Tag Archives: cse quarterly

Pudo – Pick it up. Drop it off.

This story was originally published at www.proactiveinvestors.com on May 26, 2016 and featured in The CSE Quarterly.

PUDO Inc. debuted on the CSE on July 28, 2015 at $0.70, proceeded to drop to $0.18, yet within two weeks was conducting a private placement of 1.1 million shares at $0.63.  Using that as a reference price, the stock has closed up as much as 443%, and as of publication date is up a still respectable 280%.

“While you are out and about, we’re here accepting your deliveries” reads the tagline on the company’s website, and that pretty much captures the essence of the PUDO service.  We all know how frustrating it is to be waiting for a package, only to arrive home and find that someone tried to deliver it, but unable to do so left a sticky message indicating that you cannot obtain your parcel until the following day.  Even more annoying is learning that the package had been delivered, only to be stolen off the front stoop.

PUDO completely eliminates this inefficiency by creating locations called PUDO Points where customers can specify their parcels be dropped off so as to be picked up at their convenience.

The benefits to all participants in a transaction run deeper than that, but at its core the service makes life more convenient for consumers.  It is the simplicity and connection to all of us that PUDO CEO Frank Coccia believes is behind the impressive performance by the company’s shares in the short time the company has been public.

“It is a story that everyone understands,” says Coccia.  “It is not a biotech company or mining exploration where it can be difficult to see the real potential.  I enjoy going out and speaking with investors.   They see that couriers, retailers and consumers can have a field day with this.”

Digging a little deeper, one learns why the concept would have more natural allies than competitors.  Coccia explains that PUDO seeks nothing more than to provide pick-up points inside convenience stores and other established physical locations.

Couriers thus know they have a guaranteed delivery and save money by not having to attempt re-deliveries after a failed visit.  Retailers that ship product to fulfill customer orders gain flexibility to negotiate with multiple couriers and thereby reduce their shipping costs.  The consumer gains the peace of mind that comes with knowing a parcel is available to pick up at a convenient location whenever they like.  Convenience stores and other PUDO Points not only earn fees for holding and putting parcels in the hands of their owners, but also from impulse buys thanks to the extra foot traffic.

Coccia says that investors also like the fact that PUDO keeps its costs under control by needing little more than to maintain and support the technology behind the service.  “The beauty of PUDO is that we don’t own anything outside the technology,” explains Coccia.  “The bricks and mortar is already there.  We are just taking advantage of the elements in an ecosystem that already exists.”

Growth on the ground has been quick to date, with Coccia saying that the company has already established some 800 PUDO Points in Canada and the US and over 6,000 registered locations, this latter category being locations signed up that have yet to go through training so they are fully ready to roll.

“Once we hit 3,500 to 4,000 locations in Canada then we should be exactly where we want to be,” Coccia says.  “In the US we have over 3,700 registered locations at present and ultimately want 16,000 to 20,000.  Once we reach those two numbers we will have a fixed cost with a control centre that manages everything.”

Experience helps small companies avoid costly mistakes, and fortunately for PUDO Coccia has been at this for 35 years.  “I built niche courier systems, which basically are courier systems for one industry.  We did it for the travel industry and the financial services sector and for lawyers serving one another documents and papers.  It is all about consolidation where people can pick up mail and drop off their mail.”

Coccia expects growth to continue apace, thanks in part to several potential partners he is talking to in the US.  “We’d suddenly have a network in the US that could rival that of any national carrier – UPS or even the post office,” he says.

With just 15.6 million shares outstanding, PUDO has plenty of room to maneuver if Coccia deems it necessary to raise equity capital for supporting growth.  And while the company is not flush with cash, liabilities are fairly low as well, so with revenue beginning to come in Coccia has a good shot at preserving a nice share structure until PUDO reaches the point at which it becomes self-funding.

Experienced management, enviable share structure, rapid growth, consistent communication.  Does that qualify as a formula?

Learn more about Pudo Inc at http://www.pudoinc.com/ and on the CSE website at http://thecse.com/en/listings/diversified-industries/pudo-inc

RESAAS gaining traction

This story was originally published at www.proactiveinvestors.com on May 26, 2016 and featured in The CSE Quarterly.

“There is no magic formula,” states Cory Brandolini, CEO and founder of RESAAS Services Inc. which at its peak to date sat 1,892% above its February 2011 Initial Public Offering price of $0.25.  Priced at around $1.60 at date of publication – despite its business being miles ahead of where it was when the stock was at $4.98 – the share price still represents a gain to original investors that anyone would be happy with.

“Share price appreciation is a function of two things,” Brandolini explains.  “One, execute your business plan and make sure you are growing every month, and two, get that message out so people can understand clearly what you are trying to do.  There is no magic to that – it is just hard work, execution on your model, growth of your user base in our case, and messaging that to the investment community.”

RESAAS was deliberate in formulating the right course of action before executing its business plan, spending over a year canvassing potential clients through focus group-style forums and one-on-one meetings with brokers and CEOs from all of the major brands.  RESAAS clearly had a vision as to how they felt the industry needed to evolve and the results of a year’s worth of industry data collection served to confirm the team’s ideas.

The company then went into a calculated “stealth development” phase before launching the platform on a global basis. The result is a cloud platform connecting the entire real estate services industry around the world in real time.  Finding out what you don’t know after you’ve already created your product can be lethally expensive, and since Brandolini and RESAAS CFO Cam Shippit come from the financial industry, they understand how critical a strong start is to long-term success.

“Our ideology is that we wanted to transform the industry – not disrupt professionals but advance their model,” says Brandolini.  “Technology was not the industry’s strong suit.  It needed to be solved from an outsider’s point of view, an agnostic point of view, by somebody who didn’t have a dog in the fight but was simply trying to address the legacy based problems within the real estate services industry.”

