Canada Nickel (TSX-V: CNC) – The 11th Largest Nickel Sulphide Resource Globally In Just 6-Months

Canada Nickel
  • TSX-V: CNC
  • Shares Outstanding: 67M
  • Share price C$1.33 (22.05.2020)
  • Market Cap: C$87M

Interview with Mark Selby, CEO of Nickel Exploration company, Canada Nickel (TSX-V: CNC).

Nickel could offer battery metals/EV investors a massive upside. Mark Selby has a history of success in the nickel space that extends back to his time at Inco and RNC.

In just 6 months, for just US$4M, Canada Nickel has uncovered the 11th largest nickel sulphide resource in the world, and it has a PGM upside.

Canada Nickel has its skates on and has some big plans for this year and beyond. Is Crawford an exciting take-out target for nickel majors?

We Discuss:

  1. Company Overview
  2. Putting Together Nickel Projects: Timeline and Strategy
  3. Recent Raise: Shareholder Support and Investor Interest in Nickel
  4. What Makes Canada Nickel Different to Other Nickel Companies?
  5. Drilling for Value: A Run Through the News Release
  6. Impact of COVID-19 on Canada Nickel and The Nickel Market
  7. Timeline for Deliverables

CLICK HERE to watch the full interview.

Company Website: https://canadanickel.com/

If you see something in this article that you agree with, or even disagree with, please let us know in the comments below.

Any advice contained in this website is general advice only and has been prepared without considering your objectives, financial situations or needs. You should not rely on any advice and / or information contained in this website or via any digital Crux Investor communications. Before making any investment decision we recommend that you consider whether it is appropriate for your situation and seek appropriate financial, taxation and legal advice.

Canada Nickel (TSX-V: CNC) – The night is young, And we’re just getting started (Transcript)

Canada Nickel
  • TSX-V: CNC
  • Shares Outstanding: 67M
  • Share price C$1.33 (22.05.2020)
  • Market Cap: C$87M

Interview with Mark Selby, CEO of Nickel Exploration company, Canada Nickel (TSX-V: CNC).

The newest nickel story on the block, with a trebled share price since we last spoke with them around the time of their IPO. Highly impressive. EV/battery metals investors, take note.

Mark Selby is a renowned mind in the nickel space; his experience at Inco and the helm of RNC has given him plenty of experience with large nickel projects: in particular, the Dumont Nickel-Cobalt project. Can he develop the Crawford Nickel-VMS Project in a faster, more capital-efficient fashion? The aim is to complete a PEA/scoping study (C$4M) by the end of 2020, with an FS (C$20-30M) following a year later. This is an accelerated monetisation event for nickel investors.

Canada Nickel just announced some encouraging drill results with an exciting PGM upside: 2.6g/t. Canada Nickel has managed to create the 11th largest nickel sulphide resource globally in just 6-months for just C$4M, and it is little surprise the market has cottoned on to this value proposition. Selby believes we are on the verge of the start of a new nickel supercycle at the start of this new decade, and he believes having one of the world’s few large nickel projects outside of Indonesia will stand Canada Nickel in good stead. The CAPEX is a whopping US$1B+, but he claims the sheer scale of Crawford will be enough to attract a major to take it out, despite it not having the “sexy high grades.”

In order to hit the upcycle, Selby wants to move fast. Canada Nickel has its skates on and it doesn’t appear anything is going to stand in its way. Canada Nickel recently completed a private placement of c. C$4.5M. The original aim was to raise C$2.5M, and now with the share price tripled, Selby feels this has shown the confidence of investors in the EV narrative, even if COVID-19 has distracted. It’s incredibly impressive that Canada Nickel’s share price is up 5X on its February IPO in a COVID-19 market scenario.

What sets Canada Nickel apart from the swathe of other nickel juniors?

A.) This is a new nickel sulfide discovery: something of a rarity right now.

B.) The potential scale of Crawford: big enough to attract a major, and Selby claims Canada Nickel has only just scratched the surface.

C.) The team’s experience demonstrated at Dumont has given investors confidence, taking something from resource to fully-permitted project.

Selby reveals that from the first two step-out holes from its latest drilling operations have more than doubled the strike length already registered. Exciting. Perhaps most importantly, the first assays from the first drill hole were the highest grade nickel intersection in the main nickel dunite area: 55m at 0.42% nickel, with 0.2g/t palladium+platinum. What will capture the excitement of investors is the prospect of filling the mill with as much high-grade ore as possible, and Selby is clear reticent of this.

