As we move into 2025, investors are most likely looking for a fresh start with some new stories and ideas of where they can invest or "Take a Punt". Let's be honest, for us, the retail investors in this sector of the ASX (Australian Stock Exchange), we are the so-called professional participants in a roller coaster ride that is commonly compared to the Casino.
For those seasoned players in the small-cap sector on the ASX, and especially those that live predominantly in the resource sector, 2025 is looking to have some fresh legs (we hope, anyway). The last two years have been hard, and there are probably still many "investors" who are still stuck in the lithium run who have not taken the hard medicine of taking the loss and looking set in other alternative stories.
Personally, I am fortunate enough to have missed that run and missed out on all the wins. In hindsight, my insistence on an inability to believe the might of the premium status of lithium in the EV revolution proved to be correct; however, I have to admit that I was doubting myself for a while in the early days.
In saying that, over the many decades of taking that "Punt" within the confines of the ASX, I think the might of the EV revolution is yet to come. I have noticed that when a new story develops, whether it's lithium, nickel, iron ore, etc, there is always the initial hype, which is then followed by a correction, which is then followed by the boring part of real value creation, once the dust settles. I guess, this boring value creation period is what the "real money" feast on and always seems to be the correct strategy.
So What Are The Stories in 2025
As usual, Samso has been looking out for new stories, and in 2025, I think that there are some that should be on investors watchlist, and hence some good old DYOR would need to be done. There are also some old products, such, as copper, that should be back on the radar that have been forced to take a backseat as investors grapple with short-term gains against long-term glory.
I think the journey of nett zero emissions and the clean energy narrative will take on a new level of interest and may begin to create a Fear Of Missing Out (FOMO) in 2025. This increase in attention may create a third certainty in life, after death and taxes. Since 2020 the ASX market has been monopolised by the lithium narrative, and as a result, everything else has been pretty much ignored and hopefully, till now.
The investing community understands that investments are typically shrouded in mystique and for as long as I have been involved in the ASX, the key in defining what makes the ASX ticks is all about researching to a level that measures your own risk and reward appetite.
All I hope to do here is to share my thoughts and give those interested a trigger to begin that process.
The need to have a balanced view is sometimes very hard to do in an industry where investors know that the rising share price is the only determining factor that measures our success. We cannot measure our success with how much or how little we know about the subject matter. Sometimes, we win knowing a lot, and other times, we know very little.
What we can measure is how we got ourselves into that position to allow us the opportunity to, as they say, take that "punt". In my opinion, the need for information is to allow us to take that position so that we are in the game.
1.0 What Can We Learn From Copper ?
Dr. Copper as the market calls Copper has been around since the first day the human species started to make the planet Earth their domain. I like to use Dr. Copper as a barometer on how investors should react in 2025 on the ASX. As you can see in Figure 1, the price of copper is gaining a bit of strength over the last 5 years, but the sentiment for a demand surge has been called for at least a decade, but the reality on the equities front has been far from spectacular.
Figure 1: Copper price chart since 1990. (Source: Trading Economics)
It's true that the ASX small-cap sector currently lacks any genuine quality players, but this presents a great opportunity to begin exploring the list. I used to believe that Cyprium Metals Limited (ASX: CYM) had real potential before the management change. If the previous management had secured funding (debt) before the interest rates began rising weekly, CYM might have been quite intriguing today.
Investors should realize that finding and developing a cost-effective copper mine takes decades, but its ability to generate revenue lasts for many decades more. Some of the top-producing copper mines have been in operation for over 50 years.
Why do we need all this copper, you ask? Well, look around and see what you are using that does not need copper. The simple fact is that metals such as copper are the backbone of civilisation, and the demand will not decline. What is declining is the supply, and lets leave that discussion for another time.
The challenge for "punters" is to find a sustainable product that has a prolonged value and cannot be easily manufactured or generated. As we move into a world where we are more innovative in thinking and in utilisation, these "Exotics" could become a more profound feature in the investing community.
