Ares Strategic Mining: The Fluorspar Play Powering U.S. Energy and Tech Independence

The U.S. critical minerals sector is undergoing a renaissance, driven by geopolitical tensions, climate policy, and the need to secure supply chains for emerging technologies. At the center of this transformation is Ares Strategic Mining Inc., the sole U.S. producer of fluorspar—a mineral classified as “critical” by the Department of the Interior since 2018. With $14.4 million in non-dilutive funding secured in 2025 alone and a government-backed mandate to revitalize domestic supply chains, Ares is positioned to capitalize on a market dominated by imports. For investors, its unique capital structure and strategic assets make it a compelling play on energy transition and semiconductor innovation.

The Non-Dilutive Funding Advantage

Ares' recent $11 million loan from Utah's legislature and Community Impact Board (CIB), paired with its role as a subcontractor in the Department of Energy's $3.4 billion Low Enriched Uranium (LEU) production initiative, represents a critical edge over peers. Unlike equity raises, which dilute existing shareholders, non-dilutive financing preserves ownership stakes while accelerating production. The Utah loan, authorized through Senate Bill SB187, is explicitly aimed at jump-starting the Lost Sheep mine—a project that will supply fluorspar for nuclear fuel, hydrofluoric acid, and advanced manufacturing. Meanwhile, the DOE contract guarantees recurring revenue streams through task orders, reducing reliance on volatile commodity markets.

This funding structure is particularly strategic given the risks of early-stage mining. By avoiding equity dilution, Ares retains flexibility to scale operations without pressuring its stock price—a stark contrast to peers in the junior mining sector, which often face valuation drags from frequent capital raises.

Fluorspar: A Mineral with Cross-Sector Strategic Value

Fluorspar's versatility makes it indispensable to multiple industries:
- Nuclear Energy: Used in uranium hexafluoride enrichment, a process critical to both civilian reactors and national security.
- Batteries: Fluorine-based electrolytes enhance lithium-ion battery performance, a key component of electric vehicles and grid storage.
- Semiconductors: The Lost Sheep mine also contains gallium—a metal used in high-speed microchips—filling a U.S. production gap that has persisted since 1987.
- Steel and Aluminum: Fluorspar's role as a flux in metallurgy ensures its demand remains tied to industrial output.

The U.S. imports 100% of its fluorspar needs, predominantly from China and South Africa. Ares' ability to produce high-purity acidspar (97%+ CaF₂) at its Lost Sheep mine—capable of 50,000 tonnes annually by 2025—positions it to capture a significant share of domestic demand. With the DOE's LEU project alone requiring 10 years of supply commitments, Ares is already securing a beachhead in a market valued at $473 per metric ton (as of Q1 2025).

Risks and Market Dynamics

While Ares' permits and funding de-risk its path to production, challenges remain:
1. Operational Execution: The flotation plant's 3,000-tonne/month target depends on timely construction and equipment delivery.
2. Commodity Volatility: Fluorspar prices are tied to industrial cycles; a prolonged downturn could strain margins.
3. Regulatory Overhang: Though the mine has permits, environmental scrutiny could delay expansion.

However, the $3.4 billion DOE contract and fluorspar's “critical mineral” status—enabling fast-tracked permitting—mitigate many risks. Meanwhile, demand tailwinds from EV adoption and U.S. semiconductor policy (e.g., the CHIPS Act) reinforce the case for long-term fluorspar scarcity.

The Investment Thesis

Ares Strategic Mining is a rare hybrid: a mining play with government-backed demand certainty and dual exposure to energy and tech sectors. Its fluorspar production addresses a national security gap, while gallium output taps into the semiconductor boom.

For investors, the key metrics are:
- Production Milestones: Watch for the metallurgical lumps plant's completion and the flotation plant's ramp-up to 50,000 tonnes/year.
- DOE Task Orders: Revenue visibility will grow as the LEU facility begins operations.
- Gallium Commercialization: Progress on extracting gallium could unlock a second revenue stream.

Recommendation: Ares represents a high-risk, high-reward opportunity for investors willing to bet on U.S. critical minerals self-sufficiency. The stock's valuation is currently tied to production execution, but a successful ramp-up could re-rate it as a strategic asset. For portfolios seeking exposure to energy transition and semiconductor supply chains, Ares offers a unique leveraged play—one that avoids dilution while benefiting from geopolitical tailwinds.

In a world where minerals are the new oil, Ares' fluorspar and gallium deposits are more than just rocks—they're the building blocks of American industrial might.