Canadian Zeolite Corp (CNZ.V) is focused on the exploration, development and production of zeolite. The mineral (zeolite) is known for its absorption capacities and numerous applications across different industries.
- Agriculture: Odor control in composting, fertilizer in greenhouse, animal health and hygiene, as well as, feed supplements. - Aquaculture: Fish farming, aquariums, and transport, removing nitrates, nitrites, and phosphate to maintain water quality. - Water treatment: Filtration, minimizing runoff, removing micro-organism (ammonia) and heavy metals (Cu, Zn, Ni, Pb). - Industrial: Road salt replacement, absorbent for oil spills and radioactive waste containment, and gas separation.
What makes the CNZ.V special, is its combination of resources, operations, management, demand and timing.
Resources The company has two properties: Bromley Creek and the Sun Group. The Bromley Creek site is permitted and can access 50,000 tonnes per year. Only 2% (30 of 1145 hectares) of this site is being used. Sun Group site is 949 hectares and is in proximity to roads but not yet active.
Operations Bromley Creek is operated by Absorbent Products Ltd., (private), which is responsible for the mining, processing and the packaging of the product. This enables CNZ.V to focus on product development, marketing and sales.
Management Ray Paquette is the current CEO of CNZ.V. Paquette has been involved with the company since 1994, first as a board member, and then became president in 1999. If you do the math, that's more than 20 years experience in a very niche industry. It's worth noting, success did not come overnight.
Demand The market for Zeolite is 4M tonnes per annum. Chinese companies produce 2.6M (65%) and consume most of it. In the US, the demand is 100,000 tones which is relatively small for the size of the country. In addition, Canada imports almost 100% of its zeolite from abroad, Financial Research and Quantitative Trading Strategies for TSX Venture Investors
Timing
The demand for Zeolite is expected to grow as population, infrastructure, and the need for environmentally friendly and less expensive alternatives are sought. Asia and Europe are the largest markets but Zeolite seems to be under-utilized in North America and not widely used by industry.
Indeed, 2016 was truly a stellar year for CNZ.V, the company went into production, announced a national distribution deal with Bella Turf, and obtained approval from Canadian Food Inspection Agency (CFIA) for Z-lite (an animal feed additive). This culminated to a $1.95 - 52 week high on December 5th 2016. In the last eight months the company made advancement on several fronts.
Personnel & Board Appointments
On Mar. 20 - The company launches a National and International Sales Division and appointed Mr. Tyler Adair. CNZ.V also made three board appointments: Donald J. (Buck) Ross (Jan 18), Pratap Reddy (July 5) to Advisory Board, and Anam Parmar (July 27) as a Director. Mr. Reddy's appointment is significant as it reflect the company's intent to integrate with Potash suppliers (Canada, US), as well as, enter the Indian market.
Insider & Options. On Dec. 24 - just in time for Christmas - the CEO sold 100 shares at $0.09 cents. Thereafter he has more than made up with some purchases: 5K at $0 .70 cents (March 11), and 10K at $0.52 (March 28). He also renewed his warrant at $0.09 cents (March 31st). Moreover, stock options (550K) were granted at $0.485 cents. As of July 12, the CEO reported that 20% of the shares were owned by management.
Product Development
On Dec. 12 - CNZ.V initiated a partnership with the University of Northern BC and the University of Havana for product development purposes. The company rolled out a line of natural zeolite animal bedding products - Activated Poultry Sense and Barn Sense (March 30). In addition, CNZ.V received approval by the Organic Materials Review Institute (OMRI) for Certified Organic Livestock Feeding (May 25). Last month, the company announced announces positive results on Two Year Study for the Remediation of Potash Brine (June 26). This study was conducted with Potash, Agrium and Mosaic. The results showed that acid-treated zeolite, was effective in removing sodium from brine-impacted groundwater. Currently, Bromley Creek Zeolite is registered in 14 States as an Animal Feed Additive and the plan to expand is in full force.
Deals
On Dec. 8 - CNZ.V signed an agreement with Isodiol to research and develop zeolitic infused consumer products; (i.e. pharmaceutical, nutraceutical and cosmetic), Also, the company was enlisted by a Canadian distributor to supply additive to animal feed in Manitoba, Saskatchewan and Alberta (Jan 31). CNZ.V also reported commercial activities in Ontario with a) Orange Hill Farms of South West Ontario (Mar 2) b) Piller Poultry Ltd. of Southern, Ontario (Mar. 6). Recently (July 10), another agreement was reported for distribution in both Ontario and Quebec with Ross Enterprises Ltd. including a number of products such as Z-Lite 2% animal feed, animal bedding, as well as, soil remediation.
A major outstanding deal is the LOI signed to acquire U.S. manufacturer and distributor of Zeolite products announced (May 29).
This news fueled the last spike in the stock price along with various other developments.
Synopsis
CNZ.V is in a niche market that is expected to grow within the next few years. We believe that the company is uniquely positioned to gain market share. CNZ.V has 30M shares and as such it is characterized with low liquidity and tends to be volatile - daily movements of + or -10% are not unusual.
Given the recent stock movement, we ran an Augmented Dickey-Fuller Test (ADF) for the last three months to determine if the stock is trending as per RSI in the above chart. ADF results shows that the stock is trending with statistical significance of .o5 .
As such, accumulation under S1 ($0.59) is sensible.
We encourage investors to explore further (Rockstone Research is covering the company). We consider CNZ.V a story in the making.
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