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We’d like to draw readers’ attention to Red Moon Resources (TSXV:RMK), a very interesting stock that is already on the move.

We were planning to provide further coverage on Red Moon later this month but as the share price is already starting to move and it is attracting investor interest, we have flagged it up today.

Why buy into salt mining in Newfoundland?

Red Moon Resources is an unusual mining prospect in that it is investigating a huge underground salt deposit in Newfoundland. It is currently involved in the feasibility stage for what is called the Great Atlantic Salt Project.

The Red Moon share price has moved significantly since 12 May, from 0.70 to over 1.03 (at time of writing), hence our decision to flag this up with readers sooner rather than later. The stock was trading at less than 0.1 at the end of last year.

Salt is the main focus of the company, although it is working on an interesting energy spin out too, of which more below. The primary use of salt in the regions surrounding the project is for de-icing and road safety during winter months. Right now North America still – unbelievably – ships in a lot of salt from far flung parts of the world. Yes, that’s right, salt is shipped across oceans to salt highways in Canada and the US. This is expensive and also raises ecological question marks.

But US and Canadian highways need salt. To have a huge, untapped resource in Newfoundland makes enormous strategic sense.


Renewable energy storage project

Red Moon Resources last week said it was looking to spin out a renewable energy storage asset called Fischell’s Brook. New technology is paving the way for energy produced from renewable sources to be stored underground, in the caverns formed by salt domes. Underground storage is considered to be an important plank in the Canadian green energy project.

The Canadian government is looking closely at the possibilities of hydrogen, both for domestic energy consumption and for export, and we at The Armchair Trader remain big fans of the hydrogen story at the moment. But storage infrastructure is going to be key for this. The Canadian government has estimated that hydrogen could create a C$50bn domestic hydrogen sector and create 350,000 jobs locally. That’s a big shot in the arm for the Canadian economy as it emerges from the pandemic.

Turning salt domes into energy storage

Red Moon Resources has the mineral rights to Fischell’s Brook, a salt dome 15km south of the Great Atlantic Salt Deposit. It has also added further claims/property with yet more prospect of hydrogen storage. Red Moon reckons salt domes can be used for hydrogen storage once the salt is removed.

It is also possible that the caverns could be used for compressed air energy storage (CAES) – this is again emergent technology that leverages underground compressed air to run turbines to produce technology.

“Developments in the energy storage space have been dramatic since we were the successful bidder for the Fischell’s Brook salt dome,” said Patrick Laracy, CEO at Red Moon. “Just like Red Moon was born out of a spin out, we see great opportunity to launch a dynamic energy storage project anchored by the Fischel’’s Brook asset.”

It’s hard to say whether investors are piling into Red Moon because of the salt story, or the hydrogen storage story, but both look to be very interesting projects which we’ll be keeping a close eye on.

Related

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Please note this article does not constitute investment advice. Investors are encouraged to do their own research beforehand or consult a professional advisor.

Stuart Fieldhouse

Stuart Fieldhouse

Stuart Fieldhouse has spent 25 years in journalism and marketing, including as a wealth management editor for the Financial Times group, covering capital markets and international private banking, and as an investment banking correspondent for Euromoney in Hong Kong. He was the founder editor of The Hedge Fund Journal.

Stuart has worked at CMC Markets, supporting the re-launch of its global financial spread betting and CFD trading platforms. He is also the author of two books on trading, published by Financial Times Pearson. Based in The Armchair Trader’s London office, Stuart continues to advise fund managers, private banks, family offices and other financial institutions.

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