Andrew had asked about Lithium X Energy Corp (LIX TSXV) and Nemaska Lithium Inc. (NMX TSXV) in April when he tasked me with an inspection of Berkshire Hathaway Inc. (BRK.B NYSE). I promised to rack em and get to them when time permitted and that time is now. Today I’ll analyze LIX and followed by NMX.
LIX is a junior exploration company formerly operating as Royce Resource Corp. The company has two principal projects, one in Nevada and the other in Argentina. An added goose on this story is the involvement of well respected mining investor Frank Giustra.
In an earlier analysis of Pure Energy Minerals Limited (PE TSXV) the case for lithium was outlined.Elon Musk and his vision for electrical storage for use in cars, home, and industry are driving the demand for new sources of the metal.
LIX has a market capitalization of 86.7 million, and has traded an average of 617,486 shares a day over the last three months. On these metrics the stock would best be placed in the speculative portion of a portfolio.
An audit of the charts will inform my opinion on this company.
The one year chart tells the tale of what we used to call a great promote. The backers on this deal found a great story in the rising demand for lithium, raised capital, and started the process of staking claims to properties that they believe hold the potential of being blessed by mother nature with mineable reserves. Now its a matter of working the claims to see what is there and if its worth getting after it.
The ride since the fall of 2015 has been spectacular! Even the jump from $0.40 in February of 2016 to the 52-week high of $2.85 would have to be seen as outstanding. What is observable is that investors who caught the ride have been harvesting profits taking the shares to a retest of support along the 50-day moving average.
The six-month chart pulls focus on the sell signals generated by the MACD and the RSI as LIX pulled back from the 52-week high. At present there are no indications that we can expect a new leg up in the short term.
Speculative investments need to be monitored closely. The next likely flex point for this stock is when we start seeing press releases related to field operations.
Next time I’ll examine the case for NMX.
Make it a profitable day and happy capitalism!