Why Is Critical Metals Corp's Stock Soaring Premarket?

Critical Metals Corp (CRML) stock jumped 75% in premarket trading on Monday following a report that stated that the U.S. President Donald Trump’s administration is considering acquiring a stake in the company.

According to a Reuters report, the U.S. is seeking to gain access to the Tanbreez project in Greenland, which the company acquired last year for $5 million in cash and $211 million in stock, as the Joe Biden administration lobbied for a U.S. company to purchase the project over Chinese firms. Critical Metals applied for a $50 million grant in June under the Defense Production Act.

The report stated, citing sources, that over the last six weeks, U.S. officials have begun negotiations with the company to convert the grant into equity. If the two sides agree to a deal, a $50 million conversion would result in a roughly 8% stake in the company. However, the sources reportedly warned that negotiations are not yet final and the final size of the stake could be higher or the deal itself could fall through.

The Critical Metals investment discussions were delayed by the administration's recent negotiations for a 5% stake in Lithium Americas, the report also stated. The shutdown of the federal government, which entered its sixth day, is not expected to impact the talks, as the negotiators are considered essential government officials.

The Tanbreez project is likely to hold one of the largest deposits of rare earth elements in North America. The Trump administration is trying to reduce its reliance on China for rare earth minerals, a critical component in everything from missile defense systems to renewable energy equipment. The U.S. has already taken a 15% stake in miner MP Materials.

The report further stated that part of the discussion centers on how warrants would be issued to give Washington a stake. The equity stake would be separate from a $120 million loan the U.S. Export-Import Bank (EXIM) is considering to help the company develop Tanbreez.

Critical Metals stock has risen 17.5% this year.

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