IZ.V - Underperforms.


International Zeolite (previously Canadian Zeolite (CNZ.V)) is focused on the exploration, development and production of zeolite. We initiated coverage July 2017, with additional notes on September 2017, and February 2018. Again, zeolites are known for their absorption capacities for multiple industries.

- Agriculture: Odor control in composting, fertilizer in greenhouse, animal health and hygiene, as well as, a feed supplement.

- 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.

From the time of our last note, the following releases were issued.

Mar. 1 - Change Name to International Zeolite Corp (IZ.V). Received a new ISIN of CA4605821095 and a new CUSIP number of 460582109.

Mar. 1 - Earnings: $0.59M in loss on $0.26M in sales and $.001M in royalties. $0.21M was sold by EII (81% of sales). 0.048M from CNZ.

Mar. 26 - Agreement to acquire 55% of Ichaana Indo-Can Zeolite Private Limited. Under the Agreement, Ichaana will attempt to secure all federal, state and municipal certifications, permits and clearances the (“Permits”) to enable International Zeolite Corp.’s natural zeolite and zeolite products to be used in agriculture, farming, horticulture, poultry, organic farming, as well as, water pollution treatment applications in India.

Ichaana will also undertake to secure an initial offtake agreement for the purchase of a minimum of 30,000 metric tonnes of bulk natural zeolite to be supplied by International Zeolite Corp. (“Offtake Agreement”). Prior to the execution of a definitive agreement and the closing of the Share Acquisition transaction, both the Offtake Agreement and the permits must be finalized.

Apr. 23 - Launches Smell Grabber™ at Home Hardware Stores Nationwide. Smell Grabber eliminates odors without artificial masking agents.

Apr. 30 - Received TSX Venture Exchange approval to acquire 55% of Ichaana Indo-Can Zeolite Private Limited

May 8 - Advances Commercial Opportunities for Environmental Solutions. The Company’s business strategy is to further develop strong proprietary products which will grow valuation as products advance through research and approval.

In April, IZ.V's Research and Development advisory team spent time in Ontario following up on trial evaluations of several proposed applications in commercial agriculture. Work from testing in animal feeds will be used to further develop commercial products for the agricultural sector.

In addition to Agriculture, R&D advisory team met with several leading organizations addressing water quality concerns in Ontario. IZ.V is positioning itself in the management and correction of many of the hydra-ecological disruptions affecting water quality.

Following the recent evaluation trip and throughout 2018, IZ.V will be adding to its body of research in water filtration, animal nutrition support and plant on-demand nutrient delivery with the help of University of Northern British Columbia and The University of Havana.

May 9 - Earth Innovations Incorporated (EII) Introduces the "Miracle Mineral" to the National Hardware Show. Smell Grabber + Ecotraction to be featured at the show. EII will be rolling out new retail product launches in the Autumn targeting lawn & garden and household products markets.

May 11 - Earth Innovations Signs Major US Retailer - for a sales pilot of ecoTraction™. The company will launch a marketing campaign to support ecoTraction™ in the agreed pilot market. This will compliment existing distribution through Do It Best Stores and WM Grainger Ltd.

May 17 - Initiates First Commercial Order from Cuba. Submitted its first order for 400 tonnes of natural zeolite. As a new source of supply, the Cuban zeolite will be a complement to the Company’s current supply and will better serve to facilitate a more cost effective and efficient supply chain for areas which are not logistically cost effective from the Bromley Creek deposit in British Columbia or from the Company’s US suppliers.

This development is key to the Company’s mission of becoming a significant global source of zeolite products and zeolite-based solutions.

May 17 - Adopts Advance Notice Policy. for the purpose of providing shareholders, directors and management of the Company with a clear framework for nominating directors of the Company at a shareholders’ meeting.

July 17 - Appoints New Director - Mr. Stephen Coates. Mr. Coates is Principal of Grove Capital Group Ltd. in Toronto, Canada. He has orchestrated the restructuring and subsequent sale of several companies, including the sale of Earth Innovations Inc. to International Zeolite in December 2017. He continues to serve as President of Earth Innovations, now a wholly-owned subsidiary of International Zeolite, through which the Company is focusing its combined efforts for the development, marketing and sales of zeolite-based products in retail and commercial markets.

Ichaana Indo Can Zeolite

The release was welcomed by the market but the effects were short-lived. It is now nearly four months to the date and except for the approval from the TSX.V, no update have been provided. The conditions attached to the deal were numerous. Comparing to the terms of the acquisition of Earth Innovations Incorporated (EII), it becomes drastically evident that the latter is rather tentative.

Earth Innovations Incorporated (EII)

Multiple announcements were made during the period. EII launched two products: Smell Grabber and Miracle Mineral. Moreover, Ecotraction signed a major retailer US retailer deal. EII has definitely made progress but it is uncertain to which extent the market is pricing this in.

Green Update (May 8th release)

This release suffered from a lack of context and details. The generic narrative of the trial evaluation were not well received by the market. In addition, IZ.V did not provide the economic incentives for these activities in Canada. These are clearly indicated in the IZ.V's investor presentation.

Cuba Order

The commercial order had no sustaining impact on valuation. While the argument for supply diversification is valid, the rational for it are unclear.

In essence, the supply diversification effort seems to comes with a lack of a specific client order.

Summary

As a reminder, IZ.V does not own any mines and is solely in the business of providing expertise and product. Aside from EII, IZ.V's has yet to demonstrate to the market its ability to sell commercial and industrial products on a large scale.

The recent re-branding and expanded global scope comes on the heels of a poor performance in the Canadian Market. Other than the Potash-Brine study, IZ.V has not communicated in details the impact it has in one of the four verticals proposed. It may be that IZ.V needs to focus specific verticals and bring in the expertise in-house to develop new products and provide technical support to the sales team. Currently, IZ.V has no patent that we know of and a large share of the intellectual property resides outside of the organization.

Valuation has definitely been an issue in the past year, the stock went from $0.65 cents down to current level. As time goes on, IZ.V's value proposition is being lost on the market. IZ.V will certainly need to do something different if it intends to remain relevant.

For now, IZ.V underperforms but this may be an opportunity for some.

DISCLAIMER: The work included in this article is based on current events, technical charts, and the author’s opinions. It may contain errors, and you shouldn’t make any investment decision based solely on what you read here. This publication contains forward-looking statements, including but not limited to comments regarding predictions and projections. Forward-looking statements address future events and conditions and therefore involve inherent risks and uncertainties. Actual results may differ materially from those currently anticipated in such statements. The content of rally is provided for informational and entertainment purposes only and is not a recommendation to buy or sell any security. Always thoroughly do your own due diligence and talk to a licensed investment adviser prior to making any investment decisions - rally cannot take responsibility for your investment decisions.


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