Last week, I wrote about rare earth elements – those obscure but essential minerals that make EV motors, wind turbines, and advanced defense systems possible. Currently, China dominates the supply chain, which is why the West is making it a priority to secure domestic production.
This week’s company sits right in the middle of that story.
Idaho Strategic Resources (NYSE: IDR) isn’t a household name, but it just got a promotion of sorts. The stock has been added to the VanEck Junior Gold Miners ETF (NYSE: GDXJ) after already landing in the Russell 3000.
That means more institutional money will now have exposure to it by default. For a small cap resource play, that’s like moving from the minors to the big leagues.
You might be wondering, “Why is a rare earth company part of a gold mining index?”
Idaho Strategic runs a gold mine in Idaho’s Murray Gold Belt, but it’s also building out rare earth projects in other regions in Idaho, including Mineral Hill and Lemhi Pass. The goal is to generate cash from gold today while pursuing growth and strategic upside in rare earths tomorrow.
Management has been pouring money back into the business – funding drilling campaigns, processing upgrades, and developing a new paste backfill system (basically a way of mixing crushed rock with cement and pumping it back underground into mined-out tunnels).
The second quarter showed what this plan looks like in practice. The company processed more than 10,000 metric tons of gold ore, up about 10.6% from last year, and reported record revenue and cash flow.
However, most of that cash went straight back into the ground.
Cash costs per ounce rose to just over $1,060. When you add in sustaining expenses – which comprise everything from equipment replacement to mine development – you get what the industry calls all-in sustaining costs. That figure jumped more than 40% to $1,980 per ounce. Strip out exploration, though, and the number falls to a much leaner $1,313.
In all, the company drilled nearly 6,000 meters across several gold projects and continued to invest in rare earths, signing an agreement with Clean Core Thorium Energy and securing a fresh lease covering more than 1,500 acres of rare earth ground. It’s clear that management is betting big on expansion.
Now let’s see what The Value Meter says.
Idaho Strategic’s enterprise value-to-net asset value (EV/NAV) ratio sits at 8.73, above the peer universe average of 6.46. On this measure, the company looks slightly more expensive than its peers.
On free cash flow-to-net asset value (FCF/NAV), however, it comes in at 1.29%. That may sound modest, but it’s better than the broad market average of -1.81%. The efficiency is there.
The third metric, consistency, shows free cash flow growth 54.5% of the time over the past 12 quarters, above the peer average of 46.24%. So while the absolute dollars are small, the trend is positive.
The stock has reflected both the promise and the volatility. Shares have climbed meaningfully over the past year thanks to rising gold prices, index inclusions, and excitement around rare earths.
So what does this all mean?
The ride has been anything but smooth, and it’s likely to stay that way.
Idaho Strategic isn’t a safe, steady dividend payer. It’s a speculative play with two clear levers: gold for near-term cash flow and rare earths for long-term growth.
If rare earths really do become the next great resource boom, owning the stock at today’s levels could look very smart down the road. But investors should expect swings along the way.
The Value Meter rates Idaho Strategic Resources as “Appropriately Valued.”
What stock would you like me to run through The Value Meter next? Post the ticker symbol(s) in the comments section below.