And what an industry to choose.  As estimated by the US Federal Reserve, the value of combined commercial and residential real estate assets in the United States alone totals some US $40 trillion.  Even though only a small percentage of properties change hands each year, the commissions available to real estate agents reach into the billions.

The RESAAS platform is a gorgeous piece of online architecture that gives realtors, brokerages, multi-national franchises and associations their own industry-specific enterprise social network.  Users get to custom-brand their own environment and enjoy the functionality of real-time information sharing. Think of the power of Facebook and the productivity of Salesforce.com.  “There had never been a platform built exclusively for the real estate enterprise side that advances the industry past its early baby boomer designed infrastructure,” says Brandolini.

In the third quarter of 2015, the company expanded its suite of services with the addition of the RESAAS Marketplace, where industry professionals can access a wide variety of services from companies such as Top Producer, DocuSign and Dotloop at prices available only to RESAAS members.  There are now over 50 participating companies, and counting, in the RESAAS Marketplace.  “Our strategy early on was to allow other real estate service providers that offer best in class products the ability to integrate directly into our platform and expose their services within our Marketplace,” says Brandolini.

Then in the fourth quarter of last year RESAAS introduced an exciting new feature on the platform called RealTimeMLS.

“At the end of 2015 we launched a game-changer for Real Estate Associations. RealTimeMLS is a technology that looks to eliminate static data collecting and turn that process into a real-time model,” says Brandolini.  “With RealTimeMLS, for any listing that an agent posts on the RESAAS platform, all of the members of his or her local association will be notified of that listing in real time, and the listing information will be pushed to that agent’s local MLS.”

Standing behind this young tech juggernaut is a balance sheet that at December 2015 boasted $6.8 million in cash and just over $438,000 in accounts payable and liabilities.  RESAAS has raised well over $20 million since it was established but at the end of last year had barely over 33 million shares outstanding.  Talk about solid corporate financial management.

Modern tech companies often get high-per user valuations, and there is little reason to believe RESAAS will not one day visit those hallowed realms.  After all, its user base is ultra-focused and full of high-paid professionals with shared interests that at the same time have something in common with every single one of us, as we all need somewhere to live.

Asked about achieving appropriate share valuation, Brandolini has one more piece of advice.  “You have to be able to get your value proposition across,” he says.  “Are you disrupting an industry, are you advancing an industry, or are you solving an industry problem?  You had better be able to answer one of those three questions affirmatively if you want the value of your company to be properly recognized on the stock market.”

Learn more about RESAAS Services Inc. at http://www.resaas.com/ and on the CSE website at http://thecse.com/en/listings/technology/resaas-services-inc

Urbana’s mix of private and public holdings beats street, appeals to deep value investors

This story was originally published at www.proactiveinvestors.com on May 26, 2016 and featured in The CSE Quarterly.

One would think that with a track record like Urbana Corporation’s (CSE:URB; TSE:URB) the chance to buy its shares at a discount would be almost non-existent. At an annual return based on net asset value exceeding 14% since it was launched in 2002, Urbana easily ranks as one of the better performing investment companies on the block.

Puzzling then that its stock is priced around $1.97, while its per-share net asset value is closer to $3.50. “Since October 2002 the rate of growth has been just under 14.54% but the share price is at a significant discount to the asset value, to an extent due to lack of coverage,” explains Thomas Caldwell, Urbana’s President and CEO.

Caldwell, of course, is also Chairman of investment dealer Caldwell Securities Ltd. He is well known on Bay Street and Wall Street for making big returns from investing in stock exchanges. “At one point we owned 37 exchanges,” Caldwell notes.

That legacy remains a major part of the Urbana investment approach, reflected these days more so in the heavy portfolio weighting in companies involved with the financial industry, be they major banks or service providers to the mortgage business. “That is where I spent most of my career and is an area we like to think we understand,” Caldwell says.

In many ways, Urbana is structured to offer investors the best of all worlds. It has just shy of $200 million under management, about 55% in public investments, plus 45% in private investments that its shareholders would almost certainly be otherwise unable to access.

Another benefit is that the closed-end nature of the fund is a perfect fit for Caldwell’s investment strategy. “A closed-end investment corporation like Urbana is a great way to manage money because the capital we have is permanent,” he explains. “The problem with mutual funds is that you get your money at the worst time – at the top of markets – and you lose it at the best time – at the bottom of markets. But that is when you should be doing the opposite – you should be selling at the top and buying at the bottom. If a market is going down I am not worried about a run-off of assets and that’s where I make our money. I’m a bargain hunter.”

Well-represented sectors these days include US financials, which Caldwell says make up 32% of the portfolio, while a recent move into a set of holdings he calls “Canada Inc.” saw Urbana take meaningful positions in Barrick Gold (TSE:ABX), Suncor Energy (TSE:SU) and Teck Resources (TSE:TCK.B). “Our Canadian banks are up 10%, Suncor is up a few percent, and Teck is up 100%,” Caldwell explains.

One of the CEO’s favourite holdings is a private company called Real Matters. Real Matters runs a technology platform and network of more than 100,000 independent field agents that help financial institutions and other entities in the real estate business perform appraisals, insurance inspections, title searches and mortgage closings. Its customers include 60 of the top 100 mortgage lenders in the US and a number of large insurance companies.

“Real Matters is run by an extremely bright executive named Jason Smith,” says Caldwell, noting that he invited the Real Matters President and CEO to speak at Urbana’s annual general meeting this year. “I say now that I am not interested in ideas anymore. I am only interested in people who can execute on ideas. He can do that.”

