Well, that was fast.
Just two weeks after Moon Express -- the tiny would-be Moon-miner that rose to fame as part of the Google Lunar XPRIZE Competition, which concluded in March -- announced it had signed a Memorandum of Understanding with the Canadian Space Agency, it's back announcing the creation of an entire new Canadian subsidiary to capitalize on the relationship. On Oct. 16, Moon Express said it had set up Moon Express Canada "to leverage Canadian space science and technology in the exploration of the Moon and its resources."
It's not wasting any time, either. Already, Moon Express has signed partnership agreements with a half-dozen Canadian companies interested in collaborating on Canada-sponsored projects to mine the Moon. Its new partners include:
- "Micro and nano space technology" company Canadensys Aerospace Corporation
- "Mining technologies and robotics" company Deltion Innovations
- Geological imaging company Gedex
- Space "technology development" company Mission Control Space Services
- Autonomous guidance company NGC Aerospace (no relation to Northrop Grumman Corporation)
- Lidar systems developer Teledyne Optech
How important is this news to investors?
Granted, not many of these companies are household names, exactly. Of Moon Express's six new partners, only one -- Teledyne Optech -- is tied to a publicly traded company. (Its parent, Teledyne Technologies Inc. (TDY -1.41%), is an American mid-cap defense contractor). Of the rest, some of MoonEx's new partners appear to be so new that their names don't even come up in a search of known corporations on S&P Global Market Intelligence.
Still, in an industry as fast-growing as "new space," it's probably to be expected that many companies on the bleeding edge would be brand-new start-ups. And of course, we're talking about Canada -- a land known for penny stock mining start-ups with "lots of business opportunity" (but also serious financial dangers for the unwary investor).
Words for the wise
And that's actually what I want to talk about today.
Canada is a land famously rich in natural resources, and many of the Canadian stocks that get the most attention from investors hail from the mining industry. This makes them natural partners for a company like Moon Express, whose ambition is to facilitate transportation to the Moon for those who might want to exploit lunar resources. However, smaller and often unprofitable Canadian mining penny stocks are also the ones that often give the country's stock market a reputation as a bit "Wild West."
If and when Moon Express goes public, the more such partners the merrier. These are the companies that would provide the revenue streams that could turn into profit for Moon Express. At the same time, however, investors need to be alert: As Moon Express builds up to its first lunar launch attempt, there's a risk that its new partners might overhype the opportunities of investing in Moon mining.
Access to funding could be one obstacle to such opportunities. Earlier this year, space mining pioneer Planetary Resources reportedly ran out of money, forcing it to sell itself to a "blockchain venture production studio" in October.
Another problem is the sheer difficulty of putting on the Moon equipment capable of conducting mining at scale -- and returning extracted resources to Earth. Moon Express predicts that one of its first missions to the Moon will be to collect and return to Earth some samples of lunar soil. However, that first "mining" mission is likely to recover no more than a kilogram of Moon rocks, which will be valuable here on Earth mostly for their novelty. It's also not likely to take place before 2020 at the earliest.
Granted, other efforts in this direction are also underway. Just a couple of weeks ago, in fact, publicly traded Canadian space firm Maxar Technologies Ltd. (MAXR -1.59%) announced that the Canadian Space Agency has hired it to design a prototype "lunar rover for science exploration." Capable of carrying scientific instruments massing 120 kilograms, the rover will be designed for remote operation. One of its primary missions will be to extract lunar soil samples, then place them in a small rocket (such as one Moon Express has designed) to return to Earth for analysis. And CSA is targeting a "mid-2020 timeframe" for putting this rover on the Moon.
Still, here's the upshot of all these developments: While progress is being made, actual large-scale efforts to mine appreciable quantities of precious metals (or, even more valuable in space, water from the Moon) are almost certainly years away, and more likely decades. Keep this in mind when evaluating the investment suitability of any start-ups touting the "prospects" of mining the Moon.