I believe this is truly a millionaire maker-- hard to buy enough shares to get involved as there are often not many for sale, but big upside. I see a $20k investment reaching $1-million within 2-5 years.
The formatting is tedious-- visit the link for my write-up here, or I apologize for the formatting below:
U.S. Mine Corp Green Spin-Off—Early Investment Opportunity
Purebase is a penny stock positioned to profit from legislation and transformational change in cement manufacturing, with the potential to grow annual revenues from $400,000 to $60-Million.
Purebase is part of a bigger story for a large private company spinning off their most prized business.
The Penny Stock
I should start by letting you know I don’t invest in penny stocks (or cryptocurrencies)—Although I have in the past, I avoid the sector due to a lack of objective information available. I like to understand a clear investment thesis and see a path to real revenues before I make an investment. Typically larger companies offer much more visibility into finances, TAM, and industry specific comparisons. I’m not risk-adverse by any stretch of the imagination, but I need to understand the “what and why” of an investment before I can get behind it. For that reason, I found Purebase un-investible for the first few years I followed them.
I began following Purebase (PUBC) back in 2021 when they acquired rights to 100 million tons of clay from US Mine Corp for the manufacturing of supplementary cementitious materials. This is an interesting industry to me for several reasons, and was the first step in what I believe will be a transformative journey into the low-carbon footprint cement marketplace.
Despite making my “watch list,” there was never enough objective information for me to make an investment in such a small company, so I simply followed them until I had enough dots to connect. By the end of this article my goal is for you to see how my perspective on Purebase changed from “un-investable” to “Millionaire Maker” opportunity.
Let’s start plotting some dots.
The Problem Dot
Carbon Dioxide in the atmosphere warms the planet, leading to climate change and global warming. Despite the potential positive impact on my home state of Alaska, the general consensus is global warming is bad. Carbon emissions have roughly doubled since 1970, with nearly 80% of emissions attributed to fossil fuel combustion and industrial processes.
The cement industry produces nearly 8% of all global carbon-dioxide (CO2) emissions. This may sound like a small piece of the pie, but here’s a little perspective: The top three global CO2 producers are China, the U.S., and India at 29%, 14%, and 7% respectively. Cement accounting for 8% of global emissions is a significant burden on the climate and our carbon footprint.
The cement industry produces carbon-dioxide by two primary mechanisms; first, manufacturing requires limestone to be superheated to 1500 degrees Celsius to create “clinker” which is the back-bone of traditional cement production. Superheating limestone to this temperature requires a large fossil fuel load which produces a tremendous amount of carbon emissions. Secondarily, CO2 is a chemical byproduct of clinker as it is heated converts limestone (CaCO3) to lime (CaO + CO2).
The fundamental problem, simply put, is limestone has a tremendous carbon footprint—due to the temperature required to break it down, and its chemical byproducts.
The Politics Dot
Federal and local governments are tackling carbon emissions through many different channels. One of those channels is regulation which forces organizations to adhere to strict carbon emission standards. The state of California has several pieces of legislation aimed at regulation, disclosure, and compliance; California Senate Bills 253, 261, 596.
Senate Bills 253 and 261 require California businesses to disclose carbon emissions impacts of operations and financial impacts of emissions beginning in 2026. These bills will primarily create awareness through disclosure and put pressure on businesses to engage in carbon footprint shrinking.
Senate Bill 596, which was signed in 2021, directs the California Air Resource Board (CARB) to develop and implement a comprehensive strategy to reduce greenhouse gas emissions from the cement sector specifically. Senate Bill 596 includes specific timelines including 40% emission reduction by 2035 and net-zero greenhouse gas emissions by 2045.
CARB’s latest workshop outlined a plan with an updated timeline for final strategy approval in 2024. CARB’s efforts included researching many different methods for reducing carbon impact including alternative/clean energy to heat the limestone, carbon capture unit installation at manufacturing facilities, and finally, the use of alternative materials to manufacture cement.
There are prohibitive setbacks with two of these options.
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The technology and infrastructure does not yet exist to use clean energy to heat limestone to the required temperature (1500 degrees Celsius).
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Carbon capture units can produce “leakage” which is essentially a byproduct of carbon capture, compression, and storage. Leakage reduces the net-benefit of carbon capture and creates severe risks to human and animal health.
These two options were essentially dismissed by the committee as unrealistic options until the technology and health risks are improved.
This leaves alternative materials to consider. There are several well-known and vetted alternative products already used to replace limestone in cement production, these products are known as “supplementary cementitious materials” or “SCMs.” The most common SCM is fly ash, a product of coal combustion. Fly ash can reduce the amount of limestone needed in cement manufacturing and ultimately reduce the carbon footprint of production by 10-20%. Fly ash isn’t the only SCM available, and it isn’t the best either.