Caldwell sees Real Matters eventually listing in the public realm via an IPO, a path that Urbana likes its private investments to move along as they grow and mature.

Another successful holding on the private side that anyone who follows Urbana will be aware of is the Canadian Securities Exchange, in which the investment company holds a major stake. Caldwell also serves as the exchange’s Chairman.

“The CSE fills a role that I believe, and my directors and partners believe, is important to Canada,” explains Caldwell. “Canada is an entrepreneurial country but it is very hard to build a company here because we are losing a lot of independent dealers and don’t have the big venture pools like they have in Silicon Valley. So what the CSE can do as an exchange is to simplify the role of accessing capital.

“Ned Goodman (Deputy Chairman of the CSE and founder of Dundee Corporation – a significant shareholder in the CSE) and I both say the same thing – we feel the CSE is an extremely important link in Canada’s prosperity going forward. We pursue this with almost religious fervor because both Ned and I feel so strongly in terms of helping Canadians. Remember, the large financial institutions and many of the resource companies are going to be generators of unemployment in the years to come. New jobs and head offices are only going to come from new enterprise. That’s where the CSE lives and that’s what we try to nurture.”

Fervour certainly is an apt word to describe the way Caldwell feels about the industry he has built his life around, and it troubles him to see certain pillars of the financial community struggling so mightily. “Independent brokerage firms are being massacred and that is going to impact Canada’s standard of living, the number of head offices and new companies,” he explains. “It is a difficult environment right now for new companies trying to raise money. Regulators don’t see that they are addicted to evermore regulation and the damage they are doing to the economy.”

Asked about the possibility of Urbana seeing this as an opportunity, Caldwell suggests he needs to know more. “I’d love to sit down with regulators at some point and find out what their intention is. If they are planning to wipe out an industry, which it appears they are, then naturally I would not be doing bargain hunting in it.”

In the end, he suspects the over-regulation he witnesses does not even achieve its intended objective. “Quite often in an onerous environment the people who will work hard to jump through the hoops are the ones with the more speculative deals. So it does not even mean that you are thinning the ranks of the villains because those are the ones that will bend the rules.”

Regulation run rampant is an issue Caldwell sees as a threat to the Canadian economy but, paradoxically perhaps, he sees strict regulation of the financial industry in the US creating an investment opportunity. “There has been tremendous regulatory pressure on US banks and it is the shareholders who suffer,” says Caldwell. “Our feeling is that they will have to ease up, which would be good for the banks. If they don’t then US banks may unilaterally break themselves back up into commercial and investment banks, which I think would also be good for the stocks. If history has shown us anything it is that when you break up a company, the parts are usually worth more than the whole.”

With the discount to net asset value at Urbana so significant, it makes sense to use a portion of the corporation’s capital to buy back its own shares. “We have been very aggressive buying back stock and cancelling it,” says Caldwell. “We have bought back about 37 million shares at a discount, and this has benefited the remaining shareholders.”

The buyback has doubtlessly contributed to share price stability, but there still remains a gap wide enough to present opportunity for new investors. “The great bargain right now with Urbana is that for $2.00 you get $3.50 working for you, and that $3.50 has been growing at over 14% per annum for the last 14 years. The stock price will eventually catch up with it but I think in the meantime you can get pretty good management and assets at a discount.”

Learn more about Urbana Corporation at http://www.urbanacorp.com/ and on the CSE website at http://thecse.com/en/listings/diversified-industries/urbana-corporation

Lite Access lights it up

This story was originally published at www.proactiveinvestors.com on May 26, 2016 and featured in The CSE Quarterly.

Lite Access Technologies listed on the CSE in a transaction that saw the company raise just over $1.84 million at $0.25 per share, with its first trade printing on June 1, 2015.  Since then, its stock price has closed as high as $1.80, up 620%, and at time of publication was $1.61, or 544% higher.

Lite Access could hardly have chosen a better time to go public, what with a worldwide “supercycle” in optical fibre installation by large telecoms driving growth for the company’s products and services.  And if that cycle is, as the company suggests, merely in the second inning, it is easy to understand why investors have gotten so excited about the prospects for strong, sustained earnings.

“Everyone today is touched by the digital world and realizes that high broadband speed and capacity is essential to a modern economy, economic growth and the daily lives of most consumers,” says Michael Plotnikoff, Lite Access co-founder and Chief Executive Officer.  “And as rapidly as fiber optic deployment is growing in a general sense, the micro-trenching and air-blown fibre sub-sector that Lite Access specializes in is growing faster.  We not only offer pure-play exposure to the space, but our total integrated solutions are based on both proven technologies and widely accepted installation methodologies considered to be the solution of choice for fibre-optic connectivity – that is pretty difficult to find.”

Lite Access uses specially designed proprietary equipment to create “micro-trenches” into which it places exclusive crush-proof microduct (micro-conduit) designed for all types of telecom applications, both for today’s needs and those of the future.  The microduct serves as a medium through which optical fibre is blown using compressed air to create high-speed broadband connectivity in a matter of minutes and at a cost far less than with traditional cable installation methods.

The beauty of the system, and a main factor driving demand, is the lack of interference with the local environment and archaeologically sensitive areas both during initial installation and any subsequent upgrade cycle.  As the micro-trenches are narrow, Lite Access installation teams can be in and out of a site quickly (micro-trenching and installing up to 1 metre per minute of microduct) and at a cost much lower than more disruptive conventional methods.

Later, when fibre needs to be replaced due to technological obsolescence or upgraded in support of future growth requirements, there is no need to dig up the roadway again.  Lite Access simply blows new fibre from the starting point through to its destination at the other end and, voila, there is your upgrade.  Nobody outside of the companies involved even knows it took place.

