According to Vancouver capital markets veteran Ron Loewen, evidence is mounting that the Canadian TSX Venture Exchange (“TSX-V”) has hit bottom and investors have a rare opportunity to create wealth by investing in early stage TSX-V companies. Mr. Loewen specializes in funding and advising on the restructuring of early stage, publicly traded, resource exploration companies. In this interview, Mr. Loewen shares his views on the market and small cap natural resource companies poised to benefit from the ever rising demand for Lithium created by advancing technologies and the green energy movement.
The views of Mr. Loewen are not necessary those of the interviewer, Peter Epstein. Please see applicable disclosures at the bottom of the page.
Ron, thank you for taking the time to speak with me. Can you tell readers a little bit about your background?
I’ve been involved for most of my adult life in the Canadian Venture Markets (“TSX-V”). I was a stockbroker from 1984-2011 and a contributing writer to various industry publications. I've had hands on experience in the practical aspects of TSX-V and formerly VSE publicly listed companies. I have extensive experience in advising TSX-V listed companies on how best they can restructure debt, reorganize management and, if necessary, restructure the capital structure. I 'retired' several times, but since I always invest my own capital, I find it necessary to babysit my investments to help ensure success. Further to that, I now run my own private equity firm to assist those seeking advice.
To invest in early stage companies, you are required to bet on the jockey, not on the horse. My background has always been in high-risk, early stage companies and I have used my experience as a contrarian investor and set my focus entirely on early stage natural resource exploration companies. Early stage exploration companies are very, very high risk and, “you need to break a few eggs to make an omelet.” Most importantly, I put my money where my mouth is and invest in companies I can help.
So, you've been in the Canadian Venture Capital Industry for many years. What have you learned along the way?
The TSX-V is a difficult animal to understand and predict, which is where my contrarian investment philosophy comes in. When times are bad, it's hard to make aggressive decisions, yet I push past that insecurity and make the tough decisions when I see an underlying opportunity. Most investors suffer from the fear that, 'it’s different this time,' that things won't get better, but the history of the TSX-V proves that with regard to the market, things have always gotten better. Historically the market has always returned to, 'buy on any news.,' from, ‘sell on all news.’
I've learned from mistakes I’ve made and I take ownership of them and try not to repeat them. If you don't learn from mistakes, then you’re more likely to repeat them.
So, what's a typical day like for you?
Well, you need to work hard to be successful. I generally put in about a 12-16 workday, 6 days a week. I like to involve my children in my work and would love to see them follow in my footsteps. A hard driving business and work ethic is in my blood. My daily routine involves a lot of research into the sectors I follow. I search out new reports and articles that I read and post on various social media platforms. This routine helps keep me informed and up to date. I basically study anything related to green energy and green energy metals. This knowledge has helped me work with companies like Visual Capitalist to collaborate on 'infographics' that inform the public about Lithium and the markets. Currently, Visual Capitalist and I are collaborating on a very in-depth, industry relevant piece.
You mentioned that you consider yourself a technical market contrarian, what are your thoughts on the market now?
The TSX-V is well off its bottom, up about 20% from January 20th 2016, and capital is becoming easier to find. Despite the uptick in small caps, the TSX Venture is still down about 75% from its March 2011 high. There seems to be a growing consensus that markets are improving. I’ve been assisting early stage Lithium exploration companies for the last 18 months an undoubtedly there has been a mini boom there for companies on the TSX-V that have seen this new opportunity.
With that in mind, what kinds of companies are you involved with?
I’m selective in the companies and the people I advise. I've been involved in mentoring natural resource companies, especially Lithium juniors. One of my most significant investments has been Nevada Lithium junior Dajin Resources Corp (TO:DJI). I assisted, through advice and mentoring, in its reorganization. I also helped them find attractive Nevada-based Lithium targets and raised $1.1 million of fresh capital in October 2014 to breathe new life into the company.
Skin in the game is absolutely essential. That's why I invest my own capital in companies I get behind and have been successful in attracting my associates and other high net worth individuals to do the same. Since Dajin’s funding, restructuring and reorganization 18 months ago, it has been trading with significant volume while other juniors find their stocks completely illiquid. And, as of last week, Dajin touched a new high of $0.18 per share.
Beyond Dajin, I've gotten to know the management team of Pure Energy Minerals (TO:PE). I think that company is well positioned as a pure, Nevada focused Lithium play. Pure Energy has been a success for me and for many of its shareholders. Western Lithium (TO:WLC) is another junior that I’ve traded successfully, but I was not involved in any way with them and don’t know the management. But still, I am impressed with how the company operates. With my team of experts, I think we've learned a great deal about Lithium, especially Lithium assets in southern Nevada.
I always monitor my larger investments closely, in fact I babysit them. If asked, I’m there to provide assistance in any way I can. Although I don’t proclaim to be an expert in Lithium, associating with the people who actually are industry experts, has made a huge difference. When I, along with my associates, invested in Pure Energy, we were accumulating shares in the 15 – 20 cent range. Once the company announced a substantial Inferred resource and off-take deal with Tesla Motors (NASDAQ:TSLA), it propelled the stock to over a $1.00. Pure Energy was even announced the top performing mining company based on market capitalization growth, share price appreciation and trading volume.
Why Lithium?
Again, I don’t consider myself an expert in the field, however I spend a lot of my time reading and researching; Lithium and green energy storage are here to stay. As many experts agree, we've reached the beginning of the end of the oil age. Lithium carbonate and hydroxide prices are rising, as demand grows exponentially. We are starting to see a Lithium staking rush, but investors should be cautious. Some companies don’t have the expertise, properties of value or the means to raise funds. But when I see serious entrants like Lithium X Energy, with a prominent management team coming into the space, it validates my view. So yes, I continue to believe in Lithium.
