Good Morning Team.
It’s been some time since I’ve considered Guardian Metal Resources. When the share price keeps rising, the CEO keeps performing, and the market fundamentals continue to improve…
Sometimes it’s best to simply stay quiet and let your winners run.
The first time I penned a little something was over two years ago - when the stock was in all honesty nothing more than a curiosity on the far side of the world.
A few months later, in October 2023, I noted before anyone else what was going to happen with Tungsten - the US weak point and one of China’s many critical minerals weapons.
For what it’s worth, given that antimony was also subjected to Chinese export controls, titanium will almost certainly be next.
This will be very good news for Sovereign Metals and others in the space - so watch out for this when it comes.
Grant Funding Lands
The initial tranche of grant funding has landed - and GMET is no longer in the minor leagues.
When this story started out, the plan was to get some small grant funding, maybe fund a little study and build a pilot plant to generate a little profit.
This has now changed - but more on that later.
The grant funding is here. Having waited two years for the first tranche, it’s a joy to finally see the capital pour in - with no strings attached.
Is it a smaller amount than expected?
No.
Everything we know about the grant funding process from other companies in the US resource space signals that capital is assigned in stages. You apply for grant funding to progress an asset, then the supervising body assesses whether the asset is of critical or strategic interest.
Once they've made that decision, you get an initial tranche of technical assistance funding to support getting you to the next arbitrary deadline (in this case the Pilot Mountain PFS), at which point you apply for and much more quickly receive the next tranche to reach the next checkpoint.
So assuming the PFS comes relatively soon, the next tranche of money should also be on the way.
I think there are a few things to highlight here:
Pilot Mountain and Tempiute could both receive additional grants not only from this program but others, so at any time
The grant is for Pilot Mountain feasibility studies only
The US generally likes to stagger out capital deployment for pre-feasibility assets (see BRES and the instalments over time). This hasn’t happened here - it’s been a lump sum in one go, which indicates urgency
The actual capital injection is less important than the official backing of the US government
GMET is the only US-based tungsten play to be awarded funding under the Defense under Title III of the Defense Production Act of 1950 - which means the US government has formally designated this project as essential to national defense. The DPA is rarely used for speculative projects. Awards usually go to projects that can directly support US industrial base resilience
GMET describes its ‘ultimate goal of playing a significant role in the U.S. onshoring efforts of critical metals to support U.S. national security and economic objectives.’ The game has changed
The DPA Title III award is ‘non-dilutive to Guardian Metal shareholders and no commercial covenants are included in the Award that would impair Guardian Metal's current business, nor the future sale of tungsten concentrates to the industrial base’ - meaning the US only cares that the tungsten is produced in the US and is putting zero restrictions on making this happen. The USA, the most capitalistic nation on Earth, doesn’t care about the money. At least yet - more on that below.
Let’s consider the key quotes:
Dr Vic Ramdass, Acting Assistant Secretary of Defense for Industrial Base Policy:
‘Tungsten is an essential alloying metal for aerospace, ground vehicles, munitions, and many other defense systems. Developing a domestic source for tungsten is one of our top critical and strategic mineral priorities.’
Mr William "Greg" Davis, Acting Director of the Manufacturing Capability Expansion and Investment Prioritization (MCEIP) directorate:
‘This investment will put the Nation on a path to achieve production capability for commercial-scale levels of tungsten, a key metal for numerous DoD systems. The United States has not mined tungsten in nearly a decade. A domestic source of this essential metal will add much needed resiliency to both commercial and defense supply chains.’
Oliver Friesen, CEO of Guardian Metal:
‘I firstly want to extend my thanks to the U.S. Department of Defense and Defense Production Act Purchases team for their tireless effort to support the domestic critical minerals industry and the Pilot Mountain Project, in particular. This Award is a step-change in our business, as we work towards our goal of supporting the U.S. industrial base with Mined in America tungsten.
Now is the time for the U.S. to reestablish a reliable and secure domestic source of mined tungsten. With this substantial non-dilutive award secured, we move forward with further confidence in our business model and look forward to showing the market, industry and government the achievements these funds will enable.’
J.T. Starzecki, Chairman of Guardian Metal:
‘On behalf of the Guardian Metal organization, I commend the determined efforts of our team and the working relationship they have built with the U.S. Department of Defense in the pursuit of achieving our first major milestone for the company in 2025.
This funding will unlock our ability to put forth a robust pre-feasibility study (PFS) which will detail the scope of Pilot Mountain and help us advance the Project towards our ultimate goal of being the newest domestic producer of this critical mineral.’
I feel that there is no need to expand on these quotes. This is the very highest level of government telling you that a domestic source of tungsten is a top critical and strategic priority - Pilot Mountain’s well-outdated scoping study from back in 2017 already places it as the largest undeveloped tungsten deposit on US soil, while Tempiute was one of the largest working tungsten mines in the country - only closing down due to China flooding the market in the 1980s (surprise, surprise!).
You might have thought that this news would see the stock shoot up - but to some extent it was priced in already - and the grant funding was accompanied by a raise for an additional $21 million, led by our largest shareholder and mining investor extraordinaire UCAM.
The placing was once again practically at the bid (60p), increasing UCAM’s interest to 28.7% through $13.5 million of the raise - but with ‘participation from certain of the Company's other existing shareholders and other institutional investors.’
