Initiation Report: KoBold Metals A Leading Player at the Intersection of AI and Climate Tech

‍

‍

Summary Core Thesis

‍

Traditional mineral exploration methods have long relied on labor-intensive fieldwork, geophysical surveys, intuition, and geological analysis. That, too, is suitable for only easy-to-find minerals, the majority of which have already been found. Mineral deposits of the future, essential for energy transition, will require a technology-enabled approach to exploration. This paradigm shift presents a great opportunity for KoBold Metals. Backed by a well-defined and diversified revenue strategy, proven success, and significant venture capital support, KoBold is poised to capitalize on the rising demand for critical minerals, positioning itself as a front-runner in the market.

Methodology

Our views on KoBold Metals are derived from our rigorous research process, involving proprietary channel checks with users, competitors, and industry experts, and synthesizing publicly available information from the company and other reliable sources.

Key Points

Bridging the Wide Demand-Supply Gap for Critical EV Battery Minerals: The global demand for critical minerals is surging, exceeding $12 trillion, presenting a pressing need for innovative solutions to efficiently explore and mine these minerals. To meet the 2030 EV demand, lithium production must quadruple from 490,000 tons in 2021 to 2 million tons. Without additional mining development, the lithium market could face a deficit of 700,000 tons by 2030. The copper market is projected to experience a deficit of nearly 4.7 million tons by 2030.

Multi-Pronged Revenue Strategy: KoBold Metals' diversified revenue strategy combines elements of software provision, strategic investment, joint ventures, and independent exploration. Instead of just selling software, it acts more like a junior miner, focusing on finding new mining sites. By spotting promising areas and making investments, it partners with big mining companies to explore these sites together. Additionally, KoBold has its exploration projects across North America, South America, and Australia, further diversifying its revenue streams.

Well-Positioned at the Intersection of Climate Tech and AI: KoBold Metals capitalizes on two key trends: Climate Tech and AI. By leveraging AI and novel hardware, the company optimizes mineral exploration, reducing environmental impact and enhancing operational efficiency. This commitment to sustainability and innovation positions KoBold as a leader in the mining sector, offering investors a compelling opportunity at the nexus of technology and sustainability.

Addressing Mineral Exploration's Two Core Challenges: Inefficiency and High Cost: Conventional mineral exploration has long grappled with the challenge of transition from exploration to operational mines. More than 99% of conventional exploration endeavors fall short in transitioning to operational mines. Over the last three decades, success rates have sharply declined, accompanied by escalating costs. KoBold Metals' AI-driven solutions are strategically positioned to substantially enhance the efficiency of mineral exploration while driving sustainable growth and value creation.

Well-Past the Proof-of-Concept Stage: KoBold Metals has set the benchmark for technology-enabled exploration with a string of notable achievements with lithium discoveries across strategic locations like South Korea, Australia, Namibia, Quebec, and Nevada. Furthermore, KoBold spearheads groundbreaking exploration R&D initiatives, driving AI integration and innovative hardware development. With an annual investment surpassing $60 million spread over 60+ projects worldwide, KoBold reaffirms its dedication to revolutionizing exploration practices and unlocking valuable mineral resources globally.

Substantial Venture Backing to Amplify Exploration Efforts: KoBold Metals has raised over $390 million to date. This war chest empowers KoBold to expand and accelerate its exploration initiatives significantly by strategically targeting and investigating high-potential land sites identified through its advanced AI technology. The possibility of uncovering major battery metal discoveries presents a transformative opportunity for KoBold, with the potential to rapidly raise the company's valuation.

Key Limiting Factors: Low Entry Barrier and Mineral Exploration is Inherently a High-Risk Endeavor: The proprietary features of KoBold Metals might be replicated by emerging competitors or incorporated into the offerings of established players, potentially at lower costs, thereby eroding the competitive edge. Maintaining a technological edge will be critical to KoBold's long-term success and the company will need to invest heavily in continuous improvement of its AI platform. Additionally, mineral exploration, despite advanced technologies like those used by KoBold Metals, inherently carries high risk. Investing significant time and capital into projects that may not yield economic discoveries is a reality and a string of unsuccessful exploration campaigns could shake investor confidence.

‍

Legal Disclaimer: This report is classified I+ in accordance with Manhattan Venture Research’s Information Access LevelClassification System (IALCS). Please see the definition of this classification on the last page of this report.

