Analysts' Ideas of the Week - www.researchfrc.com August 16, 2021 - Baystreet.ca
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Analysts' Ideas of the Week
Equity Markets Holding Ground Despite Rising Geopolitical Tensions
August 16, 2021
www.researchfrc.com
Page 2
Reddit Discussed Stocks
Last week’s pick, Palantir Technologies Inc. (NYSE: PLTR), went from US$22.93
on Monday, to a high of US$25.76 on Thursday (up 12.3%). The Electric Vehicle
sector remains the most actively discussed among retail investors, followed by cryptos,
cannabis, and betting. This week, we are observing strong retail sentiment around
UWM Holdings Corp. (NASDAQ: UWMC). Key parameters used may include – a) total
number of mentions, b) percentage change in the number of mentions, c) stock
sentiment, and d) market capitalization.
Aug 16, 2021
Company Ticker Sector
UWM Holdings Corp. UWMC Mortgage Finance
Source: FRC
Historic Weekly Returns (Mar 1, 2021 – Present)
20 out of our 24 picks have generated positive returns
Average return = 27.66%
*Returns were calculated based on the assumption that picks were sold at their peak the
following week.
*Past performance is not indicative of future performance.
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Page 3
FRC Top Picks
The following table shows last week’s top five performers among our Top Picks,
including two copper juniors, and one each in the cannabis, technology, and hemp
sectors. The top performer, Panoro Minerals (TSXV: PML), was up 23% despite the
termination of its JV on one of its non-core assets with JOGMEC. We estimate that PML
is trading at $0.007/lb vs the sector average of $0.028. Our reports on PML can be
viewed here.
Top Five Performers Last Week
Source: FRC
Companies in our Top Picks list were up 0.5% last week vs -0.3% for the
benchmark (TSXV).
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Performance by Sector
Source: FRC
Our complete list of top picks (updated weekly) can be viewed here.
Weekly Mining Commentary
Global equity indices hold ground despite rising geopolitical tensions in Afghanistan.
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Source: FRC / Various
Gold prices were up 3.5% as moderate inflation data from the U.S. diminished the
likelihood of rate hikes this year. Nickel prices jumped due to inventory declines on
both the LME and SHFE (Shanghai), and rising demand from EV batteries.
Source: FRC / Various
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Valuations of gold producers were down 1%; base metal producers were flat.
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Five (six last week) out of the 15 hardest hit nations (including the U.S., the U.K., Italy,
Germany, and Mexico) experienced higher daily new COVID-19 cases last week. Seven
(four last week) experienced WoW increases in deaths. Deaths to daily new cases are
at approximately 0.5% in highly vaccinated countries vs 1.5%-2.0% from the highs
earlier this year.
Globally, 31.4% have received at least one dose vs 30.0% at the same time last
week. 72.6% of Canadians have received at least one dose (previously 72.0%). 63.9%
of Canadians are fully vaccinated (previously 61.9%) vs 59.8% in the U.K. (58.1%), and
50.3% in the U.S. (49.8%).
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We are raising our nickel price forecast for H2-2021 amid rising demand from EV
batteries. Nickel is the only metal (among base metals) that has lower inventory levels
compared to the same time last year.
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The following companies reported earnings. We will be publishing updates shortly.
Company Current FRC Fair Financials Actual
Name: Share Value Released Revenue vs
Price: Estimate: Estimate
Kontrol Technologies Corp. $1.19 $6.71 Q2-2021 Below
(NEO: KNR)
Delta 9 Cannabis Inc. (TSX: $0.40 $1.04 Q2-2021 Inline
DN)
Halo Collective Inc. (NEO: $0.06 $0.15 Q2-2021 Below
HALO)
OMID Holdings Inc. (OTCPK: US$0.08 US$0.13 Q2-2021 Below
OMID)
Elys Game Technologies US$4.72 US$5.72 Q2-2021 Beat
Corp. (NASDAQ: ELYS)
Gran Colombia Gold (TSX: $4.77 $9.46 Q2-2021 Inline
GCM)
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In the following section, we review companies that announced key developments in the
past week.