The Purebase Dot
Enter Purebase.
Purebase is uniquely positioned to be a key player in reducing the carbon footprint of cement manufacturing in California. Purebase offers manufacturing and technology solutions in California that reduce carbon emissions from cement manufacturing by up to 40%. The pivotal ingredient Purebase offers is a metakaolin clay-based SCM which reduces carbon emissions by two mechanisms.
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Purebase’s proprietary product only needs to be heated to around 700 degrees Celsius—or roughly half as much as limestone in traditional manufacturing. This is a significant reduction in carbon emissions alone as significantly less fossil fuel is needed to heat the product to this level. As an aside, this also makes alternative / clean energy a more realistic option for manufacturing in the future.
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Purebase’s SCM does not create CO2 as a byproduct of its chemical breakdown, further reducing the carbon footprint of manufacturing and use. This is another significant reduction in emissions.
Purebase is also strategically building its manufacturing plant in California where the carbon footprint will be further reduced due to shorter transport distances in which fossil fuels are used in transport of materials—this is also something the California Air Resource Board considers in the overall carbon footprint.
Purebase recently began commercial manufacturing of their product by retro-fitting / upgrading an existing manufacturing plant on site of US Mine Corp’s property. This product has been submitted for testing at the University level and has thus far received exceptional marks as a supplementary product that results in a more durable, faster curing, and greener cement product. Purebase’s product was tested at Penn State University, Purdue, as well as an accredited laboratory, CTL Thompson, Inc. The testing followed the California Department of Transportation’s testing methods and resulted in ASTM certification—which is required by most public and private construction agencies.
There are a few more “dots” to plot this year that I will keep an eye out for.
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California Department of Transportation (Caltrans) approval. Purebase is awaiting approval through Caltrans to have their manufacturing facilities and product added to the approved materials list. The list can be found here: Cementitious Materials for use in Concrete | Caltrans Purebase’s addition to this list may in and of itself be a catalyst for share price movement.
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Manufacturing capacity. Purebase retro-fitted one manufacturing facility to begin commercial production in the summer of 2023. In addition to this facility, Purebase is in the engineering and planning phase to build a new manufacturing facility capable of producing one-million tons of SCM product annually—which is used to create three-million tons of cement. Completion of this facility and the production capacity timeline will impact when this investment thesis may be realized. Construction of the new plant is currently being engineered. I’m currently anticipating year-end 2026 for full-capacity production.
The Profit Dot
Purebase’s listed revenue for 2023 was a bit shy of $400,000. My thesis illustrates a path to $60M annual profits and a billion-dollar valuation. While it will take a lot of things falling into place, and the timeline is uncertain, the potential profits are very real.
In an effort to keep this digestible I will use napkin math and err on the side of conservative as best I can.
There are two primary revenue sources I will cover; the sale of SCM product, and the sale of carbon credits.
- SCM product sale revenue is probably the easiest to follow. California uses 12 million tons of cement each year for infrastructure and public building projects. There are currently seven cement manufacturing plants within the state. Purebase is uniquely positioned geographically to manufacture and sell their maximum capacity of three-million tons of product annually within the state of California. I mentioned Purebase will actually have two facilities, but in an effort to remain conservative with estimates I’m neglecting to include any production from the retro-fitted facility as I do not have visibility into its production value.
What does three-million tons of cement look like in revenue? If we don’t add any premium for the SCM product (which there almost certainly will be one), three-million tons of product generates about $300-million, with a gross margin of 10% that’s $30-million profit.
This looks quite a bit different from the company with under $400,000 of revenue one year ago.
- Carbon credits. This market is a bit harder to understand, but I will try to keep it relatively simple. When a company reduces carbon emissions by one metric ton of carbon, they are awarded a “carbon credit” or “carbon offset.” These offsets can then be sold on the Voluntary Carbon Offset Market (VCM).
There is tremendous variance in what carbon offsets are worth based on how impactful their mechanisms are. Some carbon credits, such as those produced by renewable energy companies or the preservation of forests, sell for $5 per credit, while others, such as those produced by direct-air-capture units sell for over $500, as evidenced by Microsoft’s recent agreement to pay a direct-air-capture company $200-million to capture 315,000 tons of carbon over a ten year period, valuing each credit at over $600. Since direct-capture has a meaningful and measurable carbon offset, the credits are worth significantly more than credits for preventing harvesting wood from a plot of land, as often this means the wood is simply harvested somewhere else.
While there is great variance in the VCM, California has a regulated marketplace where any carbon credits earned in California can be sold with predictable revenues. The regulated market in California currently lists carbon credits for $30.
