Every investor knows that market investing has inherent ups and downs. But while that's a given, it's never easy to accept the color red emblazoned across a portfolio watch list. The great news- adding a splash of green color isn't difficult to do when looking at the right stocks at the right time. Surge Battery Metals, Inc. (OTC: NILIF) is a case in point.
Yes, this micro-cap battery metals exploration has been in full-on rally mode, resisting the lure of bears to surge by more than 74% YTD. That's in sharp contrast to a bear-market NASDAQ-100, where at least 25% of those stocks are lower by double-digit percentages. Better still, NILIF's gains are holding after profit-taking. On an intraday basis, NILIF shares have soared by more than 96% this year, setting a trend of higher highs and higher lows in the process. (* share price on 1/21/22, 10:00am EST)
Here's the better part. A 74% gain in less than one month is incredible in normal market conditions. But, NILIF stock isn't surging under normal market dynamics. Instead, its shares are soaring at a time when broader markets are posting their worst sessions in two quarters. As noted, the NASDAQ-100 has officially dropped into bear market territory in January, and small, micro, and nano-caps are getting hit even harder than their large-cap counterparts. Again, not all of them.
Despite enormous broader market headwinds, NILIF has decoupled from the bearish sentiment to draw a breakout pattern with a steepening trajectory. And, for longs, knowing that NILIF stock can rally hard during widespread market weakness should provide comfort in knowing what it will likely do once bulls regain control of the markets. Moreover, expect investors who come off the sidelines to pay attention to the market winners.
That's excellent news for NILIF. Keep in mind that investors are much more selective in stock picks following a period of bearish market conditions. Therefore, standout companies are the first to attract attention. And when that standout performer is also a part of a flourishing industry and well-positioned to accelerate development through a risk-mitigated business plan, new investment dollars can add a considerable multiple to already posted gains. Surge Battery Metals meets this description and then some, and its more than impressive YTD gains could be the precursor of bigger ones to come.
Video Link: https://www.youtube.com/embed/kLUMPhvd0pg
Maximizing Operations In Two Countries
In fact, Surge has already laid the groundwork for 2022 to be its breakout year. In 2021, NILIF successfully built upon an already impressive list of operating assets, completed a capital raise that put them in one of the best cash positions in its history, and de-risked opportunities by committing to projects in some of the world's most mining-friendly jurisdictions. Furthermore, NILIF completed a number of accretive deals, including an option agreement with Lithium Corporation (OTCQB: LTUM) that has the potential to turn this micro-cap battery metals exploration company into a company that can compete on a scale with senior miners.
Even better, while 2021 has set NILIF up for a record-breaking year, the company remains aggressive in 2022, continuing to seek and execute deals intended to generate substantial shareholder value sooner than later.
In January, Surge announced it has staked a 1,640-acre property in the Teels Marsh Playa, Mineral County, Nevada. The staking is significant and loaded with revenue-generating opportunities by being located in an active region for lithium exploration and production, about 84 km northeast of Albemarle's Silver Peak brine mining operation. Notably, while past performance isn't always a reliable indicator for stock performance, it is when it comes to mining. Having wealthy neighbors is indeed a plus, especially with valuable metals having a way of proliferating well beyond boundary lines. That's potentially huge news for NILIF.
There's plenty more to like, though. Bulls are also optimistic about revenue-generating potential from a deal made with Lithium Corp. That project alone justifies the entire and current Surge market cap, and it's part of the reason investors have been bidding higher shares. They are right to do so, considering that the agreement gives significant claim interest in the 5,560-acre prospect area. Better still, it's an excellent opportunity to drive value with excellent terms that keep Surge's balance sheet healthy. Instead of a mass cash outlay, the deal structure allows Surge to make staged cash and 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 allows Surge to retain much of its $4.2 million in excess working capital reported at the end of last quarter.
That's not all. With Surge expanding its operations in at least two countries and boosted by ample working capital, NILIF is better positioned than ever before to turn ambition into dollars. Even better, they can make those dollars in multiple markets.
Serving A Massive EV Sector
One of the sectors is the booming EV industry, which delivers an ecosystem of opportunities growing at unprecedented rates. And the better news is that while the industry is booming now, it's expected to become close to a trillion-dollar market opportunity in the next decade. But, a big sector means nothing to a company that can't meet its demands. That's NOT the case with Surge Battery Metals.
NILIF is already positioned to benefit from historic levels of EV sector client interest. More importantly, they have the infrastructure to grow in stride with the industry as technology makes EV and green energy solutions accessible to a broader consumer base. Should everything go according to plan, Surge could become a significant supplier to the EV and green metals markets over the next few years. Remember, too. There's plenty of business to be shared in a near trillion-dollar market.
Thus, in reality, Surge doesn't need to be a leader. There's enormous revenue-generating possibility from being one of several to bring metals and elements above ground. Still, don't disregard NILIF's lofty ambitions or its potential. Unlike many of its competitors, Surge is working within some of the world's most proven reserves and mining-friendly jurisdictions. Therefore, given historical precedence, indicated reserves, and mitigated risk pointing to successful projects being put in play, Surge can do two things faster than expected. One, make money. And two, graduate out of the micro-cap class.
