy which are as old as the patient, exosomes since 2005. Prior to joining Dawson James Securities,
example of this was Foundation Health Care can be derived from discarded placenta’s and Mr.Weinstein was Director of Research for National
Securities Corporation and, prior to that, Director of
(NYSE: FMI). FMI went public in 2013. Just are a superior information delivery vehi-
Institutional Research for Joseph Charles & Assoc.
two years later Roche invested $250 million cle. Avalon Globocare (NASDAQ: AVCO) He has written and lectured on a variety of financial
in the company before acquiring the com- recently announced a partnership with GE topics and has been interviewed on numerous televi-
sion and radio shows including the Dow Jones News
pany for over $5 billion in 2018. The attrac- Healthcare to produce standardized exo- Service, Wall Street Journal, Bloomberg Business
tion? Foundation had cancer testing based somes for skin care and hair growth. This is News, and other industry media. Mr. Weinstein
has spearheaded a multitude of IPOs, public and
on genetics that allowed them to compile a an area to focus on5. Another area
private placements. Throughout his career he has
predictive model for new drug development for investors to watch is wearable tech- performed a variety of consulting services for growth
by cancer mutation. This is called personal- nology for healthcare monitoring and data companies including valuations, due diligence, and
consulting services to both public and private com-
ized oncology. Stay tuned for more in this collection. The big players here are Apple panies. Mr.Weinstein routinely visits client compa-
space3. (NASDAQ: AAPL) with the Apple Watch nies, interfaces with senior executives on a regular
basis and attends industry events. He received a
Regenerative medicine is another area and Fitbit (NYSE: FIT) with its diverse line
BA from St. John’s College, Annapolis, MD, and
from disruptive investing. The thesis behind of fitness wearables. The key area for inves- a Masters of Public Policy from the University of
regenerative medicine is that the body has tors to pay attention to will be clinical grade Maryland. dweinstein@dawsonjames.com

endogenous ways of repairing itself that noninvasive sugar monitoring as well as


Note: This article is not an attempt to provide invest-
can be harnessed. Historically this has been accurate blood pressure and hydration. The ment advice. The content is purely the author’s per-
through the use of stem cells. Stem cells are investment play is less about the device and sonal opinions and should not be considered advice
of any kind. Investors are advised to conduct their
cells with the potential to develop into many more the real-time data being generated. It is own research or seek the advice of a registered invest-
different types of cells in the body. They artificial intelligence applied to this data that ment professional.
serve as a repair system for the body. Stem will drive new business from insurance com-
David Weinstein does not own shares of any of the
cell therapy involves taking stem cells from companies mentioned.
a person’s femur and then reinjecting them 4 https://www.globenewswire.com/news-
release/2016/12/14/897537/0/en/FDA-Approves-
into a joint such as the knee or hip that has MACI-for-the-Treatment-of-Symptomatic-
Cartilage-Defects-of-the-Knee-in-Adults.html
2 https://www.iqvia.com/institute/reports/global-
5 https://www.globenewswire.com/
oncology-trends-2018
news-release/2019/07/22/1886067/0/en/
3 https://www.reuters.com/article/us-roche- Avalon-GloboCare-and-GE-Healthcare-
hldg-m-a-fmi/roche-pays-24-billion-for- Announce-Strategic-Partnership-to-Accelerate-
rest-of-cancer-expert-foundation-medicine- Standardized-Automation-and-Bio-production-
idUSKBN1JF0F3 for-Cellular-Medicines.html

www.stocknewsnow.com MicroCap Review Magazine 57


FA M I LY O F F I C E C O R N E R

Family Offices are Creating Value in MicroCaps

O
ver the last 10 years, a relatively Offices is the lexicon that they use and also transaction. Over the last three years 67 com-
new class of investors has emerged the investment structures that they imple- panies uplisted to senior exchanges in 2017,
with an insatiable thirst for quality ment. Gaining an understanding of this will 58 in 2018, and about half that amount have
transactions that on a risk-adjusted basis out- advance discussions. They generally invest uplisted so far this year. Uplisting can be
perform traditional asset classes such as real through special purpose entities that are for Microcaps because the scope of potential
estate. Family Offices are actively investing in structured as general or limited partnerships. investors available to purchase shares on the
all segments of the investment spectrum, from In addition, learning how to approach open market increases significantly, creat-
real estate to venture capital. They are very family offices is very important. The “Do’s ing access to larger pools of growth capital,
private, so accurate data is difficult to obtain. and Don’ts” have been addressed in previ- greater liquidity and ultimately more efficient
Yet the latest estimates are that family offices ous issues. The question to ask is how can valuation of the enterprise. Last year in 2018,
controlled between $3 and $4 Trillion in 2017, a company best leverage a family office? In 36 companies uplisted on NASDAQ Capital
according to Bloomberg. They are driven by terms of the “big picture”, the best approach Markets, 10 uplisted to NASDAQ Global
yield and IRR, and participate in both debt is as a balance sheet partner that can provide Select and 12 uplisted to NYSE American.
and equity investments. Many Microcap com- a consistent source of equity and credit.
panies routinely enter into private transactions Specifically, preferred equity and term loans How To aTTRacT a Family
with hedge funds and other institutions. The are typical family office structures that offer oFFicE as a lisTing paRTnER
PIPE market is the most well established insti- long term stability without the need for near
tutional capital source for most Microcaps. term liquidity through registration state- Family offices invest in funds and other man-
However, most institutions have limited hold- ments and other means that impact issuers aged products, however, in recent years there
ing periods and are structurally required to in terms of management cycle time, cost, has been a trend toward direct investments
return capital at specific periods of time. This and market exposure. A second approach is driven by fee sensitivity and also the displace-
can put pressure on publicly traded equities, as an uplisting partner. ment of the need for managed products due
sometimes at times that are inconvenient for Uplisting to a major exchange is a predict- to the development of internal “private equity-
the issuer, for example during subsequent capi- able way to create value. Increased investor like” capabilities and virtual Chief Investment
tal raises. Family offices are ideal investors for visibility, the ability for shares to be purchased Officer services. So the trend is in favor of
Microcap companies because in most cases by a much wider audience, both institutional direct investments, and the best way to attract a
they are subject to none of the aforementioned and retail, creates tremendous value by vir- family office partner is to spend time explain-
limitations. tue of increased access to capital. Combine ing the business rather than “pitching a stock”
One challenge that does exist with Family that with a solid underlying business model or pre-structured deal. Explain a clearly well-
and the smart money will gravitate to your developed investment thesis focusing on the

n BY KARL DOUGLAS

58 MicroCap Review Magazine www.stocknewsnow.com


fundamentals of the business and clearly iden-
tifying the uses of the capital will definitely get
the conversation off to a good start. Keep in
mind that most family offices generated their
own capital from successfully running their
own businesses. They are experienced opera-
tors. In addition, they understand what liquid-
ity and increased investor exposure mean for
an effective investment thesis.

Examples

There are several other advantages: for


example, major exchanges are also aware of vate equity and business development com- the company can transition from a Business
the benefit to public shareholders when there pany-like structures. There are many positives Development Company type to credit to bank
is long term shareholder equity on the books. to this since management will benefit from credit. However, with a family office partner
Balance sheet strength goes a long way in the expertise of families that have already onboard, FO’s will generally be very satisfied
terms of expediting the uplisting process. It’s built successful businesses. When it comes to provide credit on the same level as BDC’s.
also a good idea to prioritize family offices to equity investing, some of the minority So yields in the high single-digit to mid-teens,
that have experience in your specific sector. protection considerations that family offices often with equity kickers, are another option.
Recently, a Nasdaq listed fintech compa- will seek are: Family offices come in all shapes and sizes
ny, Ideanomics announced a joint venture Corporate Governance - This can vary ranging from $100M on the low end to
with Singapore based family office Yongjin depending on whether the family office is several billion on the high end. Consider
Group- a family office that specializes in investing directly in the public company or TPG Capital founder David Bonderman’s
finance companies. A review of public filings through a blocker structure of another spe- family office, Wildcat Capital Management
https://ideanomics.com/divisions/mobile- cial-purpose vehicle mechanism. and other family office mega investors like
energy-global/ and press releases clearly Board Seats - Ability to have a board member. Thomas Gutermann. These are the types of
demonstrates the benefit that Ideanomics Pre-emptive rights - which allow the inves- investors that are ideally suited to partner
is getting from the relationship. Another tor to subscribe to future offerings, thereby with MicroCap companies. n
benefit is that family offices communicate maintain their percentage ownership.
with each other. So when larger financing Restrictions on Transfer of Equity - In
rounds are needed, quite often families will order to prevent unnecessary and potentially
Karl B. Douglas is the Managing Partner at PPMT
invest together. Liquefy, a Hong Kong-based harmful changes to the shareholder base.
Capital Advisors, Ltd.., a multi-family office advisory
blockchain agnostic issuance platform for Lock-up provisions - In order to prevent firm. Mr. Douglas has a career that spans over 30
security tokens, recently raised $2.6 million. management and other investors from exiting years of investing in private and public companies.
PPMT Capital invests in private equity and debt
The round was led by Ideanomics and other early than the FO. investments of $15M to $100M in Mining & Energy,
family offices such as Soul Capital, a Hong Tag-Along / Drag Along - Specifically in Food and Agriculture. Environmental Services,
Infrastructure, and Real Estate.
Kong single-family office that also specializes the case of investment through special pur-
For further information contact:
in digital currency transactions. This list of pose entities. kdouglas@ppmtcapital.com
family office participation in public deals is Liquidation Preference - In the case of 800-401-9017

extensive and growing. Google “Family office investment through SPV’s. Note: This article is not an attempt to provide invest-
in Nasdaq” and you’ll uncover a myriad of Registration Rights - in many cases, an FO may ment advice. The content is purely the author’s per-
sonal opinions and should not be considered advice of
leads from basic stock buyers to strategic require an S1 to be filed within a certain period.
any kind. Investors are advised to conduct their own
investors across many sectors. Right of First Refusal/Offer - research or seek the advice of registered investment
As a listing partner, the family office inves- MicroCap companies have a voracious professionals. The author does not own shares or any
equity or debt interest in any companies mentioned in
tor will usually be under NDA and brought appetite for growth capital. It is incumbent this article before or at its publishing.
across the line to have access to non-public upon management teams to know how to
Karl Douglas does not own shares of any of the com-
information. And at that stage, the transac- raise capital efficiently. As the company grows
panies mentioned.
tion approach can transition into more pri- and cash flow becomes more predictable,

www.stocknewsnow.com MicroCap Review Magazine 59


P R O F I L E D C O M PA N Y oTcQB: ammX

ameramex international, inc.


A
meraMex International, Inc., incor-
porated on May 29, 1990 in Nevada,
was listed on the OTCQB Market on
July 5, 2019. The Company is a provider of new
and refurbished heavy equipment to logistics
companies, infrastructure construction com-
panies, and forestry conservation organiza-
tions—both nationally and internationally.
The Company has agreements with Swiss-
based Menzi Muck and US-based ASV to
market their line of new mastication equip-
ment with US manufacturers such as Taylor
Machine Works to market their line of imports of goods and services. The US is the public company that rents, leases, and sells
new heavy-duty forklifts and empty/loaded world’s third-largest exporter, after China new and used equipment to a variety of
container handlers; including Terex Heavy and the EU. The US is the world’s second industries. It is also only one of six publicly
Equipment to market their line of new front- largest importer after the EU. traded companies within a similar CIK code.
end loaders, scrapers, and excavators. The increase of imports and exports has These companies are very large and provide
As a provider of new equipment, for sale created a demand for EPA approved forklifts a wide variety of rental equipment from seis-
or lease, AmeraMex CEO Lee Hamre quickly and container handlers. Sales of new and used mic equipment and shipping containers, to
recognized the advantage of purchasing used container handlers and forklifts currently gen- modular buildings and electronic test equip-
equipment from customers and reselling to erate the majority or revenue for the Company, ment. United Rentals, a $10 billion company,
others. The Company has a large equipment with rental equipment contributing 10 percent. is the closest as they rent construction and
refurbishing facility in Northern California This demand, along with continued expansion industrial equipment.
where it refurbishes millions of dollars of used of product distribution centers across the US, Growth strategies consist of organic growth
equipment and resells to customers in the US has contributed to an increased requirement through continued expansion of products
and internationally. This is an extremely profit- for this equipment. Distribution centers must and markets such as the new lines of masti-
able operation and the facility is being expand- have the ability to store, track, and maneuver cation equipment for forestry conservation,
ed to meet demand for refurbished equipment. shipping containers. By incorporating con- increased rental pool inventory, and an acqui-
In 2018, US trade with foreign countries tainerization into downstream transportation sition strategy to expand market reach. n
was $5.6 trillion. This was broken down into and upstream supply chain workflows, com-
Please visit the company’s website for more informa-
$2.5 trillion in exports and $3.1 trillion in panies can improve asset utilization, use fewer
tion: www.ammx.net
trucks, drive fewer miles, reduce fuel costs, and
enhance distribution center operations. This material contains forward-looking statements. In addition, from time to
time, we or our representatives may make forward-looking statements orally or
The Company’s CEO, Lee Hamre, has 40 in writing. We base these forward-looking statements on our expectations and
projections about future events, which we derive from the information cur-
years of industry experience. Most of the rently available to us. Such forward-looking statements relate to future events
or our future performance, including: our financial performance and projec-
department managers, shop personnel, and tions; our growth in revenue and earnings; and our business prospects and
opportunities. You can identify forward-looking statements by those that are
mechanics have an average of 10+ years not historical in nature, particularly those that use terminology such as “may,”
“should,” “expects,” “anticipates,” “contemplates,” “estimates,” “believes,” “plans,”
within the heavy equipment industry. The “projected,” “predicts,” “potential,” or “hopes” or the negative of these or similar
terms. In evaluating these forward-looking statements, you should consider
board is made up of successful entrepre- various factors, including: our ability to change the direction of the Company;
our ability to keep pace with new technology and changing market needs; and
neurs/professionals in finance, heavy equip- the competitive environment of our business. These and other factors may
cause our actual results to differ materially from any forward-looking state-
ment, consulting, and operations. They ment. Forward-looking statements are only predictions. The forward-looking
events discussed in this document and other statements made from time to
average 30+ years within their specialties. time by us or our representatives, may not occur, and actual events and results
may differ materially and are subject to risks, uncertainties and assumptions
The board is very active in the operations of about us. We are not obligated to publicly update or revise any forward-looking
statement, whether as a result of uncertainties and assumptions, the forward-
AmeraMex. looking events discussed in this document and other statements made from
time to time by us or our representatives might not occur.
Lee Hamre, CEO AmeraMex is, to our knowledge, the only
The company paid consideration to SNN or its affiliates for this article.

60 MicroCap Review Magazine www.stocknewsnow.com


P R O F I L E D C O M PA N Y pRivaTE company

clear cannabis, inc.