Mining / Exploration
Company Ticker Current Share FRC Fair Value
Name: Symbol Price: Estimate:
Rio2 Limited TSXV: RIO $0.625 $1.40
PR Title FRC Opinion
Closes $35M equity financing Positive – This is part of a previously
announced project financing of US$125-
$135M to fund its Fenix gold mine to
production. Preparations are ongoing to
commence production in late 2022.
Company Ticker Current Share FRC Fair Value
Name: Symbol Price: Estimate:
Steppe Gold TSX: STGO $1.52 $4.50
Limited
PR Title FRC Opinion
Provides corporate update Neutral – Although supply chain issues
continue to impact production, we were
pleased to see that the company is making
progress on its construction and installation
activities to ramp up production. The
definitive feasibility study is almost
completed, and we are looking forward to its
results.
Company Ticker Current Share FRC Fair Value
Name: Symbol Price: Estimate:
UEX TSX: UEX $0.295 N/A
Corporation
PR Title FRC Opinion
Announces $21.2M bought deal private Positive – Funds will be used to repay the
placement loan from Denison Mines (TSX: DML),
related to the JCU acquisition. We believe
this bought deal financing is a strong vote of
confidence on UEX’s portfolio and
management’s strategy.
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Company Ticker Current Share FRC Fair Value
Name: Symbol Price: Estimate:
Noram Lithium TSXV: NRM $0.53 $1.27
PR Content FRC Opinion
Corporate update Positive – Pleased to see the appointment
of an interim President & CEO. An updated
resource estimate is expected shortly.
Company Ticker Current Share FRC Fair Value
Name: Symbol Price: Estimate:
Latin Metals Inc. TSXV: LMS $0.125 $0.43
PR Title FRC Opinion
Expands land position at the Auquis Neutral – Expansion reflects management’s
copper project, Peru conviction in the area. Auquis is a copper-
molybdenum porphyry/skarn exploration
project. Results of the planned follow-up
work will provide us more insights on the
project’s potential.
Company Ticker Current Share FRC Fair Value
Name: Symbol Price: Estimate:
Goldplay Mining TSXV: AUC $0.15 $0.38
Inc.
PR Title FRC Opinion
Announced initial exploration findings on Positive – 0.90% Cu is very encouraging;
the Scottie West project management expects to continue
exploration at Scottie West. We are
expecting news flow from the company’s
assets in Portugal.
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Company Ticker Current Share FRC Fair Value
Name: Symbol Price: Estimate:
Gold Springs TSX: GRC $0.195 $0.30
Resource Corp
Wealth Minerals TSXV: WML $0.39 N/A
Ltd
PR Title FRC Opinion
GCR sells its shares of World Copper Positive – Cash infusion ($4.4M), without
(TSX: WCU) to WML. any share dilution, is positive for GRC,
especially considering that it is currently
conducting an aggressive exploration
program.
Company Ticker Current Share FRC Fair Value
Name: Symbol Price: Estimate:
Southern Silver TSXV: SSV $0.335 $1.06
Exploration Corp
PR Title FRC Opinion
Intersects 1.4 metres averaging 383g/t Positive - Results continue to show high
Ag, 7.9%Pb and 10.2%Zn (1,051g/t probability for resource expansion. Our fair
AgEq) within a 10.8 metre interval value estimate is conservative as it does not
averaging 102g/t Ag, 1.8%Pb and account for any resource upside. SSV has
1.7%Zn (234g/t AgEq) at Cerro Las completed 56 core holes totaling 22,360
Minitas metres since September 2020. Assay
results from five drill holes are pending.
Company Ticker Current Share FRC Fair Value
Name: Symbol Price: Estimate:
Skyharbour TSXV: SYH $0.325 $0.77
Resources Ltd.
PR Title FRC Opinion
Receives $1.2M from warrant exercise Positive - SYH is fully funded for its
and partner company Valor announces ongoing drill program at its flagship Moore
radiometrics reveal new anomalies at Lake uranium project.
