There is no "right" price for anything, only what the market guesses something should be worth today based on the actions of a willing buyer and a willing seller. That said, my experience is that if you buy cheap and sell dear, you can do quite well. In reality the facts surrounding any investment are not nearly as important as the actions of investors based on their perceptions.
No one understands rare earths. First of all, they aren't rare and like 99.999% of ordinary people, I couldn't name two or three of them if my life depended on it. We use them, we need them, China pretty much controls the market on them. That's it, that's all I know and I know more than most.
Defense Metals Corp. (DEFN:TSX.V; DFMTF:OTC; 35D:FSEQB) just delivered the last of the 13 drill holes from the 2019 drill program consisting of about 2,000 meters of drilling. Like the majority of the rest of the holes in the program, the results were outstanding. Clearly no one understood them, the stock didn't do anything.
But the 58 meters of 4.01% LREO is worth $484 USD in the ground. That's about the same as 10 g/t gold over 58 meters. Any company drilling in Canada with those numbers would have a spurt of buying and probably double. But no one understands REOs so the stock price snores.
If you ignore the facts surrounding the drill hole there is another way of determining if it is cheap or if it is expensive is to look at the June 2019 43-101 that showed 11.37 million tonnes at an average grade of 1.96%. One percent LREOs is worth about $121 USD. That's an in the ground value. The only purpose is to show value and to compare drill holes to something we do understand, like the price of gold.
If you accept $121 being the value of 1% LREOs and you do the math, you will realize their old 43-101 showed a gross metal value in the ground of just short of $2.7 billion USD. The entire market cap of DEFN today, after brilliant drill results, is less than 1/10th of 1% of that. I'd call that pretty cheap.
Defense Metals is a permanent call on the value of REOs. I don't see any way it could get much cheaper. We are in Tax Loss Silly Season and if investors ever wake up to what DEFN has already, the sky is the limit.
I am an investor in DEFN. They are advertisers and naturally that makes me biased. Do your own due diligence.
Defense Metals Corp
DEFN-V $0.115 (Dec 12, 2019)
DFMTF - OTCQB 30.2 million shares
Defense Metals website.
Bob Moriarty founded 321gold.com, with his late wife, Barbara Moriarty, more than 16 years ago. They later added 321energy.com to cover oil, natural gas, gasoline, coal, solar, wind and nuclear energy. Both sites feature articles, editorial opinions, pricing figures and updates on current events affecting both sectors. Previously, Moriarty was a Marine F-4B and O-1 pilot with more than 832 missions in Vietnam. He holds 14 international aviation records.[NLINSERT]
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