As Plotnikoff explains, Lite Access is a pioneer in the micro-trenching and air-blown fibre business, and as the industry shifts into high gear he has a proven team behind him that has successfully completed dozens of projects globally, some quite challenging from an engineering perspective and at times not possible using traditional installation methods.  Well-rounded project and management experience is serving Lite Access well from both an operations standpoint and in the market with investors.  It is one of several important boxes it has ticked.

Good people?  Check.  And that includes over a dozen partners around the world certified to install microduct and handle air-blown optical fibre installation.  These partners will contribute to a re-balancing of the revenue stream in future years as they collectively come to install more of Lite Access’s patented equipment and supplies than the company does itself.

Good financial management?  Check that box, too.  Lite Access has just 30.6 million shares outstanding and no financing has been conducted since the initial $0.25 round.  A corporate update released February 1 explained that milestone payments had been received on a $7 million project for BC’s Haida Gwaii community, plus there was over $1 million in receivables and inventory on the most recent balance sheet.

Another key point to note is that with the types of customers Lite Access has – which include cities and municipalities, First Nations and Native Americans, as well as private enterprise and local governments – odds are the company rarely, if ever, finds itself chasing anyone for payment.

Plotnikoff speaks warmly about shareholders he has interacted with over the past year, saying some have essentially become advocates for the brand, helping build awareness and even calling in with business opportunities.  Shareholders are welcome to visit the company’s headquarters and main warehouse in Richmond, British Columbia, if that level of contact is important to them.

“Our shareholders are comfortable because they have an open line of communication and clear, transparent access to information,” explains Plotnikoff.  “I like to think that if we preserve that approach as a principal component of our corporate culture and continue to deliver growth, we will always have a strong degree of support in the market.”

Learn more about Lite Access Technologies Inc. at http://liteaccess.com/ and on the CSE website at http://thecse.com/en/listings/technology/lite-access-technologies-inc

Supreme Pharmaceuticals Inc shapes medical marijuana strategy around Canada

This story was originally published at www.proactiveinvestors.com on May 18, 2016 and featured in The CSE Quarterly.

Legalising marijuana for medical use can still be a thorny topic in some countries.

But Supreme Pharmaceuticals Inc. is hoping to lead the way in harnessing its acceptance and benefits in Canada.

Supreme obtained regulatory approval to grow medical marijuana at its site in Kincardine, Ontario, in March.

The company is on track to harvest its first crop in the summer and hopes to get final approval to sell it in September or October.

In the US, four states have legalized the plant for recreational use and 12 others allow its consumption for medical purposes, although that remains a relatively small proportion of the country as a whole.

But in Canada, the medical marijuana business has legalised progressively in the last 15 years.

A key milestone came in 2014 when the government’s Health Canada arm introduced the Marijuana for Medical Purposes Regulations.

The government also said last month it will press ahead in 2017 with plans to legalise marijuana for adult recreational use.

That market is expected to be worth US$5bn a year by 2020 according to leading industry analysts.

Supreme is targeting a domestic medical market, which it expects to be worth about US$100mln by the end of this year and US$1.2bn by 2020.

Supreme’s president and chief executive, John Fowler, said he believed Canada was doing better than some other countries in overcoming concerns about using the plant for clinical purposes.

“I wouldn’t say the stigma has gone but we’re moving in the right direction,” he said.

Fowler began working in the medical marijuana sector more than 10 years ago.

He pursued a legal career to help medical marijuana patients with legal challenges relating to access, jobs and tenancies, working on major cases.

He now sees his mission as being not only to provide Canadians with access to high-quality, low-cost medical marijuana, but to work with physicians to improve their awareness and support for it.

“The hope is that the doctor will be more educated and more willing to subscribe to the company’s products,” he said.

Bottom line

Supreme and its wholly owned subsidiary, AMMCan, have set up a federally-licensed, seven-acre greenhouse in Kincardine on the shores of Lake Huron.  When fully operational, the company expects to be able to produce in excess of 50,000 KG per year.

Supreme has obtained exclusive rights to work with international seed supplier Dinafem.  The arrangement will provide Supreme with access to over 100 unique cannabis strains to put into production in the Kincardine greenhouse.

“Choosing the right genetics is one of the most important aspects of producing high quality cannabis for both medical and recreational markets,” Fowler said.

“It was important we seek out a partner like Dinafem to ensure we grow only the best genetics in our greenhouse which will maximize output, increase quality and have a direct impact on our bottom line.”

Supreme has raised more than US$10mln, three quarters of which it has spent on fitting out the greenhouse and the rest of which it still has in the bank.

It expects those reserves to sustain it until it starts earning revenue from marijuana sales later this year.

Supreme is among about 25 companies holding 31 licences to produce medical marijuana.

The current market of about 45,000 patients is increasing at a rate of about 5,000 per month and is on track to more than double in this calendar year.

Supreme’s primary aim was to supply the consumer market direct by mail order.

But it is exploring the possibility of becoming more of a business-to-business supplier of licensed marijuana to other companies that would retail it.

Fowler said: “The benefits of that are long-term, stable revenue based on supply agreements, rather than volatile revenues from retail.”

Supreme has had to take extensive security precautions at Kincardine to prevent theft, such as high fencing and cameras, and the end product is stored in a vault.

“We like to joke that our marijuana in the vault will be more secure than our money in the bank,” Fowler said.

Fowler also acknowledges the general risk of abuse of the product. However it is worth pointing out marijuana consumption is seen to be less dangerous than tobacco or alcohol with few reported side effects, he said.

Strict regulation compels the company to ensure its products are not contaminated by pesticides or other substances that may be in marijuana bought from street dealers.

Supreme has international ambitions and is eyeing opportunities in countries such as Australia, Germany and Austria.

