I recommended Ecolomondo Corp. (ECM:TSX; ECLMF:OTC) just over a month ago on Feb. 13 and although it has made no net progress since then, it is worth highlighting it again here because it is at another very good buy spot and its fundamental situation continues to improve. In this update, we will also consider briefly the positive fundamentals, not least of which is a multi-million dollar offtake agreement for recovered carbon black the company just announced.
Ecolomundo has developed technologies for the efficient processing of hydrocarbon waste, especially old tires, into useful products. While others have attempted this in the past none have developed processes that are as compehensively efficient of those of Ecolomundo. After perfecting the processes at a pilot plant, the company has now moved on to building TDP (Thermal Decomposition Process) turnkey facilities that are producing rapid results.
As the company sets out in its 1st February news update entitled ECOLOMONDO ANNOUNCES TIRE SHREDDING LINE BEGINS FINAL COMMISSIONING AT HAWKESBURY TDP FACILITY the facility processes an amazing quantity of tire waste per year producing an equally amazing quantity of useful products – “Comprising four different processing departments (shredding, thermal processing, recovered carbon black processing and oil fractionation), the facility is expected to process a minimum of 14,000 tonnes of tire waste per year when fully operational, producing 5,300 tonnes of recovered carbon black, 42,700 barrels of oil, 1,800 tonnes of steel, 1,600 tonnes of process gas and 850 tonnes of fibre when operating at full capacity.” While it can be argued that long-term the Globalists will greatly reduce the world population and force those who survive into heavily surveilled urban ghettoes where they won’t go anywhere, so there will be far fewer motorists and much less tire waste, that’s still a long way off and there are an awful lot of old tires and other waste for the company’s facilities to work their way through in the meantime.
Whilst the products resulting from the processing of hydrocarbon waste should be a bountiful source of revenue for the company, it is worth taking into consideration that the company will also earn revenue from taking in this material. With respect to old tires there is a fee called a “tipping charge” in the US and the company looks set to earn enough solely from taking in these waste materials to finance the building of new plants.
Turning now to the stock charts you may recall that in the original article posted in February we looked at the long-term 6-year chart, but in this update we’ll start by looking at a 2-year chart, so that we can see last year’s dramatic bullmarket and the subsequent heavy reaction back to strong support in somewhat more detail.
On the 2-year chart we see that the bearmarket from the peak last September shaved two-thirds off the value of the stock but since December it has stabilized above the strong support shown and appears to be basing ahead of renewed advance. Downside momentum has dropped out and the volume pattern and both volume indicators (Accum – Distrib shown on 8-month chart) are positive, supporting the contention that the current basing pattern will lead to a new bullmarket, which certainly looks probable given the fundamentals.
On the 8-month chart the bearmarket and the base pattern of recent months is visible in still more detail. We can see that momentum (MACD) has been steadily improving from the November low and that the Accumulation line has been trending higher this year (On-balance Volume shown on the 2-year chart even more so) and that the price is now some way below a rising 200-day moving average which is exerting an upward pull. We can also see where we bought at a low point in mid-February after which it rallied briefly and then drifted back down again so that it is once more at a favorable entry point now being back at the support.
To say that the company’s business model is “green” is an understatement. Used tires and tire dumps are an eyesore and an ecological problem worldwide and the company should therefore gain the favor of the “New World Order”. So it seems likely that Ecolomundo will be building its processing plants all over the world, and even if motoring is drastically reduced in the years to come, there are enough old tires and tire dumps around to keep the company’s plants fed with material for many years to come.
The conclusion is that with Ecolomundo looking more and more likely to begin a new bullmarket it is more of a buy here than it was when we first looked at it, so we stay long and it is rated a strong speculative buy here. A point worth noting is that although the number of shares in issue may seem rather high at 183 million, about 76% of them are owned by management / insiders. Although listed on the OTC, trading on this market appears to be non-existent at present.
There is more fundamental information on the company and its activities in Clean Tech Co. Gives New Life to Old Tires by Colby Mintram.
Ecolomundo website
Ecolomundo Corp, ECM.V, ECLMF on OTC, closed at C$0.49, $0.46 on 15th March 22.
