Stansberry Research recently released a new presentation featuring investment guru Matt McCall, which focused on “rare earths” and six mining companies he’s bullish on.
According to Matt McCall, the U.S. government is doing “everything within its power” to build up its rare earth industry, and he believes that this could present an opportunity.
“… the U.S. government is doing everything within its power to move back to independence… by rebuilding a once-dominant, domestic rare earth industry.
“That’s where the opportunity comes in.”Source: https://orders.stansberryresearch.com/?cid=MKT655305&eid=MKT664217&assetId=AST254678&page=2
As for the six companies he’s pitching, McCall said the “next big transition in energy in America is here,” and it all rides on the “17 materials” that these six companies control.
“The next big transition in energy in America is here. And it all rides on the 17 materials these six companies control… outside of China.”
“I believe these six companies will be the sites of the next great energy boom in America… on which so much rides.”
He also talked about how the “basket approach works” when you find “the next big breakthrough” in a sector. So instead of focussing on one single company, he’s recommending six stocks that he thinks could have “10x potential” or more.
“That’s, in part, why I’m NOT giving out a free recommendation today.
“Because the recommendation I would have given could be the one that goes up over 2,000%… or it could be the one that doesn’t. To me, I’d rather you get a 1,000% average by buying all six of the stocks I recommend today… than risk just buying one.
“Speaking of those six stocks… I found some that I can almost guarantee no one has heard of… but have that incredible 10x potential, or more.
“These are the sites and companies where the next great energy boom is happening.”
Of course, there’s no guarantee that any company will see any gains, let alone 10x, regardless of what “basket” they’re in. But nevertheless, I was curious to know what McCall’s “rare earth” stock picks were, so I looked into the clues he shared.
And I think I’ve managed to uncover five of them, which I’ll share with you in this post. But before we get to that, let’s unpack his prediction a bit further.
Why Is Matt McCall Bullish On Rare Earth Miners?
According to McCall, even though the U.S. has oil, there’s a “new set of critical resources” the country needs to help maintain its position as a “worldwide superpower.” And he says that while the U.S. was once a leader in the production of these “17 rare earth materials” in the 1980s, China is now producing the majority of rare earths.
“While we have oil, there’s a new set of critical resources that’s necessary to our very survival as a worldwide superpower.”
“… the U.S. used to be the leader in the production of these 17 rare earth materials back in the 1980s.
“But cheap labor in China won out. Our mines shuttered.”
Furthermore, McCall said that a “private research firm” (which he didn’t name) found that China may soon stop exporting them as their domestic demand increases.
“A private research firm found that China, who again produces 90% of rare earths, may soon stop their exports of rare earths all together as their domestic demand increases in the coming years.”
Long story short, the presentation suggests that increasing the domestic supply of rare earth minerals in the U.S. is important for the economy and even national security.
And according to McCall, the U.S. is now “pulling some of the richest rare earth deposits in the world out of the ground” for the first time in decades. Which he believes, along with other factors like new rare earth refineries being built and ecological surveys, shows that it’s within America’s power to “become independent again.”
“… for the first time in decades, the U.S. is pulling some of the richest rare earth deposits in the world out of the ground.
“And the first-ever rare earth refinery in the U.S. is being built.
“These sites are the first of many more to come.
“That’s how we know it’s within our power to become independent again… because all those deposits are still here.
“Our ecological surveys prove that.”
McCall summed up his thesis by saying that billions of dollars are flowing into the rare earth mining sector and that the U.S. needs the 17 materials (aka rare earth elements) that the six companies he’s teasing produce.
“All of this money flowing into a sector with so few companies to disperse it to is the single biggest catalyst I’ve ever seen for a moneymaking event.”
“Our economy, our national security… we need these companies and the 17 materials they produce… and the six companies producing them for our country.”
What exactly are rare earths?
And are they really as big a deal as McCall makes out?
On the first point, Matt McCall didn’t list all of the “17 materials” he discussed in the presentation, but he’s almost certainly referring to these 17 rare earth elements.
And as for their significance… based on the presentation, it’d be easy enough to assume that if the U.S. needs these “17 materials,” the companies that make them could be set to Moon. But as with most teasers I come across, I suggest taking this pitch with a grain of salt.
Because, for one thing, there are no guarantees in investing. No matter what country needs what, or how valuable any resource is – there’s no such thing as a “sure thing.”
And second, while this page on whitehouse.gov states that “critical minerals” are essential to America’s national security and economic prosperity (and it specifically mentions rare earth elements as an example), this 2022 Final List of Critical Minerals shows that the U.S. has listed 50 minerals as “critical” in total.
