Capital 10X Growth Navigator – March 25th, 2022

In this edition of the Capital 10X Growth Navigator we highlight the outperformance of green metals, the potential of the psychedelic supply chain and the pathway to bringing psychedelic drugs to market.

Green Metals

Earlier this month we released a report highlighting the critical green energy metals to own during the current energy crisis. Namely:

  • Copper
  • Lithium
  • Vanadium

With oil and natural gas prices spiking because of Russia-Ukraine war, we believe these metals will carry high strategic value for western countries as they try to avert a global energy crisis.

We highlighted 6 companies in the report we believe are best positioned and trade at attractive valuations: Sierra Metals (NYSE:SMTS), Hudbay Minerals (NYSE:HBM), SQM (NYSE:SQM), Lithium Americas (NYSE:LAC) and Largo (NASDAQ:LGO).

The Critical Green Energy Basket of stocks is up 13% since we published the report, outperforming the market by 10%. We believe this structural upside of this basket will continue to play over the medium term.

Largo – Full Year 2021 Results | Strong Vanadium Tailwinds Ahead

Largo Inc. (TSX: LGO) (NASDAQ: LGO) reported full year 2021 results; strong revenue and net income growth were driven by favorable vanadium prices.

The setup for full year 2022 is very attractive for investors; an excellent macro backdrop for vanadium, improving operations and a clean energy division with serious upside potential over the long run.

Highlights:

  • Vanadium prices continue to be very strong and are up 40% YTD.
  • Largo is guiding to 20% production growth in 2022
  • The company is projected to make EBITDA of $175 million at $12/lb vanadium.
  • Legendary investor Lee Cooperman was on the conference call and identifies the inherent value proposition.

Sierra Metals – Full Year 2021 Results | Operations Ramping Back Up

Copper focused diversified miner Sierra Metals (TSX:SMT) (NYSE:SMTS) reported full year 2021 results; strong metal prices lifted revenue and operating profits.

After a challenging 2021 dealing with unprecedented COVID-19 headwinds and operational challenges, Sierra Metals is now ramping back operations at its key mines: Yauricocha and Bolivar.

Highlights:

  • Revenue: $272M +10% y/y; EBITDA: $105M +2% y/y
  • Ramping back operations at its two main mines
  • Green metals demand + inflation protection
  • Sierra Metals trades a deep discount vs its copper peers

Psychedelics

The Significant Market Potential of the Psychedelic Supply Chain

In the psychedelics sector we released a report highlighting the significant market potential of the psychedelic supply chain.

Psychedelic drugs are finally being recognized for their potential to treat significant mental health issues, specifically Depression, Post Traumatic Stress and Anxiety.

Though FDA research pipelines are often the focus of investors, there is an undiscovered revenue opportunity in the supply of psychedelic raw materials.

We believe the total addressable market for psilocybin use in psychedelic research trials is currently $38 million and a potential $100 million market for treatment facilities.

HAVN Life (CSE:HAVN) is one of the leaders in the psychedelic supply chain, they have tackled the legal barriers of entry to export psilocybin from their Jamaican facility to the US and Canadian markets

HAVN Life | Expanded Partnership with Mycotopia & Distribution Deal with Jonluca Enterprises

HAVN Life announced an expanded supply partnership with Mycotopia Therapies Inc. Under the existing agreement, the company will supply naturally-derived psilocybin compounds to U.S. based universities, researchers and companies, in accordance with federal laws and local protocols. The Expanded Supply Agreement will allow HAVN Life the opportunity to supply Mycotopia with functional mushrooms, as well as the white label supply and distribution of HAVN’s Line of natural OTC health products.

HAVN Life has also secured a distribution deal with Jonluca Enterprises Inc. for their line of natural health products, launched in June 2021. The deal will enable HAVN Life products to be distributed nationally through purveyors of natural and organic products.

Mindset Pharma | Psychedelics Virtual Conference & Pathway to Bringing Psychedelic Drugs to Market

James Lanthier of Mindset Pharma (CSE: MSET) spoke at the Psychedelics Today Virtual Conference this week, in a panel about psychedelic technology and patents.
The major take away form the discussion was that nature can’t be patented, but psychedelic companies may exclude their competitors from using the novel optimized forms of their discovered psychedelic chemical structures.

Early this year, the company announced a first-of-its kind co-development agreement with a member of the Otsuka Pharmaceuticals group of companies, which fully funds and advances the development of Mindset’s Family 2 & Family 4 psychedelic compounds.

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Sierra Metals is a market awareness client of Capital 10X.

HAVN Life is a market awareness client of Capital 10X.

Mindset Pharma is a market awareness client of Capital 10X.

Largo Inc. is a market awareness client of Capital 10X.

The opinions provided in this article are those of the author and do not constitute investment advice. Readers should assume that the author and/or employees of Capital 10X hold positions in the company or companies mentioned in the article. For more information, please see our Content Disclaimer.

Capital 10X gets down to the real money business, actionable financial insights for traders and investors. We analyze company earnings, interview management teams and help teach the fundamentals of financial analysis and options trading. Our mission is to hunt for genuine 10 baggers.
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