Tesla came to us to speak, the world is not prepared and, secondly, we are undervalued. The electric vehicle revolution is accelerating faster and faster, and it's quite obvious that electric vehicles are our future. In fact, tesla already sold out on its vehicles for the entire second quarter of 2021. In tesla's q1 earnings conference call elon explained how we've seen a real shift in customer perception of electric vehicles, and our domain is the best we've ever seen.

We're used to seeing a reduction in demand in the first quarter and we saw an increase in demand that exceeded the normal seasonal reduction in demand in q1. Yet, while demand for evs has certainly increased, there is one major issue whether the supply can be fulfilled. More specifically, the problem centers around whether there will be enough nickel supply that can support the exponential growth in evs. Elon has publicly spoken about this issue before, but it seems as if his concerns have died down for a reason that i'll explain in this video.

I will cover why i'm doubling down on one mining stock that i believe is extremely undervalued and may have just signed a massive multi-year nickel contract with tesla welcome to cascans academy, if you're new to the channel. Please consider subscribing for more content like this and let's get right into it. Now, i'm not going to hold you hostage to tell you the stock, i'm doubling down on the stock. I'm talking about is volley mining, ticker, symbol, v-a-l-e, and if this company sounds familiar, it's because i talked about it in a previous video before you have preconceived notions about this stock.

Allow me to explain why i see valet is a low risk. High reward investment over the next few years. I first spoke about valet mining at the beginning of 2021, where i explained how i believed that volley mining was going to secure a tesla partnership and benefit tremendously from the eevee revolution over the past couple of months. This thesis has only gotten stronger and stronger after some groundbreaking news was announced.

First of all, you might be wondering what is vale mining valley. Mining is one of the largest mining companies in the world, with operations primarily in brazil, but also canada and indonesia. The company mines iron, nickel, manganese, copper and coal. However, the only major materials that are mined in that list are iron, nickel and copper according to volley's 20f filing roughly 78.8 percent of its total revenue in 2020 was from iron ore or iron ore pellets.

After that, nickel and copper came in at 12.5 percent in 5.4 percent of vale's total revenues respectively. In the short term, vale's growth is coming from the rising commodity prices, especially with iron iron, has been in the shortage and, as a result, prices are skyrocketing in the short term, however, the long term potential lies in nickel and potentially copper, which is where tesla and Eevees come into play first of all, let's start with why i believe volley may have secured a secret partnership with tesla. Recently, back in october of 2020, multiple sources announced that volley mining was in taxes to hear a nickel mining deal with tesla mark travers, who is vail's executive director of base medals, told reuters that vale and tesla were in talks for a nickel contract. He stated that the nature of the discussions, i'm sure that is occurring across the industry right now and without specifically commenting on tesla.

Those are the conversations we are having right now, after that, when he was asked whether volley and tesla were in talks. Travers said yes, absolutely a few days later, vale cfo confirmed that tesla came to vale to discuss the possibility of securing a nickel contract. The automotive companies will need a lot of nickel and um, and the world is not prepared to supply that much nickel. So tesla came to us to speak because also this most of wally's nickel come from safe jurisdictions, jurisdictions that follow best practices in terms of vsgs and there's a role open for opportunities for mutual collaboration.

To try to develop those minds that the world will need already. The fact that tesla came to vale and not the other way around shows a hidden power pyramid as the largest nickel mining company in the world, vale has a leverage, not tesla now that part may seem relatively speculative, but take a look at what happened recently in Vale's most recent earnings report volley announced that they have plenty of buyers and they recently signed a quote: unquote: significant multi-year, nickel mining contract within oem, currently, just just by just to give a little bit of an update. We have buyers who are very interested in interested in the products that we that we produce right now in the electric vehicle space. We current.

We recently signed a significant multi-year contract with an oem it will. It represents about five percent of our class one nickel, and we see further opportunities to grow these the sale of our our class one nickel into this space. Now i do think that tesla could have been behind this nickel contract, and this is simply because of how many clues point to this. The first clue is not a credible source, so take this with a grain of salt, but according to volley's wikipedia page tesla is known to purchase the majority of their nickel from valet.

Again, this shouldn't be taken seriously because the source is not reliable, but we do have to acknowledge that it exists. Additionally, in july of 2020, elo musk said himself that tesla would be signing a long-term mining contract for nickel tesla will give you a giant contract for a long period of time, if you mine, nickel, efficiently and in an environmentally sensitive way top this off with the Fact that tesla was in talks with volley a few months before vale signed this quote-unquote significant mining contract, and there was a good kiss for this contract being with tesla. But, of course that's not enough, which is why we're about to do some long calculations stay with me, because this is all going to lead to one final result. First of all, to start with, there aren't many automakers that need a lot of nickel right now.

The eevee competition has been lacking, especially in the us. By doing some quick calculations, we can see that valet's contract being with tesla is highly likely. Tesla uses an iron phosphate battery for its operations in china, which contains no nickel, so we can rule tesla's china operations out of our calculations. Tesla currently sells roughly 22 000 vehicles per month in the us, and all of these vehicles use nickel and tesla's flagship lithium.