So, on the one hand, it appears as though what McCall said about America needing rare earths is true. But on the other hand, they are only one part of the overall picture. And as a side point, not all 17 rare earth elements are included in the above “list of critical minerals.”
Anyway, with all that said, let’s take a look at McCall’s picks.
Matt McCall’s Six “Rare Earth” Mining Picks
During the presentation, Matt McCall said that the “biggest potential returns” are in the mining companies as opposed to the rare earth materials themselves. And he specifically teased six companies that he thinks have “10x potential” or more.
After looking into his clues, I managed to uncover what I believe are five out of those six companies, and in this section, I’ll show you what they are.
But before we get started, I just want to make a couple of points:
- First, I can’t guarantee that my guesses are right. I’ll show you my research and what I think McCall is teasing, but ultimately, these are guesses. I have not joined his service or read his “Top Six Rare Earth Stocks to Buy in a Bear Market” report.
- Second, nothing on this page should be considered advice on what you should or shouldn’t do. I am not a financial advisor, and I do not provide financial advice. My aim is to simply share my research; what you do with that is up to you.
Now with that said, on with the picks…
Here are the clues Matt McCall shared about his first pick:
“The mine this company owns is the biggest producer of rare earths on the Western Hemisphere. Some say it’s the second biggest producer of rare earths in the world.
“And I confirmed, those deposits are still there and going strong. They have decades of materials left to pull out of the ground.”
As you can see, that’s not a lot to go off.
But according to nationaldefensemagazine.org, the company that operates the largest rare earth element mines in the Western Hemisphere is MP Materials (ticker: MP).
MP Materials Corp. is a rare earth mining company headquartered in Las Vegas, Nevada. And according to Wikipedia, its Mountain Pass mine located in California is the only operating rare earth mine and processing facility in the U.S.
Given the lack of clues, I can’t be certain that this is McCall’s first pick, but this company appears to be the closest match.
According to the presentation, Matt McCall’s second pick is one of the biggest processors of rare earths outside of China.
“The other site that I visited and vetted… is where all the rare earths pulled from the biggest mine in the Southern Hemisphere will be processed. And they just received a massive grant. The Pentagon awarded them $120 million to step up production.
“And, while they’re one of the biggest processors outside of China, they’re still struggling to keep up with demand. Which is perhaps why they’ve announced they’re on track to double their already robust output of rare earths by 2025.”
Based on those clues, my guess is Lynas Rare Earths Ltd, an Australian rare-earths mining company listed on the ASX under ticker LYC (and OTC market under LYSCF).
Why do I think that’s McCall’s second pick?
Because firstly, Australia is located in the Southern Hemisphere, and its largest rare earth mine is located at Mount Weld in Western Australia, which is owned by Lynas Rare Earths.
And second, according to investorintel.com, the U.S. Department of Defense (DoD) has awarded the company USD $120 million to “build a 3-5 kta heavy rare earth separation system” in the U.S.
So, while McCall’s second pick appears to be an Aussie company (Lynas Rare Earths), and the presentation was heavily focused on the U.S., this company is building a rare earth separation facility in America. One that, according to the article above, is expected to be located in Texas and aims to be operational in the financial year 2025.
Here’s what Matt McCall said about his third pick:
“Another rare earth company I stumbled upon in my research is a rare earth miner already, and one of their first refineries just got approved. They have $70 million in funding already deployed… and another $81 million in royalty payments going towards the endeavor.
“Soon, they will be a full-service rare earth producer, making their operations even more profitable. And those refineries are going to come in handy, since their mines have robust deposits of select rare earths.
“Just the sites they own now have stockpiles of rare earths that are expected to last until 2034. They also have another $1.25 billion in loan funds waiting.”
To find this one, all I did was “Google” rare earth mining companies that have received $81 million in royalty payments.
And that led me to an article on kosec.com.au, which states that Iluka Resources Limited is entitled to “annual royalty payments of up to $81 million from refinery cash flows” under financing arrangements it has made regarding a new rare earths refinery it’s building in Australia.
Furthermore, this document on the Iluka website mentions “funds deployed of $70 million,” which seems to match the other clue McCall shared. And that same document mentions a $1.25 billion loan, which is shown as an “Australian Government Contribution.”
So, based on the clues McCall shared, Iluka Resources Limited appears to be his third pick, which is listed on the ASX under the ticker ILU.
What does the company do?
According to Wikipedia, Iluka specializes in mineral sands exploration, project development, operations, and marketing. And according to the kosec.com.au article I linked to earlier, its new refinery is set to produce “separated rare earth oxides including neodymium, praseodymium, dysprosium and terbium.”
