September 12, 2020 | Blog
Clean Teq is a company that Track Record News reported on 16 April 2020 under the title “5 x successful mining entrepreneur with a CDN4.3bn exit, starts new mining venture.”
This article is a detailed break-down of Clean Teq (“Clean Teq”), which listed on the Australian Stock Exchange (ASX) in 2007 under the ticker CLQ.
Clean TeQ is a leader in metals recovery and industrial water treatment through our proprietary Clean-iX® continuous ion exchange technology.
Our vision is to help reduce the world’s environmental burden using our proprietary technologies and to become a leading supplier of clean energy solutions. We are committed to finding better ways to solve planet earth’s most pressing environmental problems.
With the development of the world-class Clean TeQ Sunrise Nickel-Cobalt-Scandium Project, and a highly innovative water technology business, innovation remains at the core of our philosophy.
Clean TeQ seeks to own, joint venture or develop assets where the application of our technical approach unlocks significant value for our customers, partners and shareholders.
Who is the Founder of Clean Teq?
Robert Friedland is a billionaire mining magnate, who just so happens to also be a mentor of the late Steve Jobs (Co-founder of Apple). The pair worked on Robert Friedland’s uncle’s apple orchard together, which coincidentally happens to be the name of the company Jobs famously started.
Friedland is a serially successful mining entrepreneur, who is responsible for more than 10 major mining discoveries, multiple billion dollar mining exits and over USD10bn in capital raised. He has been described as the most successful mining financier ever.
Robert Friedland’s latest mining project, Clean Teq, involves using technology to bring to life a USD20bn mine, which will satisfy latent-demand for a rare mineral required to revolutionise the Aviation, Aerospace and Transport industries.
Many say that Friedland has the ability to see around corners. He sees trends and problems coming before anyone else and sets the wheels in motion to solve these problems decades in advance, for which he has a track record of creating value for shareholders time and time again.
Robert Friedland’s Track Record of Success
“Promoting a stock is like making a movie,” Friedland once said. “You’ve got to have stars, props, and a good script.”
So, what movie is he making, who are the stars, what are the props and what is the script?
USD20bn of Scandium
Clean Teq started out under Robert Friedland’s oversight as a pure Scandium play. However, in 2016, the company quickly changed its tune and started positioning itself as a Cobalt and Nickel play after realising that raising the required cash to build the world’s largest and highest grade Scandium mine could not be done by selling the Scandium story alone. Investors couldn’t see the big picture.
Nickel and Cobalt for the EV revolution as a means to extract Scandium
So, rather than stalling and pivoting too late, Friedland made a quick switch into Cobalt and Nickel. Syerston (as it was known back then) also had one of the largest Cobalt deposits outside of Africa. Friedland quickly changed the story from the latent demand for Scandium to the global problem of emissions and the lack of resources available for the inevitable Electric Vehicle (EV) revolution, which requires Nickel and Cobalt for batteries.
As a result, the company hit a AUD1bn valuation in 2017 and raised ~USD120m after having already raised more than ~USD60m since 2015. Now the company is on track to mine Cobalt and Nickel in 2021, while pulling out and stockpiling approximately 80 tonnes of Scandium at no cost (~8x the current global supply). They are looking to sell this Scandium at a 75% discount to current prices of AUD5,000 per kilogram, which will generate approximately AUD100m in additional revenue that is not captured in their Definitive Feasibility Study (DFS).
This means they met their objective of building a Scandium mine, albeit indirectly. The story that is still being narrated is about the impending EV revolution, but it’s all about the Scandium and by telling a great story Friedland has managed to have his cake and eat it too.
In December 2019, Clean Teq announced it had signed a binding off-take for Scandium with Panasonic.
Lastly, the share price of Clean Teq rose more than 1,000% between 2014 and 2018 (from around the time Robert Friedland joined the company raising a total of more than USD200m).
A phoenix rising from the ashes
In August 2020, the company announced that its Project Execution Plan (PEP) is on track to be announced at the end of September, which is expected to have a Capital Expenditure (Capex) of approximately USD2bn.
