RED MOON RMK-TSXV IS THE SALT OF THE EARTH PLAY

RED MOON RESOURCES–RMK-TSXV–Is About To Become
The Great Atlantic Salt Company



Red Moon Resources (RMK:TSX.V) is the chance for investors to get in on the ground floor with a company that I believe is poised to be North America’s next commodity cash cow, and major salt producer.

Its Captain Cook deposit is right at a producing industrial mineral port in Newfoundland (gypsum is already being shipped from there).

The deposit is MASSIVE and HIGH GRADE—it has a valid 43-101 resource estimate that’s more than 900 million tons of 95% NaCl.  At $50/ton, it’s an incredible cash cow that will attract not just retail and institutional investors, but strategic industry players.

What major mineral producer would not want a 50+ year cash flow–and from a Canadian asset, no less—right on tidewater and with a local port that is already shipping gypsum from Red Moon.

In fact, Red Moon’s gypsum production has made it cash flow positive for the last three quarters.

I honestly could not make this up if I tried! It’s one of the best set-ups I have ever seen.

There is a $350 million market opportunity for salt in North America—the US imports 7 million tons of salt a year, and it’s worth $50/ton.  

It comes from SO FAR AWAY—mostly Egypt and Chile.


 
 
 
As I explained yesterday, North America is chronically short of salt supply.  We have a permanent supply and demand mismatch—— the United States has to import MILLIONS of tons of salt from SO FAR AWAY—mainly from Egypt and Chile which are thousands of miles away and costly to get here.

The demand for salt is driven by the heavily populated US Northeast.  There are tens of millions of people living and driving every winter on roads that require salt for de-icing.

We never talk about it, but salt is an essential commodity.

Many believe that the salt supply situation is actually considerably worse than it seems because several of the major existing mines are aging…..BADLY.  The mines are old, some dating back to the late 1800s. It wouldn’t take much for one of those mines to go down and create an even bigger North American supply hole.

Chile and North Africa are the biggest sources of our imports and require 25 days of travel by sea for the salt to get here which means major transportation costs. 

These are not cost advantaged producers either.  The Chilean mines are inland and at altitude, surrounded by mountains.  North African supply presents all of the challenges that you would expect from the region where nothing is easy.

The transportation costs required to move it from thousands of miles overseas are HUGE.  That is really all the background you need to know to understand why I’m so excited about Red Moon Resources’ Captain Cook salt deposit.  This is all about location, location, location…

Captain Cook is located right beside the biggest source of salt demand on the planet——the northeastern United States.
 
 
 
You can see Captain Cook’s location in the map above.  Perfectly situated in Newfoundland on the water with just a little skip down the Atlantic Coast to get to Boston, New York, Philadelphia, Washington and millions of winter drivers.

How can a salt producer in Egypt or Chile situated 5,600 nautical miles away with the exact same commodity compete with one that is just a fraction of the distance away from market? 

(This is NOT a trick question.  They can’t.)

Red Moon has a very obvious opportunity to displace major tonnage of salt that is coming from far-flung places of the Earth.

An opportunity that has attracted a management group that knows the salt business better than almost anyone——which is the most tell-tale sign of high-impact potential that a ground floor opportunity like this could ever have.
 

All Of The Upside We Are Used To
Without The Geological Risk

 

When looking for investment opportunities Warren Buffett is found of saying “I don’t look for 7-foot bars that I have to jump over, I looks for 1-foot bars that I can step over”.

He wants the no-brainer; the easy decision.

Buffett would be much more interested in a junior salt company like Red Moon with an obvious, permanent cost advantage in an undersupplied market….than he would be in a junior gold or precious metal exploration punt.

Who wouldn’t opt for the opportunity that carries less risk and similar upside? 

Red Moon’s Captain Cook project doesn’t just have proximity to market in the USA going for it.  The project itself is also set-up very well to provide for low operating costs and a rapid development scenario.

