Rare earth, battery juniors look to equity markets

February 10, 2021 / www.metalbulletin.com / Article Link

New energy companies are turning to the soaring equity markets to fund their future expansion.

A flurry of reverse mergers among companies that produce minerals used in electric vehicles show that there is increased interest in new energy equities, and could fund the expansion of mineral supply chains in Europe and the United States.

The Dow Jones Industrial Average is currently over 30,695, just below the all-time highs touched in late January, with Covid-19 vaccination programs and hopes of economic stimulus improving investor sentiment in the US.

The ebullient US stock market is attracting interest from battery and mineral companies seeking capital to invest in expanded capacity.

The preferred method for these companies is to go public via mergers or special purpose acquisition vehicles (SPACs),allowing for much faster access to the market than is possible with a traditional initial public offering (IPO).

Norwegian battery-maker Freyr announced on Friday January 29 that it would go public on the New York Stock Exchange via an SPAC at a value of $1.4 billion.

And on February 1, Microvast, a specialist in fast-charging systems, announced its own $3 billion SPAC.

These valuations reflect the interest in the battery sector arising from the potential growth of the electric vehicle market.

Microvast generated around $100 million in 2020, while Freyr has yet to sell any batteries.

MP Materials, the only rare earth miner operating in the US, was early to the party, listing at a value of $1.47 billion in July 2020. MP Materials reported revenues of $41.0 million and profits of $14.8 million in the three months to September 2020.

And on February 3, Reuters reported that junior miner USA Rare Earth, which is developing the Round Top site in the state of Texas, has engaged bankers to prepare to go public either by IPO or SPAC at a value of more than $1 billion.

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