As they say, no market goes straight up. But, knowing that doesn't make it less painful to watch portfolio values shrink in the process. After all, no one buys stocks with the expectation of declines. Instead, everyone "buys winners." And, without exception, one of their best picks in the past few weeks comes in a nano-cap package, Surge Battery Metals, Inc. (OTC: NILIF). Since the start of 2022, its shares have been higher by roughly 40%. However, that's after profit-taking. Year-to-date, NILIF shares skyrocketed by over 90% before giving up some of those stellar gains heading into a holiday-shortened week.
A 40% gain is more than impressive in normal market conditions, but more remarkable is that NILIF stock is surging at a time when markets have been at their weakest. The NASDAQ officially entered bear market territory last week, and keep in mind that small, micro, and nano-caps typically get pounced exponentially harder than their large-cap brethren. However, that's not near the case with Surge Battery Metals stock. In fact, it's fair to call a bull market for NILIF shares. And, for longs, seeing what NILIF stock can do during broad-based market declines bodes quite well for what it should do when the bulls regain control of the markets.
Know this, too. Investors putting money to work during and after a bear market usually do so with more discipline. So, it makes sense for those looking for investment opportunities to focus on companies in the right sector at the right time. Moreover, finding a company in a booming industry that is also well-positioned to accelerate growth through a risk-mitigated business plan can add an appreciable multiple to an already bullish proposition. Surge Battery Metals checks those boxes, and that could make its impressive YTD gains the precursor of more to come.
Video Link: https://www.youtube.com/embed/kLUMPhvd0pg
Substantial Assets Expose Value Proposition
The last two quarters of 2021 alone set NILIF up for a potentially transformational period of growth this year. They added to an already impressive list of operating assets, completed a capital raise putting them in one of its best cash positions ever, and de-risked its opportunities by focusing on monetizing projects in the most mining-friendly jurisdictions in the world. Not only that, NILIF completed several deals, including entering into an option agreement with Lithium Corporation (OTCQB: LTUM) that could transform this nano-cap exploration company into a revenue-generating juggernaut.
The more excellent news is that while 2021 set NILIF up for record-setting performance this year, they haven't slowed down their deal-making prowess. Last week, Surge announced staking a 1,640-acre property in the Teels Marsh Playa, Mineral County, Nevada. Located in an active region for lithium exploration and production, about 84 km northeast of Albemarle's Silver Peak brine mining operation, it may be one of the reasons the bulls are sending NILIF stock higher.
Of course, bulls are also riding the momentum from the potential interest in the deal with Lithium Corp. That project can be a game-changer on its own, with NILIF planning to increase production activity by drilling into claim holdings in the prospect area that expands 5,560 acres. The terms allow Surge to make staged cash, share payments, and incur a defined $1,000,000 in exploration expenditures to earn an undivided 80% working interest in the San Emidio Lithium-in-Brine property. This means much of its $4.2 million in excess working capital at the end of last quarter can stay with the company.
That's excellent news, especially with Surge accelerating explorations in at least two countries.
Targeting Several Valuable Markets
Keep in mind that NILIF isn't only about exploration. They are also positioned to benefit from a wave of client interest, with an EV industry growing at a pace even its staunchest advocates wouldn't have predicted. If all goes according to plan, Surge will embed itself as part of an exclusive supplier's list to EV and green metals markets expected to approach the one-trillion-dollar mark by 2030.
It's not a far-fetched presumption, especially with Surge working within several of the world’s most proven reserves and mining-friendly jurisdictions. Thus, with historical precedent and indicated reserves suggesting a future of success, Surge may not stay at nano-cap levels much longer.
In fact, piercing resistance at its 52-week high of $0.35 could be the spark to ignite a rally taking the company out of pennyland status. Reaching the $1 mark isn't an overly ambitious target, either. Surge is better positioned than ever to maximize its investments in multiple interests.
Proven Assets And Multiple Interests Justify The Rally
In addition to expanding its interest with LTUM, Surge has stakes in three mining properties that can turn valuable battery-producing metals into dollars. Even better, its properties offer diversification, enabling Surge to extend its market reach by selling a unique assortment of metal assets. As mentioned, its business targets markets with record-level demand, and that demand also puts massive revenue-generating opportunities in Surge's sights.
Thus, comparing NILIF's current market cap to its near-term sales potential doesn't even serve up an appropriate opening bid to compensate for a forward-looking valuation. Granted, some investors may be waiting for when metals come out of the ground to take a position. But, while prudent in some ways, they could be leaving significant value on the table by not taking investment action sooner. Maybe they shouldn't.