Existing infrastructure at Captain Cook includes:

– Nearby deep-water ports (Turf Point and Port Harmon)
– Airport within 20 minutes of property (Stephenville)
– Trans Canada highway and multitude of secondary roads across property
– High voltage power line crosses the property
– Mining-friendly jurisdiction, Newfoundland & Labrador
– Skilled workforce with mining experience in nearby communities

You get none of these things with a project in the Andes in South America or in a desert in Africa.  Those are hard slogs.

Again, one-foot bars folks.  This one isn’t complicated.  This project has a safe, secure location with roadwork in place and located right beside the ocean for easy and cheap transport down the coast.

Not just the shortest possible supply chain but the Captain Cook deposit is also big. Red Moon completed a National Instrument 43-101 compliant Mineral Resource Estimate on the rock salt deposit which confirmed an Inferred Resource (at 95% NaCl cut-off) of 908 million tonnes of salt at 96.9% NaCl.

 


With Red Moon management expecting the project to produce at a rate of 2 million tons per year that gives it a life of more than 50 years. 

And NOBODY KNOWS this story.  Now is when you get in on the ground floor.

 

You Measure Junior
Mining Potential

By The People Involved

 
I have a checklist for evaluating junior commodity producers.

I want low-cost.  Red Moon’s project high grade and proximity to market will give it that. All new equipment will also ensure that.

I also want a commodity that is worth producing.  Red Moon has that with salt which is going to have predictable demand as long as cars keep driving in the winter—I’d rather bet on the future of salt than I would on the future of oil. 

There aren’t billions of dollars being spent every month to transition our de-icing away from salt!!

Most importantly I want a management team that is proven, successful and amongst the smartest in the game——which is the specific reason that Red Moon captured my full attention.

Red Moon’s Rowland Howe knows more about salt mining than I know about my kids.  I shouldn’t say that but it might be true!! 

Howe led the expansion of largest and most productive salt mine in North America for almost two decades. 

He took the Goderich, Ontario salt mine up to 7.5 million tons of production and shareholders of owner Compass Minerals (CMPS-NYSE) now enjoy a $2 billion plus valuation.

Goderich is probably the most strategically placed mine. The reason for that is that is has a great location by Lake Huron close to a market that uses a lot of salt and access to deep water——you cannot move salt any cheaper than by boat.

Sound familiar?  Yep….it sounds just like Red Moon’s Captain Cook deposit.

Howe told me that when he first saw Captain Cook, he immediately thought that it has the same sort of DNA, same bones that he was looking at in Goderich. He noticed the same access to deep water and that the salt is pretty much an even deposit just like Goderich.  

He says Captain Cook is shallower than Goderich, which in mining is a production cost advantage.

Now——I don’t know much about building a big, profitable salt mine in North America.  But Rowland Howe knows more than likely anyone.  The fact that he jumped at the chance to join Red Moon’s Captain Cook project is the single most important sign of the potential of that project that I could ever hope to see.

As I will always remind you there are no guarantees in the junior mining game, but Red Moon looks like it has everything going for it.

Location, grade, size, management and a chronically undersupplied market.  Plus a fresh story that the Street will love.

Getting in on this ground floor opportunity sounds pretty sexy to me.

 


Red Moon Resources has reviewed and sponsored this article. The information in this newsletter does not constitute an offer to sell or a solicitation of an offer to buy any securities of a corporation or entity, including U.S. Traded Securities or U.S. Quoted Securities, in the United States or to U.S. Persons. Securities may not be offered or sold in the United States except in compliance with the registration requirements of the Securities Act and applicable U.S. state securities laws or pursuant to an exemption therefrom. Any public offering of securities in the United States may only be made by means of a prospectus containing detailed information about the corporation or entity and its management as well as financial statements. No securities regulatory authority in the United States has either approved or disapproved of the contents of any newsletter.
 
Keith Schaefer is not registered with the United States Securities and Exchange Commission (the “SEC”): as a “broker-dealer” under the Exchange Act, as an “investment adviser” under the Investment Advisers Act of 1940, or in any other capacity. He is also not registered with any state securities commission or authority as a broker-dealer or investment advisor or in any other capacity.