Opinions
John Embry
Critical Elements Corp.
CRE-X
WEAK BUY
Apr 03, 2007
Stock price when the opinion was issued
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As a developer, it comes down to the quality of CRE's assets. It has $40M cash, but no revenue, losses and negative cash flow. Insiders own 4.5% and management looks good (the CEO sold Rockwood for $6B). Its Rose Project (Quebec) is quite attractive, with an expected IRR of 82% and payback less than two years. The mine when built is expected to generate substantial cash flow over 17 years, with relatively low capital costs to build (though we would expect this to increase with inflationary pressures as other mines have experienced). Project financing should be completed by the end of this year, and first production could be in 2025 (though we always add time to management's expectations). Exploration potential in the area looks good and could add to economics. Overall, a very nice project in a good location. The stock is up 35% in a year but has struggled somewhat in 2023. Lithium prices moved lower and this has impacted the confidence of expected financing partners.
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