Editor's Note: Below is a look at our long MP Materials (MP) research call from our Industrials analyst Jay Van Sciver and David Talbott along with the full Black Book presentation. They delivered their long thesis on 8/12/20 at $12 a share and moved it to the Long Bench on 12/18/20 at $32.51.
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What Industrials wrote on 8/9/20
With market drowning in SPAC oversupply, it is challenging to separate ones with exceptional assets from those with, well, low quality 'companies'. The Mountain Pass mine has the richest developed rare earth deposit in the U.S. at a time when the geopolitical value of those assets has rarely been greater.
Demand for light rare earth elements is likely to grow significantly in coming years, as the properties of these elements are essential for many promising markets. China, the dominant global supplier of rare earth elements, has already used its market position for geopolitical gain; as tensions have increased, obstacles to success for Mountain Pass are likely to be cleared.
With a more competent management team, backing from some exceptional investors, favorable geology, permits, a net cash balance, and recently installed facilities, we expect Mountain Pass to take a very different path from Molycorp.
We’ll look at what went wrong with Molycorp, the post-pandemic competitive landscape, and the range of financial outcomes for Mountain Pass over the next few years. In a market where many ‘growthy’ names are often untethered from economic reality, FVAC/MP looks to offer the sort of return asymmetry, macro & factor exposures, and investment cycle dynamics that we look for on the long side.
Watch the full Presentation Below
CLICK HERE to access the associated slides
CLICK HERE to listen to the audio-only replay