Purebase’s SCM reduces carbon emissions by 40% for each metric ton of finished product.
One metric ton of cement normally produces roughly one ton of CO2.
If Purebase manufactures 3-million tons of SCM, they will reduce carbon emissions by about 1.2-Million tons. (3,000,000 tons of cement x 1 metric ton of CO2 x 40% = 1,200,000)
In an effort to remain conservative, let’s call it 1-million tons. That’s 1-million carbon credits.
These carbon credits may be worth more, or less on the Voluntary Market, but the regulated California market gives us a predictable floor of $30 per credit, or $30-million in annual revenue.
With limited access to the Voluntary Carbon Market, the only green-cement company I could find as a comp claims their credits sell for $100 each. I believe $100 is either a fair price, or will be very soon as the expected trajectory of the carbon offset market is for it to grow substantially with a CAGR over 30% through 2028.
$100 per credit would be $100-million in carbon credit revenue annually. Let’s use the floor revenue of the regulated market for the sake of conservatism.
Carbon Credit revenue of $30-million plus SCM sales profit of $30-million and we have a total annual profit of $60-Million.
The US Mine Dot
To fully understand the Purebase story, we need to understand US Mine Corp – because Purebase is US Mine Corp. More specifically, Purebase (ticker: PUBC) is the vehicle USMC is using to spin-off its green-house-gas business. The genius in this move is several fold, but first, let’s get to know the US Mine Corp story.
U.S. Mine Corp (USMC) is a large private mining and exploration company. They are the top producer of kaolin clay and silica on the west coast and a leading producer of heavy mineral concentrate (HMC). With over 40 years of experience, 100 years of mine life, and 150 distributors they are a cornerstone of US mining operations. USMC is already a profitable and efficient machine with mineral rich land, permits, and the infrastructure to provide essential minerals and materials to the world-over for the next hundred plus years. US Mine Corp was established in 2012 and ownership has continued to build an efficient and cost-effective business primarily focused on silica, titanium, and other HMC products.
Despite efficient and profitable operations, USMC’s most prized possession was yet unrealized until recently. As part of the mining and filtering process, kaolin clay is pulled as a byproduct of operations. Kaolin clay is used in the creation of metakaolin for SCM products—the very product Purebase is using to reduce green-house-gas emissions of cement manufacturing by 40%. Mining for kaolin clay in and of itself is often inefficient and produces 15:1 waste to desired product. The scarcity of accessible product at a reasonable cost-basis has made scaling metakaolin production unrealistic. Until now.
Georgia has the largest operating kaolin clay mine in the United States and reportedly exports eight-million tons annually valued at over $1 Billion. USMC is sitting on 500-million tons of kaolin clay at their existing operations. The kaolin is being separated out from silica and HMCs as part of the mining process, making the cost essentially zero.
US Mine Corp, upon realizing the tremendous value of kaolin clay as a green-house-gas solution to the cement industry put the wheels in motion to spin-off the green-cement business to access the public market in a favorable industry which will allow them to scale operations more rapidly.
By the Numbers…
US Mine Corp has access to the largest kaolin deposit on the west coast, 500 million tons of resource.
500 million tons of kaolin clay as raw product is worth over $62 billion.
500 million tons of kaolin clay will produce 1.5 billion tons of SCM, and 1.5 billion carbon credits.
1.5 billion carbon credits on the California regulated market are worth $45 Billion.
USMC is spinning off this entire SCM business as Purebase.
USMC sold rights to its kaolin clay to Purebase for $20 per ton extracted monthly. This will provide a nearly endless supply of kaolin to Purebase at a base cost of $10 billion, compared to its total raw value of $62 billion.
USMC owns 73% of Purebase. USMC is Purebase.
IPO Dot
Reducing greenhouse gas emissions is on center the world-over. The time for a Purebase up-listing is at hand. I believe this will happen in the next two years. Apart from all the tangible metric-dots to connect, Purebase has also begun preparing for the public market with a company facelift, including social media, website, newsletters, board appointments, a new CFO, and oversite committee.
Purebase management has been posturing for a big move to re-IPO in the near future. Several company filings have directly referred to preparation for up-listing Purebase out of the OTC marketplace. Uplisting will lead to a precipitous price explosion as the underwriter and institutional investors take their piece of the pie.
The most-likely timeline for an IPO is two to five years, or YE 2026-2029. IPO / up-listing rarely occurs pre-revenue (outside the biopharmaceutical industry). I expect manufacturing facilities to be completed in the next 12-24 months, and underwriting for a re-IPO to occur after 1-2 years of full revenues, in which case the best valuation will be assigned.