How this leading Colorado-based company’s strategic planning
created a competitive advantage in the cannabis industry

C
lear Cannabis, Inc. [CCI] is a dis- Investment Officer of CCI, who previously
tribution infrastructure company worked as a Financial Advisor and Private
which licenses intellectual property Equity Specialist at Merrill Lynch, managing
rights to partner businesses operating in the accounts for high profile clients. The board
legal cannabis industry to manufacture, mar- is rounded out by CCI board members Dave
ket, and distribute THC and CBD products Cole, President and CEO/Founder of  EMX
under The Clear™ brand. CCI licenses intel- Royalty Corporation, and Jason Wagner,
lectual property to partners, who manufac- tax partner at  Richey May & Co., LLP  and
ture and distribute products in states where board member of Porter Billups Leadership
cannabis is legal.  Bringing a global brand mentality to a Academy and Minds Matter Denver.
Most companies handle all aspects produc- state level operation gives CCI a competi- The cannabis market is growing at an
tion of THC and CBD products, from seed- tive advantage. It allows a customer base to unsustainable rate for many businesses. The
to-sale. However, that business model does grow outside of a hyper local market. While number of investors flooding the market
not work nationally. That is why CCI has fol- positive revenue from one state is great, the with capital is causing businesses to grow
lowed in the footsteps of giant global brands same revenue generated from multiple states quickly before imploding. CCI has a strategi-
such as McDonald’s and Coca-Cola. While is even better. Multi-state revenue paves the cally planned growth structure. The compa-
other companies are limited to states they way for more expansion as more states begin ny continues to be profitable as it expands to
can set up manufacturing in, CCI can license to legalize adult-use cannabis. When people new markets, which is not something many
products to manufacturers in every legal purchase The Clear™, it doesn’t matter the companies in cannabis can say. 
cannabis state. This means that while compa- state it was sold in, consumers know they While many of the large companies are
nies are busy working on getting licenses to can expect the same euphoria every time.  evaluated based on their potential to grow
produce their products, CCI licensed prod- The CCI Board is built on success across after cannabis is legalized, CCI licensed
ucts are already on dispensary shelves.  The many different sectors. Led by President, products are already in consumer’s hands. In
Clear THC products are currently available Richard Batenburg Jr., a former stockbro- cannabis, shelf space and sales dictate who
in Arizona, Colorado, Nevada, Oklahoma, ker and cable executive with more than can succeed and who will not. n
Oregon, and Washington. 25 years of success as an  entrepreneur
Please visit the company’s website for more informa-
and business owner. Batenburg is joined
tion: www.clearcannabisinc.com
by Chief Executive Officer John Cushman,
who comes to CCI after founding  Solany This material contains forward-looking statements. In addition, from time to
time, we or our representatives may make forward-looking statements orally or
LLC, a document management consulting in writing. We base these forward-looking statements on our expectations and
projections about future events, which we derive from the information cur-
firm, and leading Solany as the CEO for rently available to us. Such forward-looking statements relate to future events
or our future performance, including: our financial performance and projec-
over 13 years. Rick Batenburg III, the Chief tions; our growth in revenue and earnings; and our business prospects and
opportunities. You can identify forward-looking statements by those that are
not historical in nature, particularly those that use terminology such as “may,”
“should,” “expects,” “anticipates,” “contemplates,” “estimates,” “believes,” “plans,”
“projected,” “predicts,” “potential,” or “hopes” or the negative of these or similar
terms. In evaluating these forward-looking statements, you should consider
various factors, including: our ability to change the direction of the Company;
our ability to keep pace with new technology and changing market needs; and
the competitive environment of our business. These and other factors may
cause our actual results to differ materially from any forward-looking state-
ment. Forward-looking statements are only predictions. The forward-looking
events discussed in this document and other statements made from time to
time by us or our representatives, may not occur, and actual events and results
may differ materially and are subject to risks, uncertainties and assumptions
about us. We are not obligated to publicly update or revise any forward-looking
statement, whether as a result of uncertainties and assumptions, the forward-
looking events discussed in this document and other statements made from
time to time by us or our representatives might not occur.

John Cushman, CEO


The company paid consideration to SNN or its affiliates for this article.

www.stocknewsnow.com MicroCap Review Magazine 61


MARKET MAKER CORNER

What is the Difference between a


Specialist and a Market Maker?

M
any investors are curious about obligation to quote where they don’t have
how OTC stocks trade, as well an interest in the issuer. Market Makers on
as the difference between spe- Nasdaq are required to keep certain mini-
cialists and Market Makers. mum bid and ask prices throughout the day,
Market Makers represent their own firm’s which acts similar to the Specialist model to
customer orders and orders from other bro- keep an orderly market. However, OTC Link
kers who send them their own customers’ Market Makers do not have the same obliga-
orders. In addition, Market Makers may tions as Nasdaq Market Makers. Issuers are
represent their own firm’s capital and corpo- often under the impression that OTC Link
rate interest in an issuer. Market Makers are obligated to place a bid
On both Nasdaq and OTC Link there are and offer at all times. OTC Link Market
several Market Makers quoting an issuer, Makers are under no obligation to post any
each with their own bid and ask prices. specific bid or offer unless they are holding a
The best bids and offers from these Market customer order that has a requirement to be
Makers combined make up the level 1 quote represented and shown in the marketplace.
price, also known as the inside market. It’s Therefore, many Market Makers will have
common that the Market Maker with the an unpriced quote on the bid or offer until
best bid price is different from the Market they receive a customer order that meets
Maker with the best ask price. Market these requirements. Ultimately securities are
Makers on Nasdaq and OTC Link are obli- going to trade where there is market interest,
gated to execute up to their own quoted and that market interest is mainly made up
bid/ ask prices and respective sizes at those of customer orders that are represented in
prices, but they are not obligated to execute the marketplace by Specialists and Market
versus other Market Maker prices. Makers respectively. n
Specialists use an “open cry” system or
Glendale Securities, Inc.,a FINRA member since
auction system, act as Market Makers too,
2003, makes markets and accepts deposits of OTC
but also are obligated to keep the market securities, including those quoted on OTC Pink,
orderly by matching orders in their trade OTCQB, and OTCQX marketplaces.

ledger. The Specialist’s bid and offers are Eric Flesche


a combination of the customer orders it eflesche@glendalesecurities.com
818-907-1505
is holding and the Specialist’s interest in
www.glendalesecurities.com
keeping an orderly market. Specialists post
both a bid and an ask price at all times that Note: This article is not an attempt to provide invest-
ment advice. The content is purely the author’s per-
represents the best bid and ask price on that
sonal opinions and should not be considered advice
exchange. Since Specialist are quoting both of any kind. Investors are advised to conduct their
the best bid and ask price on that exchange, own research or seek the advice of a registered invest-
ment professional.
they are obligated to execute orders at those
quoted prices. Specialists are committed to
providing liquidity to the exchange on both
n BY ERIC FLESCHE sides, where Market Makers are under no

62 MicroCap Review Magazine www.stocknewsnow.com


P R O F I L E D C O M PA N Y TsX & FsE: HBp

Helix Biopharma corp.


H
elix BioPharma Corp. (“Helix” DOS47 is an enzyme that reverses the chemistry and a co-inventor of the DOS47
or the “Company”) has devel- acidic condition by metabolizing urea, a technology. Dr. Chao has led multiple
oped a novel platform technol- metabolite which is abundantly found in teams in the Company including research
ogy (“DOS47”) that combats tumor acidity. the body, into ammonia. Pharmacological and business development. Mr. Frank
Tumor acidity impairs immune functions, doses of ammonia are cytotoxic and raise Michalargias, Helix’s Chief Financial Officer,
hampers the effectiveness of many chemo- pH. Increasing pH improves the activities has had diverse senior finance and opera-
therapeutics, and even certain immunother- of certain chemotherapeutics and restores tional industry experience with both public
apy agents. While this hallmark of solid depressed immune function. and private organizations.
tumors is well defined for certain cancer Helix’s lead therapeutic from the DOS47 Helix is traded on the Toronto Stock
conditions, there is no effective therapy that platform is L-DOS47. This drug is a conju- Exchange under the ticker symbol HBP.
targets this fundamental feature of tumor gate of an enzyme and an antibody that tar- The Company recently closed a CAD
development. gets carcinoembryonic antigen-related cell $7.0 million private placement financing.
adhesion molecule 6 (CEACAM6), an anti- Management is focused on creating aware-
genic tumor marker that is over expressed in ness of the Company’s technology and clini-
many cancers. A Phase I study of L-DOS47 cal development programs. In late 2019, the
in metastatic lung cancer has been complet- Company expects to provide readouts on its
ed while two phase I/II studies of L-DOS47 lung cancer clinical studies on and during
with chemo, in lung cancer, are ongoing. 2020, along with additional readouts on its
More recently, the company has received open label pancreatic study. n
approval for a phase Ib/II study in pancreatic
Please visit the company’s website for more informa-
cancer with L-DOS47, in combination with
tion: www.helixbiopharma.com
doxorubicin.
This material contains forward-looking statements. In addition, from time to
Pancreatic cancer is the third leading time, we or our representatives may make forward-looking statements orally
or in writing. We base these forward-looking statements on our expectations
cause of death from cancer in the United and projections about future events, which we derive from the information cur-
rently available to us. Such forward-looking statements relate to future events
States and kills more than 350,000 people or our future performance, including: our financial performance and projec-
tions; our growth in revenue and earnings; and our business prospects and
per year worldwide. Currently, treatments opportunities. You can identify forward-looking statements by those that are
not historical in nature, particularly those that use terminology such as “may,”
for pancreatic cancer include surgery, radia- “should,” “expects,” “anticipates,” “contemplates,” “estimates,” “believes,” “plans,”
“projected,” “predicts,” “potential,” or “hopes” or the negative of these or similar
tion and chemotherapy. Unfortunately, these terms. In evaluating these forward-looking statements, you should consider
various factors, including: our ability to change the direction of the Company;
treatments have been largely inadequate, and our ability to keep pace with new technology and changing market needs; and
the competitive environment of our business. These and other factors may
only approximately 8% of patients survive cause our actual results to differ materially from any forward-looking state-
ment. Forward-looking statements are only predictions. The forward-looking
for five years or longer. Pancreatic ductal events discussed in this document and other statements made from time to
time by us or our representatives, may not occur, and actual events and results
adenocarcinomas are particularly difficult to may differ materially and are subject to risks, uncertainties and assumptions
about us. We are not obligated to publicly update or revise any forward-looking
treat due to a complex organization of tumor statement, whether as a result of uncertainties and assumptions, the forward-
looking events discussed in this document and other statements made from
cells and the tumor microenvironment. In time to time by us or our representatives might not occur.

addition, the tumor microenvironment is


highly acidic in these patients, due to the
preferential use of glycolysis by the tumor
cells. The use of L-DOS47 in this disease
represents a new approach in tackling this
difficult condition.
Helix is led by an experienced manage-
ment and board. Dr. Heman Chao, Helix’s
Chief Executive officer, is trained in bio-
Dr. Heman Chao, CEO
The company paid consideration to SNN or its affiliates for this article.

www.stocknewsnow.com MicroCap Review Magazine 63


F E AT UR E D A RT ICL E

How to Spot the Best of


the Undiscovered

W
e all know the “know it” when small company experience. It could be an
we see it. A surge in volume. A otherwise solid team that wasn’t properly
rocketing stock price. incentivized.
It’s the classic breakout. Or maybe they are good operators – but
It could be a stellar earnings report. A dis- have been comfortable at the company and
ruptive technology. Or a partnership with a would rather take a steady salary than take
Fortune 100 company. risks to grow the business and keep pace with
Whatever the reason, this inflection point competitors.
marks the moment a microcap goes from the Either way, having a good jockey to bet on
obscure to the discovered, often en route to is essential with microcaps. Company cul-
becoming a market darling. ture, strategy – just about everything flows
If you owned shares before the breakout, a from the top in these small companies.
celebration is in order. If not, you’re probably But from our experience, hoping manage-
kicking yourself for not finding the company ment will wake up one day and turn things
sooner. around is not a strategy. Patiently wait for the
But what if you could learn to spot these change to happen instead, and you’ll have a
undiscovered gems before they have their good thesis for why the future will be better
moment in the sun? What if you could pre- than the past.
dict which microcaps are destined for glory A new management team can bring miss-
and which are doomed for obscurity? ing skill sets, a fresh strategic vision, and
In this article, we’ll discuss the Top 4 the morale boost so many microcaps need.
indicators to look for to in your next undis- Just make sure to vet their backgrounds and
covered winner. ensure their incentives are properly aligned.

1) managEmEnT cHangE 2) nEw pRoducTs

Much like Billionaire Richard Branson quips If an undiscovered company is being neglect-
the way to become a millionaire is to begin as ed by the market, there’s probably a good rea-
a billionaire and then start an airline, the way son. And usually, it’s a simple one – whatever
to become a microcap is to start as a smallcap product or service they offer isn’t delivering
and then screw things up. the growth to get anybody excited.
This process creates many of the fallen So to turn things around, something needs
angels in the microcap universe. And the to change. And that usually means a new
first thing to happen is often replacing bad product launch, business line, or transforma-
management with better management. tive acquisition to ignite growth.
Bad management comes in many types. If you make a daily habit out of reading
n BY BRANDON MACKIE It could be a seasoned executive who lacks press releases, you’ll see these announce-

64 MicroCap Review Magazine www.stocknewsnow.com


Bottom Line
You can do all the due diligence in the world but
Don’t let a stagnant share price and low
management will always know more than you as an liquidity fool you into thinking nothing
exciting is happening at these undiscovered
investor. They see the customer orders, competitor microcaps. Under the surface, a new man-
moves, and market trends long before you’ll see agement team or product launch is laying
the foundation for the next market darling.
their impact in the filings. Learn to spot these transformations before
the broader market, and you’ll be on your
way to outperformance. n
ments regularly. But why wait until the quar- gic investors putting money to work in an
Brandon is a passionate microcap investor. He
terly financials to see if the product release undiscovered company, you might be on to
has developed a specific set of criteria for selecting
was a hit or flop? something. investment ideas. The key attributes include:
These can be golden opportunities to These could be sophisticated hedge funds, Attractive business models
Compelling valuations
deepen your due diligence. Visit the compa- high-net worth individuals, or even larger Quality management teams
ny. Speak with customers. Search for product competitors in the company’s industry. He then conducts intensive research, talking to
management teams, industry contacts, and other
reviews on blogs. And if it’s a consumer As they say, follow the smart money.
like-minded investors. His philosophy is to know his
product, try it out for yourself! stocks better than anyone else and build a concen-
If you start to hear good things, you’ll have 4) Spin-offs trated portfolio around them.
Based in Texas, Brandon spent several years as a
a solid clue the financial performance could project manager and engineer with a multi-nation-
follow. In a spin-off, a business becomes free from al oil company, a place where he could use BSc
in Chemical and Biomolecular Engineering. That’s
its corporate shackles to trade as a standalone
where he developed his technical writing skills.
3) Insider buying company. A refreshed management team But then he got the investing bug. He started read-
now has the freedom to fund new projects, ing articles and books by the gurus of value investing:
Warren Buffett and Ben Graham. He was hooked.
You can do all the due diligence in the world rationalize operations and trim overhead. After following boring large cap stocks for a while,
but management will always know more And with an enticing option grant, they are he began channeling all that experience to microcap
stocks with cash flow. After being completely self-
than you as an investor. They see the cus- more incentivized than ever to perform.
taught in the investing arena, he couldn’t get enough.
tomer orders, competitor moves, and market Yet many times spin-offs stay undis- He started getting all these ideas about stocks and
trends long before you’ll see their impact in covered long enough for you to acquire a companies, so he began writing a blog, which he has
now rolled into https://smallcapdiscoveries.com/.
the filings. healthy position. This is because institutions Brandon writes about stocks he likes, but he also
This is why you should watch their actions often indiscriminately sell the spin-off. And writes about process, how he thinks, and he analyzes
his mistakes in an honest, raw manner. That’s where
closely. As Peter Lynch says, insiders sell for management won’t want to tell the story
a lot of the best information is for retail investors.
many reasons but they only buy for one – until their option prices are set.
they think the stock is about to go up. And But as the new management team starts to Note: This article is not an attempt to provide invest-
ment advice. The content is purely the author’s per-
when insiders are buying, it’s your clue a execute, spin-offs can quickly go from undis-
sonal opinions and should not be considered advice
catalyst may be on the horizon that will send covered to market darlings. And as pure-play of any kind. Investors are advised to conduct their
a company into the world of the discovered. investments, they can soon command higher own research or seek the advice of a registered invest-
ment professional.
You’ll want to see open market purchases multiples than the parent company they left.
and not just option grants or exercises. This It’s no wonder spin-offs can be an inves-
signal is most bullish when multiple insiders tor’s dream. These unique situations are how
are buying. It’s great to see the CEO buying. famed value investor Joel Greenblatt deliv-
It’s even better to see the CFO buying. They ered 40+% compound returns over a 21-year
are the notoriously conservative types so if period through his Gotham Fund.
you see them buying, pay attention. Spin-offs don’t come around very often
Buying from management isn’t the only but when they do, you should pay attention.
thing to look for. Long before an undis-
covered company breaks out, they’ll need
capital to get there – and if you see strate-