Executive Summary

In 2022, electric car sales surged by 60%, surpassing 10 million units. From 2017 to 2022, the energy sector drove a tripling in lithium demand, a 70% increase in cobalt demand, and a 40% rise in nickel demand. Clean energy applications accounted for 56% of lithium demand, 40% of cobalt demand, and 16% of nickel demand in 2022, up from 30%, 17%, and 6% respectively, five years ago. Amidst this burgeoning demand landscape, KoBold Metals emerges as a strategic player uniquely poised to capitalize on the evolving market dynamics. Leveraging cutting-edge AI-driven mineral exploration technologies, KoBold is redefining the exploration landscape, significantly enhancing success rates in an industry known for its extremely low success rate in finding new mines. KoBold Metals' multi-faceted revenue strategy, encompassing software provision, strategic investments, joint ventures, and independent exploration, positions it uniquely in the market. A substantial 70% markup in valuation from series B to series C funding rounds serves as a testament to investor confidence in KoBold's disruptive potential. However, KoBold faces challenges such as the risk of technological replication by competitors and the inherent high-risk nature of mineral exploration. Maintaining technological superiority and navigating the unpredictable landscape of exploration outcomes will be critical to KoBold's long-term success and investor confidence.

Company Overview

Established in 2018, KoBold Metals stands as a pioneer, leveraging AI-driven solutions to streamline mineral exploration. Focusing on cobalt, nickel, copper, and lithium, KoBold Metals harnesses a strategic blend of Geo-science, data aggregation, and AI to significantly enhance the efficiency and success rates of mineral exploration endeavors. With a portfolio boasting over 60 global projects, the company has positioned itself as the premier choice for mining enterprises seeking AI-powered exploration solutions. Backed by a formidable team of over 100 scientists and an R&D investment exceeding $100 million in 2023, KoBold Metals demonstrates unparalleled technological prowess. The recent discovery of a substantial copper deposit in Zambia serves as a testament to the company's credibility, representing the largest find in the nation over the past century.

Key Investment Positives

Bridging the Wide Demand-Supply Gap for Critical EV Battery Minerals

The surge in electric vehicle adoption is gaining momentum as they become increasingly affordable for consumers and more lucrative for manufacturers. In 2022, electric car sales soared by 60%, surpassing 10 million units globally, according to the International Energy Agency (IEA). Energy storage systems doubled their capacity additions, while solar PV installations set new records and wind power is poised for growth. This surge led to increased demand for critical minerals. Demand for lithium tripled, cobalt rose by 70%, and nickel increased by 40% from 2017 to 2022. Clean energy applications accounted for 56% of lithium demand, 40% of cobalt demand, and 16% of nickel demand in 2022, up significantly from five years ago. The increasing demand for lithium-ion batteries significantly exceeds current supply levels, despite unprecedented investments in materials extraction and manufacturing.

More than $12 trillion worth of new critical mineral deposits is essential to stop catastrophic climate change, per KoBold Metals. To meet the 2030 EV demand, lithium production must quadruple from 490,000 tons in 2021 to 2 million tons, per EY. Without additional mining development, the lithium market could face a deficit of 700,000 tons by 2030. The copper market is projected to experience a deficit of nearly 4.7 million tons by 2030.

Regulatory Tailwinds – a Key Boost

The International Energy Agency's latest Critical Minerals Policy Tracker, monitoring close to 200 policies and regulations across 25 countries and regions globally, reveals heightened policymaker focus on critical minerals, with over 100 new policies enacted since 2020. Notably, the provisions outlined in the Inflation Reduction Act (IRA) have sparked unprecedented investment across critical minerals mining, EV battery manufacturing, and various segments of its value chain. Since the IRA's enactment in 2022, over $65 billion in investment has been announced, underscoring the industry's trajectory.

A confluence of favorable government initiatives, including the National Electric Vehicle Infrastructure (NEVI) program, Charging and Fueling Infrastructure Discretionary Grant (CFI) program, Golden State Priority Project (GSPP), 2023 Clean Air Grants for Infrastructure program, and the Inland Counties Incentive Project, among others, is actively driving the establishment of a robust EV charging station infrastructure. This concerted effort not only accelerates the adoption of electric vehicles but also stimulates the demand for battery minerals.

