Critical Metals Drops 7% as European Lithium Deal Sets Up New Share Issuance; United States Antimony and USA Rare Earth Decline 3%, MP Materials Eases

With its all-stock acquisition of European Lithium now moving toward the issue of new shares, Critical Metals (NASDAQ:CRML) is sliding as critical minerals peers pull back after the previous session’s rally. Critical Metals stock is at $7.59, down 7% during the morning session.

Meanwhile, USA Rare Earth (NASDAQ:USAR) stock is at $10.07, down 3%. United States Antimony (NYSEAMERICAN:UAMY) stock is at $3.22, down 3%.

How the European Lithium Deal Creates New Critical Metals Shares

Critical Metals disclosed on October 27 that its schemes of arrangement to acquire 100% of European Lithium’s issued share capital and all of its listed options became effective after approval by the Supreme Court of Western Australia. Eligible European Lithium shareholders receive 0.045 new shares per European Lithium share under the share scheme.

On October 28, Critical Metals confirmed the option scheme consideration at 0.0353158621 new Critical Metals shares per European Lithium option, or approximately 35.32 shares for every 1,000 options, subject to rounding. That ratio comes from a cashless exercise formula, which converts options into stock without option owners paying cash to exercise them.

According to Critical Metals, the formula used a scheme volume-weighted average price (VWAP) of $7.25. The record date is October 29, followed by implementation and the issue of new shares on November 5, with trading on Nasdaq expected to begin November 6. Those dates are preliminary and subject to change, the company noted.

Paying for an acquisition with newly issued stock raises the share count at Critical Metals, which spreads ownership of the company across more shares, but no total share count for the issuance appears in the releases, so the size of that dilution isn’t clear yet. For existing shareholders, the coming batch of stock is an burden to consider alongside the sector’s pullback.

What the Deal Adds for Critical Metals as Peers Pull Back

European Lithium’s interests tie into the Tanbreez rare earth project in Southern Greenland, which Critical Metals calls one of the world’s largest rare earth deposits. Critical Metals also holds the Wolfsberg lithium project in Austria, described by the company as the first fully permitted mine in Europe. Each asset remains pre-revenue, and the company’s own reports have raised substantial doubt about its ability to continue as a going concern. That risk profile stands against a strong run for Critical Metals stock, which climbed sharply over the past week and is up 14% year to date (YTD).

Both USA Rare Earth and United States Antimony are down more than Critical Metals. Year to date, USA Rare Earth stock is down 15%, though the company is building a U.S.-based rare earth magnet supply chain. United States Antimony stock is down 36% YTD, even as the company already generates revenue from antimony and zeolite and supplies the U.S. defense supply chain under a sole-source Defense Logistics Agency contract.

MP Materials (NYSE:MP) stock is at $40, down 2%. Shares of MP Materials are down 20% YTD. A pullback after the previous session’s group rally fits the declines across MP Materials, USA Rare Earth and United States Antimony.

New Critical Metals Shares Near Their Nasdaq Debut

A key question for Critical Metals is whether former European Lithium shareholders sell their new stock once it can trade. A smooth debut after the record date and the early-November issue could ease the burden, while heavy selling could add pressure. Progress on Tanbreez development and funding may matter as much, since Critical Metals is still seeking project financing for both projects.

Interest rates are another factor, with the Federal Reserve’s policy decision due October 28 and the upper bound of the federal funds target range at 4% heading in. Speculative pre-revenue small caps like Critical Metals tend to be sensitive to rate expectations, so a dovish tone could lift risk appetite while a hawkish one could weigh on the group. A conservative approach could make sense while the burden from the new Critical Metals shares resolves.

Contact [email protected] for any questions or corrections.