Hook Lake project with on-ground work
underway
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Company Ticker Current Share FRC Fair Value
Name: Symbol Price: Estimate:
Interra Copper CSE: IMCX $0.17 $0.42
Corp
PR Title FRC Opinion
Appoints Mr. Jason Nickel, P.Eng., as Positive – The new CEO has a strong
Chief Executive Officer & Extends Drill technical background. Pleased to know that
Program drilling at Thane (copper-gold) is on
schedule. Thane is in the Quesnel Terrane,
known for its high-tonnage porphyry
deposits.
Company Ticker Current Share FRC Fair Value
Name: Symbol Price: Estimate:
American TSXV: AMY $1.04 $1.71
Manganese Inc.
PR Title FRC Opinion
Receives funding to advance lithium-ion Positive – Funding from the National
battery recycling project in collaboration Research Council of Canada Industrial
with Italvolt Research Assistance Program (NRC IRAP)
for a pilot plant is a strong vote of
confidence.
Company Ticker Current Share FRC Fair Value
Name: Symbol Price: Estimate:
Quaterra TSXV: QTA $0.09 $0.49
Resources Inc.
PR Title FRC Opinion
Announces private placement Positive – Pleased to see management
regrouping and pursing this financing, after
last month’s setback pertaining to water
rights.
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Financials, Technology, Energy, and Special Situations
Company Ticker Current Share FRC Fair Value
Name: Symbol Price: Estimate:
Voyager Digital CSE: VYGR $19.41 $32.08
Ltd.
PR Title FRC Opinion
Voyager Digital and Market Rebellion Positive – Pleased to see the collaboration
announce next step in new brokerage with celebrities Jon and Pete Najarian, and
platform intentions to expand offerings to equity,
options and futures trading. Expecting to
see more details on the execution strategy.
Company Ticker Current Share FRC Fair Value
Name: Symbol Price: Estimate:
Kontrol NEO: KNR $1.11 $6.71
Technologies
Corp.
PR Title FRC Opinion
Steelcase teams up with Kontrol to Positive – Strong endorsement from
provide air quality monitoring and viral Steelcase (NYSE:SCS/ MCAP: US$1.6B), a
detection technology U.S.-based company offering furniture,
architectural design, and technologies to
offices.
Company Ticker Current Share FRC Fair Value
Name: Symbol Price: Estimate:
BIGG Digital CSE: BIGG $1.33 $3.90
Assets Inc.
PR Title FRC Opinion
Netcoins launches android and iOS Positive – This launch provides more
crypto trading apps exposure to Netcoins, and offers its users
with another platform where they can trade
cryptos.
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Company Ticker Current Share FRC Fair Value
Name: Symbol Price: Estimate:
Clean Seed TSXV: CSX $0.47 $1.14
Capital Group
Ltd.
PR Title FRC Opinion
On target for growth – momentum update Positive – Among several initiatives to
– summer 2021 obtain more product exposure, we were
particularly pleased to see retail sales order
commitments. We are look forward to
seeing actual sales figures.
Cannabis
Company Ticker Current Share FRC Fair Value
Name: Symbol Price: Estimate:
Pure Extracts CSE: PULL $0.40 $0.90
Technologies
Corp.
PR Titles FRC Opinion
Ships initial vape cart order to B.C. liquor Positive – Pleased to see its in-house
distribution branch products generating demand. Our revenue
projections do not include sales from
inhouse brands, and we will wait for actual
sales figures before we revise our
projections.
Company Ticker Current Share FRC Fair Value
Name: Symbol Price: Estimate:
Ayurcann CSE: AYUR $0.24 $0.71
Holdings Corp.
PR Title FRC Opinion
Signs new manufacturing and distribution Positive – Pleased to see the company
agreement with Innocan Pharma (CSE: continuing to expand its B2B partnerships.
INNO) Ayurcann will manufacture Innocan’s CBD
topicals and provide distribution throughout
Canada.
