14. September 2020 | 04:50 CET
BMW, Daimler, Tesla - Share price boost for Giga Metals and soon Defense Metals?
The Giga Metals stock closed Friday with a 184.5% gain, providing investors with a pleasant surprise at the end of the week. Behind this rise in the share price is the rumor that the U.S. carmaker Tesla wants to purchase part of its nickel and cobalt requirements for the production of batteries from environmentally friendly sources in the future. Not only does Giga Metals have large quantities of these raw materials, but it also has potential access to hydroelectric energy to make its mining environmentally friendly. By sourcing from Canada, Tesla would have the opportunity to reduce its own carbon footprint.
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ISIN: CA2446331035 , US88160R1014 , CA37518K1021
"[...] Our projects are at the initial, high reward exploration stage. [...]" Humphrey Hale, CEO, Managing Geologist, Carnavale Resources Ltd.
British Columbia in focus
Canada has the strictest environmental regulations in the world and can therefore give companies a more sustainable image when sourcing raw materials. For this reason, sourcing nickel and cobalt from Giga Metals in British Columbia makes perfect sense. A situation that is likely to play into the hands of Defense Metals for the foreseeable future. The company also has properties in British Columbia and is focused on rare earth exploration. The company has reported 4,890,000 tonnes with an average of 3.02% LREO (Light Rare Earth Elements) and inferred resources of 12,100,000 tonnes with an average of 2.90% LREO.
Need for independence and environmental protection
The rare earths of Defense Metals include lanthanum, cerium, praseodymium and neodymium. These materials are needed in the green energy industry, for modern electric motors and in the development and production of security technologies. Canada's access to these raw materials for car manufacturers provides further independence from China, one of the largest players in the rare earths markets. Defense Metals' stock is not attracting much attention at the moment, but as in the case of Giga Metals, this may change quickly and result in gains for investors.
Rumors make prices
For a long time, the Giga Metals share was unknown on the capital market. A few weeks ago the shares changed hands at around CAD 0.30. The value of the company at that time was less than CAD 20 million. Already for some days it seems to heat up behind the scenes of Giga Metals. In August, rumors began to circulate for the first time, moving the share price towards CAD 0.80. At the closing price of CAD 1.65 last Friday, the company is now worth around CAD 95 million. With Giga Metals reportedly sitting on over 5 billion pounds of nickel and over 300 million pounds of cobalt, the explorer may be a solution for a Tesla problem, as the automaker has manufacturing capacity for over 400,000 vehicles per year in Nevada. Many cars, many batteries.
Car manufacturer with pressure to act
However, Tesla is not the only car manufacturer looking for environmentally friendly sources of raw materials. Rumors have also been circulating that BMW and Daimler are in talks with Giga Metals. It may not be a coincidence that the start page of the explorer shows several Smarts in Berlin while loading. Anyone who is serious about environmental protection must also look at the entire balance of procurement, operation and disposal. According to media reports, neither BMW, Daimler nor Tesla have confirmed their talks with Giga Metals, but where there is so much smoke, there is also fire. The mining of nickel and cobalt will consume investments of up to CAD 1 billion. However, financing should not be a problem with well-known customers and purchase contracts and will boost speculation further.