www.stocknewsnow.com MicroCap Review Magazine 65


F E AT UR E D A RT ICL E oTcQX: oTcm

Three Principles for Thriving


Public Markets
O
scar Wilde once wrote that We Believe in Open Markets On the positive side, transparency and
“Everything popular is wrong.” He “Curb of bigness is indispensable data availability are now fueled by improved
was describing our natural ten- technology, empowering the daily decisions
dency to find comfort with well-established
to true Democracy & liberty.” of traders and investors. Driving transpar-
people and widespread ideas. Regulators, —Louis D. Brandeis ency is also not a new idea. The Exchange
faced with the opportunity to open mar- Act of 1934 included public disclosure prin-
kets to alternative choices, hear a chorus Experience teaches that the best products ciples that formed the very DNA of the SEC.
of respected voices resistant to change. The develop from the race for consumers, not Congressional rulemaking[4]  in the 1970s
SEC took until the year 2000 to repeal Rule due do regulatory mandates.   Competition required the availability of public market
390—the rule that gave the New York Stock creates diversity of choice, and not just prices. Regulators will only succeed by focus-
Exchange a monopoly in trading Blue Chip between exchanges—but between brokers ing on broader access to useful information.
securities. The principles of open, transpar- and dealers, and between exchanges and As an industry, we must encourage increased
ent and connected public markets prevailed. alternative markets.  This is not a new idea. transparency to make markets work effec-
We raise this as the old idea underlying In the 1970s, Congressional rulemaking[2] tively and enable investors to easily analyze,
Rule 390, centralization of trading, is now advocated for the principle of opening mar- value, and trade securities.
being pushed as a popular fix for small com- kets to fair competition when it directed the
pany liquidity and capital formation.    Of SEC to create economically efficient securi-
We Believe in Connected Markets
course, individual traders are determined to ties markets enhanced by technology.
make trades in many different places, which The inverse of big monopolies is a decen- “Organization can never be a
means government intervention would be tralized and fragmented marketplace—an substitute for initiative and for
required to force stock trading back onto energetic condition of capitalism beneficial judgement.”
the largest stock exchanges[1]. Rent-seeking to consumers.  Twenty years ago, the under-
—Louis D. Brandeis
regulations are often cloaked in the language dog automated quotation syst , NASDAQ,
of “reform” and the public good. bragged about the multiplicity of market
centers it supported. They boasted about Those SEC Congressional mandates from
their network of over 300 market makers, the 1970s also endorsed two critical prac-
agency brokers and ECN; —linked together tices: connecting trades with competitive
by technology and transparenc, —competing price providers and matching investor orders
for every trade. They lobbied hard against directly  [5].  These policies challenged mar-
Rules 390 and 500 that enabled a despised ket monopolies and unnecessary markups
monopoly.[3]  Today, a more established from specialists. A direct connection allows
NASDAQ promotes the misperception that a trade to follow the shortest or most effi-
small company liquidity must be bolstered cient path to its best destination. Every
by banning other exchanges from competing player who touches a trade—a broker, a
with the NASDAQ order book. dealer or an exchange—will take a cut of the
transaction in some form. Yet, during the
past twenty years, rather than rely on the
We Believe in Transparent
wisdom of the crowd to choose winners and
Markets losers, regulators have favored the supposed
“Electric light the most efficient simplicity of the agency brokerage business
and exchange-matching engines over dealer
policeman.”
n BY CROMWELL COULSON market making.   If we want vibrant markets,
—Louis D. Brandeis
66 MicroCap Review Magazine www.stocknewsnow.com
we should treat all intermediaries equally. work, expand access to shelf offerings, and competing exchanges, no OTC trading, and intraday
auctions were the three largest negatives for investor
Rather than reducing small-company invent alternative methods[7]  for companies execution quality.    See, Frazzini, Andrea and Israel,
trading to a single, centralized exchange— to directly connect with share trading liqf Ronen and Moskowitz, Tobias J., Trading Costs
which studies show harms investor execu- (April 7, 2018), available at SSRN:  https://ssrn.com/
courseIn addtion to, more benefits, such as
abstract=3229719.
tion quality,—[6]  let’s allow the market to Employee Stock Ownership Plans and margin [7]  See, Cromwell Coulson “Give Companies
decide. Traders should choose whether a eligibility, should be offered to companies that Easier Access to Public Markets” Bloomberg (March
22, 2017), available at:  https://www.bloomberg.com/
trade goes directly to an exchange, to the choose transparency.  In the future, going opinion/articles/2017-03-22/give-companies-easier-
market makers creating the best liquidity, public should be easier than remaining private. access-to-public-markets
or to a lower-fee dark pool. This freedom Open, transparent, connted — : these three
R. Cromwell Coulson - President, Chief Executive
empowers market participants to optimize qualities describe a public market where com- Officer and Director of OTC Markets Group 
execution quality, add intermediaries that petitive forces can thrive over the long term. R. Cromwell Coulson is President, CEO and a
Director of OTC Markets Group, responsible for
increase the value chain, and steadily remove We live in a democracy founded on the revo- the company’s overall growth and strategic direc-
extraneous costs. lutionary idea of individual liberty. That free- tion. Since acquiring OTC Markets’ predecessor
business in 1997, Cromwell has transformed the
dom is enshrined in open markets that foster
company from a privately-held publisher of broker-
greater transparency and build connections.
These Principles Foster Progress dealer quotations into a publicly-traded company
While our tactics and technology will change, operating three public markets for 10,000 securities
& Innovation these enduring principles will chart a path to
that trade nearly $200 billion in dollar volume annu-
ally. Cromwell is a strong advocate of improving
“There are no shortcuts in the most informed and efficient markets. The access to capital for small companies, supporting a
diverse ecosystem of broker-dealers, and empower-
evolution.” potential for true innovation must outshine
ing investors with information. He has testified
the false-promises of centralized control and before Congress and spoken on these and other
—Louis D. Brandeis issues at numerous industry conferences. Cromwell
complacent popularity. n
is a former Chair (2017-2018) of the FINRA Market
Regulation Committee that advises FINRA on rule-
Finally, we need a more imaginative and  Footnotes: making and trading issues.  Prior to OTC Markets,
[1]  A recent example is the NASDAQ Total Cromwell was an institutional trader and portfolio
sweeping approach to enhancing capital
Markets proposal, a slickly written marketing manager at Carr Securities Corporation. He holds an
formation. Regulatory restricions, —not piece for government mandated monopolies and OPM from Harvard Business School and received his
secondary market struture, —prevent more duopolies.    See, Nasdaq Total Markets: A Blueprint BBA from Southern Methodist University. 
for a Better Tomorrow.
companies from going public. Disclosure [2]Congressional findings of the 1975 About OTC Markets Group Inc.
drives investor protection and efficient mar- Amendments to the Securities Exchange Act of 1934
codified in Section 11A of the Exchange Act provide, OTC Markets Group Inc. (OTCQX: OTCM) oper-
kets. But we must continually find ways to
among other things, that [“i]t is in the public interest ates the OTCQX® Best Market, the OTCQB® Venture
lower the costs for issuers and empower and appropriate for the protection of investors and Market and the Pink® Open Market for 10,000 U.S.
investors with the internet’s open access to the maintenance of fair and orderly markets to assure and global securities.  Through OTC Link® ATS and
(i) economically efficient execution of securities OTC Link ECN, we connect a diverse network of
data. Small investors can keep themselves transactions broker-dealers that provide liquidity and execution
out of harm’s way if we shine a clear light (ii) fair competition among brokers and dealers, services.  We enable investors to easily trade through
among exchange markets, and between exchange the broker of their choice and empower companies
on the actions of powerful players.  To level
markets and markets other than exchange markets” to improve the quality of information available for
the playing field, investors need timely, con- (15 U.S.C. § 78k-1(a)). investors.
sistent facts on company share issuance and [3]  See, Jenny Anderson, “Nasdaq Asks SEC to
Open ‘Roach Motel’”  NYPost.com  (May 14, 2003), To learn more about how we create better informed
insider buying and selling, as well as under- available at:  https://nypost.com/2003/05/14/nasdaq- and more efficient markets, visit www.otcmarkets.com
standing of large long and short positions.  asks-sec-to-open-roach-motel/
[4] “It is in the public interest and appropriate for OTC Link ATS and OTC Link ECN are SEC regu-
The muddy plumbing of transfer agents,
the protection of investors and the maintenance of lated ATSs, operated by OTC Link LLC, member
clearing, custody, and stock loans must final- fair and orderly markets to assure . . . the availability FINRA/SIPC.
ly be unclogged through better data sharing to brokers, dealers, and investors of information
with respect to quotations for and transactions in Subscribe to the OTC Markets RSS Feed
and trusted record keeping.   The creatures securities” (15 U.S.C. § 78k-1(a)).
and structures that investors cannot see [5] “It is in the public interest and appropriate for
Note: This article is not an attempt to provide invest-
the protection of investors and the maintenance of fair
should keep regulators up at night. ment advice. The content is purely the author’s per-
and orderly markets to assure . . . the practicability of
Smaller public companies should not have sonal opinions and should not be considered advice
brokers executing investors’ orders in the best market
of any kind. Investors are advised to conduct their
to raise capital—at a significant discount and an opportunity, . . . for investors’ orders to be
own research or seek the advice of a registered invest-
executed without the participation of a dealer.”  Id.
to market pices, —through opaque private ment professional.
[6] AQR Capital Management conducted a study
offerings from unregulated intermediaries. that used live trade execution data across 21 developed
equity markets over a 19-year period, to measure the
We need to make crowdfunding regulations
real-world trading costs and price impact.  Lack of

www.stocknewsnow.com MicroCap Review Magazine 67


ACCOUNTING CORNER

Judged By the Company You Keep


Y our mother was right. If she told you
once, she told you a hundred times: “You
will be judged by the company you keep.” The
company’s ESG practices. Examples includ-
ed such things as overuse and wasting of
resources (environment issue); impacts on
that offers an important tool for companies
to check the performance and reputation of
audit firms.
company she was talking about, of course, communities, social discrimination, and The inspection process involves a team
were the weird friends with whom you were child labor (social issues); corruption and of PCAOB auditors spending several days
hanging out. Little did she know that one day bribery, and anti-competitive practices (gov- thoroughly examining the working papers of
you’d be hanging out with a different kind of ernance issues). selected audits done by an audit firm. Think
company—a publicly traded company, and Researchers found that when a company of it as auditors getting audited.
you’d be doing it from the C-suite. Still, moth- moved from 25th to 75th percentile of nega- Upon completion, a report is generated
er was right. It’s all about reputation. tive media coverage, it resulted in a 19.5% that will cite any insufficiencies found. More
A new study has found that a company’s increase in likelihood of auditor resignations serious violations may institute an enforce-
reputation has become a major factor in engag- and 4.68% increase in audit fees. ment action, loss of license, and worse. Due
ing and retaining an audit firm. Company Public companies have always been selec- to the PCAOB posting all inspection reports
misconduct that results in a public scandal and tive in choosing an audit firm, and rightly online, it is an important tool that companies
negative media coverage often involves brand so. When an audit firm fails or suffers repu- can use to periodically review the inspection
damage, investor concern, litigation, even tational damage, the company is damaged as records of their current audit firm, and one
consumer boycotts. Researchers at University well. It may involve restatement of financials they should use as part of their due diligence
of Colorado Denver, Bentley University, and and loss of investor confidence. Companies, prior to an audit engagement.
Northeastern University found that when a however, have tools to easily check the per- The research points out how client misbe-
company suffers negative media coverage the formance and reputation of an audit firm havior can adversely affect their audit firms.
damage often spills over and lands on the thanks to the Public Company Accounting Unfortunately there is no easy tool for audit
shoulders of financial auditors as well. Oversight Board (PCAOB). firms to assess whether a client company will
As reported in CU Denver Today, the The PCAOB was created as a private- become embroiled in a negative media epi-
researchers used a new dataset called RepRisk sector, nonprofit corporation by the Public sode, especially when it comes to the brave
and examined auditor response to negative Company Accounting Reform and Investor new world of ESGs.
media coverage related to Environmental, Protection Act, commonly known as The reputations of companies and their
Social and Governance (ESG) scandals. Sarbanes Oxley for short, or just SOX for audit firms have become ever so entwined.
Negative media was defined as coverage even shorter. Media coverage can provide needed and
that exposes misconduct or is critical of a Don’t let the “private-sector, nonprof- deserved exposure to misdeeds.
it” description fool you into thinking the Too often, unfortunately, that coverage
PCAOB is some warm and fuzzy group with provides more heat than light, and serves as
a Facebook page. Well actually they do have no more than an accelerant. n
a Facebook page, but they also have very
Corey Fischer, CPA, is Firm Managing Partner of
sharp teeth.
Weinberg & Company, a multi-office, PCAOB and
If this sounds a lot like the SEC, it should. CPAB-Registered firm specializing in the audit, assur-
The PCAOB is governed by a five member ance and tax needs of micro and small cap companies. 
He has more than 25 years of experience, having
board that is appointed by the SEC. Its worked with the Big 4 accounting firms, and as an
annual budget is approved by the SEC. It is SEC reporting officer for a number of NASDAQ-listed
companies.  Based in Los Angeles, he is an expert
headquartered in Washington D.C. just like
in financial reporting, SEC compliance, raising debt
the SEC, and it has about 800 employees. and equity, mergers and acquisitions and structuring
The PCAOB has four major functions accounting operations.
E-mail: coreyf@weinbergla.com or 310-601-2200.
overseeing audit firms: 1) registration, Visit www.weinbergla.com
2) inspection, 3) standard-setting and 4)
n BY COREY FISCHER, CPA
enforcement. It is the inspection function

68 MicroCap Review Magazine www.stocknewsnow.com


www.stocknewsnow.com MicroCap Review Magazine 69
RESOURCE CORNER TsX: sii

Mining Industry 2019


Majors Divesting Non-Core Projects and Pay Attention to
Silver – Q&A with Rick Rule, Sprott U.S. Holdings Inc.

