Company Interview / Aussie small caps to benefit from US DoE grants

Key points:

$25 billion in dividends may shift investor focus to small- and mid-cap resource stocks.Companies like Element 25 benefit from US DOE grants amid talks of critical mineral stockpiles.Macro Metals presents high-risk, high-reward opportunities in the resource sector.

Keith Della-Vedova of CPS Capital notes the rotation from banks to resources as the US dollar depreciates, benefiting the sector. With $25 billion in dividends expected soon, investors may shift focus to small- and mid-cap resource stocks for potential bargains.

Keith highlights companies benefiting from the US Department of Energy grants, like Element 25 (ASX: E25) and South32 (ASX:S32), which have seen significant share price increases. He also mentions Standard Lithium (CVE: SLI) and emphasises the positive impact of Kamala Harris's plans for a national stockpile of critical minerals.

Keith sees potential in severely undervalued lithium stocks like Patriot Battery Metals (ASX: PMT), Delta Lithium (ASX: DLI), and Wildcat (ASX: WC8). He also discusses Macro Metals (ASX: M4M) , a high-risk, high-reward investment, with significant exploration opportunities led by former Mineral Resources (ASX:MIN) executive Simon Rushton.

Full unedited transcript:

0:00

Well. As the U.S. election approaches, Vice President Kamala Harris has promised to create a national stockpile of critical minerals for economic and national security, and the US Department of Energy has selected a couple of Aussie miners for a near $250 million grant. Things looking good for the miners? Let's dig deeper with Keith Dellavedova of CPS capital. Do you like what we did there? Dig deeper. Keith, what are you seeing?

0:23

Yeah, look there's a lot of interesting rotation as you're saying at the moment. Out of the banks they've been heavily sort of hitting um, I think people are probably discounting the, the, the fed sort of cutting rates now and you know, being a positive for the US dollar and Aussie dollar as well. So that's actually people are now starting to fact that the US dollar is going to depreciate. That's good for resources. That cyclical change is is sort of uh going at the moment. And the amount of dividends that are people are getting, you know this week there is something like 11 billion getting paid. And then the following month as well, there's another $14 billion getting paid, which will be, you know, cash in hand for investors to go out and go, well, I'm not going to be going into the banks or growth stocks. I'm going to be looking into the resources sector, um, because because it's cheap. So I think that'll start to flow down naturally into the small cap sector and the mid cap sector as well, which hasn't really taken off. Um, so I think, you know, people are now just starting to get that feel for the smaller Mid-caps again, which is, you know, you can go around and find some bargains at the moment because

1:23

once that, you know, confidence comes back into this in full, you don't want to be chasing, uh, chasing people on the way up either. What are some of the bargains in? I mean, I've talked about some of the big ones, and I've had quite a few analysts say to me when when Fortescue was down 40% from its highs, then why wouldn't you be buying on a down day? But on a smaller scale? What are you seeing, Keith? Well, there's some of these stocks that are actually getting into the, uh, Doe loans as well. So you see an element 25, which is only a 50 mil market cap company, get a Doe loan recently as well. And their share price was up 100%, which has been a big positive, even even south32, you know, a much larger cap getting a doe loan. Um, you know, these are the companies that are kind of doing the groundwork in getting into the US and getting these big grants to develop their projects. So, you know, they're there to to keep an eye on. There's a US one called, uh, Standard Lithium as well, which is heavily sold off. It was worth over 1 billion USD. At one stage it's down to about 300 million US. Uh, that has, uh, shot up about

2:22

50% so far. So there's a lot of these lithium plays which are massively oversold at the moment. And if they start getting the Doe funding and Kamala Harris is now talking about building a critical metals, uh, stockpile and offering more incentives if she wins the election. So typically, like they would do with the the oil reserves, they look to go out and build, you know, 100 days or 200 days worth of critical reserves that'll just sit there. Now, they won't be going to buy these, uh, reserves from Chinese backed companies. So that sort of rules. A few of the Australian ASX listed lithium players in that out. So they may look to go elsewhere to, uh, to Africa or to Canada, um, or within the US itself to, to go out and get these critical metals. So it's quite interesting that the play off, um, with the Doe and the US election coming up so you can go to your Patriot battery metals is still well off its highs. You look at Delta lithium as well, massively off its highs. Um, you know, there's uh Wildcat as well. Again massively off their

3:22

highs. So you know you're not getting it at the top of some of these ones that are, you know, massively beaten down. And if, if these, you know, dividends come back and start to look at, uh, growth in the, in the resources sector, these are the, some of the ones that will sort of start to pick up the 20 to 30% pretty quickly. Keith, you're also looking at macro metals. This is a very small stock. $0.02 I believe. What does it do. What do you like

3:45

the macro I've bought this up previously. Um the guy Simon Rushton who's who's running this was at Mineral Resources. He's, uh, he was the company secretary there for quite a while, and really, uh, you know, got got the, the ball rolling over at Mineral Resources, putting all the contracts in place for the mining services and developing mines. Now he's heading up macro, which is still whilst it's a two cent stock, it's a $75 million company. But they've just recently got permits of work. Uh, they've also got their uh, uh, license granted for exploration. And you can see previously it was mined by BHP, uh, back in the, you know, the 60s to 80s. So what we're thinking here is the scree on top of showing high grade. So, um, hematite. Now the, the mathematics behind this is something between 300 potentially and 400 million tons if they hit with their drilling, which they've just started last week. So, you know, it's a it's a higher risk play. But back in Simon Rushton and the teaming up there they're they're quite confident that there's

4:45

potentially something here. It's along the same track that was mined at Goldsworthy between 63 and 85 by BHP. Now if this is a DSO deposit uh and you know it kind of stacks up. This is potentially over $1 billion company, uh, with the right sort of, uh, metrics coming in. So high risk, high reward. They're drilling now again, backing the team in behind it who have got, I think the management have got about 30 or 40% of the stock themselves. So and they topped up on market all the way from when they put the deal in. So again, happy backing this team. If they if they find something here the the multiples from here for a you know a DSO deposit in WA 100km from port is uh is quite significant. You could see BHP, Fortescue Rio or looking at that if these numbers come in. So yeah it's a it's a small cap. It's high risk and high reward. But the potentials are there for this to to rally hard.