The third highlight is that Canada Nickel has hit a PGM zone 100m outside of its main nickel resource, and the company has managed to hit it consistently, across several hundred metres down to 500m depth. It has been hit in 2 different spots a whopping 1.2km apart from each other. It is clear that Crawford is shaping up to be a really exciting nickel/PGM project.

What has the impact of COVID-19 been like for Canada Nickel, and what will it continue to be? In Ontario, mining was deemed an essential service, so there has been minimal disruption for the company. The assays have slowed down a little, but other than that, Canada Nickel has mitigated the impacts well and has kept employees safe.

Selby will put out another resource update in July, then another in October, in addition to a whole series of drilling/mineralogy results. these will be the key derisking events. We have no doubt Selby will continue to hit his deliverables. This could be exciting news for nickel investors.

We Discuss:

  1. Company Overview
  2. Putting Together Nickel Projects: Timeline and Strategy
  3. Recent Raise: Shareholder Support and Investor Interest in Nickel
  4. What Makes Canada Nickel Different to Other Nickel Companies?
  5. Drilling for Value: A Run Through the News Release
  6. Impact of COVID-19 on Canada Nickel and The Nickel Market
  7. Timeline for Deliverables

CLICK HERE to watch the full interview.

Hey Mark, how you doing, Sir?

Mark Selby Great. Matthew, how are you?

Matthew Gordon: Not bad. Been a while, been a while, and a few things have happened since we last spoke – good and bad.

Mark Selby: That’s right, we keep moving the ball. And there’s this virus thing that’s appeared.

Matthew Gordon: I heard, I read about that, I read about that. But look, your press release is out. There are a few things on there, which I want to talk to you about. I want to see how things are going because I was intrigued by Nickel generally in this market, and people trying to hit this cycle. There’s a real kind of interest in it. But you guys have done a financing since we last spoke as well, so I want to talk about that. But first, can we just kick off with that one-minute overview for people new to the story and we’ll pick it up from there?

Mark Selby Sure. So, what we have is a very rare thing: it’s a brand-new Nickel sulphide discovery. It’s within 6-months of drilling. We created the 11th largest Nickel sulphide resource globally. We are, because of my experience at RNC Minerals advancing Dumont and I was Head of Strategy at Inco before that, we’re able to move Nickel projects very quickly through so, and there is a scoping study by year end, a Feasibility Study by the end of 2021 because what we fundamentally believe is that Nickel goes through these super cycles which are relatively unique to Nickel, every 15 to 20-years, and we think that with the EV overlay on top of an already strong demand from stainless steel and other traditional Nickel demand sources, that we’re heading for one of these in the middle part of this decade. So, we have got one of the few large-scale Nickel projects outside of Indonesia ready for that market. We think that is going to create a lot of value for shareholders.

Matthew Gordon: It would be great if you can do that. But they are quite expensive to put together, aren’t they? Traditionally?

Mark Selby Oh yes. I mean, Nickel projects at the end are, to build these projects need a billion-dollar capital. And, again, when you look at most people in terms of how much money they need to spend on drilling, the nice thing about these larger-scale, lower-grade operations is, they don’t have the sexy high-grade attached to it. But the reality is, your chances of actually finding a resource of the scale that’s going to attract a major. You can drill these off relatively productively when you know what you’re doing. And so, we raised, we did the first 11th largest from scratch for USD$4M and this PEA is going to cost us about USD$4M to get done. We’ll continue to expand the Resource, the higher-grade part of this resource. That’s really what we’re focused on here – adding value, not necessarily tons. And so, yes, we’ll be able to deliver our Feasibility Study, we hope, for somewhere between USD$20M and USD$30M max.

Matthew Gordon: And what is the timing for all of this? You talked about doing a PEA by, by when? And when’s the Feasibility going to get done? Because if you’re going to hit the cycle, you’re going to need to get your skates on, right?

