The long term scandium strategy of Sunrise Energy Metals

Sunrise Energy & Scandium

(YouTube Audio)

Sunrise Energy Metals Ltd as of May 5, 2025 at $0.515 is the top performer among the 24 company 2025 Favorites Collection, gaining 119% from $0.235 at the start of the year. A couple weeks ago it touched $0.73 amid speculation that the company was about to announce a scandium offtake deal that would crack the chicken-egg problem that has hindered scandium from becoming an ideal alloy partner with aluminum. The news instead was a $7.5 million financing being done at $0.30 per unit which disappointed the market because the lead investor was the company's chairman, Robert Friedland, already the largest shareholder.

During last week's Kaiser Watch Episode (see KRO Tracker or Substack Post) I discussed the details of the $7.5 million financing Sunrise Energy Metals Ltd is doing at $0.30 per unit which will not close until a special shareholder meeting in early June approves it. For the next 6 weeks the stock will be in a holding pattern because the participating shareholders cannot vote on a transaction that will substantially expand their stake in Sunrise Energy.

One of the mysteries that that has now been solved as of May 6 with the filing of the special meeting circular is the identity of the two cornerstone investors Sunrise said was taking down the $3 million portion not being taken down by Robert Friedland himself. Understandably, Pengxin International, a publicly listed Chinese shareholder that is the second largest after Friedland, is not participating and will end up below 10%. China has imposed export restrictions on scandium which require Chinese exporters to document who exactly is the final recipient which must not be any branch of the US defense department. This obstacle is turning into a major headache because many importers are procurement intermediaries with confidentiality restrictions imposed by the final recipient whether or not the purchased scandium is for a military application. Scandium is an exotic element that is the subject of an unusually large number of scholarly articles and patent applications related to innovation research. Nobody wants to inform the Chinese government who is secretly working on scandium based applications.

Among existing shareholders GMO is not participating, but Sailingstone Capital Partners is boosting its 8,008,124 share position reported in the 2024 annual report. The other cornerstone investor is a new supporter, Kiril Sokoloff of 13D Research & Strategy. Each is taking down 5 million units. While the existing shareholder participants can be viewed as "throwing good money after bad", what might Kiril Sokoloff be seeing as an imminent solution to the scandium chicken-egg problem, which is: what comes first, scalable primary commercial scandium production or a solid offtake agreement that guarantees a buyer if commercial production is successful?