What other Lithium companies do you like right night now?
I like Nevada Energy Metals (TSX-V: BFF) (OTC Pink: SSMLF) (Frankfurt: A2AFBV) another company I have made a large investment in along with my associates. The company recently acquired and joint-ventured excellent Lithium targets, in close proximity to Albermarle's Silver Peak mine, the only brine based Lithium producer in North America.
Nevada Energy Metals is now focusing on Lithium exploration targets in Nevada, home of the soon to be completed Tesla Motors giga-factory, Silver Peak and previously mentioned Pure Energy.
Nevada Energy Metals see themselves as a project generator -- an incubator of lithium assets. Companies like Lithium X are doing the same. Although Lithium X recently moved into Argentina, which I think is a good play, for now it looks like Nevada Energy Metals is sticking with Nevada. Management feels there's still ample room to pick up promising targets. After assisting the company in raising over $900,000 and introducing them to key individuals and groups, I can say that in my opinion, Nevada Energy Metals is just getting started. They may be new to Lithium, but they have the right people who understand how to locate and explore targets, not to mention, raise money.
As a reminder, my risk tolerance might be far different from readers of this interview. I invest considerable amounts of my own money into a number of very risky, small cap, natural resource companies, primarily lithium juniors. The companies mentioned may never develop a project or even advance beyond the exploration stage. Readers are urged to consult with their own investment advisors before buying and selling highly speculative small cap stocks.
Does that mean Nevada Energy Metals is looking at acquisitions?
Yes. As their mission statement says, they are looking for new Lithium targets. Up until recently, Lithium was one of the only, if not the only, commodities that has experienced higher pricing each year from 2011-2015 and year-to-date. The Lithium battery industry is still in its infancy, now's the time to strike. It's like when oil and gas, 'fracking' reached a tipping point last decade, fortunes were made.
As I sit here today, the company already has 2 excellent lithium targets. One is an earn-in agreement with Dajin Resources for Alkali Lake and Alkali Flats, about 11 miles from Silver Peak and Pure Energy. The second is Teels Marsh West, situated on a closed basin with good surface sampling to date.
You are very passionate about the Lithium sector. Based on your commentary, it looks like there could still be a lot of opportunity here. Thank you for taking time out of your hectic schedule to answer my questions.
It was my pleasure. In this business you need a lot of luck and a lot of hard work. Thanks to visionaries like Elon Musk, who has turned the transportation industry on its ear, we have a new commodity that looks like it is here to stay. I feel that a lot of people underestimate the green energy movement and the role that Lithium plays in it. But just think back to when people couldn’t even fathom that a company like Netflix (NASDAQ:NFLX) would be the beginning of the end of a household name and staple like Blockbuster Video!!!
I think that we have probably seen the peak usage of fossil fuels and they will undoubtedly take a back seat to other energy sources such as renewables, sources that require Lithium for home and grid-scale storage. With the TSX-V turning around and with a commodity that has done very well while all other commodities were in a bear market, it’s time to look at Lithium juniors. Again, I remind readers that these stocks are high-risk and that there are no guarantees, the best advice I can give is to spend time reading, to do research and always seek the advice of a licensed investment advisor.
You are very passionate about the Lithium sector. Based on your commentary, it looks like there could still be a lot of opportunity here. Thank you for taking time out of your hectic schedule to answer my questions.
Disclosures: Readers are charged with conducting their own investment due diligence and recognize that small cap stocks can deliver a 100% loss of investment capital. The author or interviewer as the case may be, Peter Epstein, CFA, MBA believes that he's diligent and prudent in screening out companies that, for any reasons whatsoever, are unattractive investment opportunities. However, he cannot guarantee that his efforts will be successful. Readers understand that Mr. Epstein cannot be held accountable or responsible for the accuracy of opinions, facts, estimates, forecasts and assumptions conveyed herein or for investment actions taken.
At the time this interview was published, Nevada Energy Metals was a sponsor of EpsteinResearch.com. Mr. Epstein owns stock in the Company. He is not a registered or licensed financial advisor. His article(s) on Nevada Energy Metals and other small cap companies should be considered very carefully in this context. Readers are urged to consult with their own financial advisors before making investment decisions. This company, and all small cap companies, are highly speculative, not suitable for all investors.
At the time this interview was published, Dajin Resources Corp. and Pure Energy Minerals were sponsors of EpsteinResearch.com. Mr. Epstein owns stock in both companies. He is not a registered or licensed financial advisor. His article(s) on all small cap companies, like Dajin and Pure Energy, should be considered very carefully in this context. Readers are urged to consult with their own financial advisors before making investment decisions. These two companies, and all small cap companies, are highly speculative, not suitable for all investors.
Any commentary suggesting that a particular stock is, “under valued,” “over-sold,” a “compelling opportunity,” is “de-risked,” could be “re-rated,” or similar words and phrases, are not directed at any individual or group and do not constitute investment advice. Each individual and group must make their own determination regarding the suitability of any stock mentioned herein. Any comparisons between or among stocks are for illustrative purposes only and are not be taken as fact or relied upon. Nothing herein is to be considered explicitly or implicitly a part of full and proper due diligence.
This interview and does not constitute an offer or a solicitation of an offer for the purchase or sale of any shares or other securities of the companies referred to herein. There are substantial risks associated with investing in development stage exploration companies. Potential investors should seek advice from a qualified financial dealer prior to investing in any company referred to herein. No securities commission or similar authority has in any way passed on any of the information contained in this interview.