Title: Uzo Capital — Comstock, Liberty Stream & Merlin (small/micro-cap deep dive)
Show: Contrarian Codex (Mart Wolbert interviews Uzo / Uzo Capital)
Guest: Uzo (Uzo Capital — @UzoCapital on X / Substack)
Date: 2026-06-22
URL: https://www.patreon.com/contrariancodex/posts/uzo-capital-161748418
Length: ~66 min
Note: Members-only Patreon video — timestamps reference the recording but are not click-deep-linkable (no public video host). Auto-generated transcript reformatted to (mm:ss) cues; fillers (um/uh/er) and immediate stutters lightly removed, wording otherwise verbatim. The recording's duplicated second-half re-encode (and trailing blank audio) were dropped — content ends at the sign-off.
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(00:00) My friend and extremely sharp analyst and I'm still learning a lot from Uzo, Uzo, I'm
(00:07) very glad you could make some time.
(00:09) Let's be over here.
(00:11) Some of you might know him as Uzo Capital on Twitter or sub-sector, or even as part
(00:17) of our little codech community as well.
(00:21) He has done a lot of great work on some of the equities that we hold in the portfolio
(00:25) as well. We have discussed a lot of these names in detail and I remain, I continue to remain
(00:33) very surprised by just how much of a, like how sharp he is in some of these names.
(00:40) So I thought it was a great guest to get on.
(00:43) But first before we get into some of these names, Uzo, do you want to say anything about
(00:48) the way you work, how you got into this, any form of introduction?
(00:53) Yeah, sure. So my background is I used to work on the sell side for 15 or something
(01:01) years, mainly looking at large-cap US and European names and focusing in on that, but really
(01:09) when I was doing my own personal investing, I'd be a lot more flexible going down the market
(01:17) cap spectrum. And I would say that, I feel like it's easier to make outsized returns in
(01:25) smaller, more esoteric names. So I probably over index on small and microcaps, but I do invest
(01:34) all the way up to large caps, sometimes make a cap, but not so often. And in that opportunity
(01:43) sets, I tend to find that some of these names where they are commodity adjacent. So I normally
(01:52) do miners, but I have found, for instance, there's a lot of opportunities in, let's say, commodity
(01:58) tech names or recycling names or litigation names, which are tied to arbitration and things
(02:06) like that. So I think that's probably the area where we've over that the most. And so you're
(02:13) happy to dig into where you want to go. I think that for this year, what we've seen is I don't
(02:20) want to see an unprecedented amount of volatility, but certainly a whole lot. So to speak, I know
(02:27) a whole lot is not necessarily like very particular arithmetic, but you know what I'm talking
(02:33) about. But for some of these smaller names, they trade with the market, but they also trade
(02:40) on their own for the mentals. Like one of the prime examples that we saw last week on Friday
(02:45) was by all metrics, a terrible day for the market. And I kind of dragged everything down.
(02:52) But for example, like Merlin, who came out with some very, very significant news that I
(02:56) also found an update on, they did a great job staying up there on enormous volume. So you can
(03:05) see that these smaller cap names, Merlin is not really a micro cap anymore, I would say,
(03:10) but it's certainly a small cap. They can trade on their own for the mentals. But before, again,
(03:15) before we dive into some of the names themselves, how have you viewed your investment, but also
(03:23) your investment strategy, given that we are dealing with one of the most uncertain macro
(03:29) environments in years?
(03:31) Yes, I think I would, I would frame it as I'm mindful of macro, but I don't let macro be
(03:39) too overbearing on my portfolio allocation. I tend to, I'm quite happy taking on quite
(03:47) a lot of volatility. It has been a time when I've had most of my portfolio in SPAC warrants,
(03:52) for instance, I won't go that extreme anymore, but I, for instance, I would say that maybe
(04:00) half the names that I've owned so far this year, at some point had a 40 to 50% drawdown.
(04:07) Most of them recovered or new highs or whatever, but that's, for me, that's par for the course.
(04:14) As I said, once you've been heavily involved in SPAC warrants, big drawdowns, you sort of get
(04:21) desensitised to it. So when I, in my portfolio though, I tend to barbell it, so I will have,
(04:31) let's say, maybe half of the equity portfolio, which is, maybe it's not half, but a decent
(04:37) slug, which are names which are generating cash flow and growing and are cheap. And then
(04:45) I'll have another bucket, which I will tree warmer and size them, almost like call options,
(04:51) maybe because they're leaps or warrants or something like that in nature, or it could be a very early
(04:58) stage company pre-revenue burning cash. And obviously the, the runnative sizing plays a part in
(05:06) that. So I tend to, I tend to address that, how do you address the, I tend to address that
(05:19) through portfolio sizing, the position sizing within the portfolio. And then for each of those
(05:24) buckets, making sure that they don't get too far, too far out of whack within the overall portfolio.
