"Patience is a Super Power" - "The Money is in the waiting"
Showing posts with label Ford. Show all posts
Showing posts with label Ford. Show all posts

Saturday, August 16, 2025

If North American consolidation in the REE/Li market is in the cards, AVL looks to be a consolidation lottery ticket!

 

 

Avalon Advanced Materials (TSX: AVL)

Consolidation Driver in the North American REE & Lithium Markets

(Some penny stocks shouldn't be overlooked. I believe AVL is one of those)


1. Strategic Position in REEs

  • Nechalacho Project (NWT, Canada):

    • One of the most advanced REE deposits in North America.

    • 2013 DFS gave an after-tax NPV of ~USD $900M (~C$1.2B).

    • Contains both light and heavy REEs critical for defense, communications, and EV motors.

    • Currently split with Vital Metals (North T Zone) → clear consolidation target for a single operator.

  • AVL’s Basal Zone holds the majority of resources, positioning the company as a natural consolidator or takeover target.


2. Strategic Position in Lithium

https://www.vmcdn.ca/f/files/nob/avalon-advanced-materials-thunder-bay-site-sign-2.png%3Bw%3D960https://www.vmcdn.ca/f/files/nob/avalon-thunder-bay-site-placement-map.png%3Bw%3D960
  • Thunder Bay Lithium Hydroxide Facility (Ontario):

    • 2024 PEA showed C$4.1B after-tax NPV and 48% IRR.

    • Only planned midstream processing hub linking Ontario/Northern lithium deposits with Southern Ontario EV/battery manufacturing.

    • A rare “ready-made” piece of infrastructure for OEMs or lithium miners seeking to capture IRA credits.

  • Lithium Deposits: Separation Rapids (Kenora), Snowbank, and Lilypad → resource pipeline for Thunder Bay facility.


3. Why Avalon is a Consolidation Prize

  • Few companies combine REE + lithium assets in one portfolio.

  • AVL offers both upstream resources (REEs, lithium deposits) and midstream processing (Thunder Bay).

  • Consolidating AVL allows a buyer to secure:

    • Long-life REE supply (Nechalacho).

    • A North American lithium hydroxide plant.

    • Eligibility for U.S./Canadian government incentives under the IRA and Canadian Critical Minerals Strategy.


4. Potential Suitors & Rationale

  • Critical Metals (CRML): Synergy with Tanbreez (Greenland); cross-Atlantic REE strategy.

  • Vital Metals (VML): Logical consolidator of Nechalacho (eliminate split ownership).

  • MP Materials (MP): U.S. REE giant; Avalon secures Canadian REE + lithium foothold.

  • Lynas Rare Earths (LYC): Expansion into North America to diversify from Australia.

  • Lithium Americas / Piedmont Lithium: Thunder Bay plant is the missing midstream link.

  • Tesla, GM, Ford: Direct EV/battery makers securing feedstock & processing capacity.


5. Buyout Valuation & Escalation Potential

  • Current Market Cap: ~C$22–25M (@ ~C$0.04/share).

  • Risk-adjusted strategic value: ~C$300–600M (C$0.50–0.85/share).

  • Likely opening bid: ~C$1/share (~C$637M).

  • If multiple suitors compete: Escalation toward C$1.75–2.10/share (~C$1.1–1.3B).

  • Extreme scenario (Tesla/MP with gov’t backing): Possible bid north of C$2/share if Thunder Bay DFS confirms economics + IRA/Defense contracts lock in demand.


6. Investment Thesis

  • Underappreciated value: Market assigns only ~C$25M to assets with multi-billion NPVs.

  • Strategic location: Canada = politically secure jurisdiction, aligned with U.S. supply-chain policies.

  • Consolidation catalyst: Split ownership at Nechalacho and fragmented lithium supply chain make AVL a natural acquisition target.

  • Bidding war potential: With REE + lithium both on the strategic critical list, more than one suitor is almost inevitable.


Conclusion

Avalon (AVL) is grossly undervalued relative to its assets. From a consolidation standpoint, it represents one of the few opportunities for REE and lithium players to secure a vertically integrated North American platform.

  • Entry today (~C$0.04/share) offers exposure to a potential 25×–50× re-rating if a takeover unfolds.

  • A realistic acquisition could settle around C$1–1.25/share, with upside to C$2/share in a competitive bidding war.


👉 In short: AVL is a textbook “strategic consolidation play” in the REE market, with built-in lithium upside. The mismatch between current valuation and strategic value makes it highly attractive for patient investors — and a natural spark for a bidding war.


The three most likely suitors (MP Materials, Lynas, and CRML) would gain by acquiring Avalon Advanced Materials (AVL), and that could push bidding toward the C$2/share mark.


Takeover Case Comparison: Who Benefits Most from Buying Avalon (AVL)?


1. MP Materials (NYSE: MP)

Profile: Largest U.S. REE producer (Mountain Pass, California), backed by U.S. defense and IRA policies.

What They Gain From AVL:

  • Nechalacho REE deposit: Adds a second North American REE source, diversifying away from Mountain Pass.

  • Thunder Bay lithium hydroxide facility: Midstream processing capacity in Canada → critical for EV battery OEM contracts.

  • Canadian footprint: Strengthens IRA eligibility and helps qualify U.S. automakers for mineral sourcing credits.

  • Geopolitical leverage: Control over both U.S. and Canadian REEs makes MP the undisputed North American champion.

Why They Might Pay Up:

  • MP has the balance sheet (US$5B+ market cap) and political support to pay C$1.50–2.00/share for AVL if it locks out Lynas or CRML and secures Canada as a “REE & lithium fortress.”