Projections from RMI suggest that by 2030, EVs will capture 56% of passenger vehicle sales in the US, potentially surpassing President Biden's Executive Order target for zero-emissions vehicles by 2030. This scale of adoption will necessitate approximately 5 million tons of battery packs, containing around 200,000 tons of lithium and 100,000 tons of cobalt by 2030, along with other materials not historically produced in such quantities. To meet this demand and comply with regulatory mandates, stakeholders across the private and public sectors, including policymakers, research institutes, and EV value chain participants, must leverage robust data to inform their strategic decision-making processes and fortify the battery value chain.

The minerals for batteries have utility in electric vehicles as well as hybrid vehicles. Both high-growth markets will create ample opportunities for KoBold Metals to reap lucrative benefits. The electric vehicle market is projected to grow from $388.1 billion in 2023 to reach $951.9 billion by 2030, at a CAGR of 13.7%, per MarketsandMarkets. The hybrid vehicle market is projected to grow from $156.97 billion in 2023 to $1,301.92 billion in 2032, at a CAGR of 30.27%, per Market Research Future.

Furthermore, seven global automotive industry leaders - BMW Group, General Motors, Honda, Hyundai, Kia, Mercedes-Benz Group, and Stellantis NV - are forging a collaborative joint venture to expedite the transition to electric vehicles in North America. By enhancing the convenience, accessibility, and reliability of EV charging, this joint venture aims to deploy a high-powered charging network comprising a minimum of 30,000 chargers. This strategic move is poised to make zero-emission driving even more compelling for millions of customers.

Additionally, the burgeoning demand for batteries in emerging mobility sectors such as eVTOLs, drones, delivery robots, and others, significantly amplifies the total addressable market for KoBold Metals, widening its revenue stream.

Multi-Pronged Revenue Strategy Adds to Financial Robustness

KoBold Metals' diversified revenue strategy combines elements of software provision, strategic investment, joint ventures, and independent exploration.

The company generates revenue by owning stakes in the mineral resources discovered, in contrast to the conventional approach to selling the software as a service. The startup has forged strategic joint exploration partnerships with prominent mining entities such as Rio Tinto, BHP, and Bluejay Mining.

As exemplified by the Disko-Nuussuaq (Disko) project collaboration with Bluejay Mining in Greenland, KoBold Metals secured a commanding 51% stake in the license agreement, backed by a substantial earn-in commitment totaling $15 million across two phases. This model is replicated in the company's noteworthy $150 million investment in a copper mine in Zambia, showcasing a consistent and robust approach to strategic ventures.

The substantial revenue opportunities, complemented by the enduring longevity of mines, fortify KoBold Metals' sustainable revenue strategy. With its expanding portfolio of mine investments over time, the company is primed for exponential growth in valuation and revenue. For reference, the annual mine revenues span from $50 million to $3 billion, with mine lifespans ranging from 8 to over 100 years, per Earth AI, underscoring the vast potential for growth and profitability. Additionally, KoBold has its exploration projects across North America, South America, and Australia.

Well-Positioned at the Intersection of Climate Tech and AI

KoBold Metals capitalizes on two key trends: Climate Tech and AI. By leveraging AI and novel hardware, the company optimizes mineral exploration, reducing environmental impact and enhancing operational efficiency. Both areas have seen a strong VC interest recently. With US-based AI startup funding soaring from $22.7 billion in 2022 to $36.7 billion in 2023, per Aim Research, and the impact of recently held COP28 summit set to reignite climate tech investments in 2024, the timing couldn't be more opportune. COP28 is anticipated to spur global commitment towards expedited deployment of renewable energies, a mandate underscored by the International Energy Agency, which advocates for tripling the rate of renewable energy deployment by 2030, largely driven by technological innovations. Enter KoBold Metal, a pioneer in AI-driven mineral exploration, revolutionizing mining project success rates to bolster profitability while mitigating the adverse environmental impacts associated with unsuccessful mining endeavors.

Addressing Mineral Exploration's Core Challenges – Inefficiency and High Cost

In mineral exploration, low cost and high efficiency are key to long-term success. However, more than 99% of conventional exploration endeavors fall short in transitioning to operational mines.  Over the past century, success rates have declined while costs have risen. A century ago, during the early 1920s, approximately 13% of identified mines ascended to become Tier-1 mines, as per a five-year rolling average. Today, that figure languishes at a mere 3%, underscoring a challenge in mineral exploration.