(05:31) So sometimes these earlier stage companies where a few of them work and, you know, maybe on entry,
(05:39) I'll only size them between a two to three percent position and they can explode up to a double
(05:44) digit. Then if I find that half the portfolio in those sorts of names, then there's no way I'm
(05:50) going to add to that. It's much more, you've got to rob from Peter to give to Paul, you've got to
(05:57) move them around. And that's sort of how I approach it. But yeah, look, if there is a macro overlay,
(06:09) which I think is being underpriced, then that does feed into how I think about things. But really,
(06:15) I found that my age is much more focusing on the companies and the bottom up more so than the top
(06:22) down. And where I feel like the ratio of the top down thesis is massive relative to bottom up,
(06:28) then I'm less likely to get involved. So I don't really do banks. I generally won't do miners,
(06:36) but I will do mining adjacent completely get that. I think it's very important that you have your own
(06:45) style. And that's what I always tell the people as well that regardless of what the macro situation
(06:50) is or isn't, then give a moment, if you stray, if you stray too far from your style, you naturally
(06:59) also tend to stray too far from your risk tolerance or your portfolio strategy. And that inevitably
(07:05) also bites into conviction. And with the market being the most loyal tile, it has been in some time,
(07:11) that can really shake you out when things don't go according to plan. But right now,
(07:18) I agree with that because you got a side stuff so that you're comfortable. So each person will have
(07:25) their own risk tolerance and sleeping level. Yeah, whether it's a sleeping level, whether it's a,
(07:30) or some people like to age into names over time. But yeah, I would say you've got to,
(07:40) you've either got to be rigid in your risk profile. So some people use stop losses. I don't
(07:48) really do that. But what I will do is I will, so if it's types of positions, I will be quite rigid
(07:56) about making sure there are any ever one to 2% on cost. And maybe as the risk profile decreases
(08:05) increasing it, or some of them, if it's like an options position, being quite ruthless about
(08:09) never adding to them. Because, you know, the going to zero probability is meaningful and always
(08:17) there. So it's different ways to cut it, but I think that makes sense. I think with regards to options
(08:23) in particular, that's something that last week, or last week, when I uploaded this probably two weeks,
(08:29) two weeks ago, that we saw a comm stock like, I have like a few really good days in a row, one in
(08:36) particular when news came out that more directs were buying. And then the options we call that we
(08:43) bought the 7.50, call options for December, like they went up a lot. And I just told people like,
(08:50) there was nothing wrong with like taking some profits and scaling out after up 200, 250% because
(08:57) they're still out of the money. There's a lot of volatility, volatility premium attached to it right
(09:02) now. And as you can see, like the Friday post that really good day, they just, they just cratered. So
(09:10) on those days when it's really, really frothy, I think it's good to kind of scale into what you're
(09:17) feeling. So if you're feeling super bullish or skill away from what you're feeling rather, maybe you
(09:22) want to take off some risks. But yeah, I think it depends from person to person. There's nothing
(09:27) quite as personal as investing. But I think with regards to macro, it is just causing so much
(09:35) uncertainty for people. And I still feel like a lot of people feel like they get blindsided. They're
(09:41) going to get blindsided by the market. But right now, I'm going to describe, or I describe this
(09:46) in a newsletter as well that will be uploaded by the time I upload this, that I feel like we're
(09:51) kind of witnessing a turbo war between two sides right now. Like on one side, you have like the energy
(09:55) and geological mess, the street of a mousse closure, inventory drawdown, food and fertilizer shocks,
(10:01) whatever it may be. And on the other side, you have like this step change in AI CapEx, which is just
(10:06) accelerating. And I think both are very real. But right now, what you're seeing is that this AI
(10:13) CapEx cycle has kind of been dragging the market upward, kicking and screaming, just climbing a wall
(10:19) of worry. And what you're also seeing as part of that is just an unprecedented earnings boom. Like
(10:27) forward, S&P 500 earnings have clamped around 25% on a 252 day rate change basis. And that's like the
(10:35) 90A for 99% haul back all the way to like 1990. Yeah, Q1 growth was in the high 20% wise,
(10:43) fair enough was kind of lumpy, magnificent set of them being up around 22% is kind of again,
(10:51) dragging the market upward, kicking and screaming. But I think right now, I think people are still
(10:56) kind of underpricing the potential risks that come with the oil and gas and general energy
(11:03) shock that we're seeing. And right now, as we speak, there is still so much uncertainty regarding
(11:08) the US and Iran. But yeah, there is a lot to take into account. No, no, for sure. I think the
(11:15) framework that so I'm always mindful to risks versus what is priced albeit when I think about
(11:23) that framework. Usually when I'm looking at ideas, most of the time I find it usually pays to look at
(11:31) what is the risk reward profile in this company relative to the outlook, not today, but the outlook
(11:39) looking out one, two, three years. And so to the extent that there is a macro issue, which I think
(11:47) permeates beyond a 12-month time horizon, but it's a multi-year headwind or issue. That stuff I tend
(11:56) to pay more attention to as opposed to near-term uncertainty, because each company at the end of the
(12:04) day is a multi-year. It should be worth what the DCF for future cash flow is not just the next 12
(12:12) months. For some names, obviously, that's a lot more. We've got to be a lot more sensitive than
(12:19) others. I know one of the names which we both care about is Liberty Stream. And with that company,
(12:31) obviously, the Lithium price matters a hell of a lot. That was probably the biggest issue that I
(12:35) had was trying to form a view on the Lithium price when I'm getting involved originally. But at the
(12:41) same time, this is before Lithium price roofed it, but it was like, well, we are in a multi-year
(12:49) bear market for the Lithium price and there's some demand drivers. But to the extent thinking
(12:57) about, well, what does the inputs to the straighter commues, what does that mean for Lithium supply
(13:04) demands in the next year or so, that I cared less about. It was more very much the multi-year thesis.
(13:13) So I'm probably more sensitive to what's the risk related to sodium as opposed to
(13:20) indigestion and straighter commues for the next X months, if that makes sense.
(13:28) But there's just plenty of ways to make money. I've just found that I've tended to deliver the best
(13:35) returns when I look out a little bit further than others. I think that's the right way to look at it.
(13:41) When especially for commodity investors, it's very easy to look very, very near a term like,
(13:47) okay, when there's some mine come online, when there's the next drill campaign going to be done,
(13:50) when there's the next development step going to be taken. And commodities are inherently very volatile.
(13:58) But sometimes on that, you've got to because if it is a... I don't do explorers or things like that.
