Lithium Bull Market:
This is a contribution from an independent analyst and is opinion only and NOT investment advice.
This analysis seeks to provide an update on the Lithium bull market and in particular the performance of Pure Energy Minerals within that bull market along with the company’s potential. Prior to getting into the latest analysis readers should be aware of two previous reports on these issues provided by the same analyst. The first link explains the motivation for getting involved with Lithium and why it could very well be an exceptional opportunity. The second link specifically analyzes Pure Energy Minerals and the performance of its equity. Here are links to these two reports:
So, what has been going on lately with the company? First let’s take a look at the recent news and events. On July 20th the company closed a private placement for $6.16M that was oversubscribed. This offering potentially dilutes the number of shares outstanding by over 22 million shares because each “unit” in the offering includes a common stock share AND a warrant. This is significant dilution but it does do a couple things which are A) bring in over $6M in cash for the debt free firm, and B) spread out the dilution from warrants over a 36 month period.
On August 9th Pure Energy Minerals reported on results from its testing of Lithium extraction methods with a partner in Israel. The report essentially said that the testing was progressing with results better than expected. This is a method of extraction that intends to make Lithium extraction more efficient and profitable.
On August 24th Pure Energy Minerals announced that it executed a definitive option agreement to acquire more land adjacent to its existing property in the Clayton Valley South area in Nevada. The details are found here: http://www.pureenergyminerals.com/pure-energy-minerals-options-1520-acre-property-in-clayton-valley-from-cypress-development-corporation/
This option agreement suggests to this analyst that the company is highly confident in its current land portfolio to the extent that it is willing to obtain the land adjacent to its current portfolio. This land also orients around the northern portion of the existing Clayton Valley South land owned by Pure Energy Minerals. One could interpret this as a potentially very positive indication of what will come from the upcoming Preliminary Economic Assessment scheduled for release before the end of the current quarter. You have to wonder why they would option for more land right next to the current land if they didn’t like what they see from the current land.
Now, let’s take a look at the most important information and analysis which is the technical patterns and behavior of the equity. In early July (seen in the above link to the piece at SeatsForEveryone.com) this analyst suggested that it was entirely possible that investors were starting to accumulate shares of PEMIF in advance of a resumption of the bull market. The weekly chart showed that after getting crushed the stock was making its way back above key support levels on volume that in general was increasing while also leaving behind the overhang of the large warrant positions that expired in June.
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On 8/26 PEMIF closed at $0.67 which is notably above the 10-week moving average of $0.61. This past week was potentially a very influential week for the stock. Volume picked up to a level higher than the previous two weeks. The stock also closed literally at the highest point of its weekly range which is extremely bullish and as noted is above both the 10-week and 40-week moving average. This past week was also a bit of a wild week with the news concerning the option agreements for more land and the stock dipping down to $0.57 (below the 10-week moving average) only to rocket higher on Friday and close at the top of the weekly range.
A few weeks ago a huge amount of volume poured into the stock with a weekly volume total almost eclipsing the highest weekly total on record. The price and volume action since the crushing of the stock in May implies that it is more likely that this equity is under substantial accumulation, rather than distribution, heading into the release of the Preliminary Economic Assessment. Time will tell what happens but the price/volume action in the equity suggests that the market is expecting very positive results from the company.