Mark Selby: Yes, yes. And we have, yes. I appreciate the Canadian analogy there. So yes, no, we’re skating, or skating as hard as we can. So, we’ll have that PEA done by the end of the year, hopefully a little earlier than the end of the year. And then we have got a whole team of people that we have worked with before, we’re getting them into place. And the whole goal with that team is, the scoping study is going to be to pull up before the end of the year. The goal is really having that Feasibility Study done by the end of December 2021. Because the reality is in terms of, you want to be one of the first projects out of the gate to attract the large-scale investors. And then two, in terms of take-outs, valuation wise, if you look at what Nickel sulphide discoveries, large ones, have gone out for it in the past, you get one or two per decade, they tend to get taken out between scoping study and Feasibility Study. So, we want to surface that value as quickly as possible for our shareholders.

Matthew Gordon: Okay. And then you raised this money recently. What type of people came in, because I know everyone’s sniffing around – EV revolution, battery revolution, whatever you want to call it. Nickel is at the forefront of a lot of people’s minds, but there’s a lot of stories out there too. Did you find it easy or difficult to raise capital?

Mark Selby Well, we chose probably one of the sort of second worst months in the history of capital markets to go to raise money, back at the beginning of April. I mean, Gold has been able to raise money, and it has been good to see the money that is being raised in Gold, but outside of Gold there’s been almost nothing raised in the base metal sector. So, I think it is a sign of confidence, A, in the Nickel story generally. And then B, in our project specifically, that we went out for USD$2.5M and we ended up with USD$4.5M, and our share prices has basically tripled since we announced that story.

I mean, we started trading at the end of February, just as COVID was breaking, but our share price is up 5x during that timeframe.

Matthew Gordon: Which is insane. So obviously people are liking what they’re hearing. So, what precisely do you think that’s resonating with them? Because again, we have spoken to companies telling Nickel stories, they’re not getting that kind of reaction.

Mark Selby I think that A, that it’s a new Nickel sulphide discovery; a lot of Nickel projects that are in the market have been around before and then recycled. This is truly a new discovery. B, I think it’s the potential scale of this asset, again, in this market, what has traded well and what gets valued well are those projects that have the scale that can attract a major. And I think our initial resource, which was the 11th largest right out of the gate, and we just scratched the surface of what we have, I think has really got people there. And I think C, I think there’s, we did it with Dumont in terms of getting from resource right through to fully permitted project. I think there’s confidence with the investors behind us that we’ll be able to do the same thing with Crawford, but because we have done it before, we’re going to be able to do it in a much, much quicker, much more capital-efficient fashion.

Matthew Gordon: Okay. Interesting. Let’s get into the news release here, because you have done a bit of drilling. You got some numbers that look good to me, but why don’t you tell us about it?

Mark Selby Yes, I mean there are three key takeaways from those drilling results: first off in terms of the Nickel resource, we drilled off one portion, which was less than 20% of the structure that we have there to deliver that 11th largest resource. These are the first new step out holes. And so, from the first two step out holes we basically confirmed that this is more than double the strike length of what we have got already. So, in terms of resource upsize, that should give you some sense of what the scale of this resource could go. Secondly, and probably the most important point is, the first assays that we did back when the first drill hole was the highest-grade Nickel intersection that we have drilled to date in that main Nickel Sulphide area. So, it was 55m at 0.42% Nickel, and with 0.2g p/t Palladium plus Platinum. And that’s about six times what our average PGM grade is for the resource.

And again, what we’re drilling for is, we’re drilling for value, not for tons. So, what’s going to make the PEA exciting and what’s going to make people get excited about this project is being able to fill that mill with as much higher grade, higher grade ore for the first years of the project. So that is where we’re really zeroing in on.

And then the third, the third takeaway is, we hit this PGM zone setting, about 100m outside our main Nickel resource, and hit it consistently. You could cross several hundred meters down to 500m depth. And we have hit it in two other places. So again, this offset mineralisation that is going to double the strike length, it has been hit in two separate places in the same spot, 1.2km apart from each other. And yes, and then the other place that we targeted to drilling was 1.5km away from our last drill hole on the main intersection. And, we hit 2.7g p/t. So, most of what we hit before was 1.5g/t. This 2.7g/t, and there was actually 3 separate intervals that total nearly 30m of 1.5g/t material. There’s very few PGM hits outside of South Africa. And again, most of what’s in the market today has been around for a while, this is a new PGM discovery on top of what is already a large Nickel discovery. So, I think that’s the thing, people are pretty keen on Palladium and there’s very few new Palladium stories. So, I think, what’s, I know we’re not going to change the name yet, but in Canada, Nickel, the Palladium part is going to be a pretty important part of by-product credit in the economics for the PEA and the Scoping Study.