(14:07) If you're in a company which doesn't generate any cash, some of this stuff can be reflexive,
(14:12) right? So if you need cash to pay for the next step, then you've got to map all of those
(14:18) different steps out because if you screw up the next step, then your dilution is going to be
(14:24) up great, you know, say there's a timer on it. Yeah, there's something I think about in terms of
(14:30) which bucket different names will sit in, for instance. Yeah, exactly. So let's talk about this,
(14:39) this bucket of names that we both share, starting with what I personally think is the most
(14:46) interesting of a lot. But like this is a very tough competition because all of them are super
(14:51) interesting. But I think that given where they are right now, I think Comstock is in a super, super
(14:58) interesting position. The second half of this year feels... I don't want to call it necessarily
(15:04) make or break, but it does feel like the most important time for the company to finally show where
(15:10) they can deliver or not. And I know that you're big on the name as well. Is there anything in
(15:19) particular you want to share about it? A lot of the viewers or viewers, rather listeners,
(15:23) they know my thoughts on the company, I've done extensive work on it to a point where I'm
(15:28) probably boring, they're ever living hell out of everybody the moment I still mention Comstock,
(15:33) but what is your view on the company? Yeah, so I've been involved in Comstock
(15:39) for probably about a year and a half, something that they're about. It's obviously had its ups and
(15:46) its downs, but I do think the risk rewards in the last few months is probably the strongest it's
(15:54) been. In fact, I did a write-up on my on my sub stack when I thought things, when it I think
(15:58) fell below three bucks or something like that, and I fell things were particularly skewed. Look,
(16:06) this is a company that has a checkered history, but nonetheless, they what the amount of
(16:16) progress that they've made in their different sleeves, I think is pretty material, and the reason
(16:22) why this name, I was initially drawn to this name, was the combination of having the operating assets
(16:30) in metals, which hopefully in 2027 will be profitable and high margin, combined with
(16:43) a call option in biolium, which is a very high risk venture, but it's a separate sleeve,
(16:49) and some hard assets, which they've been promising to monetize for ages. I think what is the
(16:56) difference today, first and historically, is that there's a lot more meat on the bone around both
(17:03) the timeline and the asset value of the mining assets and the real estate, as well
(17:13) the timeline for ramping on metals is very close, so metals should be producing in a matter of
(17:22) a month or two, let's call it Q3 to be safe, and really the debate should be the trajectory of how
(17:30) utilization scales up and proving out the unit economics, but really the debate there is,
(17:37) I think the debate there 2027 in beyond is how profitable is it, as opposed to does it work at all,
(17:45) given that we've done a pilot plan, and I actually went down to see, I did a site visit to
(17:54) see the metals plan, and also see the real estate about a year ago, and I always thought that the
(18:02) real estate side of the equation is probably the piece that was misunderstood the most, and I feel
(18:10) like even now where expectations of that are changing, I feel like there's, they are literally sitting
(18:18) on a gold mine and excuse the pun on the, on the real estate side, but you know, there are, there are
(18:24) complications, uncertainties, and combined with that, you know, that there has been a big step change,
(18:33) I feel like, around corporate governance and alignment in the last three months, so
(18:38) after the last raise, there were some new institutional investors that joined the register,
(18:44) there were new board directors appointed by a couple of those institutional investors,
(18:50) you've seen directors, Karado himself, vice shares, CFO bought a little, but I think in aggregate,
(18:58) there's been over $3 million worth of insider buying in the last couple of months, and you know,
(19:04) that's been a while since there's been insider buying, and there is a new stock incentive plan being
(19:11) put in place this month, so the signals are good, and when you look at the numbers, you know,
(19:20) the enterprise value, the company relative to the potential value of these assets or the profit
(19:24) profile, it is my biggest position, you know, I ain't shares, I'm short puts, some long calls,
(19:33) you know, I'm positioned accordingly, but you know, nothing's guaranteed. Of course, like if
(19:40) something was guaranteed with regards to Comsock, it wouldn't be trading in around $4 right now,
(19:45) like if we had any form of guarantee that the facility will be as profitable as it is advertised,
(19:52) especially with current silver prices, and you have a sideline to between, what is it,
(19:57) five and seven facilities over the coming five years, it will be trading a while higher than in
(20:02) this right now, but the facilities themselves is definitely something I want to discuss, but
(20:09) on the first focus a little bit more on the land itself, because from what I've heard from people that
(20:14) did the recent investor tour, they were also pretty enthusiastic about just what has happened to
(20:21) this land over the past few years, like the value has skyrocketed and you have massive companies,
(20:26) like Track, like Tesla, like Google, they are all there or thereabouts. Microsoft is their new
(20:34) neighbor as well with their Black Hawk project, and it's just remarkable how this particular
(20:45) piece of land that's turned into a hotbed for not just data centers, but for all sorts of like
(20:50) a fence industry, all infrastructure and activity. I think that was probably the main takeaway that
(20:57) when I went down to visit them, because you've got the gig of factory which is sort of up and
(21:06) around up the road, so to speak, and you can see that there's a big industrial hub there, and more
(21:12) recently, as you said, Microsoft and a lot of the adjacent properties where there are some visible
(21:19) transaction values done, which provide interesting benchmarks. I think what the new information for me
(21:29) was that if you rewind, let's say a year, what Comstock had was lands, which was flat,
(21:38) and it has value, but there's a big gap between that value. These are the lands which is
(21:48) connected with power, which is data centers, and I feel like that the incremental information that
(21:55) we've got so far this year, it provides a bridge from the former to the latter, and the latter
(22:03) is what is priced on a provider. You've got enough land to support it, but it's priced on a per
(22:08) megawatt basis, and with Comstock's signing the agreement to secure power, I think there's
(22:18) like two slugs, one which is 300 megawatts, which comes on in 2028, and then there's at the moment
(22:25) it's indicative, I believe, going to definitive shortly, I in the next month or two, the residual 900
(22:36) megawatts of gas. Now you still need incremental infrastructure to convert the pipeline of gas
(22:45) going into power, and how those economics get split between Comstock, who owns the land and the
(22:53) rights, the water rights, and all that sort of stuff with, let's call it a nebius or a neo-cloud,
(22:58) or whoever, who would bring maybe the, whether it's fuel cells, the turbine, all that other
(23:06) capex and infrastructure, how does that pipeline get split? TBD, but we know that there's a price per
(23:14) megawatt, and those long as a huge, and I think migrating from the former to the latter is very material
(23:22) in the context of the market cap of Comstock, and it wasn't that long ago, frankly, that
(23:29) even bulls thought that either land may be as worth 100 million, and I think now it's hundreds
(23:39) of millions, not one. It is remarkable, and even without also taking into account that you kind of
(23:46) made the pun with a better than potentially sitting on a gold mine, while they're still sitting
(23:52) literally on another gold mine, well it's not producing, but it has some gold and silver in the ground,
(23:57) and of course Corrado is extremely enthusiastic about it. But how do you view the potential
(24:04) cell, because they've been very adamant that they will sell this in Q3? How do you view the potential
(24:10) seal of that and the land in terms of time frames, and what they may end up doing with the proceeds?