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Company Ticker Current Share FRC Fair Value
Name: Symbol Price: Estimate:
OMID Holdings OTCPK: US$0.08 US$0.13
Inc. OMID
PR Title FRC Opinion
Strategic investment into psychedelic Positive – The investment amount was
medicine undisclosed, but management’s decision to
enter the psychedelic medicine industry is
encouraging, as we are expecting strong
growth in the sector.
Cannabis
We recently commenced due diligence on the following companies, and will be initiating
coverage shortly.
Emerald Health Therapeutics (CSE: EMH) is a licensed cannabis producer, providing
medical, recreational, wellness-oriented cannabis products and beverages. The
company operates an 88,000 sq. ft. production facility in Quebec, consisting of 21 grow
rooms and 16 processing rooms. The company also operates facilities in B.C. for R&D.
In July, the company introduced its third and newest product line, Fuse, a cannabis-
infused beverage.
Product Lines
Source: EMH
At the end of Q1, the company had a strong balance sheet, with $46M in working
capital. However, MCAP is just $35M, implying that its EV is negative, and that the
market is assigning no value to its operations. The company had generated $2.7M in
revenue in Q1-2021.
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BevCanna Enterprises Inc. (CSE: BEV) is a health and wellness beverage and
products company. The company provides end to end turnkey solutions to clients, and
manufactures a range of plant-based and cannabinoid products for both in-house and
third-party brands. BEV operates a 40,000 sq. ft. manufacturing facility in B.C. which is
capable of bottling up to 210M bottles annually.
In-house brands Third-party brands
Source: BEV
In August, the company announced receipt of multiple initial purchase orders from the
Ontario Cannabis Store, some of which were for Keef, a top-ten selling cannabis
beverage company in Colorado and California.
In Q1-2021, the company generated $0.6M in revenue. At the end of Q1, BEV had over
$6M in working capital, net of long-term debt. Our preliminary research indicates that
the company is expecting a significant ramp up in revenue this year.
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Weekly Cannabis Commentary
Cannabis Industry Performance
August 16, 2021
U.S. Companies YTD 1-Week 1-Year
Curaleaf Holdings Inc. -10% -3% 47%
Trulieve Cannabis Corp. -16% -17% 38%
Green Thumb Industries Inc. 22% -6% 110%
Cresco Labs Inc. -3% -11% 44%
Canadian Companies YTD 1-Week 1-Year
Aurora Cannabis Inc. -32% -11% -33%
Canopy Growth Corp. -34% -11% 3%
Cronos Group Inc. -17% -12% 15%
Tilray Inc. -15% -13% -16%
HEXO Corp. -17% -13% 15%
Organigram Holdings Inc. 67% -11% 84%
Canadian Average -8% -12% 11%
U.S. Average -2% -9% 60%
Indices
Canadian YTD 1-Week 1-Year
HMMJ 6% -9% 31%
MCAN 3% -10% 26%
XCAN -5% -9% 20%
U.S. YTD 1-Week 1-Year
MSOS -10% -9% 43%
Source: FRC
Although shares of both Canadian and U.S. cannabis stocks declined, U.S. stocks
outperformed due to the following positive developments:
➢ Maine set a monthly recreational cannabis sales record in July, generating
US$9.4M, up 45% MoM.
➢ A new ruling in Alaska will allow cannabis manufacturers and retailers to start
selling edibles at twice the previously permitted potency.
➢ Wisconsin introduced a bill to legalize recreational cannabis.
➢ Missouri posted record medical cannabis sales in July, generating US$21M, up
28% MoM.
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Valuation
As of August 16, 2021, the Canadian LPs were trading at a 69% premium (down from
79% in the previous week) over their U.S. peers.