To assign a valuation for Purebase I’ve pulled some simple metrics from existing public companies in the cement / industrial manufacturing sector. These metrics focus on price to sales (P/S) and price to earnings (P/E).
| Company | CX | EXP | SUM | CRH | MLM | VMC | PUBC |
|---|---|---|---|---|---|---|---|
| P/S | 0.70 | 3.90 | 1.90 | 1.75 | 5.54 | 4.63 | 2.47 |
| P/E | 11.00 | 17.60 | 0.21 | 16.15 | 28.41 | 31.31 | 16.70 |
| Gross Margin | 33% | 31% | 29% | 34% | 30% | 25% | 16% |
*PUBC values based on my independent analysis and attempt at conservative outlook.
The graph below is created with the inputs from the table and helps illustrate my independent analysis of Purebase’s valuation heading into its re-IPO / up-listing.
Based on these metrics for P/S and P/E and without assigning any premium for green-sentiment, Purebase’s valuation is $990 Million to $1.2 Billion. I believe this represents a realistic floor for up-listing within the next 2 years.
The Investment
Since 2016 Purebase has mostly traded in the 10-cent range, and that’s where it’s trading today. It has a market cap under $20-Million with revenues under $400,000. I’ve outlined a thesis that is still yet incomplete, but one in which I believe holds tremendous potential for early ownership in US Mine Corp’s green spinoff.
My recommendation for risk-tolerant investors is to take a stake in the company today while it is valued at $20M. Park your money and wait to see if the rest of the dots plot out in the manner I’ve theorized. If the dots do plot out, when Purebase is up-listed your investment will culminate in a once-in-a-lifetime return. For reference, 0.1% ownership in the company now would cost you around $20,000; if my thesis plays out and Purebase reaches a market cap of $1-Billion, your 0.01% will be worth $1-Million.
An investment in Purebase is not an investment in a distressed penny stock—it’s an investment in the best kept secret on the market that no one is talking about-- an investment in sustainability, the future of infrastructure materials, and a generational wealth opportunity.
Risks
Penny stocks are not your traditional investment. With low trading volumes and massive price swings, they can be nauseating to own and watch. Do not invest in something you don’t understand for yourself. Do your own research until you understand and see a clear investible idea. I didn’t invest in Purebase for the first 2+ years that I watched it—not until I had enough dots to connect for myself.
As a penny-stock PUBC trades on the OTC market and may not be available through certain brokers. There is an opportunity here, but as with any penny stock, you should consider 100% of your money at risk. I believe an early investment could be life changing, but you should only partake if losing that investment would not be life-changing.
Timeline
Purebase has been gearing up for a transformative move in their business. Here is a simplified timeline of dots I started to plot along the way. The timeline tells a story.
| Date | Event |
|---|---|
| 3/22/2021 | 3/22/2021 Additional Funding From Existing Shareholder |
| 5/28/2021 | 5/28/2021 Acquires Rights to 100M tons of Clay for SCM Product |
| 8/13/2021 | 8/13/2021 Dr Kimberly Kurtis, an expert in cement-based products added to Board of Directors. |
| 2/22/2022 | 2/22/2022 Strategic Partnership with major national vertically integrated material production company. |
| 12/1/2022 | Non-Binding agreement with Fortera to design, build, and operate commercial SCM plant |
| 5/2/2023 | Terminates agreement with Fortera to persue project without partnership |
| 5/9/2023 | Phase one of construction-- modification of existing facility |
| 6/14/2023 | SCM product tested at Penn State |
| 7/5/2023 | Phase 1 operational with products being sent for testing and certification |
| 7/17/2023 | Purebase hosts California Air Resource Board to introduce SCM product |
| 9/12/2023 | Brady Barto – Exploration Manager from Signal Hill Petroleum added to Board of Directors |
| 10/11/2023 | CARB Committee meeting indicates SCM as leading vehicle to meet California SB 596 requirements |
| 11/8/2023 | Purebase ammends agreement for 100M tons of clay to a $20 royalty per ton extracted monthly |
| 11/14/2023 | Signed agreement with Capstone Partners to secure $120-million to fund brand new SCM plant with one-million ton production capacity |
| 12/14/2023 | Hires new CFO with experience as CFO in public markets |
| 3/13/2024 | Joseph Thomas—SCM and pozzolan expert promoted to Chairman of Advisory Committee |
| *6/1/2024 | CalTrans Approves Purebase SCM ??? |
| *12/1/2025 | New SCM Plant Opens ??? |
| *6/1/2026 | SCM Plant Opearting at capacity ??? |
| *6/1/2027 | Re-IPO / Uplisting ??? |
*Timelines and Events to Watch