(24:17) Yeah, I think the mining stuff is pretty simplest. I think if they say Q3, I feel pretty good
(24:26) about that, given the conversations that I've had with them, and the fact that we're into the
(24:33) towards the end of Q2, so could it get delayed, or obviously that can always happen, but they seem
(24:42) pretty confident about that being done. The question mark is about how much of that is cash up front
(24:48) versus deferred, or royalty interests, and destructuring of it, per se. But let's just say they get
(24:57) half of it, or 20 million bucks, that cash buffer, I think, will go towards either it will go towards
(25:09) metals, or it could go towards the realist, you know, or go towards enabling the monetization of
(25:17) the real estate. So I don't know that they said, look, the cash can get recycled into metals,
(25:23) I, from the digging that I've done, it seems, or the commentary from the company, it seems like
(25:30) the next slug of investment in metals comes in terms of ordering the equipment for site 2,
(25:36) after that comes after site 1, it has been scaled up to a point where it is profitable and the
(25:47) unit economics are clearly demonstrated. So, you know, maybe that is Q4, maybe it's Q1, I don't,
(25:57) you know, this uncertainty and timelines on that, but it seems they've been more measured in the
(26:00) pace of that investment, which I think is a good thing, albeit there is cash which is going towards
(26:08) proving up their recycling, and sort of taking recycling from a pilot to maybe demonstration scale,
(26:17) which is very accretive to unique economics. So, use a process for mining, so the amount of
(26:24) proceeds, I think they've already said, it's, you know, whether it's 40 or 50. Yeah, how much you get
(26:31) up front, question mark, but whether it goes into metals or whether it goes into unlocking the real
(26:38) estate, I'm relaxed, I think they should do whatever makes the most sense. I think the key bit is that
(26:45) some cash in through the door should alleviate the, you know, the bogeyman for this company's been
(26:52) dilution. So, you know, that will help. On the real estate side, I think there's a few things I
(27:02) need to get done first, so I think they still need to close out a lot of the titling and exercising
(27:07) of options and things like that on the real estate. So, you've got a clean, clean title fully owned,
(27:15) because a lot of it was options before, and then from there, they've got to fund these security
(27:26) bonds for the gas coming in. So, there are things which that need to be done first, and
(27:34) they're hopeful they can get something done before the end of the year. You know, we'll, let's see on
(27:39) that. I'd be more confident, you know, saying by this time next year, timelines on that, you know,
(27:47) look, and frankly, I think it's good to be conservative on timelines, particularly with this company.
(27:52) Oh, yeah, absolutely. You know, does it make a one of a difference if it is six months versus
(27:59) 12 months, not really. It makes a difference to my options, but it doesn't, if the debate is timing
(28:10) that matters less in my book, if as long as I'm not talking about an eternity in the differential.
(28:17) But there are more, there are definitely more open questions around the structure. There's a
(28:24) quite a wide bar of valuation outcomes, I feel, but, you know, even at the lower ends, it's a massive
(28:33) number relative to market cap. But, you know, I feel 12 months is probably a, it's a realistic
(28:42) timeline. Six months is what they're targeting. That'll be great, but I wouldn't bet my house on that.
(28:50) And I, you know, I frankly, I think that they, they said they're going to monetize it. I'll be,
(28:56) I doubt that means they're going to sell all of it and get all cash. I think what could happen
(29:05) is that they will get some cash in and retain an interest in the entity that is going to be
(29:13) developing this asset because there, you know, it is an incredibly valuable asset. And that'll be fine
(29:19) with me in the same way that it is on the, on the mining side where they may retain a royalty type
(29:25) of interest. So, you know, whatever maximizes the most value, you know, there are some complications
(29:32) around, they've got a definitive supply of gas going in for 2028, the 2030 is later and, you know,
(29:42) you've got to be able to provide bonding for all of this sort of stuff. So there are still things to
(29:47) to navigate. How, how would a partner price the 2030 capacity versus the 2028 question mark?
(29:58) It'll be probably not a full price. No, definitely. So maybe, maybe that's done as an option where,
(30:05) you know, they get, it gets exercised at a later date or maybe it's done at a discount or who knows,
(30:11) or I don't know, but the point is, even if you just take the 2028 piece, which is definitive,
(30:18) that's a big needle mover. The 2030 piece that could be massive, but it's elongated and it's
(30:28) still got to go definitive. So yeah, look, I don't think it's, I think it's possible that the cash that
(30:37) they get in from mining and real estate could be worth more than the entire enterprise value of
(30:42) the company, in which case that you get the other, you know, the metal stuff for free. I think that's
(30:48) pretty, metals and biolium. I think that's pretty credible, but, you know, this, the uncertainty
(30:56) bars are narrow on the real estate side. Of course, of course, the requires patience and, of course,
(31:04) believe in the company that they will actually deliver. And I think that it was kind of reflected
(31:09) that belief or disbelief or distrust in some of the management, whether they were actually able
(31:15) to deliver. It was kind of on show after the last race that they did, especially given prior
(31:22) communication regarding capital needs. But right now, what you see is with them buying into the
(31:30) company with that inside of it, I think that is sort of a, a letter of confidence to shareholders.
(31:37) And I think you can see that you have seen it in the share price as well.
(31:41) Definitely. I think that's been, I think that's been a big issue around alignment.
(31:47) You know, there's, you know, there are sort of valid question marks that have been posed around,
(31:55) let's say, the head of metals his, his interest is sat within the metal subdivision.
(32:02) The CEO owns his interest in the real estate division is more than in the, you know, the load level.
(32:09) But that I, you know, that I think is all moving in the right direction and being cleaned up.
(32:16) I know Karado has, you know, has, has offered to, you know, convert his S, S, O, F interest into
(32:25) livestock shares, you know, albeit, you know, that does come with tax complications and so forth.