Canberra recently legalized marijuana for medical use and Berlin and Vienna are considering doing the same.

The company believes it will be able to generate US$200mln in annual domestic revenues within the next decade.  This keeps the company’s focus on executing on its domestic business as a top priority.

Fowler said: “It’s very important to me as the chief executive that we don’t allow the prospect of new markets to in any way negatively affect our primary market, which is right here in Canada.”

Learn more about Supreme Pharmaceuticals Inc at http://www.supreme.ca/ and on the CSE website at http://thecse.com/en/listings/life-sciences/supreme-pharmaceuticals-inc

MGX Minerals thinks outside the box in pursuit of grand goal

This story was originally published at www.proactiveinvestors.com on March 1, 2016 and featured in The CSE Quarterly.

The stated goal of MGX Minerals (CSE:XMG) – to put seven to ten mines into production over the next decade – is as ambitious as they come.

But speaking to the company’s CEO, Jared Lazerson, a philosophy begins to show itself that is different than that typically followed within Canada’s junior mining community. It is certainly one that fits the company’s objective.

MGX does not embrace an exploration model aimed at defining an ever-expanding resource, but rather a more standard business model with near-term profit as its core objective.  Thus the vision of bringing multiple mines on-stream, and doing so as quickly as possible.  Or what Lazerson refers to as a “right into production model.”

The first property scheduled for production is Driftwood Creek, a 776 hectare magnesium project located in the East Kootenay region of British Columbia.

Magnesium is a mineral most people have heard of but few probably know what makes it useful.

In different forms, magnesium can do everything from strengthening steel to fortifying vitamins, and is also used for wastewater treatment.

Lazerson believes magnesium oxide (what the magnesite at Driftwood Creek would become after beneficiation and secondary processing) is suited to yet another application which is still emerging but could grow to be huge.

“One of the potential game changers in the magnesium oxide market is that it can be used as a replacement for gypsum in drywall,” Lazerson explains.  “There is in Asia very heavily produced magnesium oxide wallboard and this is a market we are moving on quickly.”

He goes on to explain that wallboard out of China is characterized by “a wide variety of qualities,” which means there is opportunity for a company with a reliable source of high-quality magnesium oxide to address North American demand for wallboard.

“It is being used in high-rise buildings and also in Florida and other areas where flooding is common,” says Lazerson, explaining that drywall containing magnesium oxide has parallels to cement products, absorbing some moisture but not losing its structural integrity when it dries out.

“In terms of where the massive growth in market demand for the commodity is, we are betting on that,” he says.

Magnesium alloy is a different story and, for the time being, not something MGX wants to target.

Like various other commodities, magnesium alloy’s is a market somewhat controlled by large players and governments.  Lazerson explains that the US maintains high tariffs to discourage Chinese and Russian imports, leaving the country with the highest magnesium alloy prices in the world.  “You have one market that is fantastic and then the rest of the world is reasonably priced.  It fits more into that space where there is sufficient supply globally to support demand.”

With the end user equation seemingly figured out, the question of what hurdles are left to clear before reaching commercialization at Driftwood Creek is an obvious one.  MGX announced in January of this year that a mining lease had been awarded for the project by the province. Separately, it received a permit to conduct bulk sampling of 100 tonnes of material at the site in the fourth quarter of last year.  Its road permit came around the same time.

“In terms of getting stakeholder sign-off – government, First Nations, local community – the mining lease required everybody to sign off, so that is a big step in terms of not running up against any major delays,” says Lazerson.

The bulk sample, he explains, “will allow us to put some hard economics to it – we will see really what it is and what it costs to operate in a true mining environment.”

Major steps to go include construction, meeting capital requirements, environmental permitting, and then obtaining the actual mining permit.  Anyone who knows anything about mining understands that while that might be a short list, the timeframe to check all the boxes is almost always tremendously long.

But Driftwood Creek has a major advantage in that production will not result in any tailings to speak of.  “We don’t have any tailings – we will essentially sell 99.8% of our product,” says Lazerson, adding that “our permitting will be tied largely to showing the public and government and other stakeholders that there are no tailings issues.”

If all goes according to plan, the mine could be in production before the end of 2016.

Looking beyond Driftwood Creek, MGX recently entered a purchase agreement to acquire a 100% interest in 96,000 hectares of property in Alberta.  The land package contains multiple oil and gas wells that the company says contain brines rich in lithium, potassium and magnesium.  It comprises six permits and six permit applications.

Like Driftwood Creek, the Alberta properties reflect an approach of acquiring projects with fairly well outlined deposits that can be put into production for initial outlays of no more than $50 million.

Lazerson explains that lithium, similar to magnesium, is a fit for the company mandate: “industrial minerals, Western Canada, low barriers to entry, low capex.

“We are going back into existing oil fields that are essentially barren.  You are at a 98% water to oil ratio, so there is some oil in there, but it is nominal compared to the level of brine.”

Risk management is another theme that runs throughout a discussion with Lazerson.

In discussing MGX’s commitment to operating in Western Canada he references his team at length.  “Everybody on the ground in terms of geology and engineering has done a tremendous amount of work in Western Canada and I can’t overstate how important an understanding of the local geology, community and infrastructure is – these are what allow us to do things relatively inexpensively, but more importantly than anything, quickly.

“That’s what maybe sets us apart about the way we do business.  We consider time as the most expensive thing, and really the enemy of all that we do.”

Another pillar of the MGX strategy is a focus on industrial minerals with “a small footprint,” the reason being, according to Lazerson, that these types of projects tend to require smaller amounts of capital to put into production.  Driftwood Creek is a good example, and because it is a magnesium oxide resource there should be minimal environmental impact at the mine or in the processing.

