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Applied Minerals Inc (OTCMKTS:AMNL): Wait For Dips To Buy

Applied Minerals Inc (OTCMKTS:AMNL): Wait For Dips To Buy
Written by
Ryan Mitchell
Published on
March 15, 2018
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Applied Minerals Inc (OTCMKTS:AMNL) is showing no signs of slowing down after a strong start to the new year. The stock is up by more than 200% and trading in a strong uptrend.The big question now is whether the stock will continue to power high or whether it will pull back before resuming the uptrend.Investor confidence in the stock has received a boost in the wake of the company providing an exciting outlook for 2019 amidst strengthening revenue opportunities. Given the strength of the uptrend, it may be wise to wait for a pullback that would provide a good entry position, as the stock looks set to continue edging higher. AMNL Daily ChartA pullback to the $0.16 level, which appears to be a key support level, should act as a good entry position awaiting further movements on the upside. At the $0.20 handle, the stock is flirting with a key support level, a close above which could see it make a push for the $0.24 mark.Applied Minerals Business OverviewApplied Minerals is an exploration stage company that extracts, processes and markets halloysite clay and iron oxide. Halloysite is commonly used to add functionality to applications such as plastic composites and flame retardant additives.The catalyst behind the recent rally Applied Minerals outlook in the market has improved, in the wake of the management announcing that the company remains well positioned for commercial success in 2018. Last year, the company advanced a number of revenue generating opportunities, which it now plans to leverage in pursuit of value.The company also signed an agreement for the supply of halloysite to BASF, for the development of co-branded halloysite clay-based products. Applied Minerals revenue pipeline consists of DRAGONITE and AMIRON.Revenue Forecast The exploration stage company expects revenue of between $4.2 million and $6 million this year, most of which will come in the second half of the year.

“The high-end of the revenue range reflects management's best assessment of the likely outcome of each revenue opportunity. The low-end of the revenue range reflects a 30% discount to the high-end of the range,” Applied Minerals in a statement.

The company expects positive cash flow on an annualized basis during the latter half of the year on revenue coming at the high end of the range.The revenue forecast does not take into consideration the revenue opportunities that the company is currently working on.Applied Minerals has already opened the discussion with partners such a BASF and Friamtec Ltd. BASF has agreed to market halloysite clay-based products under the BASF trade name. Profits are to be shared by both companiesBASF has also agreed to supply Applied Minerals with specialized toll manufacturing equipment to compliment current production capabilities.In addition, it is also targeting opportunities in new application areas such as battery materials.Lithium-Ion Battery Opportunity Halloysite clay has started to elicit interest and demand from lithium-ion battery developers. Immediate research has shown that halloysite clay can be used to increase the energy capacity of batteries as well as improve thermal stability due to its tubular morphology.The use of Halloysite clay in lithium-ion battery presents another unique revenue opportunity given that the size of the Li-ion market was about $1.46 billion in 2016.

"The Company has received significant interest in DRAGONITE for use in conventional electrolytes. Three of the leading global suppliers of electrolytes are evaluating DRAGONITE to enhance the performance of their conventional electrolytes. We believe this interest clearly,” said CEO Andre Zeitoun.

Applied Minerals has since appointed Greg Nielson, a leading executive in the energy storage field, to oversee the commercialization of DRAGONITE for use in Lithium-ion battery technology. Dr. Nielson is tasked with the responsibility of pursuing commercial partnerships with leading battery technology companies.What Next for Applied Minerals After 200% SpikeIt is turning out to be an exciting year for Applied Minerals as it starts to reap rewards of years of investments. A transition into a revenue-generating entity is already in play, given the opportunities at hand.Deals signed for halloysite clay should allow the company to generate a significant amount of revenue in line with its outlook. With the company touting the possibility of free cash flow before the end of the year, it is becoming clear that the company is on the cusp of generating significant shareholder value.A potential use of halloysite clay on the production of lithium-ion battery presents yet another opportunity for the company to strengthen and diversify its revenue stream.A spike in share price to one year is a testament to Applied Minerals strong fundamentals that investors continue to take note of.Applied Minerals is a long-term play and any pullbacks from current levels should present entry positions given the upside potential.Disclosure: We have no position in AMNL and have not been compensated for this article.Image courtesy of kqedquest via Flickr

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