(32:31) So, but, you know, I feel like those alignment concerns are being addressed through insider buying,
(32:41) the insensitive plan and et cetera. And, you know, and I, and I do feel that, frankly,
(32:50) if the last raise they were, let's say, communicating how August money was going to accelerate metals.
(32:56) You know, clearly a slug of it was going towards the real estate venture.
(33:01) I was actually quite relaxed by that because I knew the size of the price in the real estate side.
(33:07) But the fact it wasn't communicated. Maybe it's transparently up front. Clearly, I couldn't stand
(33:13) why that annoyed people. But at the same time, they were in the process of negotiating with
(33:19) that the other, and other parties in that real estate vehicle about how livestock will be increasing
(33:25) their interests and providing some funding that was needed to unlock the later value in it.
(33:32) And so, you know, I can understand why some of those details weren't shared upfront. And,
(33:39) but it buzzbed down to, do you trust them to do the right thing? And I do actually
(33:46) cross-corrido is working very hard and diligently to maximum share all the value. But it doesn't mean
(33:55) that there won't be mistakes made, or having mistakes made in the past. And that's the nature of
(34:04) investing. You've got to always try to make these difficult rules. Exactly. I think that
(34:09) with regards to this company, I think that most of the make or break is generally associated
(34:16) with metals, even though the land is so valuable, that it will likely more than cover the
(34:23) current market capitalization, still like people just view it as a recycling play. I like doing
(34:30) forward cash flow modeling for like five facilities come 20, 30, not even take into account potential
(34:37) improvements for your refining economics. You just get a remarkable number rolling out, but set
(34:43) remarkable number is not going to matter on a piece of paper if the unit economics do not
(34:47) scale the way that they are advertised. So I think that it's they're in such an interesting position.
(34:53) But a lot still needs to be done. But if they deliver, I think it's probably one of the most
(35:00) asymmetric upsides place that I currently see on the market still. Yeah, I'm with you on that.
(35:06) I think the scaling, I think the big question on metals is how do the unit economics shake? How
(35:15) want you, you know, as you scale? And how how does the market supply side? How does it look?
(35:22) How does it build? Because I feel that the longer you look out, the more certainty you have about
(35:28) how many of these panels are sloshing around at the end of life that need to be processed. But there
(35:33) are real question marks about the shape of that ramp between let's say now in 2030, which will dictate
(35:42) maybe the utilization or have a path for site one as well as the ability to open up new sites. But
(35:51) frankly, you know, again, that is a, you know, four years is a long time. But it is, for me, that
(35:59) feels like a timing issue or a scale of the earnings upside. If you have one site that is, let's say,
(36:07) operating at 70, 80 per cent capacity utilization, then this stock is dirty. You know, the ability to
(36:16) open up new ones is a very big cherry on top. But you can still get multi-bagga returns if just
(36:23) one of them is operating scale. And you know, one concern, yeah, I guess the concern I had is the
(36:33) durability. The returns are capsule is so high, competition pricing. And this is where I feel like
(36:40) the refining or what are they called extraction improvement is really important because you can have
(36:48) the tipping fee can get cut drastically. If your ability to extract metals without having to give up
(36:59) half the economics to a third party refine shipped into Brazil or Korea or China. Exactly. And they,
(37:05) it sounds like they're making real progress on there that they should have the fully operational,
(37:09) you know, the fully operational pilot should be, you know, it's pretty much, you know, that's a,
(37:16) that's a 2026 event. And then flipping that into a, from pilot to demonstration and scaling that,
(37:24) I think that provides a real moat for the earnings power on a per plant basis. And if that's the case,
(37:32) then because any any any other competitor would not only need to produce a
(37:40) a metals plant, no need to have the refining solution, they need to do both, which is tricky.
(37:46) So, so yeah, like, you know, if the stock is trading at 10 bucks, then you have to, you know,
(37:53) you have to make a much firmer view about the, you know, the timeline or ability to scale beyond
(37:59) plant one. When you're at four bucks and below, in my mind, you, you know, after you give them
(38:08) some credit for the assets that's selling, you're, you're, you're almost, or virtually getting metals
(38:12) for free. So, really what you need to be confident about is that does metals scale enough to not be
(38:21) burning cash and to be profitable. I think that's a pretty relatively low bar to reach over the course
(38:27) of the next, you know, once they're up and running the next, you know, year or whatever, and then you're
(38:33) sort of debating the scale of the upside. So, that's, that's my framework. There's a lot of embedded
(38:41) upside optionality with multiple ways to win, call it real estate, call it metals, plus
(38:51) refining within it. And, you know, the other big call option is biolium, but frankly, I feel like the,
(38:58) you know, they've hit some stumbling blocks there. So, you know, that's not something. I feel like
(39:05) I probably want to see some more progress on, on that division before ascribing it as much weight
(39:11) to, to that. I'm going to be a little agree. It's very nice to have potential lottery tickets, but
(39:17) we still need to see more of it. All right, that was a lot of information on Comstock and I think it
(39:22) speaks to the infuse, yes, and that we both have for, for the, for the company going forward. I think
(39:28) the coming six months are going to be super, super relevant, but that's not the only company
(39:33) that we're enthusiastic about was because speaking of multi-bagger potential, so to speak, and also being
(39:41) asked more of the adjacent, if you will, as Comstock, Liberty Stream. It's a, it's a bit of a newer entry,
(39:49) well, a newer entry. It's been here for a few months in the portfolio, but they have just been
(39:54) delivering. And ever since the CEO decided to stay in, was it a caravan or a camper or something near
(40:03) the site, it just spoke to how committed they are to, to getting this done. And then just delivering
(40:10) the first batch of, of Lithium and showing that it is starting to work, it's starting to click and do
(40:17) gear. It's a remarkable waste to product story. The same thing with Comstock to prepare, we should,
(40:25) we should sort an ETF for, just sort of, yeah, there's a few of these names. It's like a trash to cash.