Longer lead time from exploration to study, exploration and discovery to actual start-up is another prominent challenge KoBold promises to solve. Currently, Copper mines take 16.2 years on average from exploration to startup with exploration alone taking 12.4 years, and construction decision and construction taking another 1.4 years and 2.4 years respectively.

By utilizing advanced data analytics, machine learning algorithms, and predictive modeling, KoBold streamlines the exploration process, enabling mining companies to identify viable copper deposits more swiftly and accurately. This acceleration in exploration timelines not only reduces the overall lead time but also enhances the likelihood of discovering high-quality reserves, thereby optimizing resource utilization and maximizing returns on investment.

KoBold Metals' AI-driven solutions are strategically positioned to substantially enhance the efficiency of mineral exploration while driving sustainable growth and value creation. KoBold reduces errors by 80% compared to traditional methods. Their technology also delivers nine times more accurate mapping at each exploration stage, with a remarkable 51-fold improvement after four stages.

Furthermore, KoBold is on a mission to revolutionize the economics of mineral exploration. Currently, the industry average hovers around $3 billion per major discovery—a staggering figure that imposes significant financial burdens on mining companies. However, KoBold aims to change this paradigm by driving down exploration costs to less than $75 million per major discovery. This represents an extraordinary 40-fold reduction in exploration expenditure, promising to make mineral exploration more accessible and economically viable for companies of all sizes. By democratizing access to mineral resources through cost-effective exploration, KoBold is poised to unlock immense value and drive unprecedented growth within the mining industry.

Well-Past Proof of Concept Stage

KoBold Metals has set the benchmark for technology-enabled exploration with a string of notable achievements with lithium discoveries across strategic locations like South Korea, Australia, Namibia, Quebec, and Nevada. The company's ambitions extend to further lithium exploration in South Korea, Canada, the US, Australia, and Africa, ensuring substantial revenue growth. Additionally, plans are underway to establish a mining operation in Zambia within the next decade, exemplifying the forward-thinking approach of the leadership team.

With an impressive track record of over 60 AI-powered mineral discovery projects, KoBold Metals has transcended the proof-of-concept stage. Similar to most AI models, the predictive capabilities of Kobold’s AI model also improve with each project, as new data is fed into the system, showcasing the company's technological prowess. KoBold Metal’s innovative AI-powered methodology boasts more than double the drilling speed compared to conventional methods. Through the integration of geoscience, comprehensive data aggregation, and AI, KoBold Metals is on track to deliver a cost-saving advantage of 40 times the industry average.

The Mingomba project, spearheaded by KoBold Metals, is poised to emerge as one of the world's largest high-grade copper mines, presenting a timely and significant discovery amid the global energy transition. With the potential to address the copper demands of over 100 billion electric vehicles, as stated by Kurt House, CEO of KoBold Metals, the project underscores the company's pivotal role in shaping the future of electric vehicles.

KoBold Metals has strategically positioned itself within the mining sector by forging significant alliances, notably exemplified through a technical cooperation agreement with First Quantum Minerals (FQM) concerning the drill ready Mushima North and Mukai projects in Zambia. These initiatives, situated proximately to FQM's Trident Project and the Anglo/Arc Mineral Joint venture ground, underscore KoBold's commitment to capitalizing on existing infrastructure, thereby streamlining, and optimizing the development process.

Expanding its collaborative efforts beyond the FQM partnership, KoBold actively participates in joint ventures with industry titans BHP and Rio Tinto, demonstrating the trust of industry giants. This strategic approach not only solidifies KoBold's global presence but also demonstrates its receptiveness to diverse partnerships. Furthermore, the recent investment of $15 million in exploration expenditures aimed at investigating the Dumbwa Target within Midnight Sun's Solwezi Project in Zambia solidifies the company's stance toward inorganic growth.

Substantial Venture Backing to Amplify Exploration Efforts

KoBold Metals has raised over $390 million to date. This war chest empowers KoBold to expand and accelerate its exploration initiatives significantly by strategically targeting and investigating high-potential land sites identified through its advanced AI technology. The possibility of uncovering major battery metal discoveries presents a transformative opportunity for KoBold, with the potential to rapidly raise the company's valuation.

