Up to 300% with raw materials and defense! Standard Lithium, DroneShield, and zinc play Pasinex!

Pasinex Resources: Stock still undervalued

Zinc is overshadowed by gold, lithium, and copper in the commodities sector. Unfairly so, especially when looking at the performance of Pasinex Resources. The rally may just be getting started. The market capitalization remains below CAD 15 million, which is likely far too low: The junior producer is focused on smaller high-grade zinc projects with ore grades of up to 50%. Its key competitive advantage? Direct shipping of the mined material without prior cost-intensive processing.

Pasinex is currently working on two high-grade deposits in Turkey. The Serakaya project is located almost precisely in the middle of the country in the well-known geological hotspot around "Sarikaya." A new mineralization zone with a zinc content of around 30% was recently discovered there. As the zone is only 300 meters from the existing adit, further exploration drilling and, in parallel, the start of mining should be possible in the short term. The Pinargozu mine is already in production and is currently being expanded to access new high-grade sections. The Gunman project in the US state of Nevada offers exciting prospects—initial drilling results have yielded zinc grades of up to 26%.

About zinc: It is one of the most important industrial metals. Around half of global production is used for galvanizing steel to prevent corrosion – an application critical to the construction, infrastructure, and automotive industries. The International Energy Agency (IEA) now classifies zinc as a critical raw material, as wind turbines, power grids, and other key technologies of the energy transition require significant quantities. The metal is also becoming increasingly important in the development of new battery generations, such as zinc-air systems. The rising demand is meeting a tight supply. Mines in North America and Europe have reduced or shut down production in recent years.

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Standard Lithium faces exciting months ahead

Standard Lithium has made an impressive comeback in recent months. Since the beginning of April, the share price of the lithium company, which is on the verge of commercialization, has risen by 150% from EUR 1.03. This means that the sharp slump since the fall of 2024 has been completely recovered. However, there is still a long way to go from the current EUR 2.35 to the all-time high. In October 2024, the share price was just over EUR 10. With the foreseeable start of lithium mining, the rally could well continue.

Standard Lithium recently reported on developments in the second quarter. The Company worked intensively with its joint venture partner Equinor on the further development of its lithium projects and achieved several important milestones in the second quarter. At the flagship SWA project in the US state of Arkansas, all necessary preparations for the first phase have been completed. Discussions on off-take and project financing are still ongoing before a final investment decision is made by the end of this year. The project's lithium brine resources have some of the highest lithium concentrations in North America. The final feasibility study for SWA is expected to be published in the third quarter.

DroneShield: Billions in the order book

DroneShield's share price has lost around 20% over the past 5 days. However, at EUR 1.89, it is still more than 300% higher than at the beginning of the year. And with a market capitalization of AUD 2.97 billion, the valuation is at least ambitious in view of the most recently published Q2 figures.

Although the Australian specialist in drone defense solutions increased its revenue by 480% to a record level of AUD 38.8 million, this growth is also necessary to grow into its valuation. In addition to the traditional hardware business, the SaaS segment is also growing, increasingly establishing itself as a recurring source of revenue through regular software updates on the installed drone defense systems.

The Company continues to see strong demand. AUD 176.3 million in revenue has already been booked or secured through firm orders for the current year. In 2024, revenue was AUD 57.5 million.

With liquidity of AUD 192 million and no debt, DroneShield is well-positioned for further growth. The order backlog stands at around AUD 2.3 billion. Europe accounts for the largest share with 43% – primarily driven through the "ReArm Europe" plan – and the US with 29%. These two regions remain the key growth drivers. However, progress is also being made in Asia, as countries around China are increasingly implementing counter-drone defense measures.

**To support this growth, DroneShield is investing in new product generations, massively expanding its production capacities, and expanding its local structures in Europe, the US, and Asia. Given increasing drone activity in crisis areas and in the civilian sector, the Company is positioning itself as one of the key providers in the market for defense systems.

Pasinex offers good opportunities for further price increases. The stock is still largely unknown and inexpensive. The news flow should also be positive in the coming months. DroneShield is growing strongly. However, after its performance in recent months, a major correction should come as no surprise. The billions in the order book point to strong growth. However, this is also necessary for the valuation. Standard Lithium is on the verge of becoming a producer. However, the risk is that financing is not secured, and partner Equinor has a few other issues to deal with.