In fact, NILIF is well on its way to breaking through the latter threshold, targeting resistance at its 52-week high of $0.35 that could take the lid off the stock to reach the $1 level. Technicals in January point to a decidedly bullish setup to help that happen.
Proven Assets To Drive Significant Revenues In 2022
And given that Surge is in a better position than ever to capitalize upon its investments in multiple markets, surpassing the $1 mark isn't too lofty of a goal. Alongside expanding its interest with LTUM, Surge also has investments in three mining locations that are expected to be rich in battery-producing metals. Better yet, Surge's properties add diversification to its portfolio, allowing it to expand its market reach by selling a diverse range of metal assets. Remember, the business is targeting markets with record-high demand levels, putting massive near and long-term revenue-generating opportunities in its crosshairs.
That near-term sales potential makes NILIF a compelling investment consideration. Obviously, with its recent spike in price, investors are taking notice and taking advantage of what many refer to as undervalued prices. Of course, while some investors are jumping at the opportunity, others appear content to wait until the NILIF pulls metals out of the ground before pulling the investment trigger. While risk tolerance plays a role in each decision, seeing what Surge has done to enhance its opportunities while simultaneously mitigating operational risk incentivizes being early to the trade. And keep in mind, Surge isn't only about a short-term play.
Surge's accomplishments make a strong case for holding a position for the long term, especially following updates about its operations in British Columbia, which take place in two locations rich in 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, has already indicated a high recovery rate for copper and silver across the 4,302-acre allotment. The second area, located in Central British Columbia, is also close to a known nickel mining project, increasing the likelihood of uncovering yet another big pool of assets. Surveys have already shown significant concentrations of hard nickel, cobalt, chromium, and awaruite, and Surge is at the cusp of turning these metals into revenues.
And that should be easy to do, especially with sales meeting massive client demand. Moreover, that demand is here to stay, with all of the company's mined metals being an integral ingredient to producing EV batteries. Hence, despite its junior miner size, Surge can benefit from being in the right markets at the right time. In fact, buyers of its output have become so eager to secure raw materials to support EV and green metal technologies that many are placing orders before a dig even starts. This gives Surge sales visibility and pricing power, two factors that make the investment proposition even more potent. However, we've only discussed its deals and operations in British Columbia, Nevada, and with Lithium Corp. There's even more to like.
The company also expects to generate significant revenues through its assets at its Northern Nevada Lithium Project, which it is developing alongside Lithium America, America's only current lithium producer. With this project, Surge expects to maximize the element-rich property's value through a strategic plan that combines mining efficiency with marketing expertise. Most importantly, lithium is one of the most valuable elements driving the electric battery revolution, with demand currently at record highs.
Growing EV Demand Translates To More Dollars
Moreover, as record-level demand for these battery-producing metals continues to increase, Surge's in-progress developments will position them perfectly to capitalize off of the growing market. Notably, unlike the turbulent asset prices of the rare earth metals market, the demand for battery metals and lithium can be a more stable and robust contributor to mass-market applications.
This is excellent news for those that mine the metals, like Surge, as unearthing a steady supply could result in substantial returns. Best of all, not only has Surge confirmed that they are fully funded to complete its 2022 explorations, they have plenty of reserves to work with, as well. Thus, with Surge enjoying the operational and financial strength allowing them to secure potentially lucrative supply deals ahead of metals being pulled from the ground, its valuation today appreciably undervalues the basic sum of its parts. However, if the start of 2022 is any indication, the gap between Surge's intrinsic assets and market cap can close as early as this quarter.
Charged Up And Ready To Deliver
And, remember, while the EV sector is hot today, it's still a market far from maturity. That means Surge stays relevant as a metals supplier for the coming days, weeks, months, and years. Further, as technology continues to influence change, current market opportunities are likely a drop in the revenue-generating bucket compared to the number of applications that Surge's "battery," green metals, and lithium can power.
Also, it's important to not lump Surge in with high-risk miners. Surge's approach to exploration and mining is different, mitigating risk by utilizing prospecting, geological mapping, and rock and soil sampling to determine which properties provide the most efficient revenue-generating opportunity. And because Surge has established sales channels, the cost of managing inventory shouldn't be a drag, either.
There's even better news. Surge's bottom-line growth should be enhanced 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. Hence, micro-cap miner, big time company.
Seizing its Opportunities For A Breakout 2022
Best of all, NILIF shows no sign of slowing down its intent to deliver a breakout year in 2022. Besides making new deals, Surge has ample cash on hand and reserves in the ground to transform this exploration company into a revenue-generating juggernaut. And since Surge can target relentless demand from metals and lithium markets, the valuation today, despite its recent spike, still appreciably undervalues its core assets and near-term sales opportunities.
But that's a measure likely to change. In fact, it already is. And with several ongoing explorations, its best balance sheet ever, and accretive projects in the most mining-friendly jurisdictions, the trend higher should do more than continue; it should accelerate. Thus, while its 52-week high and a potential corresponding 112% gain is in the crosshairs, it may just be a stopping point to exponentially higher prices in the coming quarters.
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