I’ve decided to stop posting to the Energy Investment Strategies web site and to take the site down eventually.  There are two reasons.   One is that I need to concentrate my efforts on fighting my cancer.  The other is that I think to a large extent my original aims for this site have been accomplished.  The site was started to educate investors about “peak oil”, its implications for potential future energy shortages, related increases in the importance and value of energy-related equities, and ways investors can best participate .  …

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Jim Jubak just published a very useful survey course on Rare Earth Element investment opportunities.   The good news is that he nails the facts.   The bad news is that if he’s writing about REE’s, then the knowledge of this unusual  investment niche is no longer very rare.  Jubak’s sense is that the stocks have become pricey. He’d like to buy Lynas (LYSCF) if the Chinese fund it but get less than control shares. (Who wouldn’t?)  That surely must be what the Australian government wants too.  With the new interest …

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Game Changing Battery Technology: Is It Here Now? Nearly every oil observer - Simmons, Maxwell, Jeff Rubin, many others, and least of all myself - see oil prices rising in 2 - 5 years, probably to new heights, if the global economy continues to recover.   That’s based on pretty accurate visibility of new oil supply over the next 5 - 7 years, fairly certain rates of decline in old fields, plus assumptions of demand growth rates for OECD, developing, and oil exporting economies.   I provided my own version of this …

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Lynas hosted a conference call recently that can be accessed by clicking on: Investor Call - 5 May 2009 The company line was that the new Chinese investors want to fund the company’s existing business plan and management without any changes.   They understand the strategic value of REEs and wish to maximize the company’s value just as any investor would.  Two good features of the deal are, first, that the new funds are believed to be sufficient to get the company past its Phase 2 goal of producing 20.5K …

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An analysis by an experienced but controversial analyst, Jack LIfton, was recently published at Seeking Alpha and is reproduced below.  It focuses on the use of neodymium, a rare earth element, in windmills, noting China’s plans to vastly expand its use of wind power.  The use of REEs in windmills and the expansion of wind generated power is one more bullish trend supporting the idea that the prices of REEs may have a great deal of upside potential.  Lifton thinks that is the case although he raises the …

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Shown below is part of the Great Western Minerals Group web site that compares the market value per tonne of their Hoidas Lake deposit of rare earth elements with other deposits as of February, 2008.      If we assume that REE prices will rise somewhat as the recession ends, it is not unlikely that the Lynas Mt. Weld deposit would be worth $17,500 per tonne.  The company plans to reach 20,100 tpa by phase 2 with half that achieved in phase 1.  Therefore, gross revenues …

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A report in The Australian newspaper (affiliated with The Wall Street Journal) provides an insight that is worth considering.  It suggests a some key ideas that could be important in evaluating the investment prostpects of both Lynas (LYSCF) and Arafura (ARAFF):   1. China’s exports of Rare Earth Elements (REE’s) is slipping significantly.   2. China may be seeking to both monopolize the REE market and to diminish its reliance on its own domestic supply of REEs for use in its own production of end products.   In …

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Lynas Corp (LYSCF), the Australian rare earth element mining company, announced it will accept an offer from China Non-Ferrous Metal Mining Co to provide A$252 million of equity capital in exchange for a 51.6% equity position in Lynas.  As part of the deal, China Nonferrous will provide guarantees to help Lynas secure financing from Chinese banks for two loans worth $104 million and $80 million. Lynas said the second loan is not needed immediately but is to be made available at the request of its board. According to this …

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Stocks continue to recover from their panic bottoms of last November, many of them having doubled or more from then (case in point: General Electric).   All this seems very healthy to me given the lack of real world data indicating any sort of resumption in economic growth.  We get only data indicating a slowing in the rate of decline.  On top of that, we know there are more shocks to come:  huge default rates in loans on commercial real estate which lags the economy, the likely bankruptcy of both Chrysler …

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I’m scratching my head over $50 oil in the face of unprecedented levels of inventory both on land and at sea and with ample spare capacity of “underground inventory.”   Talk about speculative influence - speculation seems to be the only explanation for why oil is not, say, $35.  Speculators in oil futures are betting on an economic bottom begetting a recovery begetting greater oil demand.  Along with limited expansion capacity due to reduced investments in oil production and high rates of decline for older wells. Of course all that …

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I’ve owned Petrobank (PBEGF), a TSE oil junior, at $50, sold it as the market tanked, and over the past few months I’ve been buying it again in greater quantity in the teens.  It’s now just over $20.  I’ve been impressed with management’s apparent ability to successfully execute a standard “exploration and production” strategy as exemplified by its Bakken and it’s Columbian programs.  Beyond that, I’m fascinated with the huge speculative upside potential of the technologies it has developed for harvesting heavy oil more economically and environmentally.  

The stock may not …

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Here’s a summary published at SeekingAlpha.  Note the P/E seems to be off.  I make it about 14. http://seekingalpha.com/article/127329-sqm-reports-revenue-growth-for-eighth-consecutive-year#comment-436464

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Are stocks and oil bottoming?

Was last Tuesday’s 350-point rally the beginning of the end of the bear market or just a false “bear trap?”  And a related question: “Did oil bottom at $33 and will it get re-tested?”  Let’s see what we know.

Some things we know

Sometimes the objective observable facts can yield fairly clear conclusions.  Usually that’s not the case.  Usually you can use the available facts to make a decent argument in either direction.  But sometimes the facts seem fairly clear.

For example, there should have been clarity about being …

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My recent post on “Battery Wars” was a broad overview of the ongoing global struggle to develop one or more cost-effective batteries to power a commercially viable electric or hybrid vehicle. Follow-on commentaries to that post have added more substance and I invite readers with knowledge to add their views on the viability of lithium-ion vs. current NiMH batteries - or any other alternatives. Because  lanthanum, a rare earth element, is essential to the NiMH battery, the business of mining of rare earth elements and related investments has …

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A horse race is in progress that will determine the next generation automotive power plant.  In order to break our oil addiction cars must transition to electric power, which means the power plant must be either all electric or plug-in hybrid electric.  Either one requires a battery with vastly better cost/benefit ratios than is currently available.  The two near term favorites to fill the bill are nickel metal hydride and lithium-ion; a long shot on the outside is ultracapacitors.    Competing battery technologies also include an improved lead-acid battery and …

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