Implied, if not directly stated, in all of this is the vision of establishing MGX as a company that walks the walk, if you will.  A company that gets mines up and running efficiently and makes money.  Once that track record has been established, attracting new projects and financing, not to mention all the other tasks that need taking care of in order to accomplish corporate objectives in this incredibly challenging business, would become that much easier.  Ambitious to be sure, but worth the effort.

Learn more about MGX Minerals at http://www.mgxminerals.com/ and on the CSE website at http://thecse.com/en/listings/mining/mgx-minerals-inc

Adaptability the watchword for Pasinex Resources

This story was originally published at www.proactiveinvestors.com on February 23, 2016 and featured in The CSE Quarterly.

“It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is most adaptable to change.”

The quote above is often wrongly attributed to Charles Darwin. But it does, I am told, summarise eloquently his seminal work ‘On The Origin of Species’.

It might equally be applied, in stock market terms at least, to the junior miners that have survived the recession that has decimated the industry.

Adaptability has been the watchword for Pasinex Resources (CSE:PSE), joint owner of the Pinargozu Mine in Turkey’s Adana Province.

It and local partner Akmetal set out in 2012 to compile a significant zinc resource – in the order 10 million tonnes – from claims staked around the historic Horzum Mine.

Pretty soon the cold harsh realities of life caught up with the companies, which luckily enough had a plan B to fall back on.

This was to mine high grade direct shipping quality zinc, crush it and send it off for export.

In a time where the capital markets have been shut to juniors such as Pasinex, the Pinargozu operation has provided manna from heaven – or at least a welcome source of working capital.

To date 16,000 tonnes of zinc material grading around 35% have been unearthed from this carbonate replacement-style deposit.

The extraction costs are currently around US$140-150 per tonne, while Pasinex and its partner receive “well in excess of US$200” a tonne for what they ship from Pinargozu.

With 120 people on-site, production is ramping up from 25-30 tonnes a day to around 60 tonnes.

This equates to output of around 20,000 tonnes a year. As capacity grows, so costs ought to fall.

Exploration work – the company carried out 12,000 metres of drilling last year – is aimed at finding and chasing high grade veins and delineating enough ore to keep the hoppers full.

“There was an old small-scale miner who went in and dug some high-grade zinc at very small tonnage,” says Pasinex chief executive Steve Williams, explaining how Pinargozu came into being.

“But that was clearly an indication that there was more high-grade zinc and that proved to be the case.

“We went in and started exploration and drilling. We found some very high-grade material and quickly realised there was the opportunity to get in and start mining.

“The horrible situation we have in the market and the terrible situation the exploration industry finds itself in was very much a driver for this.”

Located in the Taurus Mountains, Pinargozu is thought to be the sweet spot for a much larger zinc deposit.

In fact the area, which hasn’t been extensively explored using modern techniques, is itself a small part of a belt that extends into Iran and Afghanistan.

In a different world, one where the capital markets were open, share prices were buoyant and there was ready demand for new zinc projects, the Pasinex-Akmetal ground would have been comprehensively explored and its potential tested.

In the current environment compiling an independent resource estimate is a waste of time and money. When the wind changes Pasinex will adapt its plan of attack, says Williams.

In the meantime, it will look at methods to expand output a little further.

The commodity markets haven’t been especially kind to Pasinex. The price of zinc has come down to 77 cents per pound from around US$1.10 at its height last year.

Pasinex’s budgeting is done at 67 cents, which is more conservative than other operators out there.

But like its rivals it is operationally geared to an uptick in the price of the metal.

This could happen if the older, less economic mines continue to be shuttered. Glencore recently turn the spigots down – but then as Williams points out it could very easily push output up when the market conditions become a little more benign.

Demand for zinc might start nudging up in the latter part of 2016, but don’t bet on a recovery in the mining sector this year, says the Pasinex boss.

“Zinc I think will be one of the first metals to move; capacity is being removed.

“The [equity] markets? Well, I’m really not so confident. The big miners still have some big news to shake out. That will keep pressure on share prices.”

In Turkey foreign companies almost always take a partner. Pasinex’s Williams said he’s has had some minor differences of opinion, but the experience with Akmetal has been an “overwhelmingly positive” one.

The Turkish miner has been able to interact more astutely with the politicians than a foreign company might, while it has also been active and effective on the ground with the local population.

This expertise was used to good effect to fully permit and bring Pinargozu into production in about two years.

Practically, Akmetal had the plant and equipment needed to mine the deposit.

The country itself is caught on the fringes geographically but in the middle politically of one of the most volatile regions in the world.

Millions of Syrian refugees have flooded over the border since the hostilities began, and Turkey’s major cities are on red alert after a series of bombings.

But while Adana is near to the border, the mountain mine of Pinargozu remains isolated from what’s going on around it.

“We are in the northern part of the province so it is business as usual and we don’t see anything,” says Williams.

“But the country as a whole has been influenced by the conflict and in particular the refugee crisis.

“Turkey is a strong country, but in a difficult area of the world.”

Pasinex is an oddity on any exchange – a revenue generating mining junior that is able to survive under its own steam.

Is this recognised by the market? Definitely not at the moment. Neither is the long term potential of its zinc assets, or the copper property we haven’t even touched on.

But this is the harsh reality of life for the likes of Pasinex.

“This last three years have been very tough for us as it has for everybody,” says Williams.

“I think doing what we have been doing is the right thing for this moment in time.

“At some point we’ll get recognition for what we have done and the assets we have.”

Learn more about Pasinex at http://pasinex.com/ and on the CSE website at http://thecse.com/en/listings/mining/pasinex-resources-limited

Western Uranium blends big resource base, new technology in low-cost model

This story originally was published at www.proactiveinvestors.com on February 23, 2016 and featured in The CSE Quarterly.