Instead, investors can embrace plenty of reasons to attack the long side of the trade. Updates about its British Columbia operations alone put NILIF's pace of growth into warp speed, banking on two locations loaded with copper, nickel, and other valuable metals. Its Caledonia location, located within a 31-mile long copper belt and 7 miles away from BHP's Island Copper Mine, is metal-rich, indicating substantial recovery rates for copper and silver across the 4,302-acre allotment. The second location in Central British Columbia is near another proven nickel mining project, heightening the optimism of finding another large pool of assets. Already, surveys indicate substantial pockets of hard nickel, cobalt, chromium, and awaruite. Of course, mining the metals is only part of the equation. Selling it is the better part.
In that respect, Surge should meet no market softness. Demand is surging, with each metal being an integral ingredient to producing EV batteries. If anything, buyers of these metals are getting more aggressive, sometimes buying output before a dig starts. That makes the combination of having the right metals and pricing power a one-two punch that prospective investors shouldn't ignore. But, there's more than its BC operations and deal with Lithium Corp to support that consideration.
Surge also expects to drive revenues through its assets at its Northern Nevada Lithium Project, alongside Lithium America, America's only current lithium producer. From that project, Surge expects to maximize the element-rich value of the property through a strategic plan that combines mining efficiency with marketing expertise. Best of all, lithium is one of the most valuable elements powering the electric battery movement, with demand for it currently off the charts.
Soaring Demand From EV Sector
Indeed, demand for all of Surge's metal interests are reaching unprecedented levels. Today, 18 of the largest 20 manufacturers spend billions on EV design and production. Even better, unlike the rare earth metals market that sent those asset prices soaring and then crashing, the demand for battery metals and lithium can be a more robust and long-term contributor to mass-market applications.
The good news for those that mine the metals, like Surge, is that pound for pound, battery metals are in a better market position than rare earth metals could have ever hoped for. Hence, theoretically speaking, Surge is sitting on mountains of cash. Best of all, Surge provided a shareholder update confirming that they are funded to complete its 2022 explorations, holding ample reserves as well.
Thus, with Surge enjoying the operational and financial strength that can lead to securing supply deals sometimes ahead of metals being pulled from the ground, its valuation today is a disconnect from what's happening on the ground in real time. But, if the past three weeks are any indication, the window of entetaining this wide gap between intrinsic assets and market cap could close quickly.
The EV Trend Is Just Getting Juiced
Remember, too. While the EV sector is hot today, expect it to be scalding in the coming weeks, months, and years. And, with NILIF taking multiple shots on revenue-generating goals, its investors become inherently positioned to punch a ticket to join what could be a transformative bull run. That's not all.
As technology ramps, current market opportunities will be a drop in the bucket compared to the number of applications that Surge's "battery," green metals, and lithium can power. Better yet, it's important to note that Surge's approach to mining can be profitable sooner by mitigating risk. How? By utilizing prospecting, geological mapping, and rock and soil sampling to determine which properties provide the most efficient revenue-generating opportunity. And with sales channels clearly defined, the cost of managing inventory shouldn't be a drag, either.
There's better news still. Surge's bottom-line growth should be expedited by a copper, nickel, and lithium market expected to increase 15x by 2030. Another consideration that holds tremendous operational value is that Surge's projects are ESG mandated. That's a big deal, as ESG (Environmental, Social and Corporate Governance) mandated companies are projected to grow almost 3x as fast as non-ESG-mandated businesses.
Thus, as decision-makers prioritize the value of environmental sustainability, Surge should continue to hover near the top of contract lists for consideration. In fact, with its ESG distinction, Surge is better positioned than most to expand its operations and take advantage of fast-moving, competitive markets. In many respects, the designation will even allow Surge to better meet specific demands ahead of more senior mining companies.
Bottom line: despite its nano-cap size, Surge can effectively compete with just about any company. That's good to know.
Value Exposed, Opportunities In Plain Sight
But back to basics, here's the most obvious reason to consider investing in Surge Battery Metals- NILIF is showing no sign of slowing down its intent to deliver a breakout year in 2022. Surge has reserves in the ground to capitalize on enormous market demand that, when combined with expanding lithium interests, makes the valuation disconnect more than attractive; it's a call for investment action.
Frankly, taking a sum of its parts that combine Surges operations, balance sheet, and accretive projects already presents a case for Surge stock to increase 2X from current levels. Still, that only brings them back to their 52-week high. The more appropriate value, noting that Surge is better positioned for growth than ever in its history, is likely significantly higher – making current prices simply too good to ignore. Recent price trends suggest that savvy investors aren't.
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