Matthew Gordon: That’s fascinating. I mean, they are meaningful grades there on the PGM. But can I just come back to, and I’m sure as you drill out more, you’ll tell us more about that, can we talk about what you mean by drilling for value? And people don’t understand this, because I’m not sure I completely understand it either. The old model is drill for resource and you’re building out the size of the ore body and that’s the old way of doing things. You’re trying to do things in an accelerated way. So, you’re trying to bring the good stuff to the fore quicker. Is that, is that what you’re doing? Is that what you mean by that?

Mark Selby  Yes, that’s exactly it. I would say Australian mining companies tend to do it. They tend to build enough resource to get their mine built then they get going. Canadian resource companies have tended to just build up larger and larger resources and that at some point they’ll put some economics around them. But it’s all about making the resource as large as possible. We already, with the first set of drilling, we’re the 11th largest already. The key piece that’s really going to move, and we have enough resource for a 50-year mine life, the key piece is really finding more higher-grade, higher-value material to be able to mine in the first few years of that mine project life. So, the geophysics that we have got sort of points as to where those higher, best areas may be. And so that’s where we have been focusing our drilling, as opposed to just stepping out on a standard basis and trying to add, just maximizing tons for the sake of maximizing tons.

Matthew Gordon: Okay. So, things are going well; share price, I appreciate, it’s great. Well done. The numbers are starting to look good. You are going to try and deliver this PEA by the end of the year. I’m assuming therefore, COVID-19 has not drastically impacted your ability to move things forward. It seems to be what I’m hearing?

Mark Selby: Yes. Northern Ontario, in Ontario, mining was deemed an essential business. So, whereas a number of other businesses and their supporting businesses shut down. In Ontario, we were allowed to continue operating and we were able to, the work that we’re doing, we can still do it in a way that keeps our employees safe, so we have been able to continue drilling. Our assays have slowed down a little bit, that’s where you’ll see there’s nine holes of assays pending. But, by and large, all the suppliers and support industries have been, they’ve been able to keep working safely and we have been able to continue to move things along, which has been great.

Matthew Gordon: Okay. And what’s your view with regards to how all of this, again I’m talking about COVID-19, is going to impact the battery market? Is there going to be a slow down before it gets back up to what it was aiming to be before? Is there going to be an impact? Because we have had a couple of CEOs come on here and go, ‘Oh, it has absolutely devastated the supply chain. It’s going to impact the way people think about these things. What’s your take on it?

Mark Selby: Yes, so I think it’s really more, well, let me talk about the battery market in general and then more metal specific. I think we are going to go through several months of economic slowdown. But I think you’re going to see governments want to stimulate the economy. So, the Chinese have always done it through infrastructure projects. And if you look at the stats that are coming over the last six weeks, they are, you’ve got copper mills running at more than a hundred percent of capacity right now. Iron ore prices; huge amounts of iron are now going into China. And the Nickel market itself, you’ve seen a lot of the physical numbers improve pretty dramatically. So, I think that’s going there.

 I think in the West where consumer spending is the biggest driver, governments are going to have to provide incentives or mail checks to people to help get consumer spending to the point where the economy is going to be growing again. And again, cars are a big ticket item; that is something where you’re going to see government incentives show up. And again, there’s a lot of discussion on non-politicians around sort of using this opportunity to retool or redesign the economy. So, I think a lot of those incentives are going to be geared towards, okay, we’re going to give you money to buy a car, help you buy a car, but it’s going to be only if you buy a clean car. So, for those people who are kind of on the fence about buying one, okay, what if I get a thousand bucks from the government to do it, then I’m going to do it.

So, I’m not as doom and gloom in terms of, I think it is going to be pretty challenging for the next year or two economically. But I think the way out of this is to stimulate the economy. And so, I think those incentives will come. In terms of the individual metals, the metal I feel sorry for the most, I think is Cobalt through this process because  it’s got three whammies: if you look at Cobalt sources of demand, one is alloys for the oil and gas industry, which has just kind of took it in the teeth. The other part is for super alloys in the aerospace sector. And so, again, airplane travel is something that’s going to take a while to fully, fully come back. And then you’ve got the EV market, which has become the third source, which is going to be, again, a few bumps here going forward. So, I think Cobalt has got it the toughest.