Two things make Western Uranium (CSE:WUC) stand out from the junior mining pack: size and technology.

The first is straightforward enough. Western Uranium is the second largest holder of uranium resources in the United States, according to chief executive George Glasier.

The largest holder is Energy Fuels (NYSE MKT:UUUU), a company to which Western Uranium has close connections.

“We acquired our base assets from Energy Fuels in August 2014,” says Glasier, so there’s one connection. There’s also the small matter of Glasier having founded Energy Fuels himself.

So if there’s a man who knows his US uranium, it’s Glasier. And the company he’s now proceeding to build is a clear reflection of that.

A lot has been achieved in a short time.

At the time of the acquisition from Energy Fuels, Western Uranium was private. But shortly after that, in December 2014, it listed publicly on the Canadian Securities Exchange.

And following on from there Western Uranium acquired Australian company Black Range Minerals in a 1-for-750 all-share deal.

The entity thus created now controls a total resource base of upwards of 100 million pounds of uranium and 35 million pounds of vanadium across two of the key US uranium mining states, Utah and Colorado.

It was the acquisition of the seven permitted uranium mines that came with Black Range that catapulted Western Uranium into the number two slot behind Energy Fuels.

But there was more to that deal than just building scale.

Because it was with Black Range that Western Uranium acquired the second factor that gives it the edge over its junior peers: technology.

New technology in mining can be a mixed blessing, as anyone who’s followed the trials and tribulations of investing in nickel laterite processing can testify.

In uranium, certain types of deposit are amenable to leaching in-situ, which cuts down considerably on waste and completely does away with the need for tailings facilities.

Black Range’s technology doesn’t quite do that, but the effects and benefits are comparable.

It’s called “ablation”, a term borrowed from the medical profession, and it was originally developed by metallurgists looking to apply it to refractory gold deposits.

That didn’t work, but the same metallurgists then applied the technology to sandstone-hosted uranium deposits and the results were a whole lot better.

“Ablation causes a collision between sand grain particles,” says Glasier. “It removes the uranium coating and leaves a clear particle. That means it can leave up to 80% of the rock at the mine site.”

Perhaps even more significant in this environmentally conscious age, it’s a completely physical process and doesn’t involve any chemicals. Thus, the use of sulphuric acid in the milling process at a uranium mill can be significantly reduced. “It should substantially reduce the cost of producing uranium from our mines,” says Glasier.

So, with the two arms of the company – the resource base and the technology – in place, the next trick will be to find the finances to initiate production.

To that end, Glasier is about to embark on an extended roadshow that will encompass the US, Canada and Europe.

The thinking is that it will take approximately US$3million to get mining operations at the Sunday complex in Colorado into production while building the required additional ablation production units (‘ABT Units’), addressing the additional permitting costs of the State of Colorado for use of the ABT Units in the mining process and to retire the remaining debt.

That money will probably be raised through equity.

At the same time though, the company will also be working on putting together a US$35 million debt package to allow for the construction of a mill at a site already permitted at Pinon Ridge in south-western Colorado. The permitted mill site is currently owned by Pinon Ridge Mining Inc., an affiliate of the Company with common ownership interests of the principles of Western.

Ultimately, says Glasier, the plan is to produce upwards of 3 million pounds of uranium per year, and at very low cost.

Why so low? The first answer to that is the ablation technology, which is patented and tested. The second is that Western Uranium’s tenements also allow for a substantial vanadium credit to be applied in any economic model that gets built.

All told, Glasier reckons that Western Uranium will go into the lowest 10% of the cost quartile, which is welcome given that the uranium price has been relatively depressed of late.

Indeed, that weaker uranium price is the reason why the seven mines that Western Uranium acquired from Energy Fuels ceased production back in 2009. Other than the naked economics, they are ready to go.

But will the uranium price improve?

Longer-term, there’s plenty to be optimistic about. China is building nuclear reactors at a rate of knots. And Russia too is set to add significant new nuclear capacity, although the country is also one of the main producers of uranium. It’s estimated that by 2025 the number of nuclear power reactors in the world will have risen from the current 439 to a more substantial 497.

Western Uranium itself already has one secured customer.

An off-take agreement is in the bag with one US utility and doubtless there’ll be more to come. What the pricing will be in further deals is an open question, but it was interesting to see commentary from Cameco (TSE:CCO) recently in which the uranium giant argued that a position of oversupply is likely to linger for most of this year, but that an uptick may then be likely.

If so, the timing would suit Western Uranium nicely. “By the end of the year,” says Glasier, “we’re going to get production at the Sunday mine complex.”

Work on the mill will probably be well underway too, and there will be the additional kicker of marketing the ablation technology to companies overseas. The application to sandstone-hosted uranium deposits would suit some of the more well-known African uranium deposits in particular, and could well have a significantly beneficial impact on the economics of these projects.

More immediately though, the next crucial steps will involve the financing, a listing on a US exchange, and then deployment of those funds to generate early production.

Because this is not a market in which a junior miner can afford to take its time. But George Glasier knows that.

“The company’s moving fast in a tough market,” he says. “We are a low-cost and near-term producer.”

Learn more about Western Uranium Corporation at http://western-uranium.com/ and on the CSE website at http://thecse.com/en/listings/mining/western-uranium-corporation

International Wastewater Systems modernizes energy recycling with fresh take on familiar technology

This story was originally published at www.proactiveinvestors.com on February 24, 2016 and featured in The CSE Quarterly.

“Why didn’t I come up with that…it’s so obvious?”  Pretty much all of us have seen a new product or service and wondered why it took so long for someone to finally do something with an opportunity that had been sitting right under everybody’s nose.