The PEP is designed to provide a definitive Net Present Value (NPV) for the project, which will enable debt and equity financing discussions to progress.
One of the most interesting things to look out for is the amount of Scandium that is included (or not) in the PEP. Essentially, CLQ has the ability to stockpile the world’s largest and highest grade supply of Scandium, which has a potential value of more than AUD20bn. This AUD20bn will not be factored in the PEP and NPV (other than the small amounts they plan to sell each year).
This is where I believe the real value of the Sunrise project is, and once the mine is financed, it will be clear that the Sunrise development is, and always has been about the Scandium.
What other value might be unlocked that is yet to be included, which could send CLQ back to its July 2017 highs and north of a billion dollar valuation?
In addition to the updating the market on the PEP in September, Friedland stated that:
“It is difficult to think of a better walk-up drill target in Australia than the Sunrise dunite, with over one million ounces of platinum already defined surface and a handful of historic drill holes intercepting high grade platinum in bedrocks, but never adequately followed up. The Sunrise resource may have a lot more to give.”
At current Platinum spot prices, that means there is approximately USD1bn of Platinum at Sunrise, that has gone completely unaccounted for.
Platinum is a critical metal for the health and wealth of the world. Demand for the metal is 3.8 x higher than it was in 2018 compared to 1988.
It should therefore come as no surprise that the company confirmed that they would be testing the bedrock at the Phoenix Platinum Zone. As such, diamond core drilling will commence in the second half of CY 2020. It has been drilled to a depth of 140m. There will be 6 drill holes targeting 400m – 600m below surface (4.2x the depth).
This new Platinum resource will either be integrated into the proposed Sunrise nickel-cobalt-scandium mine or be developed as a standalone mine.
Also, historic downhill intersections suggest there is more nickel, cobalt and platinum, via Ivanplats in 2005/06. It’s likely there is a motherlode in the Sunrise dunite (400m below).
The Phoenix Platinum Zone contains mineralisation that appears analogous to Alaskan-type ultramafic systems, often hosting platinum group element (PGE) mineralisation, including Platinum, Palladium, Iridium, Osmium, Rhodium and Ruthenium.
Friedland stated that:
“As I’ve said for years, despite an incredibly valuable base metals resource, Sunrise is one of the best walk-up precious metal drill tagers on the planet. It is astounding what little work has been done to test geological interpretations under the blanket of this laterite, despite very encouraging results from historic drilling,
“It is pleasing to a small renaissance of PGE interest in Australia, with Chalice Gold’s recent exploration success in Western Australia and now with work commencing on the east coast at Sunrise. In defining the Phoenix Platinum Zone we are now starting to pull together a work program that addresses the gaps in our knowledge. In an era resigned to monetary debasement and a search for safe-haven asset classes, platinum has a bright future.”
Lastly, Clean Teq will assess the feasibility of separating and recovering Platinum using the Sunrise nick-cobalt-scandium mine (Clean-iX® continuous ion exchange technology) instead of the usual simple gravity circuits.
During the week preceding the 9th of September 2020 Robert Friedland bought another 11 million shares ($3,127,099), and Sam Riggall bought 475,890 ($103,000). This means Friedland has ~15% ownership of CLQ.
So, what opportunity does Clean Teq present for investors?
Excluding the USD1bn Platinum opportunity, and other minerals that may be discovered, there seems to be a few billion dollars worth of Nickel and Cobalt alongside USD20bn worth of Scandium in the Sunrise mine.
This means Clean Teq which is currently valued at around AUD130m Enterprise Value (EV), presents investors with an opportunity to support a company that aims to unlock latent demand across many important elements on the periodic table that will be required for the next wave of technology, health and environmental sustainability.
As such, if CLQ is able to unlock even 20% of the USD20bn of value in the Sunrise mine, investors will be handsomely rewarded.
Disclaimer: I own shares in Clean Teq (ASX:CLQ).
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