Looking ahead, KoBold Metals could redefine the landscape of mining operations with its AI solutions. Beyond exploration endeavors, the platform could offer a transformative approach to safety enhancement within mines. Through predictive technologies, KoBold Metals could equip mining teams with real-time insights to avert potential dangers and establish proactive measures for risk mitigation.

Moreover, KoBold Metal holds the potential to revolutionize productivity within the mining industry by addressing a myriad of challenges. By leveraging machine learning algorithms, the platform could enable real-time monitoring of machinery and data analysis, paving the way for predictive maintenance strategies that preempt equipment failures and optimize operational efficiency. By implementing proactive maintenance protocols, mining enterprises can minimize downtime and maximize equipment performance, ensuring operational continuity and cost efficiency in the long run.

Environmental stewardship could also be a revenue generation opportunity for KoBold Metals, with its AI capabilities extending to satellite imagery analysis for comprehensive environmental monitoring. From tracking deforestation to assessing land degradation and vegetation cover changes, the technology could empower mining companies to identify conservation priorities and evaluate the effectiveness of environmental initiatives.

Facilitating Long Awaited Upgrade on Conventional Exploration

More than 99% of conventional exploration endeavors fall short in transitioning to operational mines. Over the last three decades, success rates have sharply declined, accompanied by escalating costs. KoBold Metals' AI-driven solutions are strategically positioned to substantially enhance the efficiency of mineral exploration.

The mining industry's expenditure has tripled while yielding 60% fewer discoveries compared to three decades ago, signaling an impending supply crisis. Presently, mineral exploration relies heavily on manual methods, where geologists employ heuristics to interpret maps and data, resulting in sluggish, inefficient, and unpredictable searches.

In response, KoBold Metals is pioneering a comprehensive digital prospecting solution, integrating computer vision, machine learning, and data analytics to pinpoint materials crucial for electric vehicles and the renewable energy sector. By harnessing the synergy of ore-deposit science and advanced algorithms, the company aims to streamline and cost-effectively expedite the discovery process. Leveraging diverse data sources such as geological reports, soil samples, satellite imagery, and scholarly research, the team employs scientific expertise to identify potential deposits beneath the earth's surface. Drawing from their collective backgrounds in academia, investment, and the sciences, the team is uniquely positioned to address this multifaceted challenge.

Moreover, the US government is taking initiatives to bolster its battery minerals supply chain. KoBold Metals, with its AI-powered solution, holds the potential to significantly improve the efficiency of mining companies. For instance, the Office of the Assistant Secretary for Industrial Base Policy, via its Manufacturing Capability Expansion and Investment Prioritization (MCEIP) office, has partnered with Albemarle Corporation to bolster domestic lithium mining and production. This $90 million agreement, under the Defense Production Act (DPA) Title III authorities, funded by the Inflation Reduction Act, will aid Albemarle's initiative to reopen their Kings Mountain, N.C. lithium mine, enhancing domestic lithium production for the nation's battery supply chain. The agreement aligns with President Biden's April 2022 Presidential Determination for Critical Materials in Large-Capacity Batteries, showcasing the Department of Defense's commitment to meeting current and future warfighter needs. This initiative underscores MCEIP's five-year investment plan to fortify supply chains for vital minerals and materials crucial to both the defense sector and commercial industries, demonstrating ongoing collaboration with industry to ensure the availability of these essential resources.

Key Investment Concerns

High-Risk Nature of Mineral Exploration and Regulatory Challenges in Global Expansion

Mineral exploration, despite advanced technologies like those used by KoBold Metals, inherently carries high risk. Investing significant time and capital into projects that may not yield economic discoveries is a reality and a string of unsuccessful exploration campaigns could shake investor confidence.

Although Kobold Metals enhances the success rate of mineral exploration, a challenging endeavor with conventional methods, the startup's profitability is directly tied to the revenue generated by the discovered mining sites. Despite leveraging AI for mineral exploration, the discovered sites encounter the same challenges encountered by any mining operation, including heightened scrutiny from investors and the community regarding ESG parameters.

The mining sites may also encounter geopolitical hurdles as Kobold Metals expands internationally, owing to varying regulations across different jurisdictions. For instance, in 2013, a provincial government in Pakistan denied Tethyan Copper Co. the mining license for the 'Reko Diq' deposit, resulting in a significant setback of $400 million in investment. This adverse action prompted investors to pursue restitution totaling $11.4 billion.

