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November 30th, 2020 | 13:00 CET

Defense Metals, TUI, Everfuel - these are the new stars!

  • Rare Earth Elements
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Electromobility is the future. The sales figures of Tesla and HAN are rising exorbitantly month after month. Currently, orders for the latest models can only be met slowly. The demand for the materials needed to build the new types of batteries is even more serious. There is a threat of severe excess demand and sharply rising prices - from which one can profit on the stock exchange.

time to read: 4 minutes | Author: Stefan Feulner
ISIN: CA2446331035 , DE000TUAG000 , DK0061414711

Table of contents:

    Dramatic development

    These scarce raw materials are "rare earth metals." Permanent magnets for electric motors, for example, are produced based on "rare earth metals" - REM. Smartphones, monitors and even wind turbines contain dysprosium, neodymium, germanium or gallium. REMs play a decisive role in the production of weapons. For example, the US Air Force's most modern combat aircraft, the F-35, requires about 1,000 pounds of rare earth metals, most of which are currently sourced from China.

    China on the move

    The US is also dependent on China for REMs, needed for laser-guided missiles, other advanced weapon systems and space satellites. And here is the problem, currently 80% of rare earths are produced in China, a quasi-monopoly. Due to the trade dispute with the US, this can lead to enormous supply bottlenecks in the Western world. As early as 2017, outgoing President Trump tried to free the US from its dependence on China for rare earth metals by issuing an Executive Order. This Executive Order was followed with a statement by the President in early October declaring a national state of emergency in the mining sector to set up a US domestic REM storage facility for military requirements.

    Alternative from Canada

    The Canadian mineral explorer Defense Metals has its finger on the pulse here. Founded in 2016, the Company focuses on the acquisition of mineral deposits containing metals and elements used in the production of renewable energy technologies, such as rare earth magnets. The main focus is on the Wicheeda project in the province of British Columbia.

    Successful Placement

    By the end of October, the Canadians were able to complete a private placement of 2,525,000 units for gross proceeds of CAD 505,000. Last week, the private placement of 800,000 shares was announced, which puts another CAD 200,000 in the pockets of Defense Metals. Defense Metals' CEO, Craig Taylor, commented on the use of the funds: "The previously closed 25-cent-per-share private placement financing will be used to conduct additional fill-in hydrometallurgical test work with the objective of capitalizing on opportunities that have been identified to optimize and improve on our already exceptional hydromet recoveries. As previously disclosed, we intend to complete the preliminary economic assessment by the end of the Q1 2021." The market capitalization of the Company is currently CAD 11.24. A bet on the future!**

    Template used

    Norwegian hydrogen producer Nel Asa posted a new all-time high on Friday at its home exchange in Oslo. At NOK 24.18, the previous August high of NOK 23, was surpassed for the time being. The reason for this was the successful IPO of the spin-off, Everfuel. The former Danish subsidiary made its stock market debut in October with an opening price of NOK 22. After a brief period of weakness at NOK 15, the share price was at NOK 57 before the weekend, an increase of more than 150%. Nel Asa is still the proud owner of almost 17%.

    Another deal in the pipeline

    With the new money from the IPO, Everfuel goes on a shopping spree. At the end of last week, the Norwegian filling station operator H2CO AS announced that it is selling its two hydrogen filling stations to the Danes. Everfuel also wants to take over the majority of the filling station operator, which in addition to the two filling stations also operates a hydrogen distribution plant in Norway. The Danish Company is also working on a takeover of H2Fuel, which happens to be a subsidiary of Nel Asa.

    Caution required

    Asset Manager Kepler Cheuvreux has rated the share as "sell". The French see the price target at NOK 18.50, converted, EUR 1.73, which is well below the current level. In terms of charts, a fall below the previous high of NOK 23.0 would be negative. The price of Nel Asa would need a break to reduce the overbuying of the last weeks. Even a substantial correction to the upward trend that has been developing since April 2020 at currently NOK 18, the equivalent of EUR 1.70, would not be a break in the leg.

