On January 7, 2021 at 6:30 a.m. Vancouver time, Defense Metals (DEFN.V) had a market cap of $15 million.
Seven hours later, DEFN is worth $19 million – a 26% SP bump on 1.8 million shares traded.
Defense Metals develops materials used in the electric power market, military, national security and the production of “GREEN ENERGY” technologies.
Green Energy is getting a lot of investor love right now.
In December, 2020 The Tesla Model 3 (TSLA.Q) was the UK’s best-selling car (5,798 vehicles). Last year, UK sales of EVs increased from 72,834 to 175,082 (+140%).
This week, vocal Tesla critic RBC Capital Markets analyst Joseph Spak lifted his price target from $339 per share to $700 per share.
“There is no graceful way to put this other than to say we got TSLA’s stock completely wrong,” stated Spak.
“Spak admitted that his biggest error was underestimating Tesla’s capability to take advantage of its stock price’s momentum to raise capital and fund growth or acquisitions,” wrote Teslarati.
DEFN has an option to acquire 100% of the 1,708 hectare Wicheeda Rare Earth Element Property located near Prince George, British Columbia, Canada.
The updated Wicheeda MRE comprises an Indicated Mineral Resource of 4,890,000 tonnes averaging 3.02% LREO (Light Rare Earth Oxide), in addition to Inferred Mineral Resource of 12,100,000 tonnes averaging 2.90% LREO reported at a cut-off grade of 1.5% LREE.
What caused Thursday’s 26% share-price spike?
Bonanza drill results?
Positive Feasibility Study?
New strategic partner?
None of the above.
DEFN’s last press release was on December 22, 2020 when it announced that 3,157,828 warrants with an exercise price of $0.20 were exercised.
Defense is catching a macro political tail wind.
“REEs are crucial for high-tech manufacturing,” confirms The Verge, “These elements are produced mostly in China, and used in the US for everything from electric cars to missiles”.
The U.S. currently gets 77% of its REEs from China.
This summer the US House of Representatives launched a bipartisan caucus focussed on REEs.
“The Critical Materials Caucus, is the latest effort by officials in Washington to blunt China’s prowess as the world’s largest producer or processor of rare earths, lithium, titanium and other niche but important minerals,” reported Mining.com.
“As US-China relations hit new lows, Washington is redoubling efforts to address a major Achilles’ heel: its dependence on Beijing for rare earth elements – essential materials in various hi-tech products from smartphones and electric car batteries to Javelin missiles and F-35 fighter aircraft,” confirms The South China Morning Post.
Since the summer, the urgency has increased.
“The pandemic aid and spending package signed by U.S. President Donald Trump includes more than $800 million to fund rare earths and strategic minerals research, spending that mining companies say will help counteract China’s dominance over the sector,” stated The Chronical Herald.
“The $2.3 trillion, 5,593-page bill essentially codifies Trump’s executive orders on rare earths, a group of 17 minerals used to make magnets for electric vehicles, other green technologies and weapons”.
The National Mining Association praised the bill’s minerals clauses.
President Trump – bless his gentle soul – is about to leave the White House.
Good timing – since Duck Dynasty & Friends recently staged a house-wrecking party on Capital Hill – who knows if they’ll target the West Wing next.
Recent Wicheeda 43-101 Technical Report Highlights:
- 49% increase in overall tonnage of Updated Wicheeda REE Project Mineral Resource Estimate (MRE) based on the results of 2019 diamond drilling of 13 holes totaling 2,007.5 metres;
- 30% increase in overall average grade, in part though the incorporation of potentially economically significant praseodymium not previously estimated;
- Conversion of 4,890,000 tonnes to Indicated Resources previously defined as Inferred;
- Increased Inferred Resources by 730,000 tonnes in comparison to Defense Metals Initial Wicheeda MRE; and
- Potential for expansion of the Wicheeda Deposit to the north and west in the down plunge direction.
“If you want intense detail on the property they’re working or the data they’re getting from their work, feel free to check out Greg Nolan’s work on the technical end,” stated Equity Guru’s Chris Parry on November 29, 2020, “I’m not a technical guy. I’m a ‘show your work’ guy, and DEFN is showing a lot”.
“DEFN are genuinely the cheapest clients we have,” observed Parry, “Nobody grinds us more on our fees than DEFN’s team, which you’ve got to respect, especially in a time of free-spending promo teams”.
“Defense actually does promote itself, but in a sustainable, steady manner that shows long term share price growth over the last year, limited spending on anything that won’t advance the project, and no trouble finding investors to bring them financing as needed.
“Sure, it may have a down day here and there but, over the long haul, DEFN just keeps going steadily up, regardless of what competitors are doing, and regardless of what rare earth prices are doing,” added Parry.
Patrick Stark – “an entrepreneur with 30 years experience in the film industry” created a high-production-value video on DEFN here:
“I’m holding until they talk about development, get bought out, or I lose my investment. Either way long game with this one,” stated @Jonathanm91 somewhat fatalistically.
“This is with (AFAICT after a quick search) ZERO about REEs in the news,” observed @zentrarian, “So where are the buyers coming from? Something is happening behind the scenes, folks.”
“Up 30% on the day,” added @zentrarian, “Whoever it is, if they’re trying to stealth buy, they’re failing miserably”.
“The global market for Rare Earth Metals estimated at USD $4 Billion in the year 2020,” reported Research and Markets on January 6, 2021, “is projected to reach a revised size of USD $6.6 Billion by 2027, growing at a CAGR of 7.3% over the analysis period 2020-2027.
Typically, a stock surges on positive news.
Occasionally, you just need to have the right asset, in the right place, at the right time.
Tesla traded at $880 per share on Friday.
- Lukas Kane
Full Disclosure: Defense Metals is an Equity Guru marketing client.