Lynn Mueller is one executive who refused to let such an idea get away, founding International Wastewater Systems (CSE:IWS) in 2010 to make a difference for customers and the environment by recycling something most of us discard on a regular basis without even thinking.

Warm water from showers, kitchen sinks and other sources cascades down the drain in huge volumes every second of every day, the energy initially used to heat that water being lost completely, or actually becoming a detriment by reaching our oceans and introducing unneeded heat to them.

International Wastewater Systems, or IWS as the company calls itself for short, recaptures that energy using technology that Mueller, the company’s president, explains is a century old, quickly sending it back up the chain to be used again.  It is a simple concept and it works, with users in Canada, the United States and Europe addressing their energy needs in a responsible way, and saving money at the same time.

The equipment that makes this happen is called the SHARC unit, developed in-house during the company’s first four years.

“I started out as a refrigeration mechanic, spending my early work years doing refrigeration and heat movement,” explains Mueller.  “All I’ve ever known my entire life is how to move heat.

International Wastewater Systems invented what we call SHARC technology, which is sewage heat recovery specifically designed to recapture a third of the energy used in the world that finds its way down the drain,” he continues.  “We refer to ourselves as the ultimate in renewable energy.  It is the same energy – we just use it one day, re-capture it, and then use it again the next day.”

The company did all of its original SHARC system installations in and around Vancouver so it could access them easily for monitoring and tweaking.  A couple of years ago product refinement had reached the point where Mueller decided that SHARC was ready for prime time.

The reaction has almost been more than the company can handle, with Mueller referring to the last 24 months as a “blur of growth” characterized by interest from all over the world.

It helps that SHARC is eminently scalable, with Mueller explaining that the system can handle anything from a single building to a district energy system.  Not surprisingly, SHARC units are custom-designed for each installation.

An easy way to understand the SHARC technology is to visualize it in stages, the first filtering out waste within the sewage that streams into the unit and returning it to the sewage flow so it can continue on its merry way.  What’s left is water that is clean enough to put through a heat exchanger, which extracts the heat energy for reuse.

“You temporarily intercept the flow, clean it up, use it for your heating needs, and then it goes off to the sewage treatment plant,” says Mueller.  “We’ve just had a thermal effect on it and nothing else.  We have not done any chemical processes or altered it in any way other than recovering the heat from it.”

Which brings us to that vintage technology – the heat pump.  “A heat pump is really just a glorified refrigerator,” explains Mueller.  “If you put warm food or beverages into a refrigerator, a few hours later your food is cold but the back or your refrigerator is warm – that is a heat pump in action, moving heat from the warm product into the refrigeration system and then by means of that heat pump it is rejected outside.”

Within the realm of IWS’s technology, that warmth is most often directed back into a building or used to heat water.

One of the installations of which IWS is most proud can be found in Sechelt, a small city popular with tourists and retirees on British Columbia’s picturesque Sunshine Coast.

“Sechelt built the world’s cleanest and most efficient water treatment plant,” says Mueller.  “The water leaving the Sechelt Water Resource Centre is of a quality such that you can actually drink it.

“The philosophy at the treatment plant was to be completely sustainable.  Energy recovered from the sewage heats and cools the entire building, so it uses no fossil fuels.  The system has worked flawlessly now for two years and people come from all over the world to see it.”

Potential users in Europe needn’t travel quite so far to see the SHARC system in action, as IWS has an office in Leicester.  And there are more international locations to come, as the company follows a philosophy of supporting the communities that welcome its products.

“Part of our strategy of being sustainable is that we want to manufacture and employ people where we do business.  Rather than building things offshore, we want to be a functioning, live part of every community where we operate.  For example, we want to open an office in Australia and will find a way to manufacture there and create jobs and become a functioning part of a sustainable, local community.”

The sustainability part is reflected not only in a commitment to respecting local communities, but in the efficiency of the system as well.  IWS’s equipment is not something developers install just to make themselves feel good.  The units run at what Mueller explains as somewhere between 400% and 500% efficiency, meaning that for every dollar spent operating the system, the owner gets back around $5.00 worth of heat.

With economics like that, it is easy to understand why the business is growing quickly.  Mueller says he foresees orders totaling tens of millions of dollars over the next three years, with cash flow likely turning positive in 12-18 months.  The public listing on the Canadian Securities Exchange in October 2015 was seen as a cost-efficient way to give the company access to the capital that will help fuel its revenue growth.

At the moment, revenue is generated in one of two primary ways, depending on jurisdiction.  In North America and most other markets, units are sold to the user, with IWS also collecting an ongoing revenue stream through maintenance work.

In the UK, however, the company enters power purchase agreements for its installations through the government’s Renewable Heat Incentive.  This program sees the government commit to paying a project owner a rebate for recovered green energy for 20 years.  IWS partnered with British institutional investors for the capital it needed and Mueller says the groups are working together well and should enjoy good returns on investment.

Helping to open additional international markets for IWS going forward is a new product called Piranha.  This is a standardized, self-contained heat pump built specifically for hot water heating that, like the bigger SHARC units, recovers heat from wastewater.  The stand-alone Piranha system is designed for residential buildings of between 50 and 200 units, and given the pace of urban densification worldwide seems like a product tailor made for the times.

“At its core, our message is that we can retrieve energy for you efficiently and without effort on your part, so there is no reason to throw it away,” concludes Mueller.  “As we move to a carbon free economy, we have developers coming to us and saying they want to plan for the future and get off of fossil fuels as much as they can.  We are the vehicle to do that because we can recycle more energy than anybody else and do it for any building in the world.”

Learn more about International Wastewater Systems at www.sewageheatrecovery.com and on the CSE website at: http://thecse.com/en/listings/technology/international-wastewater-systems-inc