Moreover, the mining sector's substantial environmental impact has led to heightened pressure on mining sites to mitigate their footprint, encompassing initiatives to decrease greenhouse gas emissions, optimize waste and water management, and safeguard biodiversity.

Furthermore, mines discovered by KoBold Metals will contend with the ramifications of resource nationalism, characterized by governmental policies aimed at maximizing national resource benefits, potentially imposing higher taxes, permitting fees, or export duties on private enterprises. While not a novel challenge, resource nationalism has gained traction amid recent economic slowdowns, exacerbating industry complexities.

Economic downturns and geopolitical shifts introduce additional risks, as fluctuations in global demand and commodity prices can profoundly affect mining operations. Stringent regulatory mandates across operational domains also pose financial burdens, compounded by escalating costs associated with securing social licenses amidst growing environmental concerns raised by communities and advocacy groups. Furthermore, Kobold Metals’ revenue will be impacted by other challenges prevalent in mining operations, such as addressing workforce challenges and managing costs and productivity, among others.

Low Entry Barrier

The distinctive features of KoBold Metals' proprietary technology face the risk of being replicated by emerging competitors or assimilated into the offerings of established players, potentially undercutting its competitive advantage. Many existing AI companies possess the technological prowess to provide AI-powered mining solutions, posing a significant threat. For instance, Snowflake, an IT solutions company, managed to train an enterprise-grade generative AI model within three months, utilizing 1,000 GPUs and $2 million, underscoring the rapid pace at which products and services could be launched in the AI landscape. With the proliferation of high compute power accessibility through GaaS providers and investors' willingness to fund AI-related ventures, the barrier to entry has significantly lowered. From the client's perspective, the switching cost is minimal, as they can easily transition to alternative AI-powered vendors or integrate AI solutions into their exploration processes. While the first-mover advantage does help, sustaining a technological edge will be paramount for KoBold's long-term success, necessitating substantial investment in the continuous enhancement of its AI platform.

Industry Overview

Conventional mineral exploration suffers from manual and inefficient methods. For instance, among 1,070 mineral sites discovered from 2008 to 2018, only 19 proved to be Tier 1, based on MinEx Consulting data. The efficiency of mineral exploration can be improved significantly with the help of AI. KoBold Metals is positioned at the forefront of streamlining mineral exploration through AI.

Record deployment of clean energy technologies such as solar PV and batteries is propelling unprecedented growth in critical minerals markets.

Electric car sales increased by 60% in 2022, exceeding 10 million units. Energy storage systems experienced even more rapid growth, with capacity additions doubling in 2022. Solar PV installations continue to shatter previous records, and wind power is set to resume its upward march after two subdued years. This has led to a significant increase in demand for critical minerals. From 2017 to 2022, demand from the energy sector was the main factor behind a tripling in overall demand for lithium, a 70% jump in demand for cobalt, and a 40% rise in demand for nickel. In 2022, the share of clean energy applications in total demand reached 56% for lithium, 40% for cobalt and 16% for nickel, up from 30%, 17% and 6%, respectively, five years ago.

Financials

KoBold Metals has a diversified revenue model. While the company's exact revenue figures are not publicly disclosed, we estimate the company’s annual revenue at $36 million in 2023 and $49 million in 2024. That said, we believe the true revenue potential lies in the transformative impact of the company’s AI technology for mineral exploration and discovery. By streamlining exploration processes, KoBold aims to slash average exploration project costs by a staggering 40 times, positioning itself for significant revenue expansion.

In 2023, KoBold made strategic investments in exploration and R&D, totaling $100 million, across premier mining districts worldwide, boasting the largest R&D budget dedicated to scarce battery metals. This technological superiority not only enhances its exploration capabilities but also strengthens its bargaining power for future mining endeavors. For instance, KoBold's collaboration with Midnight Sun Mining resulted in an earn-in agreement granting KoBold a commanding 75% interest in the Dumbwa Target, a Tier-One exploration site showcasing a remarkable copper soil anomaly in Zambia.

The intrinsic value of newly discovered mines, averaging $1.5 billion over their lifetime with an average lifespan of 15.7 years from discovery to commercial production (per S&P Global), underscores the immense revenue potential awaiting KoBold's ventures. Bolstered by its proprietary "Machine Prospector" tool fueled by advanced AI and data analytics, KoBold gains a competitive edge in identifying EV battery mineral deposits efficiently.