I
n this Wall Street View, our host caught Robert Kraft: So we last had you on, I So in what is changing a little bit right
up with Rick Rule, President and CEO think was about September 2018 and the now, is that in addition to focusing on
of Sprott U.S. Holdings Inc. at the title of that interview was “What is Rick companies that are going to be taken over,
Sprott Natural Resource Symposium 2019 Rule doing with his money for the next 12 I’m going to focus on the companies that
in Vancouver, BC. Robert Kraft and Rick months?” So, let’s get a recap on that - how have the ability to buy castoff projects and
Rule discuss how major mining compa- did you do? beneficiate them.
nies are divesting in non-core projects and Rick Rule: Well, it’s been very difficult The second thing that we focused on
why investors should pay attention to silver. in the last 12 months not to make money were the royaltiey in the streaming com-
This is an excerpt of the interview, and we in natural resource-based businesses. You’ll panies. The best of the best businesses
invite you to watch the full interview on recall at that point in time the oil price was in natural resources and they’ve of course
our YouTube channel: www.Youtube.com/ about $45 a barrel, now its $65 a barrel, a merely gone from strength-to-strength.
SNNwire $20 a barrel increase in the oil price from The third thing I’ve looked at was explo-
a low level does wonders for the oil stocks. ration, and the exploration stocks haven’t
They’ve done well, the gold stocks have done done particularly well. They’ve done as well
well, the whole resource complex has done as the market per se, which is to say that
well, so I’ve done well, maybe not necessarily they have done okay, but they traditionally
as a consequence with my stock picking, but move late in the cycle. So we think that’s the
rather because I’ve had the wind in my sails. cheapest sector in front of us. We think that
I was interested in a few principal themes that sector probably begins to catch fire 12
with regards to that. One was mergers and to 18 months from now.
acquisitions which have continued. At that Robert Kraft: So I want to hit on the first
point in time, you probably wanted to buy point that you were talking about how that
the companies that were going to be taken some of these great entrepreneurs out there
over for good near-term gains and we’ve are now looking at some of the castoffs from
enjoyed some of those. Atlantic Gold being these majors. What’s been the reasoning
a sterling example. What’s happening now behind that? Are they just trying to really
however, is that as the first rounds of acqui- focus on their core business and letting
sitions by the majors are being digested, some of the better entrepreneurs out there
those majors are beginning to sell projects develop these projects?
which are distal to their core value thesis, Rick Rule: I think the answer to that is
that can be picked up by other people and yes. The truth is that the major mining com-
brought forward. We went through this in panies made enormous mistakes in mergers
the decade of the 90s. Great entrepreneurs and acquisitions at the beginning of the last
like Bob Quartermain with Silver Standard, decade. The management teams who did
Ross Beaty with Pan American Silver, Ross that were thanked and excused; allowed to
Beaty again with Lumina Copper, bought pursue other employment opportunities and
n ROBERT n RICK RULE
projects that were castoff by the majors and at least so far in this bull market, the senior
KRAFT, MBA SPROTT U.S.
built multi-billion dollar businesses. managers of the major mining companies
HOLDINGS

70 MicroCap Review Magazine www.stocknewsnow.com


are sticking closer to their knitting. There the silver price outpaces the gold price. Silver Robert Kraft: For the next six months
are circumstances where there are assets that is ubiquitous, but silver stocks, particularly what are some things that our audience
could be beneficiated, but they aren’t core good silver stocks are rare. when silver genu- should look for?
to the company’s focus. as a consequence of inely begins to move, the momentum money Rick Rule: In the very near term, the gold
that, they are sold off to reduce the cost of that piles into the silver stocks, Doug Casey and silver stocks have run pretty far, pretty
acquiring the better assets, 1 million or 1.5 once described it as attempting to siphon fast. My suspicion is that they need to con-
million ounce deposit may be of no conse- Hoover Dam through a garden hose. The solidate. Don’t get shaken out of this market.
quence to Barrack or Newmont, but it could move and particularly the best silver stocks You are very, very early on. People say, well,
be of enormous consequence to a $20 mil- early in the moves are truly spectacular. gold’s already moved. It moved from 1200
lion or $30 million vehicle started up by one Silver hasn’t moved. The silver stocks haven’t to 1400. The last time we had a setup like
of these serially successful mine builders. really moved. If the last four bull markets of we have now, a bull market following a long
So this is a circumstance that’s unusual. my career are any indication, when the bet- bear market was in the year 2000. the gold
It benefits everybody. There is no loser. ter quality silver stocks begin to move, those price moved over 10 years from $250 an
The major mining company doesn’t distract moves are truly ones for the record books. ounce to $1,900 an ounce. The truth is that
their focus. They raise cash for an asset that At age 66 I look forward to this. it’s going to growd fits and starts. Don’t get
won’t be developed under their steward- Robert Kraft: What would you say then is shaken out in the fits, hang on for the starts.
ship for 10 years. At the same time, a more the potential of the Black Swan event? In Think about this. The most important
nimble team that is better at extracting value other words, what is the next event, the seis- determinant, at least from my point of view
out of smaller assets has the opportunity to mic event that you will see and you’ll start to with regards to the gold price, not the gold
generate shareholder value where none was see thess (gold prices) climb up? price stock, but the gold price is faith in the
apparent before. Rick Rule: What’s lovely about natu- purchasing power of the U.S. dollar. I would
It’s important that your listeners under- ral resource-based businesses is you don’t suggest and I think that your listeners could
stand the potential upside of this, a big major need a Black Swan event. These businesses verify if they thought that the real strength
now, Goldcorp was formed as Wheaton River are very, very predictable. They’re cyclical. in the U.S. dollar in the last 10 years hasn’t
20 years ago to do precisely this: buy assets Bear markets are the authors of bull markets. been truly the strength of the U.S. economy.
that were castoff by major mining companies the bear market that we’ve been through is It’s been the weakness of other economies.
and beneficiate them. Pan American Silver, truly one for the record books. The TSX-V Gold has been doing well in foreign cur-
the same thing, Ross Beaty took that stock resource index off by 88% in nominal terms, rency terms for two years, now it’s doing
from $0.10 a share to $45 a share, building the stage has been set. well even in the face of a strong U.S. dollar.
the second largest silver mining company The second thing is that these moves are If the U.S. dollar begins to roll over like it
in the world by making something out of so extraordinary that you don’t need to buy did in 2000 then you’ll see gold truly turn on
other people’s assets. Silver Standard, Bob the most marginal names, the riskiest names. its afterburners.nyou don’t have to believe
Quartermain grew it from $0.72 cents to $45 The biggest and best companies in the world that gold is going to supplant the U.S. dol-
with the sam, business plan. nit isn’t just pre- move 300% and 400%. At the beginning of a lar. Those old gold bug arguments, gold just
cious metals. Ross Beaty again did this with bull market buy the best, not the rest. needs to lose the war less badly which is in
Lumina Copper, taking the stock from an The third thing thas it’s critical that your the process of doing. n
initial financing of $0.50- to if my memory listeners understand this. People add value
For more information about Rick Rule and Sprott
serves me well, seven dispositions totaling to resources. Buy management teams that
U.S. Holdings, please visit: www.sprottglobal.com
over $160 per share. have been serially successful. Yes, you’re
Robert Kraft: Speaking of silver, I’ve spo- going to miss a new guy or a new gal who Note:: This article  is informational in nature and
ken with a number of companies and experts hits a long ball home run, but statistically should not be construed as providing individualized
investment advice.  Investors are advised to conduct
on gold and what’s going on in the space. that doesn’t matter. The people who have their own research and due diligence or seek the
But little has been really paid attention to been successful in the past are going to be advice of a registered investment professional. Both
the Author and Ridgewood Investments disclaim
silver. Can you comment on this asset class? successful again.
any liability from the use or misuse of this informa-
Where are we at in the cycle for silver? So to recap, bull markets follow bear tion.
Rick Rule: For the speculators among markets. We had a great bear market. We’re
your listener, silver always holds a special going to have a really good bull market. Buy
fascination. Historically, when the gold pric- the best, not the rest. And with people, buy
es move, the silver prices lagged. But then the best too.

www.stocknewsnow.com MicroCap Review Magazine 71


D ATA C O R N E R nasdaQ cm: sRaX

What’s Your Privacy


Worth?
Pioneering a premier consumer and commercial solution for
the new data economy

E verything we do online creates data. Every purchase we make,


every video we watch, every friend we interact with on social
media, and every link we click on.
Service providers, devices, and apps track conversations. As the number of “things”
that information carefully because they become more instrumented, interconnected,
know it’s valuable. Data brokers deal in this and intelligent, data will grow exponentially.
mined data. They use it to create a digital And in spite of that exponential growth, no
profile of you, and that profile becomes a major solutions to the problem have gained
targetable and incredibly profitable entity. traction. According to Pew Research, 91% of
Companies want to know specific details Americans “agree” or “strongly agree” that
about each of us: our income, what property people have lost control over how personal
we own, what car we drive, our marital sta- information is collected and used.
tus, our movie preferences, what we’re aller- Seventy-five percent of people believe
gic to, and so much more. And with the new that data sharing benefits enterprises more
data economy in place, that information is than consumers. That fact may seem obvi-
all attainable and valuable for the right price. ous, but it’s important to acknowledge the
The massive amount of data our society widespread awareness and acceptance of the
produces fuels an industry that is worth problem. People know full well that these
more than $200 billion. Sure, Google and companies are benefiting immensely from
Facebook collect this data and sell it. But data sales. And even more people, 84% to be
data brokers like Oracle and Axciom are exact, want more control over the informa-
the power players: they possess billions of tion captured and used by these enterprises.
profiles on consumers around the world and But since consumers feel helpless in the face
sell it to anyone that will buy it. This infor- of massive companies, nothing has changed
mation is often personal and sensitive, and yet. Our lives are mined for information,
it’s only becoming more so. The specificity exchanged into value, and we don’t have
and volume of data is now accelerated by the any control of this exchange. Most of us feel
growing popularity of the Internet of Things like our data is already out there, so what’s
(IoT) devices. Your Apple Watch tracks your the point? It’s too late. There’s nothing to do
physical activity and vital organ health, while but sit idly by while these companies make
Chris Miglino, CEO your Amazon Alexa listens in on your daily their money. And on the other hand, digital

72 MicroCap Review Magazine www.stocknewsnow.com


Seventy-five percent of people believe that data win-win situation through and through. To
learn more about BIGtoken, visit https://
sharing benefits enterprises more than consumers. bigtoken.com. n

That fact may seem obvious, but it’s important


About Christopher Miglino
to acknowledge the widespread awareness and Christopher Miglino is CEO and Founder of SRAX.
He has spent the past 20 years working in the digital
acceptance of the problem. People know full well advertising space and has successfully launched and
sold two internet companies. Both of these compa-
nies were sold to publicly-traded companies on the
that these companies are benefiting immensely from NASDAQ. He has a detailed understanding of how
technology interacts with brands.
data sales. And even more people, 84% to be exact,
About SRAX
want more control over the information captured SRAX (NASDAQ: SRAX) is a digital marketing and
consumer data management technology company.
SRAX’s technology unlocks data to reveal brands core
and used by these enterprises. consumers and their characteristics across marketing
channels. Monetizing its data sets, SRAX is grow-
ing multiple recurring revenue streams through its
various platforms. Through the BIGtoken platform,
SRAX has developed a consumer-managed data
marketplace where people can own and earn from
marketers are engaging in an essentially slow. In the meantime, it’s time to give power their data thereby providing everyone in the Internet
unethical practice. They’re blindly enabling to the consumer. One thing we can do is start ecosystem choice, transparency, and compensation.
SRAX’s tools deliver a digital competitive advantage
the data brokers to create a non-consensual a movement to show legislators just how cru-
for brands in the CPG, automotive, investor rela-
human rights violation. cial and powerful data ownership really is. tions, luxury, and lifestyle verticals by integrating all
In the European Union, a law entitled Your data is yours, so you should be able to aspects of the advertising experience, including veri-
fied consumer participation, into one platform. For
The General Data Protection Regulation control it in one centralized location. That’s more information on SRAX, visit https://srax.com/.
(GDPR) was passed into law in 2018. It’s the what the BIGtoken app aims to be. Your
Contact
most comprehensive and far-reaching data place to integrate all of the data points you
Kirsten Chapman
privacy regulation ever passed, and it gives create online to create a verified personal LHA Investor Relations
consumers an unprecedented level of con- profile. And since your data is your property, srax@lhai.com
415-433-3777
trol. Every business that collects data must you should be empowered to sell it if you so
take measures to ensure that information please. Our parent company SRAX has been This material contains forward-looking statements. In addition, from time to
time, we or our representatives may make forward-looking statements orally or
isn’t made publicly available without explicit, in the data sales business for ten years. We’re in writing. We base these forward-looking statements on our expectations and
projections about future events, which we derive from the information cur-
informed consent. And the provider of that here to function as the intermediary between rently available to us. Such forward-looking statements relate to future events
or our future performance, including: our financial performance and projec-
data has the right to revoke this consent at you and advertisers. Our technology can col- tions; our growth in revenue and earnings; and our business prospects and
opportunities. You can identify forward-looking statements by those that are
any time. Consumers also have the right to lect and anonymize your data before selling not historical in nature, particularly those that use terminology such as “may,”
“should,” “expects,” “anticipates,” “contemplates,” “estimates,” “believes,” “plans,”
request a portable copy of the data, and the it to advertisers. It’s the same ecosystem, but “projected,” “predicts,” “potential,” or “hopes” or the negative of these or similar
terms. In evaluating these forward-looking statements, you should consider
right to have their data erased. U.S. Congress now you’re involved and you get paid for it various factors, including: our ability to change the direction of the Company;
our ability to keep pace with new technology and changing market needs; and
has yet to pass a federal regulation protect- too. You decide which advertisers can use the competitive environment of our business. These and other factors may
cause our actual results to differ materially from any forward-looking state-
ing its citizens in this way. They’ve left the your information, and you which data is ment. Forward-looking statements are only predictions. The forward-looking
events discussed in this document and other statements made from time to
task of securing data to the individual, and even available for targeting in the first place. time by us or our representatives, may not occur, and actual events and results
may differ materially and are subject to risks, uncertainties and assumptions
left major corporations mostly unregulated For advertisers, we’re providing verified about us. We are not obligated to publicly update or revise any forward-looking
statement, whether as a result of uncertainties and assumptions, the forward-
in this way. The Federal Trade Commission and opted-in data. Consumers voluntarily looking events discussed in this document and other statements made from
time to time by us or our representatives might not occur.
has stepped up recently to hold Facebook’s provide information, feeding the ecosystem
feet to the fire by fining them $5 Billion with accurate information. Advertisers can
for privacy violations, and that’s certainly deliver more accurately-targeted campaigns,
necessary. But these incidents will continue so consumers see products and services
to matriculate unless a strong, federal law that are more relevant to their needs. And
is passed. That’s ultimately the goal for data consumers are compensated for their role as
privacy advocates far and near. But it goes providers in the first place, so the exchange
without saying that the legislative process is is consensual and mutually beneficial. It’s a
The company paid consideration to SNN or its affiliates for this article.