2. Lynas Rare Earths (ASX: LYC)

Profile: World’s largest REE producer outside China (Mount Weld mine, Australia), with Japanese government support.

What They Gain From AVL:

  • Nechalacho REE deposit: A second production center outside Australia → diversification + North America expansion.

  • Thunder Bay facility: Processing hub ties them into the EV battery value chain — an area where Lynas currently lacks direct presence.

  • Strategic partnerships: Japanese offtakers (Toyota, Sojitz, JOGMEC) could be extended into Canada.

  • Geopolitical insurance: A hedge against China disruptions and over-reliance on Australia/Malaysia operations.

Why They Might Pay Up:

  • Lynas is under pressure to expand capacity in Western-friendly jurisdictions.

  • Could justify C$1.25–1.75/share, possibly more if MP enters the bidding.


3. Critical Metals Corp. (NASDAQ: CRML)

Profile: Developer of the Tanbreez REE project in Greenland, currently advancing a Definitive Feasibility Study (DFS).

What They Gain From AVL:

  • Nechalacho REE deposit: Complements Tanbreez, giving CRML two of the world’s largest non-China REE resources.

  • Thunder Bay facility: Instant midstream processing — CRML’s missing piece for vertical integration.

  • Lithium exposure: Expands portfolio beyond REEs, adding lithium hydroxide production → higher relevance to EV/battery markets.

  • U.S./Canadian critical minerals politics: Strengthens case for DOE/DoD funding, partnerships, and offtake deals.

Why They Might Pay Up:

  • CRML is smaller than MP or Lynas, so financing a C$1–2/share bid would require partnerships or equity raises.

  • But the strategic synergy is enormous — owning both Tanbreez and Nechalacho could make CRML a takeover target itself later.

  • Likely to bid in the C$1.00–1.25/share range, but might stretch higher if MP/Lynas enter the fight.


Who Would Push the Bidding War Toward $2?

  • MP Materials: Most likely, because of financial capacity and U.S. strategic interest.

  • Tesla or GM/Ford (dark horses): If they step in for vertical integration and secure lithium hydroxide, they could shock the market with a C$2+ bid.

  • Lynas: Would bid aggressively if threatened by MP’s Canadian expansion.

  • CRML: May trigger the bidding, but less likely to win against giants without financial partners.


Investment Takeaway

  • AVL’s unique REE + lithium + midstream combo makes it the only Canadian consolidator play with immediate strategic relevance.

  • Base case: Takeover at C$1–1.25/share (C$637M–800M).

  • Bidding war case: Escalation to C$1.75–2.00/share (~C$1.1–1.3B).

  • Extreme upside: If OEMs or governments step in, C$2.50–3.00/share is possible, though less likely until DFS updates are complete.


👉 This is why AVL at ~C$0.04 today looks like a consolidation lottery ticket



the downside is limited, but the upside is multiples higher if a bidding war ignites

Ed Note: Disclosure: We've been acquiring shares in AVL UCU CRML

Related Articles:

REEs are critical to all cutting edge technologies now and early investors should be rewarded! We just took a small position in our 4th REE stock-CRML


Tuesday, May 21, 2024

Investor John Templeton got his start in penny stocks. Here are some large companies that were once pennystocks!

Let’s explore how some of these tech giants 

and other companies were once penny stocks:



  1. Apple (NASDAQ: AAPL): Apple, founded in 1976, had its ups and downs. With nine stock splits taken into account, it was in penny stock territory as recently as 1995. Now, it trades above $300 a share1.
  1. Ford Motor Company (NYSE: F): Ford, a Fortune 500 company, was also once a penny stock. It has come a long way since then2.
  1. Amazon (NASDAQ: AMZN): Believe it or not, Amazon was once a penny stock too. Its remarkable growth turned it into the e-commerce giant we know today3.
  1. Google (now Alphabet): Google (now part of Alphabet) started as a penny stock when it went public in 2004. Its search engine dominance and expansion into various tech sectors transformed it into a powerhouse1.
  1. Microsoft (NASDAQ: MSFT): Microsoft, with its stock splits considered, was in penny stock territory until the mid-1990s. It has since become one of the world’s most valuable companies1.

These transformations demonstrate the potential for substantial growth

even from humble beginnings!


As an interesting side note, in 1998 when Amazon was still in it's infancy, Jeff Bezos was not a multi billionaire. 

However, he saw a company that he believed had a vision for the future.  He invested $250,000 (a large sum for him at the time) into that company. That company was Google!

Bezos turned that modest $250,000 investment into $7.9 billion 

a 3 million percent-plus return



Here are five more companies that were once penny stocks that have achieved significant success:


  1. Sirius XM Holdings Inc. (SIRI): Sirius XM, one of the world’s biggest audio and communication companies, was once a penny stock trading at only $0.60 about 10 years ago. It has since grown over 965% and expanded its reach with the addition of Pandora Radio1.
  1. Accelerate Diagnostics Inc. (AXDX): Focused on solving antibiotic resistance challenges, Accelerate Diagnostics has seen substantial growth. Its stock was once considered a very small penny stock but has risen significantly since then1.

Remember, investing in penny stocks can be risky, but these examples show that with the right catalysts and timing, substantial growth is possible! 


Are there hidden gems in today's crop of penny stocks with new technology?

We currently own shares in these Microcap companies!

DNA RXRX IONQ QBTS OUST AEVA WONDR CHPT ADPT OPEN EDIT CRSP STEM PLUG