District Metals Opportunity - Huge Re-rate potential ahead.
The company current has a market cap of $12 million dollars and is acquiring the Viken property which gives them exposure to over 1 billion pounds of uranium.
District Metals is a tiny company based in Sweden, they currently have a market cap of around $12 million Canadian, with around $3 million cash in the bank. They had previously been focused on 3 polymetallic projects in the heart of Sweden, which they have had some really good drill results on in the past. These results were forgotten and the company went from a high of .60 cents in mid 2021, down all the way to .5 cents in November.
At a $12 million market cap, the company is extremely undervalued just with the polymetallic projects alone. But here is where it gets really interesting, the company announced in early January, that they would be applying for a mineral license to cover about 70% of the Viken property in Sweden.
Okay so what’s so great about the Viken Property? The Viken Deposit is the largest undeveloped Alum Shale vanadium-uranium-molybdenum-nickel-copper-zinc deposit in Sweden, and amongst the largest deposits by total historic mineral resources of vanadium and uranium in the world.
There is over 1 billion pounds of uranium , 16 billion pounds of vanadium, 3 billion pounds of nickel, 1.5 billion pounds of moly, nearly 1 billion pounds of copper, and around 2.8 billion pounds of zinc.
The company that owned the property before had a market cap of almost $350 million Canadian, then the uranium ban came into effect in 2018 and the property was basically forgotten about it until now.
That resource must be worth alot more than $12 million Canadian going into a commodities cycle, where we have shortages of almost everything. The most intriguing part of the project is the uranium/vanadium aspect. The uranium is low grade but it is comparable to some of the projects in Africa currently and at higher prices will work, operating costs would be extremely low here, as it would just be a shallow open pit style of mine. The vanadium is decent grade and was not included in the 2014 PEA, that had the project at a US $1 billion dollar NPV. This is one of the ways District Metals can unlock even more value, Vanadium prices have been on the rise lately as well.
Okay so what's with the current valuation of the company? There is a couple uncertainties right now, the company hasn’t announced that they have received the mineral license yet, which they should be receiving in the next few weeks. I spoke with the CEO on this topic, and everything is pretty straightforward in Sweden with regards to the license and he didn’t anticipate any problem with gaining the 70% portion of Viken.
The bigger issue is if Sweden is going to lift the uranium ban moratorium that was put in place in 2018, there has been a new government elected and this was one of their high priority items. The vote will take place in March, it’s expected the ban will be lifted, but is likely keeping investors away until it is official.
The company is also looking into staking additional ground north and south of the Viken Deposit and is looking fore more uranium properties throughout Scandinavia, they want to be first movers in the district after the ban is removed.
Aura Energy is another uranium developer involved in Sweden they currently have a market cap of around $160 million even before the moratorium is lifted, you can see that Viken is the same grade and even larger, you can see that District Metals is likely to have to play some catch up here.
Okay so does the management team know anything about Uranium? The CEO is Garrett Ainsworth, he was the project manager at Alpha exploration, he discovered the Triple R Deposit which is currently owned by Fission Uranium. He then moved onto Vice President of exploration for NexGen Energy, they found the Arrow deposit there. He is the right main for the job.
Another point worth nothing is that there is uranium juniors with no significant discoveries and much larger markets cap than what District Metals currently has, if we really get into a crazy uranium bull market, things could get really fun with this stock.
If you are interested in this company I would also encourage you to take a look at the poly metallic projects the company owns and some of the drill results they’ve had in the past. Here is an example below of some of the success they’ve had, 30 metres at 11% ZnEq is very nice.
This company is severely undervalued and this is the kind of speculation one should look for with so many catalysts ahead, the stock has already trended higher off its bottom in November. Here is the weekly view, volume has rose significantly since the Viken announcement, the next catalysts will be the license becoming offical and uranium moratium being lifted. The sky is the limit here and I am positioned in this one.
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