www.stocknewsnow.com MicroCap Review Magazine 73


F E AT U R E D A R T I C L E

Awesome Aussies
“The Upside to Down Under Stocks”

T
here are certain things that is always an equation of shares times price.
Americans just don’t seem to get The Australian Securities Exchange
about their mates from Down (“ASX”) has a daily turnover of around $4.7
Under, like vegemite ( I mean, who else billion and a market capitalization of $1.5
but an Aussie would eat that stuff?), AFL trillion- it has over 2,600 listed companies.
or Aussie Rules Football (no it’s not soccer, There are 6.7 million Australian share own-
rugby or gridiron), and small cap companies ers , which might not sound like a lot, but
with billions of shares on issue (it can’t be with a population of only 24.6 million repre-
any good if it’s trading below $5 a share or sents a ratio of just over 27% of every man,
can it?). The psychology of the Australian woman, gender neutral person and child in
share market is different from the US and the country, making Australia one of the
why is that? Maybe it’s because we come highest, if not the highest, share owners per
from a long line of convicts and gamblers, capita in the world. Again, this is somewhat
and there is something very satisfying about idiosyncratic to the Australian environment.
pulling off a ten or twenty bagger; maybe it’s Most professionals and semi-professionals
because we focus more on market capitaliza- set up their own “self-managed” personal
tion than share prices. I am often bemused pension plans (or Superannuation Funds
when I speak to US investors and broker/ as we call them) rather than entrust their
dealers, they can rattle off share prices till the retirement savings to government or indus-
cows come home but no one seems to know try run pension plans, which fundamentally
how many shares are on issue and therefore just track the index. It is also in the Aussie
what the market value of the company is. It DNA to be a bit of a gambler or punter (as

n BY RICHARD REVELINS

74 MicroCap Review Magazine www.stocknewsnow.com


Dual listing is not a magical solution. If
Dual listing is not a magical solution. If the the company’s prospects are limited and the
management are poor marketers in their
company’s prospects are limited and the own jurisdiction the chances are, they will
be poor marketers in the foreign jurisdic-
management are poor marketers in their own tion. Dual listing also requires an ongoing
jurisdiction the chances are, they will be poor commitment to expend effort, time, and
resources in the US and form relationships
marketers in the foreign jurisdiction. with quality news and investor relations
groups so there is always a presence on the
ground in the right time-zone.
we would say), and a little maverick element Reading the above it might seem like So why should US investors want to buy
that doesn’t like the idea of “Big Brother” Australia is the wild west, however nothing Aussie based shares? Aussie companies, par-
making our investment decisions for us. could be further from the truth. The ASX is ticularly the ones that are dual listed in the
In the US there is a negative perception highly regulated and has some of the strongest US, offer the opportunity to invest at a much
and strong blue sky, and securities laws rules and controls in the world. Australia was earlier stage than their US counterparts.
restrictions to ward investors away from one of the first countries to adopt continuous Depending on an investors’ risk tolerance,
investing in what are often referred to as disclosure regulations which are enshrined this can result in far greater returns than
“penny stocks” … in Australia we bloody in the ASX Listing Rules and I would ven- investing in more mature, established com-
love ‘em! We like to get our hands on as ture to say that Australian offering docu- panies. The ASX is a highly regulated world
many 1 cent or 0.1 cent shares (even better) ments and prospectuses are far more useful class stock exchange so investors are able to
in well managed prospective, earlier stage and user-friendly materials than US offering rely on the announcements and financial
companies as we can and strap ourselves in documents. There are specific guidelines and information contained therein. Of course,
for the ride. Although the calculation and regulations ensuring prospectus documents Australia has its share of multi-billion-dollar
market capitalization fundamentals may be are clear and concise so that the important market cap companies but also a very large
the same, it is a lot easier to get a 1 cent stock information, particularly investment risks, concentration of well managed microcap
to 10 cents than a $1 stock to $10. Certainly, are prominently displayed upfront rather than companies which offer a hugely diverse
a lot of this has to do with the underlying buried in volumes of paper which no sane range of investment opportunities. As an
risks and stage of development of a com- person would ever consider reading. investor, it is all the easier if you can trade
pany but this is where the 10, 20 and 50 Over recent years there are more and these stocks electronically directly from the
“baggers” live. Another difference is Aussies more ASX listed companies setting up oper- US through dual listed ASX companies. n
tend to go public at a much earlier stage ations in the US or operating in sectors
Richard Revelins has worked as an international
than their US cousins. This is partially to do which have direct relevance to US and inter-
investment banker for over 30 years and specializes in
with more restricted and less sophisticated national markets. Many of these entities listed public companies. He is a co-founder of Peregrine
private equity markets as well as possibly a have elected to dual list their securities in Corporate Limited based in Australia and is also a
Managing Director at Cappello Group Limited based
higher risk tolerance by Aussie investors. By the US including the NYSE, NASDAQ and in Los Angeles, USA. He currently resides in Venice,
the time most companies in the US consider OTCQX/OTCQB. This not only gives ASX California and divides his time between the US and
Australia.
going public, the companies are substantially listed companies access to the largest capital
larger, have completed development and are market in the world, but also enables US Note: This article is not an attempt to provide invest-
usually cash flow positive. The big gains have investors to gain access to smaller cap, and ment advice. The content is purely the author’s per-
sonal opinions and should not be considered advice
already been locked in by the founders, as earlier stage investment opportunities with- of any kind. Investors are advised to conduct their
well as the original private and institutional out the burden of having to establish bank- own research or seek the advice of a registered invest-
ment professional.
investors who initially backed the company. ing and broking relationships in Australia,
The ASX allows investors access to invest- which most investors find overly onerous.
ment opportunities at a much earlier phase Once an ASX company is dual listed, all
of the development cycle and respectively announcements made to the ASX are at the
the ability to emulate similar returns to those same time made available for the US market.
enjoyed by a privileged group of founders This ensures complete transparency between
and institutions in the US. both markets.

www.stocknewsnow.com MicroCap Review Magazine 75


GA MI N G COR NER

Coloring Apps and Match-3


Games; Taking Mobile Apps
to New Levels
coloRing apps ity of the companies analyzed compete on however, is the growing presence of women
a pricing basis. There was a wider variation in mobile gaming. Exhibit 2 shows that
Despite the highly competitive landscape of when it came to the prices of the upgrades. 69% of Match-3 players are female, higher
mobile gaming, colouring apps have taken From a quality perspective, there was less than any other genre. Some companies have
a disruptive approach by innovating a tra- differentiation. The drivers of value were taken note of this demand. Candy Crush
ditional yet timeless experience, while also simply different shades of colour, as well as Saga adopted bright, colourful aesthetics
targeting an underserved group of users. The level of convenience and community engage- and a gender-neutral theme to effectively
purpose of this overview is to highlight the ment on social media. Leading apps such as appeal to women and ultimately increase
industry and more specifically, understand Colorfy or Recolor have developed a strong sales at staggering amounts.
the level of competition that is faced by the moat through a first-mover advantage and Unlike coloring apps, Match-3 games is
companies operating within this niche. scale grown over time. a multi-billion dollar market. Key play-
Middle-aged women with college degrees ers include King (Candy Crush), Playrix
are the predominant target market for maTcH-3 gamEs (Township, Gardenscapes), Jam City
colouring apps. These types of apps can be (Cookie Jam), and Rovio (Angry Birds).
deemed as high potential because female Match-3 games, also known as tile-match There has been some recent consolidation
gamers are mainly underserved. While most games are a type of video game puzzle. The in the segment with Playtika acquiring
gaming apps focus on traditional male inter- primary objective is to meet a certain crite- Seriously Digital Entertainment Oy (the
ests such as action or adventure, relatively rion that enables the tiles to disappear. They publisher of the Best Friends mobile game)
fewer accommodate the needs and interests operate on both Android and iOS platforms. for ~US$275M, and Zynga acquiring Small
of women. A particular trend that should be noted, Giant Games Oy for ~US$650M. Seriously
We estimate that the Coloring App market and Small Giant are Helsinki-based and
is in the $90-100M range in size. The key
players in the colouring app segment include
Kuuhubb (Recolor), TFG (Colorfy), AppsX
(Unicorn) and Pixite (Pigment). The major-

Exhibit 1 – Affordability vs. Value Positioning Map

Source: FMG Estimates; “Quality” refers to quality of images, User Interface (UI), and
n BY RALPH GARCEA, P.ENG, MBA
coloring experience

76 MicroCap Review Magazine www.stocknewsnow.com


Exhibit 3 – Key Players in the Match-3 Segment

Company Notable Apps Apps Monthly Apps Monthly


Downloads (M) Revs ($M)
Candy Crush Saga 20.9 $98.6
Bubble Witch Saga
Pet Rescue Saga

Township 30.1 $96.5


Homescapes
Gardenscapes
Fishdom

Toon Blast 2.4 $34.1


Toy Blast
Exhibit 2 – % of Gamers Who Are Female
Lost Jewels
by Genre
Lost Bubble
Source: HubSpot

Cookie Jam 1.5 $10.2


Genies and Gems
share similar Match-3 strategies as Kuuhubb, Juice Jam

building their own Match-3 engines and


changing the meta-game layers.
Considering how many games there are Angry Birds Pop! 1.4 $6.0
Angry Birds Match
these days in the app stores, it’s worth not- Angry Birds Blast
ing that only 20 games have made it to Fruit Nibblers
the so called “Billion Dollar Club” (games
with lifetime revenues exceeding $1 billion). Dancing Diaries Coming Soon Coming Soon
Tiles & Tales
According to PocketGamer (list) there are
three Match-3 games: Disney Tsum Tsum
(Casual, Japanese markets), Candy Crush
Saga (Casual, Worldwide) and Puzzle & Source: Sensor Tower July 2019
Dragons (Midcore RPG, Japanese markets).
However, we believe Playrix’s Gardenscapes
should be in the list too, which according to
a Gamesindustry.biz article, Gardenscapes
had made $880M by October 2018. The
article is about a year old and the game has
been steadily grossing $30M/month, which
would make it a fourth Match-3 game that
has grossed over $1B lifetime (we estimate Exhibit 4 – Global Social Media Apps Valuation using MAU
that Homescapes is pretty close to the $1B
Source: Factset, Consensus Estimates (as of August 27/19)
level also).
multiple of US$67/MAU – valuing KUU in the years, he has received top three rankings from
Brendan Woods, Greenwich, Starmine and Thomson
Valuation the C$4-5 range. n
Reuters surveys. One of Mr. Garcea’s consulting cli-
ents currently is Kuuhubb Inc. (KUU-TSXV).
About the Author
We note that KUU is trading at a significant
Note: This article is not an attempt to provide invest-
discount to its peers - both Global/Nordic Mr. Garcea co-founded Focus Merchant Group in ment advice. The content is purely the author’s per-
gaming and global social apps. Global and September 2018 and has more than 23 years experi- sonal opinions and should not be considered advice
ence in senior analyst positions at major domes- of any kind. Investors are advised to conduct their
Nordic gaming apps are trading at 2019 tic and international firms. He was a top-ranked own research or seek the advice of a registered invest-
EV/Sales of 5.0x/3.0x – valuing KUU in the research analyst, well regarded for the depth and ment professional.
breadth of knowledge he brings to bear on his cover-
C$0.75-1.25 range. Comparable global social
age of technology, gaming, and industrial companies Ralph Garcea does not own shares of Kuuhubb Inc.
apps are trading on average (excl. FB) at a across a broad range of market capitalizations. Over

www.stocknewsnow.com MicroCap Review Magazine 77


P R O F I L E D C O M PA N Y TsX-v: kuu / pink: BcdmF

kuuhubb inc.

K
uuhubb is a publicly listed compa- gloBal gaming know-How
ny focusing on mobile games and
esports. Our mobile game develop- Kuuhubb has an international team of 70+
ment and publishing division is targeting professionals in the fields of management,
the female audience with bespoke mobile finance, business development, user acquisi-
experiences. Kuuhubb´s esports is engaging tion, publishing, production, game develop-
with a rapidly growing audience of esports ment, game art, illustration, customer ser-
enthusiasts through omnichannel networks. vice, and live operations. Kuuhubb is led by
Our mission is to become a top player in co-founder and CEO Jouni Keränen, a Finn
women’s mobile gaming, while building a fluent in Mandarin Chinese and over 18
leading global esports ecosystem. years of international game and app industry
Kuuhubb´s vision is to create games and experience, with particular in-depth knowl-
apps that will have our female audience edge of the online games industry and mar-
relax, express and entertain themselves ket in China and elsewhere in Asia - which
every day. Through our games, we explore are areas of focus for KuuHubb in its busi-
new lifestyle trends that can be converted ness plans going forward.
into games and apps. In addition, Kuuhubb
offers global esports fans an unforgetta- uniQuE gRowTH sTRaTEgy
ble world-class esports experience through wiTH a sTRong poRTFolio
social media, TV and events with its Tier
Jouni Keränen, CEO one team – Cr4zy. Discover, acquire, develop, integrate, grow

78 MicroCap Review Magazine www.stocknewsnow.com


user base, monetize, and partner with us.
KuuHubb’s growth strategy enables the com-
pany to find the next billion dollar hit game
or app. A return to robust revenue growth
led by Recolor, MyHospital, and upcoming
new product launches – with titles includ-
ing: Recolor by Numbers, Incolour, Dancing
Diaries, and Tiles & Tales.
In recent years, the mobile gaming mar-
ket has seen the rise of colouring apps. The
rationale for these apps is that they provide
the same sense of stress-relief and relaxation
as their physical book counterparts, but in
an easily accessible fashion. We estimate the
market size to be in the $90-100M range,
with the key players including Kuuhubb
(Recolor), TFG (Colorfy), AppsX (Unicorn)
and Pixite (Pigment).
Match-3 games, also known as tile-match
games, are a type of video game puzzle.
The primary objective is to meet a certain
criterion that enables the tiles to disappear.
Unlike the coloring app segment,
Match-3 is a multi-billion dollar market.
Key players include King (Candy Crush),
Playrix (Gardenscapes), Jam City (Cookie
Jam), and Rovio (Angry Birds).

