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Call it taking the road less traveled in the resource industry.
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While other companies in the resource sector talk about investing in green metals, CoTec Holdings Corp. (CTH.V) is actually making investments in revolutionary processes and projects that can make metals production green and is securing the first-mover advantage.
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As you’re about to see, CoTec has already invested in two disruptive technologies in the resource industry and is on the verge of adding another. It has a significant pipeline of companies/technologies that are being reviewed, as it executes on its strategy of securing and then applying technology in its quest to become a mid-tier metals producing company.
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These technologies promise to dramatically reshape how some metals are produced, saving resources and energy while significantly reducing carbon dioxide emissions which could translate to significant profits and unlocking of value within marginal assets.
In short, this is a chance to get in on the ground floor of company with the game plan and the management team to make its ambitious goals a reality … and produce potentially massive gains for shareholders along the way.
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A Green Production Process
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The CoTec story starts with the company’s investment in BSL, a company with a patented binding technology.
BSL is the world leader in cold agglomeration and pelletization, technologies that can dramatically reduce energy usage and emissions in the process of making a saleable product out of iron ore.
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But this is more than a big equity stake: The C$4 million total investment and commitment that CoTec has made in BSL gives it co-investment rights in certain jurisdictions.
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Those rights have CoTec focused on identifying marginal iron ore mines and waste dumps to which it can apply BSL’s technology.
Not only would this process reduce the carbon footprint of such projects, but it would also transform their profitability while potentially reducing liability for remediation.
It’s a win-win scenario that has CoTec on the hunt for large mining and steel companies to explore applying BSL’s technology to their projects.
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MagIron:
Transforming Iron-Ore Concentrate Production
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But that’s not the only arrow in CoTec’s quiver. It also made a US$2 million investment in MagIron which has already increased by 130%.
That investment gives CoTec a 16% stake in MagIron, which has purchased an iron ore concentrator in Minnesota out of insolvency with total original cost of ~$500 million. The company also has proprietary technology to realize significant efficiency improvements on iron ore concentrate production.
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While the project is still dependent on MagIron raising about US$80 million to bring the concentrator back online, CoTec is excited about its chances, given that it’s a relatively new plant that has hundreds of millions of dollars of in-place infrastructure.
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If successful, the value of this investment alone could possibly justify CoTec’s entire current market cap.
Add in a potential CoTec investment in an Australian incubator fund with ties to ore-sorting technology, and the investment in MagIron gives the company a powerful strategy on the verge of realizing its potential.
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The Management Firepower
To Realize CoTec’s Goals
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Any bet on a resource company is inevitably a bet on management, and junior resource management teams don’t come more seasoned than the one leading CoTec.
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It starts with CEO Julian Treger. He was previously the CEO of Anglo Pacific Group Plc, where he executed $450 million of acquisitions on his way to transforming a coal-based equity royalty business to a battery-focused streamer.
More recently he was a key driver behind the merger between Mantos Copper and Capstone Resources for close to $1.6 billion and around 500% of its original cost. Last but not least, he was instrumental in taking Western Coal from close to bankruptcy to an exit worth $3.3 billion.
Then there’s non-executive chairman Lucio Genovese. He has 33 years in the merchant and financial sector for the metals and mining industry and is also CEO of Nage Capital Management in Baar, Switzerland. He also ran the copper division of Glencore for many years.
Then there’s Braam Jonker, CoTec’s chief financial officer. An accomplished financial leader with over 30 years of experience in the mining industry, Jonker has overseen the raising of more than $750 million in debt and equity instruments for the sector.
Among the array of big names behind CoTec is none other than non-executive director Tom Albanese, who previously served as CEO of Rio Tinto plc and currently serves as non-executive director of Franco-Nevada Corporation.
Last, but not least, recently CoTec appointed Sharon Fay to its Board as non-executive director. She is an extremely well-accomplished investment professional that was Head of Equities for AllianceBernstein, which currently has approximately $779 billion assets under management.
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Simply put, CoTec’s team is a team led by heavy hitters with an entrepreneurial bent and an understanding of finance. This is a group of players with a track record of attracting major money and making big things happen for shareholders.
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Applying The Tech They Invest In
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With CoTec, it all comes down to a strategy of making investments in disruptive tech for the resources industry with the purpose of getting the rights to apply that technology in OECD jurisdictions ahead of everyone else.
CoTec wants to take the technology it invests in and apply it to recycling, tailings and fines, and marginal and previously uneconomic operations.
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The goal is to use this tech to transform CoTec from a tech investment holding company into a green, mid-tier producer of metals — a “unicorn” of the mining industry.
And as you’ve seen, the prominent talents behind the company wouldn’t have joined forces if they didn’t think they would achieve this goal.
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The plan is straightforward, to tie up the needed technologies and then move to the operational side. CoTec also has ~$90 million of tax losses from the company’s previous history that it can apply to future gains.
It’s a unique set-up, and one that promises to pay big dividends to shareholders who appreciate the company’s vision and put CoTec on their short list in the near future.
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