Scott Matusow

About the Author Scott Matusow

StockMatusow.com is Scott Matusow; Team Leader, co-owner and founder of StockMatusow.com and Dan Cohen, co-owner, and independent investor/scientist/inventor/trader and lead contributor at stockmatusow.com. Scott is an independent investor/writer/trader and team leader of StockMatusow.com. He has have about 20 years of stock market experience which include trading, investing, and managing his family’s trust as well as his personal account. Scott has had the most success in trading/investing in smaller cap growth companies. Because Scott is not 'officially trained' in the markets, he see things outside the box, using his experience to provide clarity and alpha. Scott uses his ability to read situations, emotion, charts, times and sales, historical data, and macroeconomic and other market forces to predict stock price movements, in both short and longer terms situations. Using these acquired allowed for him to completely divest his own and family's money near the top of the market before the 2008 financial crisis. Dan Cohen is an entrepreneur in the fields of biotech, nanotechnology, medical diagnostics, and energy storage - Dan is also a Scientist and inventor. He has 7 years of experience investing and trading biotechnology focused equities with a specialty in identifying under-appreciated value in small caps. Dan utilizes his experience reading and reviewing scientific literature to evaluate prospects for success. His work with diagnostics development give him a strong background in immunology which is leveraged in evaluating immunology focused approaches. As well Dan has 5 years trading futures, specializing in E-minis and Treasury products. He utilizes a combination of technical analysis, deep scientific research, and macro views to generate alpha for the team. Places you can follow Scott are: www.stockmatusow.com http://www.twitter.com/StockMatusow @StockMatusow http://www.facebook.com/TheScottMatusowShow Places to follow Dan are: https://twitter.com/biosleuth and www.stockmatusow.com

Texas Mineral Resources (TMRC): This Rare Earth Metal Play Could See Substantial Upside


Texas Mineral Resources (TMRC) is a unique play in the rare earth space, which has been developing a new methodology to extract these elements from waste coal products in Pennsylvania. The company has been operating under grants from the Department of Energy (DoE) as well as the US Defence Logistics Agency (DLA). In 2015 the company was awarded a grant from the DLA and a year later successfully demonstrated a proof of concept which then led to the application of a DOE grant. Just recently in April of this year, the company announced a successful completion of phase 1 of the two phase DOE grants. Minerals including Scandium, Neodymium, Dysprosium, Cerium and Lanthanum were purified to 99% from coal waste, meeting the study goals. On February 28th of this year, the company had applied for the second phase of the DoE grant for the award of 20 Million.

The second phase of this grant would be used to build a pilot plant in Pennsylvania consisting of a self-contained, modular and mobile ion exchange/continuous ion chromatography (CIX/CIC) system. The company has been operating within a consortium with Penn State University, Inventure Renewables, and K-Technologies. What’s differentiated in this approach is its relatively small environmental footprint, whereas rare earth extraction typically comes with significant issues with radiation. Penn State has developed a process with the company to generate a high recovery rate of 90% using a benign pH of 5. On a relative basis this concept can be scaled quickly with the right funding. Given the nature of these strategic elements in defence applications, continued trade war pressure from China will likely accelerate the scale-up.

For those interested, you can view the company’s presentation it sent The DoE here.

Additionally, as of today it’s being reported that The Pentagon just submitted a report on REE to Congress as it seeks to reduce reliance on China for REE’s

So, what does this all mean? We can honestly say that this play is a highly speculative one that carries a considerable amount of risk, especially when viewing it as a speculative investment. However, we think the odds are favorable that the company receives the $20M grant from the DoE, and headlines matter when it comes to these OTC stocks.

Positive Considerations:

  1. Insiders own roughly 30% of the float which comes in at around 26M, with 46M outstanding shares
  2. The shell itself is ‘clean,’ with only 1% warrant coverage
  3. China is likely if not now, at some point to escalate the current trade war narrative as their communist government is not in the practice of ‘saving face’ so-to-speak, as this would show weakness to an already splintered populace.
  4. Likeliness of receiving grant from DoE is high – game changer
  5. Political expedience for President Trump – the company would be primarily using coal from Pennsylvania, a key swing state for Trump in 2020 and a large coal mining producing state, especially in Northwest region of the state where the company’s pilot facility is located.

Negative Considerations:

  1. Company trades on the OTC, which is not direct access to NASDAQ market – this means there is a ‘middleman’ between buyers and sellers routing orders manually to the NASDAQ.
  2. China could de-escalate the current trade war narrative and take the rare earth metal supply chain threat off the table.
  3. Company may not receive the grant they have applied for.

Price Target Scenarios:

  1. If China escalates trade war further by even threatening to cut REE supply chain and company receives the DoE grant in the near term, we think we will be over $1
  2. If China backs down on REE threat, yet company receives grant, then 50 cents a share or so
  3. If China escalates trade war and company does not receive grant – 50 cents a share or so.
  4. If China backs down on REE threat, and company does not receive grant, then 15 to 20 cents a share.

All of the above defines the short-term trade here. Long term success or lack thereof is very hard to determine at this time. An up listing to The NASDAQ would certainly be a game changer, but even then, long term success is too hard to predict. At best, its long term chances here would be highly speculative

 

Disclosure: We have a long position in Texas Mineral Resources stock

 

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