Are you Cr4zy for eSports? There is a handful of established esports • Media reach of 1.5M+ followers; com-
brands and those are well funded or co- biningnorganizations, players and our
owned by athletes, billionaires or celebrities. influencer content creators
Of the US$234M in investments made to • 400K+ hours of produced content
team organizations in the last two years, over watched by our fans and followers. n
50% has gone to the top 10, and are reaching
In addition, Kuuhubb has invested in a 14x revenue valuations. www.kuuhubb.com
Counter-Strike: Global Offensive (CS:GO)
This material contains forward-looking statements. In addition, from time to
esports franchise called Cr4zy (@gocr4zy). Cr4zy at a glance: time, we or our representatives may make forward-looking statements orally or
in writing. We base these forward-looking statements on our expectations and
esports is a high growth, high barrier to projections about future events, which we derive from the information cur-
rently available to us. Such forward-looking statements relate to future events
entry industry. Over US$4.5B was invest- Significant portion of team valuations are or our future performance, including: our financial performance and projec-
tions; our growth in revenue and earnings; and our business prospects and
ed through ~ 70 deals in 2018. According based on world ranking. Cr4zy has hit the opportunities. You can identify forward-looking statements by those that are
not historical in nature, particularly those that use terminology such as “may,”
to PitchBook, a handful of startups have Top #14 out of 700+ CS:GO teams in the “should,” “expects,” “anticipates,” “contemplates,” “estimates,” “believes,” “plans,”
“projected,” “predicts,” “potential,” or “hopes” or the negative of these or similar
already raised a total of $65 million in VC world. Participated in 75 esport tournaments terms. In evaluating these forward-looking statements, you should consider
various factors, including: our ability to change the direction of the Company;
backing this year, including a $10.8 million in 2018-19 our ability to keep pace with new technology and changing market needs; and
the competitive environment of our business. These and other factors may cause
financing for ReKTGlobal, a provider of • UML League Champion, Dreamhack our actual results to differ materially from any forward-looking statement.
Forward-looking statements are only predictions. The forward-looking events
esports infrastructure services. The essen- runner-up discussed in this document and other statements made from time to time by us
or our representatives, may not occur, and actual events and results may differ
tial value of the eSports industry is the core • 2019 CS:GO Major participant in Berlin; materially and are subject to risks, uncertainties and assumptions about us. We
are not obligated to publicly update or revise any forward-looking statement,
demographics – including a global fan base Cr4zy has qualified to the Legends stage whether as a result of uncertainties and assumptions, the forward-looking
events discussed in this document and other statements made from time to time
of ~380M in 2018, with 37% males aged 21 through the Challengers stage (guaran- by us or our representatives might not occur.

to 35, and 16% females aged 21 to 35. teeing a Top 16 finish)


The company paid consideration to SNN or its affiliates for this article.

www.stocknewsnow.com MicroCap Review Magazine 79


P R O F I L E D C O M PA N Y asX: knm / oTcQB: knEoF

kneomedia limited
K
neoMedia Limited (ASX: KNM, ized story- based lessons and education games
OTCQB: KNEOF) is a world class that are highly engaging and provide students
publisher of online education and with new ways to practice and master key
learning programs for students of all aca- concepts and skills. The programs are sold
demic abilities. Delivering though their on a Business-to-Schools basis via a per Seat
SaaS education portal, KneoWorld.com, License, with each Seat typically selling for
their program of Story-based Lessons and US$50.00 for each student for a 12-mnoth
Education Games are making a significant period.
impact to help bridge the achievement gap The Company has three revenue
across many socio-economic groups in both streams:1.“the Connect all Kids” education
general ed and special needs school settings. initiative with the National Association for the
The evidenced-based programs are globally Advancement of Colored People (NAACP),
recognized and educator validated and with Dell Technologies, and KneoWorld which
the commencement of the current US school is now generating sales in New York City 2.
year, KNM has already announced the sale of State, District or County-wide deployments
approximately 9,500 new seat licenses in the funded typically by education departments
past two months in the US alone ( New York 3. Direct-to-school sales where the technol-
City and Florida) ; as well as its first significant ogy is sold on a school-by-school basis.
license seat sales in the United Kingdom. In KNM recently had its shares approved for
early September KNM announced a 500 seat trading on the OTCQB market under the
license order to Florida A & M University stock ticker: KNEOF. n
Development Research School, which poten-
Please visit the company’s website for more informa-
tially paves the way for a statewide rollout. In
tion: www.kneomedia.com
a subsequent announcement dated September
17, KNM announced a 2,000 seat license to This material contains forward-looking statements. In addition, from time to
time, we or our representatives may make forward-looking statements orally or
“general education schools” in the Borough in writing. We base these forward-looking statements on our expectations and
projections about future events, which we derive from the information cur-
of New York City. This system encompass- rently available to us. Such forward-looking statements relate to future events
or our future performance, including: our financial performance and projec-
es 1.25 million students in 2,300 schools in tions; our growth in revenue and earnings; and our business prospects and
opportunities. You can identify forward-looking statements by those that are
NYC’s 5 Boroughs alone. US-wide there are not historical in nature, particularly those that use terminology such as “may,”
“should,” “expects,” “anticipates,” “contemplates,” “estimates,” “believes,” “plans,”
approximately 23 million elementary students “projected,” “predicts,” “potential,” or “hopes” or the negative of these or similar
terms. In evaluating these forward-looking statements, you should consider
who can potential participate and benefit various factors, including: our ability to change the direction of the Company;
our ability to keep pace with new technology and changing market needs; and
from KneoWorld’s “Connect All Kids” edu- the competitive environment of our business. These and other factors may
cause our actual results to differ materially from any forward-looking state-
cation program pioneered by the National ment. Forward-looking statements are only predictions. The forward-looking
events discussed in this document and other statements made from time to
Association for the Advancement of Colored time by us or our representatives, may not occur, and actual events and results
may differ materially and are subject to risks, uncertainties and assumptions
People (“NAACP”), Dell Technologies and about us. We are not obligated to publicly update or revise any forward-looking
statement, whether as a result of uncertainties and assumptions, the forward-
KneoWorld. With the initial acceptance of the looking events discussed in this document and other statements made from
time to time by us or our representatives might not occur.
KneoWorld program into the general educa-
tion space, this creates further market oppor-
tunities for seat licenses into the general educa-
tion sector.
The Company has operations in 4 conti-
nents, principally in the US, has successfully
James Kellett, Executive Chairman developed a sophisticated program of custom- SNN did not receive any compensation for the publication of this profile.

80 MicroCap Review Magazine www.stocknewsnow.com


www.stocknewsnow.com MicroCap Review Magazine 81
FEATURED ARTICLE

A Case Study
Using SEC Filing Information Arbitrage to Protect Your Portfolio

M
icrocap companies are going …which is why we continue to monitor
to start reporting third quarter TAYD.
earnings soon. Earnings season The company manufactures and sells
is a great time for investors, especially begin- industrial structural devices to protect build-
ners, to use Information Arbitrage (InfoArb) ings and equipment from environmental
to profit or avoid loss. Even though I consid- elements.
er myself to be more of longer-term investor, “The Company was incorporated in the
I don’t mind putting on short-term trades State of New York on July 22, 1955 and is
when I come across stocks that are going up engaged in the design, development, manu-
or down based on misinformation. During facture, and marketing of shock absorp-
the 2019 second quarter earnings period, I tion, rate control, and energy storage
wrote a case study highlighting $OESX and devices for use in various types of machin-
how beginner investors could have earned ery, equipment, and structures. In addi-
swing trading profits by exploiting informa- tion to manufacturing and selling exist-
tion gaps between the company’s earnings, ing product lines, the Company continues
press releases, and related conference calls. to develop new and advanced technolo-
In this article, I’m going to talk about how gy products. The Company manufactures
traders could have used SEC Filing InfoArb and sells a single group of very similar
during the 2019 second quarter earnings products that have many different applica-
season to avoid entering into a suboptimal tions for customers. These similar prod-
short-term swing trade and how longer-term ucts are included in one of eight categories:
investors could have also gained insight into
the neat-term growth prospects of the target • Seismic Dampers - Designed to mitigate
company. the effects of earthquake tremors on
structures, and represent a substantial
TaRgET company – TayloR part of the business of the Company
dEvicEs • Fluidicshoks® - Small, extremely com-
pact shock absorbers for primary use in
$TAYD Is a company that we have followed the defense, aerospace, and commercial
for a long time. Overall, the stock has been industry.
good to us on two occasions… • Crane and Industrial Buffers - larger ver-
sions of the Fluidicshoks® for industrial
• Shares rose as much as 75% within a year application on cranes, ships, container
after a Call to Action Alert was issued ships, railroad cars, truck docks, ladle
to GeoInvesting Premium Members in and ingot cars, ore trolleys, and car stops.
September 2011. See more about Call to • Self-Adjusting Shock Absorbers -
Actions here. Automatically adjust to different impact
• Shares rose as much as 36% within a year conditions, and are designed for high
after a Call to Action Alert was issued cycle application primarily in heavy
to GeoInvesting Premium Members in industry.
n BY MAJ SOUEIDAN
October 2015. • Liquid Die Springs - Component parts

82 MicroCap Review Magazine www.stocknewsnow.com


Sales:
• An EPS increase of 462% to $0.73

So, the year numbers looked great, but we


still wanted to know how the company fared
for its fourth quarter. Quarterly SEC filings
will highlight a company’s income statement
for the current quarter, as well as cumula-
tively. For example, a third quarter filing
will show the income statement for the third
quarter and nine months. But 10Ks, which
summarize annual financial results, will nor-
EPS: mally not break out the fourth quarter.
In order to calculate Q4 financial results
we subtracted the company’s 2019 nine-
month sales and EPS from its year end num-
bers which also yielded impressive results:

• Sales Increased 41% to $9.0 million


• EPS Increased 600% to $0.28

We almost jumped on the stock heading


into the close. Our initial thought was to
buy the stock before the related press release
crossed the news wires. However, we knew
of machinery and equipment used in the the SEC before it issues a related press that TAYD reports detailed backlog informa-
manufacture of tools and dies release. This gives us time to read the filings tion in its SEC financial filings and wanted
• Vibration Dampers - Used primarily by before other investors who do not know this to glance over them. After continuing to
the aerospace and defense industries to or who do not apply SEC filing analysis in read the 10K, we noticed that the yearend
control the response of electronics and their stock research process. (On a side note, backlog numbers did not look too favorable.
optical systems subjected to air, ship, or I also like to keep a journal of companies Included in the filings:
spacecraft vibration that omit key information from quarterly 2019 vs 2018 10K backlog verbiage:
• Machined Springs and Custom Actuators earnings press releases.)
- Used primarily for aerospace appli- So for example, if the company reported “At May 31, 2019, we had 153 open sales
cations that require custom features great numbers, we might be able to buy some orders in our backlog with a total sales
that are not possible with conventional cheap stock ahead of the market. value is $13.3 million. $6.7 million of the
wound coil springs. These actuators are This seemed to be the case when TAYD current backlog is on Projects already in
used for special military and aerospace filed its FY 2019 10K, 12 minutes before the progress.”
applications.” market closed on Friday, August 2, 2019,
but issued no corresponding press release. “At May 31, 2018, we had 121 open sales
However, one of the issues investors have TAYD’s fiscal year ends in May 31. Here is orders in our backlog with a total sales
to contend with is that the company’s annu- the headline alert we saw: value of $23.1 million. $8.8 million of the
al/quarterly revenue and EPS performance The stock closed the day up 40 cents to $23.1 million sales order backlog at May
can be lumpy. $10.98 31, 2018 was in progress at that date.”
Furthermore, depending on the backlog Per the 10K, for the year ended May 31,
mix, margins can be quite volatile. 2019 TAYD reported: So, my first moment of pause came when
The TAYD case study is very simple. I noticed that the year over year May 31
Because we are familiar with the company, • A sales increase of 38% to $33.6 million backlog was substantially lower. However, I
we know that the company often files its
quarterly and annual financial reports with
Source: Reuters

www.stocknewsnow.com MicroCap Review Magazine 83


also wanted to know how the Q4 May 31, “FY20 Q1 sales are down from last year’s ABOUT MAJ SOUEIDAN
I lead the GeoInvesting Team on a daily basis to
2019 backlog compared sequentially to Q3, level due primarily to a dip in sales to our increase build a healthy investment opportunity
Q2 and Q1. After quickly heading over to the aerospace/defense customers resulting from pipeline and heighten GeoInvesting’s awareness in
the financial market. I stress the concept of “informa-
related quarterly filings I found that: natural delivery cycle gaps in the production
tion arbitrage” in an era where information overload
At that end of Q3 the Company had a schedules of the mature platforms/products has actually made it more difficult for investors to
backlog of 120 open sales orders, with a total that we support,” stated Tim Sopko, CEO. locate profitable information. An arbitrage exists
when a disconnect between stock prices and available
sales value of $15.9 million. He continued, “Our FY20 Q1 backlog of public information on a company is noticeable, and
At that end of Q2 the Company had a $18,300,00, which is up 38% from the monetarily worth pursuing. 
backlog of 130 orders with a total sales value $13,300,000 at the end of the prior year,
www.GeoInvesting.com
of $18.0 million. includes recently received sales orders from
At that end of Q1, the Company had a our aerospace/defense customers that we Note: This article is not an attempt to provide invest-
ment advice. The content is purely the author’s per-
backlog 118 orders, with a total sales value expect to positively flatter future sales the sonal opinions and should not be considered advice
of $22.6 million. remainder of this fiscal year.” He con- of any kind. Investors are advised to conduct their
own research or seek the advice of a registered invest-
On the negative side, we had two things to cluded, “Our focus on lean initiatives to
ment professional.
consider. First, backlog has been consistently reduce lead times while realizing efficiencies
falling and second, the value of the backlog continues and is expected to help us achieve Maj Soueidan does not own common shares of
$TAYD, and owns a small position of common shares
per order has been falling and, as of May 31 our goal of profitable growth this year.” of $OESX.
2019, experienced a steep decline. However, it failed to mention that the Q1
year over year backlog was down from $22.6
Backlog Orders Value million.
of each “At  August 31, 2018, the Company had
order
118 open sales orders in its backlog with a
total sales value of $22.6 million. At August
Q4 2019 $13.3M 153 $87K 31, 2019, the Company has slightly more
Q3 2019 $15.9 120 $133K open sales orders in its backlog (124 orders),
Q2 2019 $18.0 130 $138K and the total sales value is $18.3 million.”
Q1 2019 $22.6 118 $192K  On the positive side, even though the per
Q4 2018 $23.1M 121 $190K unit value of orders of $148 thousand in the
Q1 2020 backlog is less than Q1 2019 of $192
We obviously did not enter TAYD for a thousand, it’s up nicely, sequentially, from
trade. The press release eventually hit at the last 3 quarters. Also, man-
4:23 PM, after the market closed on Friday. agement seems to be saying that it expects
Interestingly, it did not mention any backlog sales to rise for the remainder of the year.
information, which was out of the norm So, since I have not spoken with them in sev-
for the company. The stock did eventually eral years, I might call management to learn
go on to reach $11.45 on Monday, perhaps more about what is going on at the company
buoyed by investors who did not read the and how margins are faring.
10K. However, shares never ran much past I didn’t create this case study to put down
that price. TAYD. It was intended to make a point that
Our research, in the short term, was vali- traders, momentum investors, and longer-
dated when TAYD reported fiscal Q1 2020 term investors should not take press releases
financial results on September 26, 2019: at face value and that SEC filings should be
part of your process for parsing out informa-
• Sales decreased 22% to $5.7 million tion. If you are not reading them, someone
• EPS decreased 53% to $0.10 else out there is, gaining an investment edge
over you. n
Shares are still sitting around $11.00. This
time, management did reference backlog in
the related press release:

84 MicroCap Review Magazine www.stocknewsnow.com


EVER WONDER
WHERE THE PEOPLE
WITH ALL THE ANSWERS,
GET ALL THE ANSWERS?

