Clean Teq and Musk from Barry Fitzgerald, page-18

Hi Tle85, I don't like to give direct financial advice, so here are the facts instead:

• There are currently no material Class 1 nickel projects in construction anywhere in the world
• The lack of new Class 1 (either nickel sulphide or pressure acid leach [PAL]) developments is leading to a continued Ni sulphate premium of up to 35% over the London Metals Exchange [LME] nickel price
• No other person ever has been more successful at taking what come to be tier-one assets that he has discovered or has interest in ‘to market’ than Robert Friedland (the chairman of CLQ)
• The world needs more than 1 million tons per year [mtpa] of new nickel capacity over the next decade (about 50% of today’s global nickel production of 2.2mtpa). That is the equivalent of five of CLQ’s Sunrise projects each year for the next decade
• The majority of those new projects will need to produce battery-grade nickel feedstock (referred to as Class 1 nickel), not low-grade nickel pig iron or ferronickel
• Nickel sulphide deposits have traditionally supplied class 1 nickel, but are now essentially an extinct beast. The last major nickel sulphide deposit to be brought to market was Voisey Bay in Canada. Guess who discovered this deposit? Robert Friedland. This was described as the find of the century. Voisey Bay turned out to be lowest cost nickel producer in the world.
• So, the world is turning to nickel laterite deposits. Nickel laterites are a very important type of nickel ore deposit. They are growing to become the most important source of nickel metal for world demand
• Historically, these laterite projects take approximately 6 to 12 years from start of feasibility study to first production.
• CLQ is the only development-ready Class 1 nickel project in the world. It will be in the top 10 largest nickel sulphate and cobalt sulphate producers on the planet. It will also be the highest grade and largest source of Scandium on the planet

As to what might or might not be a good entry price:

• Australian Super and Fidelity invested $150m AUD into this project at a share price of $1.15 per share.
• Pengxin Mining paid $81m AUD to take a 16% stake in Clean TeQ at 88 cents per share.
• None of these institutional investors have sold a cent and Australian Super continues to accumulate.
• The net tangible assets of Clean TeQ stands at ~ 30 cents. I.e. even if the mine is unsuccessful and the CLQ Water Treatment business generates zero cashflow (both scenarios are extremely unlikely), the value of this company is still 30 cents MINIMUM. I expect the share price to re-rate to above this level in the near term. This re-rate will be assisted by newsflow from the CLQ water treatment business, the PEP announcement and news regarding the prospective Au/Cu tenement...
• The only reason the share price has fallen this low is because it has been short sold and manipulated lower. Even the company is aware of this. Short sellers are now closing out their positions as the nickel price is due to start climbing.
• Based on the NPV of the mine, the fair value share price for CLQ once Sunrise is financed is north of $2 per share

So, at the current price, which is at an 82% discount to the price the institutions paid at the capital raise, the answer is clear to me. My status remains: "Buy" & "Held".

T.E.P.