"Patience is a Super Power" - "The Money is in the waiting"

Monday, July 7, 2025

The importance of Rare Earth Elements (REEs) used in technologies from Smart phones and AVs to National Defense and Space Tech, cannot be overstated!

 


A small, retail investor looking to gain exposure to rare earth materials might consider MP Materials (MP) and Avalon Advanced Materials (AVL/AVLNF),

Here is how I am approaching the investment, with strategies tailored to risk profile, capital allocation, and market timing.


๐Ÿงพ Step-by-Step Investment Approach

1. Understand Their Profiles

CompanyTickerExchangeStageRegionRisk Level
MP MaterialsMPNYSE (USA)MatureUSALow-to-Medium
Avalon Advanced MaterialsAVLTSX-V (Canada) / OTCQB (AVLNF)Early-stageCanadaHigh (speculative)

2. Diversified Allocation Strategy (Example for $10,000 Portfolio)

Risk AppetiteMP MaterialsAvalon (AVL)Cash / Other
Conservative$7,000 (70%)$1,000 (10%)$2,000 (20%)
Balanced$5,000 (50%)$3,000 (30%)$2,000 (20%)
Aggressive$3,500 (35%)$5,000 (50%)$1,500 (15%)

Why?

  • MP Materials gives you stability, cash flows, and policy tailwinds.

  • AVL offers asymmetric upside if Canada builds its rare earth value chain and AVL scales successfully.


3. Entry Strategy

✅ MP Materials (MP):

  • Buy in tranches on pullbacks or near $16–$18 (historical support levels).

  • Consider:

    • Dollar-cost averaging (DCA) monthly.

    • DRIP (Dividend Reinvestment Plan) if/when dividends resume (none currently).

    • Long-term hold (5+ years), especially as magnet plant comes online in Texas (2025–2026).

✅ Avalon (AVL / AVLNF):

  • Higher volatility—treat as venture capital–style bet.

  • Entry near lows (e.g., <$0.20 CAD) may offer multi-bagger potential if milestones hit.

  • Buy small initial position; increase only after:

    • Major partner/funding announcement.

    • Processing milestones with Saskatchewan Research Council.

    • Government contracts or grant programs.


4. Monitor These Catalysts

MP MaterialsAvalon / Nechalacho
U.S. DoD magnet plant progressFinancing or JV for full-scale processing
Q4/Q1 financials (growth + margins)Offtake agreements for heavy REEs
EV/OEM contracts (GM, Tesla, etc.)Indigenous partnerships & ESG momentum
REE price trends (Nd-Pr especially)Federal critical mineral program funding (Canada)

5. Alternative / Supplementary Exposure

If you want a broader REE basket, consider:

  • ETFs (Note: very few pure-play REE ETFs exist):

    • ๐ŸŸข REMX – VanEck Rare Earth/Strategic Metals ETF

      • MP is a top holding. AVL may be included in future if it grows.

      • Includes Lynas (AUS), Iluka, China Northern Rare Earth, etc.

  • Battery Metals ETFs – Broader exposure but with lithium/cobalt/nickel too.


๐Ÿ”š Final Thoughts

RecommendationMP MaterialsAvalon Advanced Materials
Buy if you want...Stability + growth + U.S. policy exposureHigh-risk, high-reward REE growth
Best time to enterOn dips below $20Sub-$0.25 CAD on good volume
Exit horizonHold through 2030Re-evaluate after 12–24 months

Conclusion:
๐Ÿ”’ Use MP Materials as your anchor investment in rare earths—de-risked, policy-supported, with upside from magnet integration.

MPs new Magnet plant in Texas


๐Ÿ”ฅ Use AVL as a speculative levered bet on Canada’s REE independence and heavy rare earth supply growth.

Thursday, July 3, 2025

Kraken Robotics in a great position to help supply NATO navies with their sub sea technology - July Update!

 


Did Desjardin just Release the Kraken? - Kraken Robotics Investment and Business Report (June 2025)

Kraken Robotics’ recent momentum as a growing business and investment opportunity, now including these strategic dimensions:


๐Ÿ’ฐ 1. C$100 Million Bought-Deal Financing

  • What’s new: Kraken announced a bought‑deal public offering in June 2025—raising roughly C$100 million with a 15% over-allotment.

  • Why it’s positive:

    • Bolsters liquidity, enabling aggressive expansions or debt reduction.

    • Supports continued investment in acquisitions and manufacturing scale-up.