Ask MARCUM

www.stocknewsnow.com
marcumllp.com
MicroCap Review Magazine 85
F E AT UR E D A RT ICL E

Give it Away - The Million


You Never Made You Are a Product
S
ocial media websites, agencies and accounts and compromised the phone num- as its foundation and goes live on January
brands want more of your private bers of 500 million subscribers. These types 1, 2020, grants Californians the right, at
data because you are their product. of breaches are one catalyst that prompt- any time, to direct a business not to sell the
In exchange for free access to websites (like ed the European Union to implement the consumer’s personal information. Businesses
social media), we provide (often voluntarily) General Data Protection Regulation (GDPR) cannot deny goods or services to consumers
details about who we are, where we are, apps regulation in May 2018 to protect the data who have made such requests.
we use, Internet pages we visit … You get and privacy of citizens. Any organization But the bigger problem for companies
the point. Companies collect your data and breaching GDPR can be fined up to the with U.S. operations is many states are in the
create a profile about you, which is packaged greater of 4% of annual global turnover or process of enacting GDPR-like legislation,
and resold by companies like Oracle. €20 million. These fines aren’t onerous for including: Alabama, Arizona, Colorado,
These companies monetize your personal larger, non-compliant firms, leading us to Iowa, Louisiana, Nebraska, New York,
data and you get squat. Worse, we know that believe that the bigger reason for GDPR is Oregon, South Carolina, South Dakota,
many companies aren’t good stewards of our to inform consumers about how companies Vermont, and Virginia. An online survey
personal information. Your data is circulat- are collecting, using and monetizing their published by TrustArc in March 2019 found
ing around the Internet and stored in data personal data. only 14% of companies were CCPA com-
centers waiting to be hacked. pliant. With potentially 50 different data
TakE iT Back! privacy regulations, companies operating in
consumER pRivacy is the U.S. that handle personal data are facing
paRamounT, BuT knowing Although the U.S. doesn’t have a national a logistical nightmare.
youR daTa’s woRTH is moRE law like GDPR, the California Consumer
impoRTanT Privacy Act, (CCPA), which used GDPR don’T woRRy BE Happy

Data breaches are a regular occurrence. The


Yahoo! attack in 2013 impacted 3 billion user

n BY SEAN PEASGOOD

86 MicroCap Review Magazine www.stocknewsnow.com


banks and even charities are using and/or
selling personal data. What many people
may not know is that many brands sell the much are you getting? We’d bet nothing.
data they collect to data aggregators known
as “data brokers”. The ONLY Way to Invest in
Data brokers track and collect personal Consumer Data Privacy
information from multiple sources to resell.
Companies are rightfully spooked about laws They collect your data from your online Freckle (TSXV:FRKL), a Sophic Capital
regarding personal data rights. Several firms habits, location, surveys, loyalty programs, Client, is the only company that adheres
stopped doing business in Europe because and even your public records. They then to consumer data privacy regulations like
of GDPR including California’s Drawbridge, use this data to create profiles and sell lists CCPA and GDPR. Freckle accomplishes
Factual and Verve, and we haven’t heard how of profiles that match the targeted markets this through its Killi application, where
these firms plan to comply with CCPA. Keep of brands, so that brands know who to send users select what personal information they
the Internet Free, an Internet Association advertisements. choose to monetize. Brands, platforms and
project (see members here), has suggested All of this is legal and it’s a big business, companies pay users to complete surveys.
that many free, advertising supported web- currently worth $76 billion growing to an Users can change their privacy preferences at
sites could start charging users because of estimated $200 billion by 2022. any time; more personal information results
CCPA. This may be a scare tactic to get con- A Vermont law requiring data brokers to in more money earned, while less personal
sumers to back down from opting out of per- register with the State unveiled at least 121 information translates to less money. This
sonal data monetization. Or, maybe they are industry players. Privately held Acxiom is user control over personal data is effectively
scared and trying to get CCPA amendments one of the largest data brokers, and collects CCPA-compliant opt-in. Should the Killi
because they know the Act will disrupt their data from over 200 third-party sources that user choose to forego future monetization
businesses. supply personal information. of their data and delete the application, all
personal data used by the app is also deleted.
Mining and Selling Your Your Data’s Worth to This is the ONLY way to invest in consumer
Personal Data Digital Advertisers data privacy. n
So stop giving your personal data away –
Facebook and Google aren’t the only compa- Our lives constantly change. Today, we’ll download Killi and start making the million
nies collecting and selling our personal data. buy a new gadget online; tomorrow, we’ll you never made from your personal data.
For example, CVS allows its pharmacy cus- search for a local plumber because a pipe
www.sophiccapital.com
tomers to earn up to $50 on prescription burst at our rental home. This changes our
refills in exchange for waiving some health value to data brokers because our changing Disclosures
care privacy rights. Grocery store chains, lives introduce new data that appeals to new Sean Peasgood, Sophic Capital, and Sophic Capital’s
employees own common shares of Freckle Ltd.
brands. More brand appeal means more
money for both the data brokers and the Here is a link to Sophic Capital Disclosures and
Disclaimers: http://sophiccapital.com/disclaimers/
websites getting paid by brands to advertise
to us. Note: This article is not an attempt to provide invest-
Data Makes Possible, by Western Digital, ment advice. The content is purely the author’s per-
sonal opinions and should not be considered advice
estimated the worth of personal data to of any kind. Investors are advised to conduct their
brands by dividing the total U.S. digital own research or seek the advice of a registered invest-
ment professional.
advertising spending by the number of
Americans accessing the Internet. The 2018
estimate was $341.08 per American. How

www.stocknewsnow.com MicroCap Review Magazine 87


88 MicroCap Review Magazine www.stocknewsnow.com
www.stocknewsnow.com MicroCap Review Magazine 89
F E AT UR E D A RT ICL E

When To Sell
8 Reasons To Put A
Stock Up For Sale

D
o you ever have difficulty knowing Several situations can arise where it is nec- but are currently experiencing difficulties. A
when to sell a stock? If you’re like essary to consider selling a stock. Here are the company that doesn’t generate profits must
most investors, you probably find it eight most common I’ve encountered over have a solid balance sheet with enough cash
harder to sell than to buy. Resources abound the years: to keep operating. It must be able to pay its
on strategies and criteria for buying stocks, but employees and suppliers, but also to pay off
what about selling? Are there strategies at all? 1. sEll To invEsT in a BETTER its debt.
‘’Our favorite holding period is forever.’’ oppoRTuniTy A company that doesn’t have enough cash
- Warren Buffett to continue to operate for at least the next
So Buffett never sells? He also states that Finding a better opportunity is my favorite twelve months presents significant risks. It
if you are not comfortable owning a business reason to sell. When I look at my portfolio, may have to raise additional capital through
for ten years, you shouldn’t own it for ten I not only consider the quality of the com- the issuance of new shares or debt. In both
minutes. Essentially, what Buffett wants us panies that are part of it, but I also compare cases, it is hard to predict at what terms it
to understand is that by buying high-quality them with my watchlist (those I don’t own will be able to raise these funds. In my expe-
companies only, an investor can patiently wait yet). Each stock in my portfolio competes rience, those who benefit most from these
forever as they execute successfully and their with those on my watchlist and needs to situations are the investors who come to the
value compounds. deserve its place. rescue of the distressed company, not the
Although I don’t intend to question Mr. Sometimes I find new opportunities that existing shareholders.
Buffett’s teachings, I think it is necessary to are just too attractive not to include them in If the balance sheet presents a significant
make a distinction when it comes to microcaps. my portfolio. If I do not have enough cash risk of refinancing, it can be wiser to sell
Because microcaps are typically start-up com- available, I then have to sell the least attractive and wait for the problem to be solved. The
panies or they operate in very specific market stock I own to make room for the newcomer. two main advantages are that you can judge
niches, their situation can change quickly, and whether you like the solution, and you can be
you need to monitor them properly. 2. sEll iF Financial part of the solution by reinvesting directly in
‘’ Small microcaps evolve in different ways, REsulTs don’T mEET youR the financing if you like the terms.
and a lot of the ways aren’t good ways. You EXpEcTaTions
can’t buy and forget, you need to buy and 4. sEll iF THE naTuRE oF THE
verify, and the smaller the company the more When investing in a company, it is generally company cHangEs
often you verify.’’ a good idea to estimate its intrinsic value first
- Ian Cassel, Buy And Verify (at least if you are a proponent of fundamen- Sometimes you invest in a company because
tal analysis). This process implies estimating you see potential in the business model, a
the future cash flows the company will be able specific product or service, the CEO with a
to generate through its operations. track record of success, or a host of other
If a company delivers results that are below reasons.
your expectations quarter after quarter, you And sometimes, things change drastically
must question your investment thesis. Are the after that. The business model turns out to
prospects still as attractive as you originally be a failure, and the company pivots to a
thought they were? Is the risk/reward ratio new strategy. They sell the division in which
still favorable? you saw great promises. The successful CEO
accepts a better job offer elsewhere. The
3. sEll iF THE BalancE sHEET company makes a major acquisition in a sec-
is Too Risky tor you don’t know well.
If the business changes and no longer fits
Sometimes you may invest in companies that your criteria, it might be time to move on.
n BY MATHIEU MARTIN are not profitable yet or that historically were,

90 MicroCap Review Magazine www.stocknewsnow.com


5. Sell If Management Is a shareholder of the company, would you be
Dishonest buying it today, at the current price? If not, ask
yourself why the stock is in your portfolio then.
Life is too short to invest with management In the end, the reasons for selling are often
teams you can’t trust. There are thousands of reasons not to buy in the first place. If you
public companies in North America. Do not have a solid investment process with clearly
waste your time with the bad apples. defined criteria when you buy, these criteria
NASDAQ during the dot-com bubble
Each person has his level of tolerance and should also guide you through the selling
his definition of dishonesty. I don’t invest in a traditional valuation metrics. process. Monitor the red flags continuously
management team that: An expensive valuation is not necessarily a for the companies you own.
• Makes false promises and does not deliver reason to sell in itself. That said, sometimes If you ever have a chance to find an out-
what it said a stock will get overvalued because investors standing company, in good financial health,
• Uses creative accounting to manipulate push their positive sentiment about it to the with a solid long-term potential, a product
the financial statements extreme. You have to be careful and be able or service that is easy to understand, an
• Has a history of theft or fraud to recognize when there are no more skeptics honest and competent management team,
• Attempts to misrepresent past qualifica- about a company. When a stock seems over- and its valuation never gets too crazy, then
tions and accomplishments valued, and everyone agrees it will keep going you might have the opportunity to make a
• Discloses material non-public informa- up, be careful. Warren Buffett of yourself and hold it forever.
tion to certain investors For proponents of technical analysis, a Otherwise, I recommend you keep your eyes
stock chart that climbs in a parabolic way is open for reasons to sell! n
6. Sell If Management usually a sign that the positive sentiment has
At age 24, having a decent amount of savings, Mathieu
Does Not Act In Your Best become extreme. Again, be careful because was looking for an investment strategy that would
Interests the subsequent fall is often brutal. allow him to stand out and grow his portfolio in a
meaningful way. It didn’t take long for him to discover
the microcap sector. Being a self-learner, he spent the
One of my important criteria when buying a 8. Sell If You Don’t Know next five years reading books about investing, taking
online classes, attending conferences and testing his
stock is that the management team’s interests How To Value The Company
ideas on the ground by putting his own money at risk.
are aligned with mine. That is, they have a Properly Five years later, he has attended more than twenty
significant equity stake in the company, and investing conferences, met over three hundred com-
pany executives and wrote over fifty blog posts on his
their salary is reasonable. When the opposite Sometimes, you may end up owning a stock blog Espace MicroCaps. He now acts as a consultant
happens, it may be a reason to sell. and having no idea how to value it. Maybe and analyst for the Rivemont MicroCap Fund, which
is dedicated to finding the smallest and most undis-
Therefore, I am not fond of extremely high you bought it because you thought you
covered growth companies in North America.
salaries (compared to similar companies in understood the business, but you realize it Mathieu believes that every person has the potential
the same sector), exaggerated bonuses, and was a mistake. Maybe you just followed a to invest successfully in microcaps if they really commit
to it. His mission is to help people educate themselves,
the aggressive use of stock options, among friend’s advice. Maybe you wanted to take improve their skills and grow their savings.
other things. I need to feel that the sharehold- advantage of an uptrend in a sector you are
Espace MicroCaps - Bio
ers will ultimately benefit from the success of unfamiliar with (cryptocurrencies/cannabis/
Espace MicroCaps is a community of microcap inves-
the company, not management alone through natural resources anyone?). tors with a growth-value philosophy. Through in-
sky-high compensation. Whatever the reason, it is important to know depth research and due diligence, they aim to put their
growth capital at work for the most promising public
what you own and to understand it properly at firms in Quebec and Canada with a long-term invest-
7. Sell If The Stock Is all times. If you don’t, how will you make good ment horizon.
To help its members improve their investment
Overvalued buying or selling decisions about the stock in
knowledge and skills, expand their network and grow
the future? If you have no idea when or why to their portfolio, Espace MicroCaps publishes educa-
Be very careful with this one. There are sell, the best time might be now. tional articles on microcap investing, organizes net-
working events in Montreal and shares fundamental
probably some good reasons why a stock research about exceptional microcap companies.
appears overvalued: a track record of success, Would You Be A Buyer
a solid long-term potential, strong competi- Today? Note: This article is not an attempt to provide invest-
ment advice. The content is purely the author’s per-
tive advantages, etc. Essentially, high-quality sonal opinions and should not be considered advice
companies have the potential to appear very This question can help you to put things in of any kind. Investors are advised to conduct their
own research or seek the advice of a registered invest-
expensive from time to time when looking at perspective. Assuming you were not already
ment professional.

www.stocknewsnow.com MicroCap Review Magazine 91


ASIA CORNER

Hong Kong’s Summer of Discontent


Overshadows Growth Stocks
H
ong Kong’s summer of discontent tions’ vital interests as well as hundreds of Looking beyond the geopolitical and local
is attracting headlines throughout thousands of investors. tensions, some positive news can be found in
the world feeding into a range of Still, news of the events in Hong Kong the market. In August, net inflow into Hong
misinformation about the future of Hong has stirred up a bit of an apocalyptic senti- Kong stocks through the southbound Stock
Kong. While political uncertainty is high, ment in the market. Caught between the Connect was the third largest recorded at
it is also certain that China still needs Hong U.S.-China trade war and fourteen weeks of US$7.5 billion, as mainland investors were
Kong. Hong Kong has a special role of con- riots, the Hang Seng Index has fallen over 14 buying shares listed in Hong Kong trading
necting the world to China making it an percent from its April highs, for a year-to- at attractive discounts compared to their
irreplaceable asset to the PRC. As a pure date return of around only 3 percent. The China-listed counterparts. According to
financial center ranking among the top three deteriorating public order has also taken a the Hang Seng Stock Connect China AH
global financial hubs, Hong Kong is an entry toll on the city’s IPOs. Expectations were Premium Index, which tracks the average
point for global investors to buy Chinese high for another active year of IPOs with price difference of China-listed A shares
assets and for Chinese to borrow U.S. domi- PwC predicting funds raised in 2019 would over Hong Kong-listed H shares for the
nated funds. Since the handover in 1997, be greater than last year. In the first half of most liquid Chinese dual listed companies,
Hong Kong has developed one of the world’s the year, 84 new companies listed in Hong in August, A shares were priced more than
most active and liquid security markets with Kong raising HK$8.9 billion for an increase 30 per cent above their H-share listed coun-
free flow of capital, western-style laws, inde- of 35 percent year on year, according to terparts.
pendent regulatory environment, unfettered PwC.  Yet, weeks of protest have pushed IPO A deeper analysis of the Hong Kong mar-
access to information, and favorable tax valuations lower and many companies have ket shows trade-war proof industries such as
policies on capital gains and dividends. It either withdrawn their IPOs or are postpon- healthcare and domestic consumption are
also serves a critical role in China’s financial ing until stability returns to the city. In July, outperforming the broader market. China’s
opening up as the world’s largest offshore Anheuser Busch In Bev’s Beverage Asia pharmaceutical market, driven by increasing
RMB business center, with stock and bond Unit withdrew its plans for a Hong Kong domestic consumption, policy support and
connects between Hong Kong, Shanghai and IPO to raise $9.8 billion stating prevailing reform, is projected to grow to US$393 billion
Shenzhen. Any disruptive moves or attempts market conditions as one of the factors in 2025 from US$226 billion in 2017, accord-
to damage the financial sector in Hong Kong for the decision. Additionally, China’s big- ing to Citibank. Top performing pharmaceu-
would jeopardize global financial institu- gest e-commerce company, Alibaba Group tical companies on the Hong Kong Exchange
Holding has delayed plans to raise up to include: Sino Biopharmaceutical (1177:HK),
US$15 billion in Hong Kong amid growing a conglomerate targeting cardiovascular
political unrest. Only US$10.8 billion has and hepatitis, which is up over 105 percent
been raised through IPOs as of the end of on strong organic growth and the acquisi-
August, putting Hong Kong in fourth place tion of Beijing Tide, a Chinese company
among global exchanges, down significantly with a strong cardiovascular and pain treat-
from the US$24.3 billion raised by the same ment pipeline and; CSPC Pharmaceutical
time last year. Despite the current bleak sit- (1093HK) which up around 35 percent with
uation, Hong Kong will maintain its appeal a top line growth dominated by the sales of
as an attractive IPO destination. Especially, its oncology drug portfolio.
for companies that have business in Greater China’s domestic consumer goods sector
China whose listing in Hong Kong is not just with its limited exposure to the US markets
about raising funds but about also raising and support by the Chinese government’s
n BY LESLIE RICHARDSON
their profiles in the region. push to boost domestic spending is another