(40:34) I love that. I think that they're super interesting because, I think with all of them, they,
(40:44) you know, the returns on capital are high. Without patent protection, there is a bit of a first
(40:54) mover and medium term competition dynamic, but that first mover component is material. I think
(41:03) for Liberty is probably of the, of them is probably the most important because this is sort of
(41:09) new ground. And once you get plugged in, you know, it is, it should be sticky infrastructure like you
(41:17) have to rip out and replace with a new partner. And that'll be difficult if you've already got a
(41:24) very long term contracts in place and so forth. So yeah, but we can dig into that.
(41:29) Yeah, I think that for Liberty stream, it's just the entire theme that has basically been in place
(41:38) for the better part of one and a half years. And particularly after last year's tariff tantrums,
(41:42) has been at the US is very, very adamant that they want to reassure a lot of industry on commodity
(41:49) related supply chains. And I think that's a trend that is not going to change regardless of the
(41:55) outcome of this conflict regardless of the what supply chains may look like in six months time.
(42:00) I think that this is something that they are super focused on. I think there's something that
(42:03) other countries should focus more on as well because being reliant on foreign supply chains,
(42:09) inevitably at some point you're going to get into trouble for whatever part of the equation.
(42:16) You might find yourself in what do you need rare of elements to build new weapons system
(42:20) or lithium for batteries or whatever it may be. For the US, they do not have a ton of
(42:28) lithium production available, but they do pride themselves on their oil production. I think that
(42:35) Liberty stream, it's such an interesting concept or even more in the concept like this is not a
(42:40) powerful presentation company anymore, but where they are right now, I think they fit that mold
(42:47) of reshoring critical commodity supply chains very, very nicely. Of course, there's a question
(42:54) of whether they can scale or it's a question of whether they will get government support or
(42:59) how they will finance going forward. But right now, I think they were the sort of very interesting
(43:07) journey. I like how do you view risk rewards when it comes to Liberty stream? Do you have anything
(43:13) monolithower for where they may stand in, well, let's call it three, four years?
(43:17) Yeah, so the way I feel for Liberty stream, the first is that they've obviously,
(43:25) I feel like the key bit to unlock here is how the financing side in the both in the immediate
(43:37) term as well as in the medium term. Obviously, there's a lot of waste water, so they convert
(43:47) lithium from waste water or gas waste water. There's a lot of that and the concentration in
(43:56) in the Permian is low and so the ability to do that is somewhat differentiated versus competitors,
(44:03) who tend to focus in higher concentration locations. But at the end of the day, there is still
(44:10) some capex involved to do it on each site and because they are listed in Canada and each raised
(44:17) so far has come with warrants, which as an investor participating in them has been attractive,
(44:23) but it is costly from a dilution perspective. So I think them securing and offtake agreements
(44:33) is critical to unlocking cheaper financing. So they have a plan within, say, six to 12 months to be
(44:43) listed in the US and with that, there should be capital raising and cheaper capital.
(44:49) But if you do need an offtake agreement structure to be able to raise capital on a project level
(45:01) basis, so as opposed to needing to dilute at the perinco. So my running assumption is that
(45:11) in the in the next, in the immediate term, if they come out with an offtake agreement, then either
(45:20) they will do a financing with pref shares, which potentially convert into common at the time of the
(45:28) US re-listing. And hopefully thereafter, they should be able to use project level debt financing,
(45:38) which drastically changes the dilution maths. At the end of the day, where lithium prices are
(45:44) and where the capex per site sits and the opx, well the opx is moving, the payback period on these
(45:51) sites is, you know, called it two years, is pretty quick. But the fact that, you know, you're
(46:00) needing to raise equity to fund it all, does change the return maths. But I think that debate is
(46:07) probably most front and centre for the next 12 months. And I think thereafter, you know, once you've
(46:15) proven it up and have offtake agreements or and pricing, which is perhaps a little bit uranium
(46:25) S, and what I mean by that is some sort of floor, like a floor pricing, and then you have a which
(46:34) provides you with a downside protection, and then pricing, which is let's say tethered to the
(46:40) Chinese index, maybe a bit of a premium, but importantly, there's some floor protection in the
(46:45) area. And then then then you then you have a earnings profile, which is, you know, pretty sticky
(46:53) and got a long duration, it could come on to decent multiple. But I think to get that multiple,
(47:00) you need to investors need to feel comfortable around the financing, as well as the shape
(47:07) of the offtake agreement. So if the offtake agreement is a rolling three-month spot-ike thing,
(47:14) that's a very different profile versus a multi-year-with-a-floor. And so hopefully the latter,
(47:24) you know, because that latter also unlocks the financing side, and that the companies are aware
(47:31) of that, they're working on it. Hopefully we should we shouldn't need to wait too long. And you know,
(47:37) the holy grail is if they get some sizable DOE funding. I think the odds of that happening are
(47:45) good, but you know, definitely not certain. And I think we should rely on. Yeah, it's something which
(47:52) the company won't rely on in terms of how they plan for the future, but it's an important
(47:59) upside call option, which could address some of these dilution and financing concerns. But
(48:05) what I love about these guys is that they are true hustlers. You know, their work ethic is,
(48:11) you know, it's sort of loud and clear, they, they, you know, CEO, you know, he's a big slug of this,
(48:20) and he's working hard. You know, IR is working hard. Everyone in that company is pulling in the same
(48:29) direction and, you know, operating in fifth gear. And so, you know, the runway potential is massive.
(48:38) If they can scale to multiple partners, and you know, I think they've proven that it works. It's just
(48:44) scaling up, doing it in a capsule efficient fashion. And yeah, you know, it's,
(48:53) you know, I think this could be a multi billion dollar company. But, you know, they, they need to,
(49:01) they need to execute, but so far they have been. I agree. I think that's the, the, the spread that
(49:08) runs through all these names. It's just a question of can they execute? If yes, and if they can get
(49:13) the financing associated with set execution, I guess it's part of the equation, of course.
(49:19) It has multi-back potential. I just think that for, for Luity's dream in particular,
(49:25) it's just a narrative around the company could be, could really drive it forward. I think that's,
(49:32) that's an important part, especially if they secure that U.S. uplifting. Yeah, I think the U.S.