Analyzing the EV/Revenue multiples of various companies in mineral exploration, mining SaaS, and enterprise AI, the blended median multiple is 3.6x, 4.6x, and 3.4x for 2022, 2023, and 2024 respectively (Figure 20). We believe Kobold Metals commands a premium compared to its public peers, owing to technological differentiation in its product offerings due to AI integration.

The significance of AI integration and company valuation is evident when we observe the median EV/Revenue multiples of AI startups including Hugging Face, Harvey, Perplexity, Open AI, Gong AI, Databricks, Stability AI, and Anthropic. According to one study by Finro Financial Consulting, AI start-ups command a 6x premium over traditional SaaS companies.

Accordingly, we believe Kobold Metals should command a 6x premium for bringing its AI capabilities to mineral exploration. Based on these adjusted public peer multiples and Kobold Metals' recent private valuations, the company’s implied revenue in 2023 and 2024 is $36 million and $49 million, respectively (Figure 20).

Funding Rounds & Private Valuations

KoBold Metals has secured around $393.5 million in funding across four funding rounds. KoBold Metals’s approach of integrating AI in mineral exploration has resonated with both customers and investors, leading to significant investor interest since 2022. Notably, the company raised $1 million in 2021, followed by $192.5 million in 2022. The company's ability to attract investment has continued to grow, with its latest funding round – a $200 million Series C in June 2023 with Bond as the lead investor and participation from Andreessen Horowitz and Breakthrough Energy Ventures. The latest funding round valued the company at $1 billion, a 70% markup from its valuation of $588.49 million post-series B in November 2021.

Comparative Public Multiples

The following table shows the public peer multiples of companies in various sectors including mineral exploration, mining SaaS, and enterprise AI. These multiples provide a useful reference for valuing KoBold Metals. Given the first-mover advantage of KoBold Metals in AI-powered mineral exploration, we believe KoBold Metals’ valuation multiple should command a premium over its public peers.

‍

About the Analyst

Santosh Rao

Santosh Rao has over 25 years of experience in equity research with a primary focus on the technology and telecom sectors. He started his equity research career at Prudential Securities and later moved to Dresdner Kleinwort Wasserstein, Gleacher & Co, and Evercore Partners, where he followed Telecom and Data Services. Prior to joining Manhattan Venture Partners, he was the Managing Director and Head of Research at Greencrest Capital, focusing on private market TMT research. Santosh has an undergraduate degree in Accounting and Economics, and an MBA in Finance from Rutgers Graduate Business School. While at Gleacher & Co he was ranked leading telecom equipment analyst by Starmine/Financial

Times

Disclaimer

I, Santosh Rao, Head of Research, certify that the views expressed in this report accurately reflect my personal views about the subject, securities, instruments, or issuers, and that no part of my compensation was, is, or will be directly or indirectly related to the specific views or recommendations contained herein.

Manhattan Venture Research is a wholly-owned subsidiary of Manhattan Venture Holdings LLC (“MVP”). MVP may currently and/or seek to do business with companies covered in its research report. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. This document does not contain all the information needed to make an investment decision, including but not limited to, the risks and costs.

Additional information is available upon request. Information has been obtained from sources believed to be reliable but Manhattan Venture Research or its affiliates and/or subsidiaries do not warrant its completeness or accuracy. All pricing information for the securities discussed is derived from public information unless otherwise stated. Opinions and estimates constitute our judgment as of the date of this material and are subject to change without notice. Past performance is not indicative of future results. MVP does not engage in any proprietary trading or act as a market maker for securities. The user is responsible for verifying the accuracy of the data received. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The opinions and recommendations herein do not take into account individual client circumstances, objectives, or needs and are not intended as recommendations of particular securities, financial instruments, or strategies to particular clients. The recipient of this report must make its own independent decisions regarding any securities or financial instruments mentioned herein. Periodic updates may be provided on companies/industries based on company-specific developments or announcements, market conditions, or any other publicly available information.

Copyright 2023 Manhattan Venture Research LLC. All rights reserved. This report or any portion hereof may not be reprinted, sold, or redistributed, in whole or in part, without the written consent of Manhattan Venture Research. Research is offered through VNTR

Securities LLC.

‍