๐Ÿงช 2. Acquisition of 3D at Depth (Closed April 2025)


๐Ÿญ 3. Nova Scotia Subsea Battery Facility

  • What happened: Plans for a high-energy SeaPower™ battery plant in Halifax slated for late 2025 krakenrobotics.com+2krakenrobotics.com+2krakenrobotics.com+2.

  • Why it matters:

    • Strategic location: Halifax—Canada East Coast Navy HQ and major NATO port—offers logistical and defense synergies.

    • Defense reach: Perfect staging for contracts, including those with NATO navies. Infrastructure and proven naval partnerships are already in place.


๐Ÿ“ˆ 4. Robust Q1 2025 Results & Backlog

  • What happened: Q1 revenue was C$16.1 M with 62.7% gross margin, C$58 M in cash (up sharply YOY), and C$94.6 M in working capital.

  • Why it’s positive:

    • Confirms improved profitability, operational efficiency, and a strong cushion for growth.


๐Ÿงญ 5. Growing Bookings & Service Expansion

  • What happened: Since Q4 2024, Kraken received ~$45 M in subsea battery orders and ~$3 M in sonar bookings.


  • Why it matters:

    • Reflects sustained demand in defense and offshore energy sectors.

    • Validates product-market fit across diverse offerings.


๐ŸŽฏ 6. Defense & NATO Engagement

  • What happened: Ongoing contracts include $50 M+ for Royal Canadian Navy mine hunting systems in Halifax and past contracts with NATO navies (Australia and UK).


  • Why it’s important:

    • Halifax facility aligns geographically with Kraken’s East Coast naval customers.

    • Strengthens NATO interoperability and trust amid global naval tensions.


✅ 7. Comprehensive Subsea Ecosystem & Diversification

  • What’s evolving: Kraken now offers sonar (KATFISH™), LiDAR (SeaVision + 3D at Depth), subsea batteries (SeaPower™), and RaaS.


  • Pipeline inspection through Kraken Seapower
  • Why it’s smart:

    • Reduced reliance on a single revenue stream.

    • Offers integrated solutions for underwater defense and infrastructure clients.


๐Ÿ“Š Summary Table

StrengthDetails
Financial PowerC$100M financing + C$58M cash = strong investment capability
North American ReachU.S. operations via 3D at Depth + Halifax manufacturing
Defense EcosystemHalifax ties to RCN and NATO; major contracts secured
Tech PortfolioIntegrated sensors + power + service delivery
Proven DemandOrder backlog and major contracts affirm market traction

๐ŸŽฏ Why This Update Matters for Investors

  • Global Expansion: A U.S. footprint hedges geopolitical trade risks, unlocking access to American contracts.

  • Strategic NATO Positioning: Halifax location and facility align with allied naval operations, reinforcing defense supply chain credentials.

  • Integrated Tech Stance: Offers deep-tech defense clients everything from data to power, buoyed by recurring service demand.

  • Financial Firepower: Strong capital reserves enable execution of strategy without dilution or debt stress.


In combining financial strength, geographic diversification (Canada + U.S.), purpose-built naval infrastructure, and a full-stack subsea solution, Kraken Robotics has elevated its status to more than a sensor company—it’s now a strategically aligned defense-tech enabler with actual commercial momentum. These developments make it a more compelling long-term investment.

Here’s a deeper look into Kraken Robotics (PNG/KRKNF) covering contract timelines, valuation considerations, and the competitive landscape:


๐Ÿ“… Contract Timelines & Execution

  • Royal Canadian Navy Remote Mine hunting & Disposal System (RMDS)

    • Awarded: December 2022, with formal kickoff in January 2023.

    • Acquisition phase: 24 months, through end-2024, followed by a 5‑year integrated logistics support (ILS) program ($40 M acquisition + $10 M ILS) .

    • Operational readiness: RMDS installations expected fully operational in 2025 .

  • KATFISH Sonar System for Royal Danish Navy

    • Integration began in 2023, achieving full operational capability in early 2024.

    • Sustenance contract spans 7 years with potential extensions up to 21 years .

  • NATO Vessels Upgrade Contract

    • Roughly US $9 M follow-on deal secured in late 2022 for additional KATFISH units, tentacle winches, and autonomous launch-recovery systems (ALARS) .



๐Ÿ“ˆ Valuation Snapshot & Market Outlook

  • Analyst price targets: Average 12% upside to CA $3.40 (range CA $3.28–$3.68) over the next 12 months .

  • Intrinsic value vs market price:

    • Simply Wall St: Fair value ~CA $3.28, placing current price ~7% below fair value .