2.0 The Exotics of 2025
I have coined the term "Exotics" to describe a few products that are being promoted as essential items to complement the no-emission narrative. While I am not a believer that the pricing of lithium will recover to being a premium product, I am definitely a believer in products that will be aimed at narrating the reduction of the emission story. This is not to say that lithium is not part of that narrative; I just feel that lithium is now just one of the components and is no longer the "superstar".
I feel that the age of post-COVID is all about reduction in emissions. The journey is not about whether you are pro global warming or not; the reality is that the path to a reduction of emissions is the main game. The serious nature of this sentence is clearly identifiable with the Australian government having established a full-time department to facilitate this topic, the Department of Climate Change, Energy, the Environment and Water. The quote below is straight out from the department:
Australia and the world are undergoing the biggest and fastest economic transformation since the industrial revolution. Action to reduce emissions will help prevent the worst impacts of climate change, but will also create a boom in new jobs and new industries. The government’s ambition for a future made in Australia will form a comprehensive, coordinated and practical strategy to seize these opportunities.
As the path to net zero will require innovation and investment across all sectors, the Australian Government is continuing to take major steps to realise the opportunities of an efficient, productive, high-wage net zero economy and make Australia a renewable energy superpower. - Department of Climate Change, Energy, the Environment and Water.
The government has set up a Net Zero emission plan and is 100% serious in making this a focus. This is why I say the age of the Exotics is just being made known to the investing world. I am not saying that the traditional metals are to be ignored, but if we, the retail investors, are to have a chance in getting closer to the front seats in this game, we need to think more exotic.
Figure 2: Australia's energy-related emissions and net-zero carbon budget, BNEF's Economic Transition Scenario and New Zero Scenario. (Source: Mining.com.au)
Whether we are talking about the transition to a cleaner energy or to a reduction in emissions, I see great opportunities as this timing is like moving from horse carriages to automobiles. We are still early in the conversation, and the new "Super Products" are coming on, and like all new products, the promotions are coming in quick and fast.
The introduction of exotic commodities to tackle the reduction in sending "nasties" to our atmosphere is what we are talking about, so let's take this journey here on Samso and get informed.
3.0 Zeotech Limited (ASX: ZEO)
Late last year I came across Zeotech Limited (ASX: ZEO), a mineral resource company that, according to the website, is developing advanced materials for a sustainable future.
We are developing sustainable processes to produce advanced materials and investigating the application of their unique properties to deliver positive global impact. - Zeotech Limited
I admit that when I first came across the company, I had a hard time understanding the business of the company. Apart from knowing the CEO, James Marsh, I was and am still learning the business. As I looked more into the business of Zeotech, I became aware that this is like a Resource Tech story. I have yet to approach James to get a closer understanding (Work in Progress), but looking at the business from afar, this is a bit of an industrial minerals play with a bit of technology that seems to be the theme of another company that we will have a chat about as well.
Let's have a look at the announcement on the 10th December 2024 - Methane Control Field Trial Deliver Promising Results.
Figure 3: Simulated landfill configurations located at Griffith University. (Source Zeotech Limited ASX release.)
That release on the 10th of December highlights that the the company’s two zeoteCH₄® showed in tests with Griffith University a reduction in methane emissions with an average (mean) efficiency of 70-85%. The development is still too early to have conclusive proof of its efficiency, but one can see the potential of the product.
From what I can understand, the implementation of the zeoteCH₄® is akin to putting a topsoil over areas such as landfills to filter out methane release (Figure 4).
Figure 4: Diagrammatic representation of how the zeoteCH₄® product will be used. (source: www.zeotech.com.au
3.10 Zeotech - Projects
Zeotech lists the following projects on the website, which makes this company more about products than mineral resource projects.
The company website does give a good brief of each project. As far as I understand, Zeotech has a unique Kaolin product that has been tested to show they have properties that are allowing them to create their own proprietary products that are used in the business of capturing the emission of carbon.
I will not go into the technical aspect of the project at this stage but when and if I get a chance to get James Marsh on a Coffee With Samso, I am sure, James will be able to articulate that with more accurately. James is no stranger to the Samso Platform so it will be great to have him back to communicate about Zeotech.