(49:39) not listing is, because I think they've already read on the salt in terms of their corporate,
(49:46) I think they're now officially a U.S. corporate and done that read domicine in terms of changing the
(49:51) listing that should change the cost to capital. But, you know, there's, as I said, there's more than one
(49:58) way that you can address the cost to capital if you come through the government. And it could come
(50:03) through project level financing via a nicely framed offtake structure. But, you know, there is,
(50:13) there is a bit of a race dynamic going here, you know, they, I feel like they have the
(50:17) technical lead at the moment, but is that, you know, how long that persists? They need to
(50:24) try and lock down these different sites as quickly as possible, because once you're in there,
(50:29) you know, you sort of lock down that capacity and there's a lot to go after. So, yeah, I like that a lot.
(50:38) I think at the time, I think I invested originally in October last year, at the time, the Lithium
(50:45) price was a fraction of where it was today, the debate was, could they really get a big premium to
(50:51) Chinese spot? You know, we're now Lithium price is multi-bags since then. So, really, I think the
(51:03) question is for the risk profile is where is the floor set and how long do these offtake agreements
(51:10) last? Yeah, if you run a free cash flow model for a certain amount of modules, and you're under the
(51:16) 15k Lithium or 25k Lithium, it makes a huge difference. Not even funny. Yeah, and also the, you know,
(51:26) what they're quietly doing as well is that the OPEX is been coming down meaningfully. So,
(51:33) some of that is expected at the expense of a bit more capex, but, you know, I think,
(51:38) you know, that's been coming down quite nicely. And so, they, I think the debate, one sentence,
(51:46) this is a lot more convoluted way of saying the debate here is the amount of profit they make
(51:50) per site. As opposed to, I was, you know, they're at the top of the cost curve. So, if Lithium price
(51:55) halves, they're in trouble. That's not the case. Absolutely. I think that the sets are so
(52:02) nicely for the, the final company and the newest entry that I want to discuss with you, because
(52:08) you, as much as myself, we like it when our, when our equities fly upwards, but I like it more when
(52:14) the equity literally gets stuff flying upwards because Merlin, as I, as I put in the update as well,
(52:22) following set, following set, news release, that they announced the successful completion of the
(52:28) critical design review for the C 140J autonomy program. And it was, as you saw on that particular day,
(52:37) with regards to volume and price action, it was absolutely remarkable. Merlin is, I think, the most
(52:44) complicated of the three in terms of stories, mostly because I do not have a background in, in AI,
(52:49) I'm mostly a commodity guy that's now really liking recycling and try to cashplace as you so nicely
(52:56) put it. But for Merlin, in particular, like it's, it's a different, it's a different beast. It has
(53:01) a very cool name, which kind of helps it, but it is certainly a different beast. And I wonder how you
(53:08) are viewing the company, because you tend to like stocks that have something associated with
(53:13) throwing things into the air and keeping them there. Yeah, I'm sorry, one second.
(53:19) Yeah, so Merlin, I, so historically, I have done very well in de-spac, or de-spac warrants,
(53:31) and despite, I would say, 90 plus percent of them being terrible companies. So there is a small
(53:41) cohort of companies which are either really good businesses, or have the potential to be really
(53:46) good businesses. Yeah. And Merlin, for me, sits in that latter camp. It's a very early stage
(53:53) business. And frankly, it reminds me an awful lot of AST space mobile, which I still own,
(54:00) and I originally, I think I was long the warrants in AST space mobile from day one of that deal being
(54:09) announced. And lots of potential forward-looking unit economics look fantastic, but there is a long
(54:20) treacherous path to make it happen. And I think that is the case here. You know, it is, so what Merlin
(54:29) does is it effectively provides a, the technology for, to have an autonomous pilot. And initially,
(54:37) they're trying to do it where, instead of using two pilots, you have one, and then you have this Merlin
(54:43) co-pilot software, which can do everything. And, but, you know, there's a, there's a long path
(54:52) to get there. You've got to, you've got to get regulatory sign off. You need to, there's contracts
(54:58) that need to be delivered upon. But what, what caught my attention here, and a credit to Crossroad
(55:04) Capsule, who did a very good detailed write-up on it that put the name on my radar.
(55:09) What stood out to me was that this was a disruptive early/first mover in a massive tab. So,
(55:19) you've got reliable robotics. There's a couple of other adjacent operators that are doing
(55:25) similar things, but not something which is platform agnostic with the exception of reliable robotics.
(55:33) And, the amount of money that, whether it's airlines, the military, that they all spent on pilots
(55:42) is huge. This is your waymo-like solution, but for the skies. And you don't need to be a rocket
(55:48) exception. You need to be a rocket scientist to realize that is super valuable if you can put
(55:53) it off. The, and waymo itself is worth over $100 billion. You know, so the size of the price is huge.
(56:02) There's a lot of these crappy businesses that even though they're addressing sexy topics,
(56:09) the unit economics are poor. So, Joby and these types of names, Evitole, where you're physically making
(56:19) the flying instrument. You know, they've got multi-billion dollar market caps with no real revenue,
(56:29) but even if they do scale, there are, you know, capex versus gross margin question marks.
(56:34) The reason why I like this is that there is multiple modes that kind of sit on top of each other.
(56:41) You've got a very long, protracted regulatory approval timeline. You'll be retrofitting existing
(56:47) aircraft. You're not going to rip out something once you've retrofitted it with this stuff.
(56:52) And then you've obviously got the overlay of, if you've got all these things up in the air and flying,
(56:59) then there's some data advantages there. And your charging structure is software-like. It's a
(57:07) licensing fee to utilize this product once it's in the skies if they get there. What I liked here was
(57:15) that you've got strong industry partners, your GE, general dynamic, Honeywell, you've got framework
(57:24) agreements with the DOD in place already. Yeah, massive names. Yeah, and so they've decided,
(57:29) when you see industry players deciding to partner instead of self-build, you're getting some validation
(57:36) and there's a degree of de-risking going on at the same time. So, I thought that was important.
(57:42) And then the final thing, this is why I saw this with AST Space Mobile as well.