  • Key metrics:

    • Trailing P/E around 38× (Yahoo Finance), forward P/E not yet meaningful .

    • P/E ~42× vs industry avg. ~31× (Simply Wall St) .

    • EV/EBITDA ~28× vs sector avg. ~18× .

  • Growth: Earnings projected ~8% annually; last year saw ~136% growth .


๐Ÿ† Competitive Positioning

Strengths:

  • Integrated solution platform: Combines advanced sonar (KATFISH™, AquaPix™), subsea LiDAR (SeaVision + 3D at Depth), batteries (SeaPower™), AUVs, and RaaS—enhancing defensibility.

  • Long-term contracts:

    • Danish results show FOC achieved and a multi-year sustainment contract .

    • Canadian RMDS creates 7+ years of recurring revenue .

  • Global adoption: 

  • Deployed across the U.S., U.K., Australia, Denmark, Poland—plus mounting interest from NATO .

Risks:

  • High valuation relative to peers: Premium multiples imply investor expectations for continued growth.

  • Execution risk: Meeting ambitious contract delivery timelines across multiple large-scale programs.

  • Geopolitical dependency: Much revenue tied to defense budgets, which can be cyclical.


๐Ÿงญ Investment Implications

MetricInsight
Cash flow & marginsLarge multi-year contracts with sustainment provide stable, predictable revenue.
Geographic diversificationU.S. and NATO footprint hedges trade/tension risks; Halifax location aligns with naval operations.
Valuation debateDisagreement between growth-based models (Simply Wall St) and DCF-based (Alpha Spread); current price sits between fair-value estimates.
Catalysts
  • RMDS ramp in 2025

  • Further U.S./EU contracts via 3D at Depth presence

  • Continued deployment of KATFISH on NATO-MCM vessels |

Conclusion: Kraken’s strategic positioning, recurring revenue pipelines, and expanding global engagement present a compelling growth narrative. However, execution reliability and valuation premiums warrant careful monitoring—especially given its ~40× P/E.


Here’s a refined look at how NATO’s new 5% GDP defense‑spending pledge bolsters Kraken Robotics’ strategic positioning—and why it matters:


๐ŸŒ NATO’s 5% Defense Commitment


๐Ÿ“ฃ What This Means for Kraken Robotics

  1. Boost in Core Defence Procurement

    • With NATO countries winding up core defense budgets, there's greater emphasis and funding available for equipment like sonar systems (e.g. KATFISH™), underwater LiDAR, power systems, and autonomous platforms—all in Kraken’s portfolio.

  2. Infrastructure Spending Tailwinds

    • The additional 1.5% of GDP aimed at dual-use infrastructure—ports, bridges, cyber, and shipyards—aligns perfectly with Kraken’s Halifax battery plant and its sensor systems used for marine infrastructure monitoring and readiness.

  3. Special Defense Focus on Canada & Allies

    • Canada (currently ~1.3% GDP on defense) is expected to scale up significantly. Kraken’s Halifax facility—on the East Coast naval hub at a major NATO port—is primed to capture more contracts as defense budgets grow.

  4. Leverage European/NATO Industrial Expansion

    • As NATO boosts its defense-industrial base under this plan, Kraken stands to benefit from increased R&D and procurement contracts across the alliance, particularly in the U.S., Canada, and Europe.


๐Ÿ“ˆ Strategic & Investment Implications for Kraken

AxisPositive Impact
Revenue GrowthLarger NATO defense budgets widen pipeline opportunities for sonar, LiDAR, batteries, AUV deployments, and sustainment contracts.
Geographic & Industrial PushKraken's U.S. and Canadian build-out is well‑aligned with NATO’s spending surge, increasing its positioning as a key supplier.
Valuation UpsideGiven Kraken’s high multiples (P/E ~40×), securing new, credible NATO contracts supports earnings growth and validates premium valuation.
Execution RiskWhile budget increases help, Kraken must still deliver projects on-time and scale its capabilities to meet heightened demand.

๐Ÿงญ Bottom Line

NATO’s 5% GDP commitment is a paradigm shift in defense spending—a ramp-up that directly plays to Kraken Robotics’ strengths:

  • Its full-stack subsea offerings — sonar, LiDAR, batteries, AUV deployment — become increasingly relevant.

  • Its Halifax and U.S. footprint aligns with infrastructure investments and defense-alliances.

  • With large-scale defense budgets unlocking in the coming decade, Kraken is uniquely positioned to capitalize.


Related NATO defense‑spending news