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The recently announced TSX Venture 50 list of top performing companies listed on the TSX Venture Exchange include CoTec Holdings Corp [TSXV: CTH]. CoTec is a listed company that invests in new ways to extract and process metals and minerals.

CoTec Holdings stock is now up over 300% since the company listed on the TSXV, which goes some way to explain its inclusion in that prestigious list. The company also brings with it strong ESG credentials and describes itself as a green disruptor. But how can it do this in the mining space?

The mining sector gets plenty of criticism from the ESG investment community, despite its ability to deliver many of the metals and minerals we need to help our transition from fossil fuels. CoTec Holdings follows a two pronged approach, both acquiring mineral bearing assets but also applying new technology to provide ways to mine and produce green steel inputs, recycled magnets, rare earths and green copper.

It is a tough road to navigate, but the management team led by Julian Teger is getting it done. The approach helps CoTec to reduce the timeline for approvals and helps it to access government funding, thereby reducing capital costs. It emphasises the speed of project delivery when a more sustainable approach is used.

What about the assets though?

Maginito: a 21% stake in UK-based Maginito as well as as a 50-50 JV to deploy technology in the US which is using a patented hydrogen process to extract rare earths from recycled material in the US. The project has been selected as a Minerals Security Partnership Project, under the terms of an international collaboration scheme with 13 countries and the EU. It will be aiming to commission plants in the UK and Germany in 2024-25, and in the US in 2025/26..

MagIron: a 17% stake in a venture to process iron waste material from historical mining operations in the US. This tech is being deployed as part of a 10 year business plan to produce DR grade concentrates and iron oxide pellets for green steel producers.

Binding Solutions: a 3% equity interest and JV rights for a cold agglomeration tech company which can create BF and DR pellets from iron ore concentrate. CoTec has the right to participate in JVs with BSL in certain jurisdictions. To this end, CoTec has secured an option to acquire the Lac Jeannine mining claims in Quebec for the application of BSL technology in the production of iron pellets by 2025/26.

Ceibo: Cotec has a 3% stake in this low carbon copper heap leaching tech company. It targets chalcopyrite and other refractory copper minerals containing 70%+ of known copper reserves.

Example project: HyProMag in the US will use the HyProMag technology developed by leading global experts in the field of rare earth magnetic minerals at the University of Birmingham, underpinned by approximately $100m of research and development funding. It has a process for extracting and demagnetising alloy powders from magnets embedded in scrap and redundant equipment through the Hydrogen Processing of Magnet Scrap (HPMS). This is a patented process. HyProMag USA, is a 50-50 JV between CoTec and Maginito (80.4% owned by AIM-listed Mkgano Resources). Maginito announced it increased its ownership in HPM last year, from 42% to 100%.

The sort of mining projects CoTec is looking for are those with mineral-bearing assets but which are being undervalued and could benefit from the application of disruptive technologies. These include marginal mines, those on care and maintenance, brownfield restarts and waste dumps. CoTec works closely with its JV partners to apply technologies to underperforming assets.

The aim is to end up with a portfolio of revenue generating, high margin, eco-friendly assets in commodities that support the energy transition. Projects generally fall into three buckets: critical minerals, green iron and copper. The company has provided an indicative road map for the next three years which includes copper JVs targeting over 500m tonnes of copper sulphide material and 100m tonnes of BSL iron ore material.

What we like about CoTec

CoTec represents the next generation of high tech mining stock, which is leveraging a considerable portfolio of technological IP to revisit otherwise neglected resources. Its ESG credentials will address concerns some investors will have with the mining sector. Its high level partnerships also demonstrate the considerable pedigree of the management team. Investors should also pay close attention to the projected development road map in comparison to traditional mining development timelines. CoTec is targeting a shorter road map to revenue.

Stuart Fieldhouse

Stuart Fieldhouse has spent 25 years in journalism and marketing, including as a wealth management editor for the Financial Times group, covering capital markets and international private banking, and as an investment banking correspondent for Euromoney in Hong Kong. He was the founder editor of The Hedge Fund Journal.

Stuart has worked at CMC Markets, supporting the re-launch of its global financial spread betting and CFD trading platforms. He is also the author of two books on trading, published by Financial Times Pearson. Based in The Armchair Trader’s London office, Stuart continues to advise fund managers, private banks, family offices and other financial institutions.

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