CLQ: A Multibagger in the Making [2019 Bull Run], page-21

Hi @ozbucheron,

The reason that both nickel prices and cobalt prices affect the share price of all companies in the sector, regardless of their level of advancement (exploration v construction v production) is that a share price (and the corresponding market cap) reflects the markets expectations of future earnings across the lifetime of the company.

The intrinsic value of a company can be estimated and compared with the market cap of a company by calculating the projected earnings of the company (cash flows), summing them, and then discounting back to todays dollars. In the case of CLQ this calc obviously relates to the nickel and cobalt price. This is called a DCF analysis.

If you overlay both the cobalt price and the nickel price over the share price chart of CLQ, you will see the correlation. For example, the huge spike in cobalt prices in 2017, closely correlates to the rise in share price of CLQ over that same time period.

Cheers,