Inevitably, markets will occasionally experience periods of weakness. But that weakness exposes opportunities, too, especially in sectors where product demand and pricing power are at all-time highs. Those measures describe the EV battery metals market to a tee. And finding the companies playing into that demand could provide a safe haven for investors and generate significant returns in the process. Surge Battery Metals, Inc. (OTC: NILIF) makes that list.
Better yet, not only is NILIF worthy of making the list, but they also benefit from getting a tailwind from government regulations and technological advancements that continue to push electric vehicles into the mainstream. Of course, having the right products to sell at the right time matters. Surge Battery Metals does. Moreover, they are well-funded, are operating at several of the most mining-friendly jurisdictions in the world, and have made deals that could transform this small-cap metals exploration company into a revenue-generating juggernaut by the end of 2022.
Thus, while NILIF stock is caught in a downdraft with broader market weakness, consider it an opportunity that may be getting too big to ignore. After all, there can be no denying that Surge Battery Metals is in the right markets at the right time. Better still, they are ideally positioned to maximize their market opportunities.
EV Sector Drives Interest In Surge Battery Metals
In fact, a transformation at Surge is already in progress by leveraging assets that capitalize on potentially massive revenue-generating opportunities as demand for electric vehicles (EVs) and the battery metals required to power them pierces all-time highs. And the more excellent news is that the exponential growth in the sector is allowing Surge Battery Metals to land deals that can be immediately accretive to revenues. In addition, by tapping into some proven properties in two countries, maximizing the power inherent to those agreements could spark transformational growth for Surge as they serve one of the generation's fastest-growing and most important global industries.
In fact, exponential growth for Surge is likely in 2022, especially with the company arguably in its best-ever condition financially and operationally to exploit the booming battery metals markets. That's, of course, excellent news for both Surge and its shareholders. And that's not unjustified speculation. It's a reasonable assumption knowing that Surge has inked multiple deals that can expedite near and long-term market opportunities to transform itself from a metals exploration company into one that unearths valuable battery metals and elements.
By the way, that could happen faster than many think, especially with geographic mapping suggesting that Surge could be sitting on potentially hundreds of millions in underground assets. And, with even more deals expected to be negotiated, investors taking advantage of what many call significantly undervalued share prices could be well-rewarded as the company matures.
Capitalize On A Valuation Disconnect
There are reasons to be bullish. Part of that sentiment traces back to 2021 when Surge enhanced its already impressive list of operating assets, completed a capital raise that put them in one of its best cash positions ever, and mitigated many of the inherent risks in the battery metals exploration sector by conducting their operations in some of the world's most mining-friendly jurisdictions. And they haven't slowed in 2022. Surge recently announced additional agreements expected to accelerate expansion while diversifying its revenue sources.
One of the deals to watch is an option agreement with Lithium Corporation (OTCQB: LTUM) that could create substantial near-term shareholder value. In fact, this agreement alone could be the potential catalyst that propels Surge from a small-cap exploration company into one of the industry's most reliable suppliers of battery metals and elements.
The agreement provides Surge with substantial claim interest in a 5,560-acre prospect region, which should allow the company to maximize revenue-generating interests while keeping its balance sheet strong. That's because the deal's terms are quite favorable to NILIF. Instead of a large capital draining 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 means they can keep most of its $4.2 million in excess working capital reported after the previous quarter and put it to work to facilitate additional asset interests.
Surge isn't stopping there, either. In January, the company announced that it has staked a 1,640-acre property in the Teels Marsh Playa in Mineral County, Nevada. Located roughly 84km northeast of Albemarle's Silver Peak brine mining operation, the agreement should be accretive to Surge's expected revenue streams by drilling into new opportunities in a region with high lithium concentrations. It's important to note that in the mining and exploration industry, prior performance is a solid predictor of future success. And, with the region having proven its worth as an ideal location for lithium mining and exploration, NILIF and its investors could expect a substantial return from this new interest.
One of the most appealing factors of NILIF's expansion strategy is its focus on choosing operating sites within the world's most mining-friendly jurisdictions. This allows Surge to avoid many potential operational disruptions caused by environmental groups or geopolitical uncertainty. Thus, unlike many of its competitors facing potentially turbulent local climates, Surge can confidently invest its resources in its properties without fearing unplanned closures.
That's good to know when serving a generational market opportunity.
EV Industry Will Be A Trillion-Dollar Market
Even better, with the EV industry becoming one of the world's fastest-growing and most important sectors, Surge's target market is only continuing to grow in size. Recent estimations predict that the already massive industry could reach a trillion-dollar valuation by 2030. This represents an exponential growth in market opportunity over the next eight years. And with the company in its best operational position in history, the expectation that NILIF will grow along with those increases makes sense.