In other words -sticky hands. UCAM is not going to be able to sell a single share without smashing the price down, and don’t invest for small beans - so they are expecting either assets sales or dividends.
Also - remind me to check Goehring & Rozencwajg’s filings when they get updated, among others.
We’ll get to what the capital will be used for momentarily - but I think many have missed a comment at the bottom of the grant funding announcement:
Further investments into other companies (not GMET) were ‘complemented by $83.4 million in total recipient cost shares since the beginning of FY 2025.’
This indicates that next time GMET may be required to stump up some of their own capital for next stages - and the same-day raise means they are immediately capable of that.
Which shows the US government they are already ready for the next part of the deal AND this may also be needed for further non-related grants.
Yeah.
Get that NASDAQ listing going. We almost qualify.
Rebuilding the US Tungsten industrial base
Here’s the thing.
The US wants DOMESTIC tungsten production.
Not Canadian (sorry Fireweed)
Not Australian (sorry Greatland)
Not British (sorry Tungsten West)
AMERICAN.
Yes, Fireweed has also benefitted from similar funding ( a larger amount, but it costs a lot more to get anything done in the middle of the Canadian winter, hence the increased support).
Yes, O’Callaghan’s and Hemerdon are potentially world class deposits (though the first will struggle to be developed without permanently evacuating Plymouth).
But GMET is leading the domestic charge.
Two years ago, tungsten was not sexy. Nobody wanted it. The entire market was worth around $5 billion in 2023. This is a pittance.
In Oliver’s own words:
It was ‘contrarian to acquire a tungsten deposit when no one wanted it in the US. And now obviously it’s become incredibly valuable and we’ve positioned ourselves very strategically in the US to lead the reshoring efforts here in the country.’
But like antimony and titanium, it’s irreplaceable, particularly in defence.
Tungsten is needed for penetrators, high-density, armour-piercing projectiles - required in US Department of Defence contracts.
It’s also a requirement for nuclear fusion. There is nowhere near enough of the metal for future demand if this tech becomes a reality (GMET is funding research into this) - and any real breakthrough will make tungsten the most valuable metal in the world, overnight.
Because fusion will replace oil, coal and gas for energy needs.
Yes - highly speculative and it’s always been a decade away. But the right people are positioning for it.
Tungsten prices are now at their highest in over a decade, and the metal is nowhere close to having followed antimony’s Chinese export control driven trajectory yet.
There is a long, long way to go.
China continues to dominate global tungsten production - controlling 80% of 2024’s 81,000 ton total. The US seeks to break this control.
Other than grant funding, the permitting side of things have changed overnight. Rather than a drawn out process, Friesen notes that ‘we’re seeing tailwinds from the new administration and the DOI…we’re getting chased to get (applications) submitted. The government is serious about fast tracking defense metal projects. US investors want American mines.’
Yes, the company is getting chased and not the other way around.
It’s a brave new world.
Oliver told Mining.com in June that ‘we can supply a very meaningful amount of tungsten to the US market.’
What’s very meaningful?
It has to be enough to mean the US no longer relies on Chinese tungsten.
Consider - the original MRE for Pilot was 12.53Mt at 0.27% W03 with copper-silver-zinc credits.
But the grades uncovered by drilling over the past two years and indications at Pilot North sport much higher grades.
I’m not going to go through it all, but consider this result from PM from November last year:
Or these from Tempiute a month ago:
We are no longer in the 0.27% category. Higher grade metal is there.
We know drilling for the PFS is complete - or was. We also know that high grade gallium (one of two rare earths export banned by China) has been found across both Pilot and Tempiute.
It is worth noting though that the RNS indicates the ‘advanced’ PFS may take longer.
Let’s consider how the cash will be used:
Pilot Mountain - ongoing and planned resource drilling operations, metallurgical test work, engineering studies, and permitting. The culmination of the above workstreams will result in an advanced pre-feasibility study which GMET expects will incorporate both the Desert Scheelite deposit and the recently completed resource drilling completed at the Garnet Zone.
Tempiute - a drilling programme aimed at defining an open pit resource. The Company also plans to advance engineering work focused on leveraging in-place mine and support infrastructure, progress project permitting, and further evaluation of surface stockpiles from the previous mine operations.
The key bit though is that these workstreams ‘are to be completed during H1 2026.’
Pilot’s PFS may therefore be a while away.
Tempiute looks perhaps more interesting right now - not only for further grants but also for production. Oliver indicated in a recent interview with me that he hopes to have two distinct mining camps for each asset - and clearly as the infrastructure is already there, Tempiute is the one to develop first.
I crunched the numbers long ago - for a brownfield rejuvenation, you’re looking at $50 million to get a sizeable operation up and running, which is much lower than a greenfield site.
I put this figure to Oliver and the response was not negative.
Generally you have a 30/30/20 split in debt/grant financing, equity and offtake - so maybe $15m in cash up front, which the company now has.
Drill, get the resource, and maybe you could build two mines at once.
Looking ahead, if the global market was worth $5 billion a couple of years ago, and the metal is at a 14-year high and barely warmed up, and the US wants to wrest tungsten control from China, then the story has only just got started.
And a year from now, if a resource is defined for Tempiute and the PFS is strong enough for Pilot, these assets will be sold.
A special dividend will come - and maybe our favourite geologist will come back to explore Golconda’s gold or Garfield’s antimony/copper.
Which are in all likelihood going to be spun out, perhaps for this very purpose.
Good work.