Nickel, cobalt aluminum battery, also known as the nca battery according to inside evs tesla uses 30 kilograms of nickel per model 3.. If we add in the model s x and eventually cyber truck into this calculation, then the real number is likely new 35 to 40 kilograms of nickel per vehicle to stay conservative we're going to use 35 kilograms. Now, let's assume that tesla sells 25 000 vehicles per month for 12 months in the u.s 25 000 vehicles times 12 months is equal to 300 000 vehicles per year. If we assume that vale's multi-year contract is three years long, then we can do 300 000 times.

Three and then multiply that by 1.2 to account for a potential production ramp up in the end, this number is equal to 180 vehicles. After that, we can multiply million 80 vehicles by 35 kilograms of nickel per vehicle, which is equal to 37 800 000 kilograms of nickel to translate this to metric tons. We can divide this number by 1000 to get 37 800 metric tons of nickel. If we assume that tesla gets 60 of its nickel from valet, then we get a final result of tesla needing 22 680 metric tons of nickel from valet.

If we divide this number by 3, we get tesla's annual nickel demand from valet of 7500 metric tons. Then we can divide this number by volley's total class 1 nickel supply of 124 000 metric tons. Then we get a final result of tesla needing roughly six percent of valley's annual nickel supply in the electric vehicle space. We current we recently signed a significant multi-year contract with an oem it will.

It represents about five percent of our class, one nickel. Of course, at the end of the day, we don't know if the contract was with tesla, but given the clues, it seems likely either way, there's a huge investment opportunity with valet and the eevee space in general and something even more profound recently occurred. Although volley mining stock has gone up recently, the stock remains unreasonably undervalued, valet, currently trades at a trailing pde of 11 and a forward pde under 5. that is incredibly low, especially considering that vale is only expected to become more profitable in the future.

In fact, analysts are expecting vale's earnings to grow 34 every year in the next five years. That is equivalent to a 4.3 x in 5 years in vale's earnings which, if valet is valued at a pde of 12 five years later, would mean a 5x in the stock price. Additionally, valet also has a dividend yield of 3.5 percent, which is quite high, given valet's low pde ratio. Valet is clearly very undervalued, especially considering its future growth, and it's not just me saying that vale's executives also know this.

Before valley's q1 earnings call volley announced that it was considering spinning off its eevee based metal mining business. When asked about this valet ceo responded by saying that they were considering spinning off the business so that the full value of it would be recognized by the eevee hype. Additionally, the ceo also mentioned that valley was extremely undervalued and the base metal story was undervalued as well. Well, let me be clear here with uh.

Obviously we are always analyzing opera, this opportunities. Okay, that's a main, the main. How can i say, driver behind us? What what is really pushing us to that situation? I think it's twofold. One is that we are in the midst of the foundation of recovering the business and we believe we are on the right track and, secondly, we are undervalued both on the valley as a whole and on this map of the story.

So it's a clear way to unlock value, just in the basis of the multiples. So what we said and uh - and i would be clear now to me to give you where our minds are: it's in the exactly the conceptual phase of analyzing. What does that mean? That's right. The valet ceo literally said that their business is undervalued.

Of course, you might think that every ceo would say this, but there's an underlying reason as to why valet ceo outright claims that vale is undervalued. In this case, he used vali's valuation to explain why he potentially wants to spin off vale's base metal portion as a new company. So now that we know this, let's take a look at what this would look like, because such an event could lead valet to almost 2x in value in such a short period of time. First of all, vali's eevee base metal operations would be spun off for a new business that is publicly traded.

These base metals, in particular, are nickel and copper which are commonly used in batteries. If this is valued at a price to sales ratio of 10, then this new company alone would be worth 71.7 billion dollars and instantly boost volley stock by 50 percent, and i'm not kidding to put this into context. Mp, materials is another eevee based metal mining company that has a prices, sales ratio of 17. So it's not a far-fetched assumption, since vale is already profitable by a substantial amount.

Overall, vale is definitely mispriced by the market. But with that being said, there are some reasons as to why that is, which is what i will address right now, back in january 2019, volley faced a major environmental disaster in its iron ore operations in brazil, one of vale's dams collapsed and led hundreds of people To be killed, and for that reason i offer my condolences. A similar, damn collapse occurred in 2015 and now vali is finally doing something about it. The 2019 damn collapse led vale to 7 billion dollars in fines, and now vale is on the path to finally save its image.

Now do know that these collapses are all with vali's iron operations in vale's, nickel is mined in an environmentally friendly way either way. This wasn't good for valley's reputation, however, valley is doing everything it can to recover. First of all, volley is looking to improve its dam management. Valet is reducing the number of dams that are at risk of collapse and will continue to do so in the next few years.

In 2021 alone, volley is looking to reduce the number of dams at risk by 10 and is also looking to use a hazard, identification and risk management methodology with 37 dams by the end of 2021.. Valet is also looking to increase iron ore production in the next few years from 327 metric tons to 450 metric tons, which will increase revenue over the next few years. To top it off, volley is actively improving its reputation, which are seen through a 2 billion investment plan was reducing carbon emissions over the next decade. Additionally, vali also sold off its new caledonia.

Nickel mine, which has not only been sparking protests due to environmental damage, but has also been extremely unprofitable for valet. There are also some drawbacks to that, though, as tesla became an advisor with the mining company, that valley sold the mine too, but either way it's a win for valet. Overall valet is a stock that i believe, has massive potential over the next few years. However, i'm not a financial advisor so always do your own due diligence with that being said, thank you for watching.

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