Leveraging its already accretive deals and using its excess capital to add additional assets could help accelerate that mission. Thus, while NILIF's asset portfolio is impressive now, knowing that they likely have other deals lined up, an investment at these levels could exploit an opportunity made available by weak markets, not anything company-specific.
Metal-Rich Assets Expose Valuation Disconnect
As it stands, several signs point to the possibility that Surge could be on the verge of entering rally mode. In addition to the company's deal with LTUM and expansion into Teels Marsh Playa, NILIF's stake in three mining locations known to be rich in battery metals could bring considerable near-term returns. Surveys and geological mapping indicate potentially lucrative mining results.
Surge's exploration initiatives within British Columbia are expected to contribute significantly. This project encompasses two locations known to have high reserves of copper, nickel, and other vital metals used in producing EV batteries. The 4,302-acre Caledonia claim has a proven track record of being rich in copper and silver, located just 7 miles away from BHP's Island Copper Mine. The second site is close to known nickel deposits, implying that more metal can likely be found in the area. Notably, surveys of the site indicate high concentrations of hard nickel, cobalt, chromium, and awaruite, all of which can generate excellent income potential to Surge.
Furthermore, Surge is also developing its Northern Nevada Lithium Project in collaboration with Lithium America, America's sole active lithium producer. Lithium is one of the most critical components in battery production. Its demand is skyrocketing as electric vehicles become more commonplace and because it is a required element for most battery-powered electronics. With this in mind, Surge intends to capitalize on the plethora of resources in Northern Nevada by combining new breakthroughs in mining efficiency with its marketing expertise to get its unearthed battery metals into clients' hands.
Boost From A Tailwind of Surging Demand for EV Metals
Keep in mind, too, NILIF is also on pace to reach several milestones, giving investors more to look forward to. Moreover, they can count on another thing: the unprecedented demand for next-generation batteries is here to stay. Indeed, the metals and elements required to manufacture those batteries will grow in tandem to meet that demand. Best of all, unlike the historically volatile asset valuations of other rare earth metals, the battery metals and elements being mined by Surge are predicted to be a long-term necessity to an industry still in its relative infancy.
For element and metals miners like Surge, that visibility is a critical component of a successful business strategy. The good news is that there will undoubtedly be no shortage of demand for other battery-related technologies, and analysts have emphasized that metals prices are sure to reflect that value.
Still, an exploration and metal mining business must be able to meet those record-high demands to be successful. Surge has indicated it can, confirming that it is fully funded to complete its planned 2022 explorations. Not only that, but the company also has an impressive cash reserve to continue building its asset portfolio. Thus, current share prices may be a value opportunity too good to ignore.
More To Like At Surge
While all the above is great, there's still more to make the investment proposition more compelling. By adopting the most efficient and responsible mining technologies and processes, Surge and its investors benefit from the advantage of operating with reduced risk. The company has also taken measures to ensure that its exploration and mining operations do not suffer from the same risks as other operators by utilizing advanced prospecting, geological mapping, and rock and soil sampling to determine which properties can provide the greatest potential for return on investment. Furthermore, Surge has already built a formidable network of sales channels, meaning that supply chain issues shouldn't impact its business when that time comes.
A final key differentiator to note is that Surge benefits from the status of being an ESG (Environmental, Social, and Corporate Governance)-mandated company. This designation could potentially triple the revenue-generating opportunities compared to those without the ESG status. This ESG designation allows Surge to meet the demands of a competitive market and seize opportunities that even some of the more senior mining companies can't. Thus, though Surge may be a small-cap exploration company in size, its revenue potential based on the sum of its parts puts them in the big leagues.
A Compelling Investment Proposition
Accordingly, the entirely of the Surge Battery investment proposition is more than attractive; it's compelling. Even a basic calculation of its assets suggests that its current market cap falls well short of an appropriate valuation. Not only that, as noted, NILIF is definitely in the right markets at the right time and has demonstrated its ability to decouple from market weakness on sector news. Remember, too, NILIF has ample cash reserves, is boosting its shareholder value by leveraging several accretive business deals, and continues to seek out new opportunities to expand its growing portfolio.
For now, though, knowing that Surge Battery Metals is focusing its exploration projects in the world's most mining-friendly jurisdictions, enhancing its asset portfolio, and is securing accretive deals in locations with proven metal reserves, should be enough to drive share prices higher. Therefore, investment consideration now may be more than a wise consideration; it's a timely one as well.
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