    Scepticism justified

    The tourism group TUI has already received a total of EUR 3.0 billion from the state since the beginning of the Corona Crisis. Now further state aid is to be provided. It is rumoured that between EUR 1.5 billion and EUR 2.0 billion will be forthcoming. That makes a total of EUR 4.5-5.0 billion. The current market capitalization is currently only EUR 3.4 billion. Yes, the developments in vaccine development can be viewed positively, and the government's goal of starting the vaccination program for the masses in spring is in place - in theory! The cash burn rate was certainly driven below the EUR 500 million per month mentioned in May due to massive job cuts of more than 8,000 jobs and a tight austerity program. Nevertheless, it remains uncertain how long and to what extent the pandemic will depress TUI's sales and earnings. Therefore, at the current level, the stock appears to be too expensive.

    Conflict of interest

    Pursuant to §85 of the German Securities Trading Act (WpHG), we point out that Apaton Finance GmbH as well as partners, authors or employees of Apaton Finance GmbH (hereinafter referred to as "Relevant Persons") may in the future hold shares or other financial instruments of the mentioned companies or will bet on rising or falling on rising or falling prices and therefore a conflict of interest may arise in the future. conflict of interest may arise in the future. The Relevant Persons reserve the shares or other financial instruments of the company at any time (hereinafter referred to as the company at any time (hereinafter referred to as a "Transaction"). "Transaction"). Transactions may under certain circumstances influence the respective price of the shares or other financial instruments of the of the Company.

    Furthermore, Apaton Finance GmbH reserves the right to enter into future relationships with the company or with third parties in relation to reports on the company. with regard to reports on the company, which are published within the scope of the Apaton Finance GmbH as well as in the social media, on partner sites or in e-mails, on partner sites or in e-mails. The above references to existing conflicts of interest apply apply to all types and forms of publication used by Apaton Finance GmbH uses for publications on companies.

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    Der Autor

    Stefan Feulner

    The native Franconian has more than 20 years of stock exchange experience and a broadly diversified network.
    He is passionate about analyzing a wide variety of business models and investigating new trends.

    About the author

    Related comments:

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    Defense Metals, BYD, NEL, Plug Power - Rare earths, who is the fastest?

    • Rare Earth Elements

    Scarcity is the issue in 2021! Western governments have completely miscalculated regarding technological progress. They are now being driven by the industry; decisions that should have been made 5 years ago are now being followed abruptly. Since Battery Day in mid-September 2020, it has been clear that a technology giant like Tesla, led by Elon Musk, will enter large-scale battery mass production. What is missing is the complete closing of ranks between battery and car manufacturers so that the produced and expensively developed high-performance batteries are also installed in e-cars through corresponding demand. In coordination rounds between the automotive industry and the EU, the decision has probably already been made: E-mobility will come, and it will come in the big version...!


    Commented by Carsten Mainitz on January 26th, 2021 | 08:05 CET

    Lynas Rare Earths, Defense Metals, Arafura Resources - Rare Earths: still in time to get in before the boom!

    • Rare Earth Elements

    China has dominated the rare earths market for a long time. A supply shortage in the People's Republic and a substantial increase in demand can lead to a massive price increase of the commodity group at any time. These price increases are then often reflected in the share price of relevant players. Rare earth metals are in demand in a wide range of industries and to close the emerging supply gap the production of rare earth metals must be increased outside of China. We present three opportunity stocks that will benefit from industry trends and scarcity prices as producers or prospective producers.


    Commented by Nico Popp on January 18th, 2021 | 09:48 CET

    BYD, Defense Metals, Nornickel: Still investing in electromobility?

    • Rare Earth Elements

    Electromobility is a trend that is making waves on the stock market: Car manufacturers such as Tesla or BYD are benefiting from the rising demand and the vision of the future, but so are commodity companies. The reason: If you want to drive electric cars with low emissions, you need more raw materials for energy storage and motors than for classic combustion engines. Typical candidates are copper, cobalt, or lithium. Rare earth metals play a unique role. So far, most of them have come from China - and some are mined under dubious conditions. But anyone serious about sustainability must look at the entire value chain when it comes to electromobility and pay attention to raw materials from producers with a good ESG profile. For raw material companies outside China, this is an opportunity.