Strategic Resources: More Than Just Traditional Commodity Production
North America recognizes its vital role in supplying critical materials to the West. Within this region, few commodity regions combine political stability, industrial infrastructure, and resource density as efficiently as the Canadian province of Québec. For years, this location has been considered one of the world’s most attractive jurisdictions for mining investments, not least due to clear permitting structures, low energy costs, and a dense network of rail, road, and deep-sea port connections. Over 900 mining and exploration companies are active there, while the industry directly and indirectly supports more than 65,000 jobs. Raw materials and metalworking industries now contribute a significant share to the province’s economic output and form a central pillar of regional value creation, particularly in northern Québec. Added to this is the virtually unrivalled supply of affordable hydropower, which is increasingly making energy-intensive projects a strategic locational advantage, particularly in the context of the decarbonization of industrial processes and the global race for critical metals.
At the heart of a dynamic industrial movement lies global decarbonization, the new boom in electromobility, and, of course, the development of modern defence systems. The demand for metals is enormous! For the explorer and developer Strategic Resources, this is a dream environment for significant forward momentum. At the center is the BlackRock project, which combines vanadium, titanium, and high-purity iron, thereby addressing several critical commodity themes at once. Particularly noteworthy is the combination of mining, processing, and planned further processing, as the company aims to establish an integrated on-site value chain. Plans include a pelletizing plant in the Port of Saguenay with a capacity of 4 million tons of DR-grade pellets per year. These high-quality pellets are required for electric arc furnaces, which are considered a key technology for the production of green steel. The location offers significant advantages: affordable hydropower, access to deep-water ports, and direct connections to North America and Europe. The collaboration with Tyfast Energy remains particularly exciting from a strategic perspective. Together, the two companies are working on a North American supply chain for battery-grade vanadium oxide, which is to be used in lithium-vanadium oxide anodes. These batteries are considered extremely durable, fast-charging, and cold-resistant—properties that are particularly in demand for off-road vehicles, mining equipment, and military systems.
There is also movement within the company on the financing front. At the end of April, Strategic Resources adjusted its ongoing capital raise, which is scheduled to close at the end of May. The plan is to issue up to 40 million units at CAD 0.25 each, including a CAD 0.40 warrant, with the aim of raising a total of up to CAD 10 million. The funds are primarily intended for final planning and construction readiness of the pelletizing plant. For a company with a market capitalization of only about CAD 17 million, this financing seems bold, but it shows that Strategic Resources actively wants to accelerate the transition from explorer to industrial developer. Extremely exciting!
IIF host Lyndsay Malchuk in conversation with CEO Sean Cleary about the upcoming construction of the production facility in Québec.
Rheinmetall: The Crux Lies in Speed
Hardly any other industry is currently under comparable expansion pressure as the European defence sector. This is because a limited number of specialized and security-certified suppliers must now deliver highly complex systems in quantities that were beyond realistic planning just a few years ago. While full order books are causing euphoria in the boardrooms, the challenges of recruiting personnel, expanding production, and securing critical supply chains are growing at the same time.
At Rheinmetall, signs of the scale that could set the pace in the future were already evident last quarter. The Group increased its revenue to just under EUR 1.94 billion, a year-on-year increase of around 8%, driven primarily by its defence-related core business areas. Operating profit grew even more strongly, rising by 17% to EUR 224 million. This resulted in an increased EBIT margin of 11.6%, a first indication of emerging economies of scale. However, the development on the demand side remains astonishing. The so-called nomination value of orders reached EUR 4.9 billion, while the total order backlog expanded to around EUR 73 billion, marking a new record high.
In purely mathematical terms, the current order backlog now corresponds to five times the annual revenue of 2026, signalling capacity utilization for many years to come. Our earlier assessment regarding the anticipation of this positive development at share prices between EUR 1,800 and EUR 2,000 has proven correct. At around EUR 1,200, a significantly more rational valuation is now priced in, as expected. Nevertheless, CEO Papperger knows that with a 4x revenue multiple, he must now deliver surprises quarter after quarter to keep the share price high. After all, a high market valuation is by no means a gift, but rather a temporary dominance of potential buyers! Technically consolidating, the stock should now hover between EUR 950 and 1,350 for the time being. That would be a healthy stabilization and a new starting point for higher targets.
RENK and CSG: Full Order Books but Falling Prices
What is interesting about the entire sector is the discrepancy between industrial reality and market expectations to date. At the beginning of the year, numerous analysts still assumed that prices in the defence sector were protected from the downside and that price targets would have to be raised continuously. At the peak of the euphoria, the Czech CSG Holding went public on Euronext. In the first week, a valuation of EUR 40 billion was called for, based on a 2026 revenue estimate of EUR 7.5 billion (multiplier of 5.5). This matched the peak valuations set months earlier for RENK and Rheinmetall at EUR 2,005 and EUR 90, respectively. Short interest was correspondingly high, sending CSG, with prices around EUR 15, to a point where analytical reality and downward momentum found an equilibrium. In just 7 months, RENK’s stock also halved from EUR 90 to EUR 42. Both companies have full order books and can now work toward a renewed revaluation. This requires operational discipline in order fulfillment and a bit of luck that everything goes according to plan. Consequently, Europe aims to be fully defence-capable by 2029. Time is of the essence, and the stock market is more impatient than ever!
The stock markets have difficult months ahead. On one hand, the Nasdaq’s valuation has been pushed to the very limit in anticipation of SpaceX; on the other hand, the new Fed Chair, Kevin Warsh, will have no choice but to adjust interest rates in line with the economic situation and inflation. For investors, this means in plain terms: avoid overvalued stocks and, if possible, reallocate to opportunity stocks such as Strategic Resources.
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