4.0 Corporate Matters
At the writing of this blog, Zeotech is sitting at a market capitalisation of AUD81.56M with a share price of AUD $0.044. This would give the company about 1.8B shares on issue.
Figure 5: The Zeotech Limited share price chart. (souce: Commsec)
On the 19th of August 2024, Zeotech announced the appointment of James Marsh as the Chief Executive Office (CEO), effective 9th September 2024. James Marsh gave a good presentation at the recent Noosa Mining Conference on the 15th of November 2024 which outlined the business of Zeotech.
Here are some notable news releases from Zeotech:
10th December 2024 - Methane Control Field Trials Deliver Promising Results
19th November 2024 - QLD Govt Funding Secured for Metakaolin Feasibility Study
28th October 2024 - Zeotech Executes MOU with Holcim Australia
3rd July 2024 - Bulk Zeolite Sample Sent to Protekta North America
22nd April 2024 - High Reactivity Metakaolin to Advance Low Carbon Cement
30th January 2024 - Methane Control Trials Advance Infield to Cleanaway Landfill
13th November 2023 - Trials Deliver Promising Methane Oxidation Efficiency
31st August 2022 - Commencement of Legal Proceedings against Zeotech
12th April 2022 - Opportunities for Zeolite-Based Greenhouse Gas Mitigation
30th November 2021 - Pilot Program Update - First Continuous Closed-Loop Circuit
6th September 2021 - Griffith University Delivers Promising Agronomic Results
23rd August 2021 - ZEO Acquires High-Grade Kaolin Project within Approved ML
28th October 2020 - Commercial Grade Zeolite Produced from Li Process Residue
9th June 2020 - Early market interest in Synthetic Zeolite Technology
21st May 2020 - Zeolite Technology Intellectual Property Protection Filing
7th April 2020 - Exclusive Licence Agreement to Produce Synthetic Zeolite
7th April 2020 - Board Restructure and Executive Appointment
17th October 2019 - Acquisition of Abercorn High Purity Alumina Project Complete
13th August 2019 - Metalsearch to Acquire High Purity Alumina Project
The list of notable news releases broadly gives a summary of the journey of Zeotech as the company transitioned from 2019 to the current management. There are a lot more items which are listed in the Investor Information section of the website.
5.0 What Does this All Mean?
The Zeotech story is not a new concept, as we remember there was EcoGraf Limited (ASX: EGR) and FYI Resources Limited, which is now called Cadoux Limited (ASX: FYI) back in 2021. The vertical integration pathway is popular with ASX companies, but I feel the investor patience still needs a process of hand-holding and a lot of patience.
My experience in the ASX tells me that the inner circle, the "purple circle", is very much informed, and the companies that have the support are going to have a lot of traction, but to convince the general investor, the retail sector, and investors like myself, there is still a lot of work to be done.
The retail market is generally impatient, and most investors are not used to the long gestation periods that are required with projects such as the one Zeotech is selling. The whole Zeotech story started in 2019, and the value created came in the heights of the 2020 bull run (Figure 5) and has since slowed and had a consistent decline with the general state of the bearish sentiment.
In terms of market capitalisation (MC), I am guessing that most small-cap investors will not like the AUD81M number. I have to agree as there are many great "Punts" which have MC at sub-AUD5M which makes a great position to take on any appreciation.
However, for a product like Zeotech, if they do get it right and the timing has arrived, AUD81M is very cheap. My thinking is that the new world order of clean energy and all the clean products that we are embracing, a product that can reduce carbon emission would be like the beginning of the computer age.
The key for investors is to watch the space and talk to management. What I have learnt over the last 5 years of Coffee With Samso is that management do want to engage and they are doing everything they can to engage with all forms of investors. They all know that the core supporters, from founding shareholders to the significant shareholders can only take them so far and the holistic engagement with the investing community is still the holy grail.
5.1 New Management and Advancement of Business
The new management and the recent release of the findings with the Methane, government funding, and the MOU with Holcim do give me a sense that there is more than a good speech for the Zeotech story.