August 9, 2021 August 16, 2021
Canadian Companies Ticker TEV/Revenue TEV/EBITDA TEV/Revenue TEV/EBITDA
Aurora Cannabis Inc. TSX: ACB 6.8 NM 6.3 NM
Canopy Growth Corp. TSX: WEED 16.2 NM 15.1 NM
Cronos Group Inc. TSX: CRON 28.8 NM 23.1 NM
Tilray Inc. NASDAQ: TLRY 13.5 NM 12.5 NM
HEXO Corp. NYSE: HEXO 6.5 NM 5.9 NM
Organigram Holdings Inc. TSX: OGI 11 NM 11.9 NM
AVERAGE 13.8 NM 12.5 NM
MEDIAN 16.2 NM 15.1 NM
MINIMUM 5.0 NM 5.0 NM
MAXIMUM 28.8 NM 23.1 NM
U.S. Companies Ticker TEV/Revenue TEV/EBITDA TEV/Revenue TEV/EBITDA
Curaleaf Holdings Inc. OTC: CURLF 11.0 37.8 9.0 33.3
Trulieve Cannabis Corp. OTC TCNNF 7.1 15.1 5.4 11.8
Green Thumb Industries Inc. OTC: GTBIF 11.3 30.8 9.6 26.1
Cresco Labs Inc. OTC: CRLBF 6.9 23.2 5.5 17.0
AVERAGE 9.1 26.7 7.4 22.1
MEDIAN 9.1 27.0 7.3 21.6
MINIMUM 6.9 15.1 5.4 11.8
MAXIMUM 11.3 37.8 9.6 33.3
Implied Premium Over U.S. (Average) 79% 69%
Source: S&P Capital IQ, FRC
The following chart shows the average EV/R of the companies we track in both
countries:
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Average EV/R
Source: S&P Capital IQ, FRC
Canadian Retail Cannabis Pricing
Province (As of 2021/08/16) Average Price per Gram Average Price per Gram THC Average Price per Gram CBD # of Products Min. Price Max. Price
B.C. $ 9.65 $ 9.72 $ 8.45 259 $ 3.53 $ 15.71
Ontario $ 9.33 $ 9.48 $ 7.88 372 $ 3.57 $ 22.66
Quebec $ 9.20 $ 9.20 $ 9.23 275 $ 3.60 $ 21.68
Alberta $ 10.64 $ 10.64 $ 10.61 426 $ 3.14 $ 22.00
N.B. $ 9.31 $ 9.44 $ 7.64 214 $ 3.57 $ 15.99
P.E.I. $ 9.67 $ 9.69 $ 9.34 187 $ 4.40 $ 23.30
Newfoundland $ 9.98 $ 9.94 $ 10.24 175 $ 4.08 $ 15.40
Yukon $ 16.33 $ 15.13 $ 13.95 4 $ 13.68 $ 13.95
N.S. $ 9.91 $ 9.94 $ 9.50 208 $ 4.64 $ 42.85
Nunavut $ 13.15 $ 13.35 $ 13.41 32 $ 9.43 $ 17.91
Northwest Territories $ 14.68 $ 12.65 2 $ 12.08 $ 17.28
Manitoba $ 11.30 $ 11.21 $ 11.55 375 $ 4.87 $ 23.57
Saskatchewan $ 11.85 $ 11.84 $ 12.07 278 $ 4.40 $ 38.50
CANADA $ 11.15 $ 10.94
Province (As of 2021/08/9) Average Price per Gram Average Price per Gram THC Average Price per Gram CBD # of Products Min. Price Max. Price Max. Price
B.C. $ 9.65 $ 9.72 $ 8.45 257 $ 3.53 $ 15.71 $ 15.71
Ontario $ 9.38 $ 9.53 $ 7.88 371 $ 3.57 $ 22.66 $ 22.66
Quebec $ 9.22 $ 9.21 $ 9.23 273 $ 3.60 $ 21.68 $ 21.68
Alberta $ 10.68 $ 10.68 $ 10.61 423 $ 3.14 $ 22.00 $ 22.00
N.B. $ 9.32 $ 9.45 $ 7.64 212 $ 3.57 $ 15.99 $ 16.28
P.E.I. $ 9.67 $ 9.69 $ 9.34 187 $ 4.40 $ 23.30 $ 23.30
Newfoundland $ 9.98 $ 9.94 $ 10.24 174 $ 4.08 $ 15.40 $ 15.40
Yukon $ 16.33 $ 15.13 $ 13.95 4 $ 13.68 $ 13.95 $ 22.28
N.S. $ 9.92 $ 9.96 $ 9.50 207 $ 4.64 $ 42.85 $ 42.85
Nunavut $ 13.15 $ 13.35 $ 13.41 32 $ 9.43 $ 17.91 $ 17.91
Northwest Territories $ 14.68 $ 12.65 2 $ 12.08 $ 17.28 $ 17.28
Manitoba $ 11.31 $ 11.22 $ 11.55 373 $ 4.87 $ 23.57 $ 23.57
Saskatchewan $ 11.92 $ 11.91 $ 12.07 275 $ 4.40 $ 38.50 $ 38.50
CANADA $ 11.17 $ 10.96 $ 10.32