92 MicroCap Review Magazine www.stocknewsnow.com


Beer, Litres (Mn)

f = Fitch Solutions forecast. Source: National Sources, Fitch


Solutions

safe haven for investors. As the country pur- Top Hong Kong growth large millennial population who has a more
sues its transition to become a consumption- companies in 2019 active lifestyle than previous generations and
driven economy, the PRC is implementing a embraces the athleisure trend. ANTA Sports
consumption stimulus plan. In addition to As China’s resident disposable income (2020:HK) is up over 65 percent YTD while Li
boosting urban consumption by promoting increases, highly successful premium life- Ning (2331:HK), China’s premier sports brand
the night economy with cinemas, museums, style and food and beverage companies are founded by the former Olympic gymnast,
gyms, and tourist sites open longer hours, swiftly emerging. Catering to the middle has taken off this year with over 155 percent
China is undergoing a massive renovation class with its exceptional service, trendy increase YTD. China’s largest sportswear firm
program to turn old factories and build- Sichuan hot-pot restaurant chain Haidilao with more than 8000 retail stores Topsports
ings into modern shopping complexes and International Holding (6862:HK) which International, is proceeding with its IPO plans
create more open-air markets. In rural offers manicures and massages to custom- in Hong Kong as it looks to raise up to $1 bil-
areas, China is accelerating the development ers waiting for tables, is up almost 100 per lion by the end of the third quarter. n
of e-commerce and tourism. Supporting cent YTD. While condiments manufactur-
Ms. Leslie Richardson has over 20 years of investment
the growing domestic consumption is the er Yihai International Holding (1579:HK),
management and equity research experience. She oper-
most advanced electronic payment system in the sole supplier of hot pot flavorings to ates a boutique investor relations firm in Hong Kong
the world with the leading online e-wallets Haidilao, is up almost 140 percent YTD after for Asian companies listed in the U.S. and Hong Kong.
She also assists private companies develop investment
Alibaba Group’s Alipay, Tencent’s WeChat becoming the top performer on the HKEX material and build an investor following in prepara-
Pay and UnionPay. in 2018 with a 140 percent increase. tion for a public listing. Additionally, she is the Asian
Correspondent for Micro-Cap Review, www.microcap-
Another source to stimulate domes- China being largest beer market in the
review.com, a financial magazine focused on mirco-cap
tic consumption is China’s roll out of 5G world, dwarfing the next leading markets, companies. Previously, she worked for CCG Elite in
technology. This year Shanghai’s Hongkou United States and Germany is seeing an assisting Asian-based, U.S. listed clients formulate key
communication strategies. Ms. Richardson began her
became the world’s first district with a com- increased demand for quality beer. With con- investment career at U.S. Trust Company then went
mercial 5G network which is serving as a sumers looking for new niche and craft beer on to join Odyssey Advisors as a portfolio manager
and Director of Research. Ms. Richardson specialized
testbed in preparation for the country’s offi- brands, China Resources Beer  and  Tsingtao
in high growth sectors such as bio-tech, alternative
cial commercial 5G launch in 2020. China Brewery, which together hold 40% of the energy, IT and telecommunications. She earned her
is forecast to spend $143 billion on its 5G Chinese beer market, are moving away from M.B.A. from the University of Southern California. Ms.
Richardson is based in Hong Kong.
network by 2025 as it builds a network that their low-cost strategies and ‘cheap beer’ image www.elite-ir.com.
will represent 40 percent of the total global as they expand their premium beer portfo-
Note: This article is not an attempt to provide invest-
5G connections. Over the next five years lios. Tsingtao Brewery (0168:HK), China’s
ment advice. The content is purely the author’s per-
of its commercial deployment, 5G is pre- second largest brewery is up over 55 percent sonal opinions and should not be considered advice
dicted to drive an economic output of about YTD while China Resources Beer Holdings Co of any kind. Investors are advised to conduct their
own research or seek the advice of a registered invest-
US$1.5 trillion and create 3 million new Ltd (0291:HK) is up almost 55 percent YTD. ment professional.
jobs, according to the Ministry of Industry Another segment that is one of the largest
Leslie Richardson does not own shares of any of the
and Information Technology. and fastest-growing in the world is the sports-
companies mentioned.
wear market. Driving this market growth is a

www.stocknewsnow.com MicroCap Review Magazine 93


F E AT U R E D A R T I C L E

Is Gold About to Lose It’s Luster?


“O Gold! I still prefer thee unto In Brief: However, internal market structure anal-
paper, ysis will provide high probability confirma-
• Preferred Scenario – Gold’s most recent tion well before $1,304!
which makes bank credit like a
“major” low was in late 2015, followed
bark of vapour” by a sideways move in a corrective tri- In the application of Elliott Wave analysis,
angle structure that was completed in there are many different patterns that a coun-
Lord Byron May 2019 and has been trending higher ter trend corrective trend may take, some
Born at the start of the 125 year in a final leg up to an estimated range sharp and others sideways
of $1,580-$1,700 As noted above, the completed picture
“Revolutionary” Cycle
• Now expecting a downward correction perfect contracting triangle is just one of
from a recent short term peak that those forms and commonly found in the
Comex Gold, 1503.7, 11 may be complete or may take a more middle of a correction, just as depicted
September 2019, 1:38 PM, expanded form thus taking weeks to Gold is expected to “eventually” decline
Chicago, USA complete, both leading to an important “impulsively” below $1,000 with a likely
top that will bring a reversal trending target of $681, the extreme low of the previ-
down to under 1,000, with a potential ous Primary Cycle low in 2008
target of $681 in a deflationary envi- To reaffirm per the Monthly Chart :
ronment Gold crested in 1980 at $875 and then
• Alternate Scenario – As a very close sec- crested again in 2011 at $1911, a span of 31
ond, Gold has made a major crest and years
is now in the process of trending down That span is not surprising, as commodi-
to under $1,000, with the potential to ties in the aggregate tend to crest every 30
hit $681 years, top to top and bottom every 30 years,
• As a long term Gold projection, the low to low
next major long lasting low is expected Commodities also have a tendency” for
to be in 2029-2030 and the next major down trends to exhibit a duration of 20
long lasting top is expected to be in years and upward trends to have a dura-
2039-2041 tion of 10 years for a total of….. surprise,
30 years!
Gold is above its 200 week and 50 week
simple moving averages, so the trend is As Gold last crested in 2011, it is expected
technically up to crest again around 2041, a 30 year span
However, its mostly likely in a current As Gold last bottomed in August 1999, it is
short term downward correction, followed expected to create a lasting bottom around
by a continuation of the upward trend 2030, an approximate 30 year span ending at
In due course, Gold will peak and decline Cycle c, Supercycle (c)
toward under $1,000 and a potential target However, following the upcoming Cycle
of $681, in a deflationary trend over time a low, perhaps around 2020 or so, antici-
However, the move from 2015 low is not pate a countertrend rally up to Cycle b
expected to reach the 2011 highs crest, then rolling over toward Cycle “c”
n BY STEVEN M. SHELTON, A move under $1,304 in a five wave
MS, MBA, CFP®, CLU, CHFC, TEP, internal structure will initially confirm Point to Ponder:
CIMA®, CMT resumption of the long term trend to down TAKE NOTE THAT DURING THE LAST

94 MicroCap Review Magazine www.stocknewsnow.com


Market Technical Report and CGG Technical
Research Notes, all of which are general informa-
tional services regarding Global Macro Economics
and Market Technical Analysis. Cornerstone Global
Group LLC’s independent contractor consultants are
not investment advisers. At no time may a reader,
caller, viewer or consultancy client be justified in
inferring that any advice from Cornerstone Global
Group or its Non-FINRA registered consultants
is intended as investment advice or as investment
recommendations directed to any particular person
or in view of the particular circumstances of any
particular person. Investing carries risk of losses,
and trading futures or options is especially risky
because these instruments are highly leveraged,
and traders can lose more than their initial margin
Comex Gold Daily funds. Before investing consult with your investment
advisor. Cornerstone Global Group LLC does not
render tax, accounting or legal advice and the infor-
mation contained in this communication should
not be regarded as such. Information provided by
Cornerstone Global Group is expressed in good faith
but is not guaranteed in any way.

About the Author:


Steven Shelton is a Financial Services veteran of more
than 30 years, having served in senior management
in both the insurance and broker/dealer commu-
nity, on and off shore. He has expertise in econom-
ics, financial market analysis, wealth management,
traditional and alternative investments, financial
Comex Gold Weekly planning, marketing, insurance, sales and consult-
ing as well as an international speaking regarding
global economics and financial markets. This is
evidenced by advanced degrees in business admin-
istration and economics as well as six professional
designations to include, Certified Financial Planner,
Chartered Life Underwriter, Chartered Financial
Consultant, Certified Investment Management
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Dealer focused on investment banking.

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www.stocknewsnow.com MicroCap Review Magazine 95


P R O F I L E D C O M PA N Y TsX-v: Fvan / oTcQX: FvanF

First vanadium corp.


F
irst Vanadium Corp. is Earth Elements over the winter

V
23
a Canadian junior min- that drove MSM to consider the
ing company with an 21 Critical Elements to the suc-
advanced stage exploration proj- Vanadium
cess of the US, woke some people
ect in mining friendly Nevada, A steel strengthner and up to the lack of control over
battery metal
during a mining sector expan- our own destiny. The demand,
sion period and a political the need and the critical nature
administration that understands the critical of these elements has not diminished at all.
nature of vanadium. The 2,609-acre project In fact, the necessity of a world power to
is 6 miles from Carlin, Nevada meaning control its destiny has never been as neces-
near to roads, railhead and power. It is sary as now.
a large resource which is fully funded to We cannot rely on Russia and China for
Project Location
Preliminary Economic Assessment (PEA) our infrastructure, our energy and power, or
in Q1 2020. Not only is this resource near our shift towards a clean and green future. scale battery is superior to the well-known
surface but at 300,000,000 pounds in the First Vanadium is a high-grade opportu- lithium ion counterpart. Clean, not degrad-
Indicated category so far, and 75 million nity on track to provide North America a ing over time with countless recharging,
pounds in Inferred resource, this makes it potential supply of critical vanadium for our the Redox battery doesn’t have the risk of
the largest and highest-grade primary vana- future. exploding, which has happened with the
dium deposit in North America. A technical Vanadium is on that critical elements list. lithium ion battery. In Dalian, China, the
team with over 400 years of senior industry The importance of Vanadium cannot be world’s largest battery, a vanadium Redox
experience has been assembled to maximize overstated for safe strong infrastructure and battery is about 10 times the size of Elon
the evaluation and potential viability of this reliable sustainable energy storage, incred- Musk’s lithium battery. The current multi-
high-grade project. They represent the new ibly important to a modern growing and billion dollar booming solar plus battery
shift in Western control over key minerals. mobile nation and currently vanadium is projects world-wide are also expected to up-
not being produced in quantity in North take vanadium batteries. These solar projects
vanadium is sTill cRiTical America. China and Russia supply just over span residential, corporate, municipal, state
and FiRsT vanadium is 70% of the world’s Vanadium, although and country levels. As residential example,
alignEd To THE soluTion deposits exist in North America. “it is time California has regulated that solar panels
to discover, recover and reserve a hold on must be on all new house construction. n
The trade war with China has many consid- this metal for the future”, stated Paul Cowley,
Please visit the company’s website for more informa-
erations. The flurry of interest about Rare CEO of First Vanadium.
tion: www.firstvanadium.com
Eighty-five percent of vanadium is used
in infrastructure making the steel stron- This material contains forward-looking statements. In addition, from time to
time, we or our representatives may make forward-looking statements orally or
ger and lighter, revolutionizing construction in writing. We base these forward-looking statements on our expectations and
projections about future events, which we derive from the information cur-
from rebar in buildings, bridges, pipelines, rently available to us. Such forward-looking statements relate to future events
or our future performance, including: our financial performance and projec-
even jet turbines and bodies. Globally, $3.7 tions; our growth in revenue and earnings; and our business prospects and
opportunities. You can identify forward-looking statements by those that are
trillion is required in infrastructure per not historical in nature, particularly those that use terminology such as “may,”
“should,” “expects,” “anticipates,” “contemplates,” “estimates,” “believes,” “plans,”
year, according to McKenzie Global Growth “projected,” “predicts,” “potential,” or “hopes” or the negative of these or similar
terms. In evaluating these forward-looking statements, you should consider
Initiative. various factors, including: our ability to change the direction of the Company;
our ability to keep pace with new technology and changing market needs; and
the competitive environment of our business. These and other factors may
cause our actual results to differ materially from any forward-looking state-
vanadium vERsus liTHium ment. Forward-looking statements are only predictions. The forward-looking
events discussed in this document and other statements made from time to
time by us or our representatives, may not occur, and actual events and results
may differ materially and are subject to risks, uncertainties and assumptions
Far more exciting is the energy storage about us. We are not obligated to publicly update or revise any forward-looking
statement, whether as a result of uncertainties and assumptions, the forward-

Paul Cowley, CEO opportunity: the vanadium Redox utility looking events discussed in this document and other statements made from
time to time by us or our representatives might not occur.

The company paid consideration to SNN or its affiliates for this article.
96 MicroCap Review Magazine www.stocknewsnow.com
sEE company pRoFilE pagE 8

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sEE accounTing coRnER pagE 68