I am guessing that the combination may seem to have sparked a renewed interest with a recent jump in share price movement. What that translates to is anybody's guess, but if the latest Noosa presentation by James Marsh is an indicator of things to come, there may be a good reason to start the DYOR process on Zeotech.
James did do wonders for the initial share price movement for Andromeda Metals Limited (ASX: ADN), however, history is clear that the Andromeda story has not ended well (Figure 6).
Figure 6: The share price chart for Andromeda Metals Limited. (source: Commsec).
How or who was responsible for the decline is not something we retail investors will ever have an answer to. Personally, I did not follow the entire story, but what I know is that it is never about what it seems.
6.0 Samso Concluding Thoughts
As I am looking at Zeotech, I cannot help but be reminded of the likes of EcoGraf Limited (ASX: EGR) and Cadoux Limited (ASX: CCM), formerly FYI Resources Limited. One could go as far as comparing it to companies such as Blackstone Minerals Limited (ASX: BSX) with their vertical integration of their nickel sulphide project in Vietnam.
The value creation journey for EcoGraf (Figure 7) and Cadoux (Figure 8) is not a great role model for investors looking at Zeotech, but sometimes, timing is critical. You could have a great idea or a great product but if you are too early or late, that is not a good thing.
Figure 7: Share price chart for EcoGraf Limited. (source: Commsec)
If you look at the share price chart for Andromeda, EcoGraf, and Cadoux, the three share price chart are almost in perfect symmetry, so it looks like the three companies caught the same bug.
As investors, we must always remember that the market is always changing, and there is definitely less market understanding for this type of commodity/story. It is not like gold or copper or lithium, where the investing community can easily understand the fundamentals.
Figure 8: Share price of Cadoux Limited (formerly FYI Resources Limited). (source: Commsec)
Projects such as that Zeotech are promoting, are all going to take time and the triggers for success are normally subtle to start, especially for the retail side, and with time it will lead to larger news. Selling this type of story is not easy and may approach the level of very hard, but it is not impossible.
This is not your typical mineral resource project that is widely promoted on the ASX. I am not saying that it is not a good project; in fact, I am taking the time to write because I like the concept. In fact, James Marsh with Andromeda was looking to do something like this as well, but as I said, how, what, and why the Andromeda story ended up in tears could be solely a case of timing. There will be much commentary on the reasons, but I have seen some significant disasters turn into a gem and vice versa.
6.1 Zeotech Makes Sense
I don't think the Zeotech story is comparable to that of Andromeda, EcoGraf, or Cadoux, but it is the same pathway. It appears that Zeotech has more merits with the backing of government funding and the collaboration with the University. I am a big fan of thinking outside the norm, so I am very skewed in my thinking for taking that extra risk when it comes to predicting future pathways for all aspect of my life.
As you read through the news release, you will start to see the runs on the board and the proof of concept being announced by the company. All these steps take time, and the great news is that it has been done. I did mention that this story has been on the move since 2019, and that is now nearly 6 years of work that has been completed, meaning that the boring hard work that takes time has been done.
Commercialisation or monetisation of the Zeotech concept may be just around the corner, and the market cannot deny that the clean energy and no-carbon or less-carbon-emission train will only gain traction as we go beyond 2025. Planet Earth is building solar and wind farms as if they were the only energy source available.
It is not a revelation that I feel the reduction of carbon emission space will be the next "Flavour"; however, I am not sure if the timing is 2025 or 2030. All projects require the balance of funding and storytelling, and the combination will be the telling factor for the survival of Zeotech and the other companies in this space.
To conclude, Zeotech may or may not happen as an investment for investors, but as I mentioned in the start of this discussion, one needs to take an alternative look at investments, otherwise we will just be another sheep in the herd. History tells me that when I am in that situation, I do feel that I am completely at a lost of my investment entry and exit decisions.
Disclaimer
The information or opinions provided herein do not constitute investment advice, an offer or solicitation to subscribe for, purchase or sell the investment product(s) mentioned herein. It does not take into consideration, nor have any regard to your specific investment objectives, financial situation, risk profile, tax position and particular, or unique needs and constraints. Read full Disclaimer.
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