(57:47) There is zero insiders selling. In fact, a bunch of them import more, who are private owners
(57:56) and moving into the listed sphere. The SPACS is always people taking money off the table.
(58:01) And so the signaling from that with a founder running the business, it doesn't guarantee success,
(58:09) but these are all very powerful signals. So I treat this like a listed VC vehicle. So what
(58:16) that means is that expect dilution, draw downs and delays. But I do think that this could be a
(58:26) large cap business. In the same way that AST Space Mobile is now a large cap. I think AST's market
(58:35) cap is $40 or $50 billion now, when they did a SPAC deal, it was $1 billion. And I think that could play
(58:44) out here if they execute, but there's a ton of risks that shouldn't be ignored. And I like these
(58:56) types of opportunities when they are early and before they were the size of the prize relative to
(59:06) the likelihood of getting their stack up. One thing I have noticed in the commonality between this
(59:14) and the AST Space Mobile is the use of, is a dual use technology. So the military is stepping up
(59:22) first in terms of bank rolling and partnering and so forth. But the same technology can be used
(59:29) in commercial, which is arguably a bigger tab, maybe it takes longer. That's the loss rate. That
(59:37) is a massive loss rate ticket. But it's there. I think it's prudent to focus on what's in front
(59:46) of you in terms of the defense pathway, but that commercial opportunity is enormous.
(59:56) And I think just being a bit more general, what so far have been the AI, if you think about AI
(60:07) deployment, the use of AI is obviously proliferating, but where companies can make the most money,
(60:16) I feel like is where AI is used in a way that delivers visible value, visible value, where there are
(60:24) real barriers to entry from others to be able to replicate what you're doing. And when you combine AI
(60:31) with physical infrastructure, which is or physical product, which is the case for Merlin, combine
(60:36) with that long regulatory lead time, that's quite differentiated, I feel like.
(60:42) So yeah, look, I have noticed that there is a growing investor. There is a growing interest
(60:53) amongst the same shareholder base that I would say, that space model and ASD space model, I know there's
(61:00) quite a few of those same people who have drawn to this name and I'm one of them. And I think it
(61:05) makes sense. But at the same time, this stock is doubled in half, like two or three times in the
(61:13) last three months. And sure, there'll be a lot more of that. So you've got to size these things
(61:18) accordingly. But as they de-risk and execute, I feel like this is not going to be a linear return
(61:29) profile, because you've got somewhat a, let's call it necessarily binary, but you've got, let's say,
(61:35) a downsides case where it could be worth zero. That risk is probably reduced because they've
(61:40) of the news last week. But if your probability is signing between the ball case, you know,
(61:47) a non-zero bare case. So a bare case, a base case and a ball case. Because the ball case is a
(61:58) 30 to a 50 or plus bag of potential. Could be a hundred bag of it depending on if you want to
(62:05) factor in commercial. Small changes in those probability assignments means that the equity can
(62:14) move a lot. So it's, I treat this as a name which I'm fully prepared to sit out for three to five
(62:24) years to see how they execute. But you know, to do that, you've got to be prepared for those drawdowns
(62:31) and delays and dilution. If you can't do that, don't bother. You're just going to get disappointed
(62:38) and sell them after it's collapsed. You know, it's just the nature of the beast. Absolutely. It's
(62:46) far from the course. I mean, like I also, in the 11 base rider that I'm sure people are still
(62:53) taking time to read because it can be a little dull sometimes, but I also made a bare base and ball
(63:00) case analysis on the company. Of course, my bare case was a higher than the current share price,
(63:06) but that's, of course, a real bare case just zero. It's as simple as that. Yeah. There is a real
(63:12) bare case. There's prefs. There is some hair on this. They've got conversable prefs, which are,
(63:19) you know, material and there's a there's a restripe component tied to the September ADV. So the dilution
(63:28) could, you know, the share count could go up. That preff could sit over the equity. If, you know,
(63:34) there's a whole bunch of things that, you know, can make this a, you know, the, the, the,
(63:41) the main is a complicated or you've got to be sensitive to the downside cases. And
(63:46) with quite a few of these same with, I guess, exploration mining, right? If you, if the market cap is
(63:53) depressed and you need to race capital, then it's going to hurt even more. Yeah, it can be self,
(63:59) it can be reflexive in that regard. Yeah, but, you know, the same, at the same way,
(64:07) a lot of these types of companies aren't listed anymore. I think that's, that's, that's probably
(64:14) the main, my main takeaway is that a lot of these types of businesses sit in, in VC,
(64:24) you know, VC funded. And, you know, to the extent you get these opportunities, I like kicking the
(64:34) ties on them, but, you know, I'm fully prepared to be patient because you have to be.
(64:41) Same. It is part of the course. Like, if you're not going to be patient with these sorts of
(64:47) place, then you need to stick to the mega caps that already have approved track records, you know,
(64:52) their business, and they try to get some more, what's it called, some more advantage there, but for me,
(64:57) I like dabbling in these place where they don't have a lot of eyeballs yet, and then we'll just see
(65:02) if they execute to what extent they will execute, and then we, we go from there. And if they don't,
(65:08) we just take our losses. Like, it's not going to be a hit every single time because it was a hit
(65:12) every single time. There will probably not be price as such, but, no, I think it's very interesting,
(65:20) we're just about coming up to an hour, and we discussed a lot, like, a lot of these are very,
(65:27) very interesting. I want to be respectful of your time, but I also want to ask you, do you have any,
(65:32) any final thoughts that you still want to share? And I think, I think we've covered a lot of grounds,
(65:37) but yeah, look at anyone's to reach out. I'm on Twitter and Discord, so yeah, you know where you are.
(65:49) I would recommend reaching out. Do not bother him too much. He's a very busy man, but he has a lot of
(65:54) interesting things to say. They were definitely given follow on Twitter. But for now, we so thank you
(65:59) very much for this interview for taking the time. Thank you also very much for being part of the
(66:04) community, and I hope we will have another conversation. Maybe later this year when we have more
(66:09) news on all all three of these names. Sounds good. All right. Thank you everybody for tuning in,
(66:15) and I hope you have a good and healthy rest of your day.