Source: Online Provincial Cannabis Stores, FRC
The average retail price per gram fell week-over-week from $11.17 to $11.15. The
chart below shows the Canadian retail dried cannabis flower pricing trend:
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Canadian Retail Dried Cannabis Flower Pricing
Source: Online Provincial Cannabis Stores, FRC
Canadian Retail Cannabis Stores
As of August 16, 2021, there are 2,448 retail cannabis stores, a week-over-week
increase of 70 stores across Canada, including 51 in Ontario, and 13 in Saskatchewan.
Nationwide Store Count
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July-26-2021 Aug-3-2021 Aug-9-2021 Aug-16-2021
Geographic Region Store Count Store Count Store Count Store Count Population Population / Store
Alberta 661 663 667 670 4,428,247 6,609
B.C. 367 369 366 369 5,120,184 13,876
Manitoba 106 106 106 107 1,379,121 12,889
N.B. 20 20 20 20 780,890 39,045
N.S. 25 25 25 25 978,274 39,131
Newfoundland 30 30 30 30 520,437 17,348
Northwest Territories 6 6 6 6 44,982 7,497
Nunavut 39,486
Ontario 954 945 974 1,025 14,745,040 14,385
P.E.I. 4 4 4 4 158,717 39,679
Quebec 75 84 78 77 8,552,362 111,070
Saskatchewan 98 97 97 110 1,181,987 10,745
Yukon 5 5 5 5 41,293 8,259
CANADA 2,351 2,354 2,378 2,448 37,971,020 15,511
Source: Provincial Websites, FRC
Weekly Psychedelic Commentary
Psychedelic Industry Performance
August 16, 2021
Company YTD 1-Week 1-Year
COMPASS Pathways plc -31% -9% 3%
Atai Life Sciences N.V. -24% 3% -24%
Numinus Wellness Inc. -19% -3% 296%
Mind Medicine Inc. -1% -3% 700%
Braxia Scientific Corp. -69% -2% -69%
Cybin Inc. 40% -18% 182%
Levitee Labs Inc. -7% -3% -29%
Seelos Therapeutics Inc. 38% -10% 114%
AVERAGE -9% -6% 147%
MIN -69% -18% -69%
MAX 40% 3% 700%
Index YTD 1-Week 1-Year
PSYK -17% -4% -17%
Source: TMX Money, FRC
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Last week, Compass Pathways (NASDAQ: CMPS) announced they applied for a new
patent to treat stronger forms of depression, while Atai Life Sciences (NASDAQ:ATAI)
launched a new subsidiary to treat mental health disorders.
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Disclaimers and Disclosure
The opinions expressed in this report are the true opinions of the analyst(s) about any companies and industries mentioned. Any
“forward looking statements” are our best estimates and opinions based upon information that is publicly available and that we
believe to be correct, but we have not independently verified with respect to truth or correctness. There is no guarantee that our
forecasts will materialize. Actual results will likely vary. Certain companies mentioned in pages 3, and 10-18 are covered by FRC
under an issuer paid model. FRC or companies with related management, and Analysts, may hold shares in some companies
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