“One of the companies specializes in the one rare earth material that China is forced to import… and this company is entering into contracts with 10 parties to become the processor for around 85% of the world’s supply. Their rare earth mine has a projected life of 38 years. That gives this company a true chance at an incredible 50x gain, or I believe it could go higher. Especially with financial backers, like Hyundai, who they just signed a deal with.”
My guess? Arafura Resources Limited (ASX: ARU), an Australian mineral exploration company focusing on rare earth elements headquartered in Perth.
- Because for one thing, according to stockhead.com.au, Arafura signed a non-binding agreement to supply neodymium and praseodymium (both rare earth metals) to Hyundai over a seven-year term starting in 2025.
- Second, the company has reportedly said that it’s “in discussions with 10 parties,” which partly matches McCall’s clue. Although I’m not sure about the “85%” part of what McCall said. So, while I could be missing something, I’d only consider this a partial match.
- Third, according to thewest.com.au, the life of Arafura’s Nolans rare earth mine, which is located in the Northern Territory, is estimated to be 38 years.
“Then there’s another company that acquired a mountain in Texas that is chock-full of rare earths. As an established miner already, they have the means to develop this project. In fact, they already have produced rare earths for the Department of Defense. And the diversity of their rare earth deposits is incredible – they’re mining 15 of the 17 rare earths.”
My guess? Texas Mineral Resources Corporation (ticker: TMRC), an exploration stage mining company located in Texas.
Why do I think that’s his pick?
Because firstly, the “mountain in Texas” McCall’s referring to appears to be Round Top Mountain. This mountain is owned by the Texas General Land Office, but it was leased to Texas Rare Earth Resources in 2011, which is now known as Texas Mineral Resources.
Today, the Round Top Project is a joint venture between USA Rare Earth and Texas Mineral Resources that hosts 16 of the 17 rare earths, as well as lithium, beryllium, and uranium.
According to the USA Rare Earth website, it owns an “80% interest in the Round Top Heavy Rare Earth, Lithium, and Critical Minerals deposit.” But if I’m not mistaken, this is a private company, whereas Texas Mineral Resources is a public company.
Furthermore, according to globalminingreview.com, the U.S. Department of Defense awarded Texas Mineral Resources a Broad Agency Announcement (BAA) research contract through the Defense Logistics Agency (DLA) in 2015. So that may help explain the other clue McCall shared in the presentation.
“And the last company acquired a mine that creates one of the most coveted and rare materials found in the most sophisticated tech.Their sales are up 80% from a year ago since they announced their switch to rare earth production.”
As you can see, the clues Matt McCall shared about his final pick are extremely vague, and as such, I was unable to figure out what this company is.
If you want to know what the final pick is and find out if my previous guesses are right, the best thing to do would be to see the report he’s created called “Top Six Rare Earth Stocks to Buy in a Bear Market,” as that’s where he details his recommendation.
The only “catch” is that the only way to access that report is to join a $2,500 service he runs called Megatrend Investor, which is published by Stansberry Research.
Recommended: Go here to see my #1 rated stock advisory of 2022
Is Megatrend Investor Worth $2,500?
Megatrend Investor is a monthly newsletter service run by Matt McCall of Stansberry research focused on tech trends.
And based on the Stansberry Research website, some of the examples of “revolutionary technologies” McCall is focused on appear to be 5G, artificial intelligence, and electric vehicles. Not to mention, rare earth mining companies.
How does it work?
Megatrend Investor costs $2,500 per year, and as a subscriber, you get access to the latest Megatrend Investor recommendations from Matt McCall. And according to the Stansberry Research website, McCall “takes the basket approach to large megatrends.”
So, as is the case with his “rare earth” picks, instead of recommending one company, he appears to recommend a group of stocks he’s bullish on.
With that in mind, it’s probably worth noting that, even if my guesses are right, McCall is technically not recommending any one rare earth miner on its own. Instead, he’s recommending six companies as a group, or “basket,” as he calls it.
In any case, the report I mentioned earlier details his picks, and that comes with a Megatrend Investor subscription. Subscribers also get access to other resources, including a second report (“handbook”) and investment-related videos he’s put together.
As for whether or not it’s worth joining, I can’t say because I’m not a subscriber of this service. I have looked into other stock teasers he’s released, though, and uncovered some of his picks in the process. So you might find the page I just shared worth a look if you want to know more about the types of companies he has recommended before deciding.
Matt McCall’s latest presentation is all about the importance of rare earths and how the U.S. is working on increasing its supply of them, which he sees as an opportunity.
Only time will tell if what he’s predicting plays out, but at least now you know what some of the companies he teased might be, based on the clues he shared.
So I hope you got some value from this post!
Thanks for reading.