Lithium. Again, you’ve just got so much supply sloshing around that as we go through this low point, I don’t think, I might be wrong, but I don’t know how much Lithium production has been impacted by COVID. Where we benefit from Nickel is that one of the major mining sources is mines in the Philippines and those are going to have to ramp up to help make up for the ore that’s not coming from Indonesia anymore. But those mines have been shut for quite a period of time and it’s just been extended again. So, we’re seeing ore stockpiles coming down in China pretty dramatically. I think that’s important for investors, to think about the COVID impact, not just on demand, but on the supply of the metal. And Nickel has come out of this in pretty good shape relative to the other metals.

Matthew Gordon: That’s fascinating. That’s funny. I always love listening to you to see your take and because you understand that, that with the ghost of the micro. So I appreciate that. Well it must be exciting times for you guys. I guess you’ve just got a whole bunch of deliverables to be able to get that PA done. You feeling confident about the end of the year? That’s, that’s definitely going to happen.

Mark Selby: Yeah, I mean, between now and then we’ll have, we’ll have

Another resource update on ode in July, right. Have another resource update in October. So, before we finalize the, the scoping study we’ll have a whole series of drilling and mineralogy results again for these deposits. The key issue is, okay, how much of the Nickel can you actually recover? And again, what we’re seeing so far is very encouraging. But, we’ll have those numbers come out. And again, those are going to be the key risking events in terms of, how do we have done well getting from $0.25 to $1.25 and how do we take this, to USD$5 a share or higher from here. It’s going to be some of that news that comes out, over the summer. And then, the other big thrust of this too is, it’s easy carrying around high-grade core that looks very sexy.

You know, I did that in a prior life with target, rocks with chunks of gold in it. And, that definitely gets investor attention. But I think, in terms of delivering, building a project that the majors are going to be interested in, know large lower grade projects. I, part of the reason I’m so keen to get the economics done is to really demonstrate to people, it’s like, yes, it’s low grade, but you’re going to build an operation that’s even,, equally low cost and you can deliver very good margins., I’ll point people to believe in ATEC mine in Finland, it’s started in Scandinavia, it’s a 0.22% copper where the tiny bit of Silver and Gold is a by-product credit and it is in the first core tile cash costs for copper,, so it has a fraction of the grade, but because it’s in the right location, lots of infrastructure, it has a productive workforce and it’s built to the scale to the,, it’s the right scale for that kind of grade., they can make money all day long. And so, that’s what we want to demonstrate with, with Crawford, know that we’re going to be able to build that kind of scale operation and generate those kinds of cash flows for many, many, many decades to come.

Matthew Gordon: Okay. Well, I appreciate your time today. I’m just, delighted for you, got the ball rolling and got the money in as well. But, you clearly know what you want to do and how you want to do it, which is fantastic. Now you’ve got to go and do it. So, yeah. Over to you. Stay in touch.

Company Website: https://canadanickel.com/

If you see something in this article that you agree with, or even disagree with, please let us know in the comments below.

Any advice contained in this website is general advice only and has been prepared without considering your objectives, financial situations or needs. You should not rely on any advice and / or information contained in this website or via any digital Crux Investor communications. Before making any investment decision we recommend that you consider whether it is appropriate for your situation and seek appropriate financial, taxation and legal advice.

Neometals (ASX: NMT) – I do believe I’m feelin’ stronger every day (Transcript)

The Neometals company logo
Neometals Ltd
  • ASX: NMT
  • Shares Outstanding: 545M
  • Share price A$0.17 (18.03.2020)
  • Market Cap: A$90M

Interview with Chris Reed, CEO of Neometals (ASX: NMT), and Accompanied by Darren Townsend, Chief Development Officer, and David Robinson, General Manager.

Neometals’ management team’s track record of success extends from the Mt. Marion Lithium Project, where they timed their exit to a tee, selling their 13.8% stake for AU$103.8M. We’ve interviewed them several times. Each time, they’ve described a new project that fits neatly into a green narrative. It’s a cookie-cutter approach of finding value that’s gone under the radar, acquiring it cheaply, and developing it efficiently. The retail market hasn’t clocked the potential of Neometals yet, with their market cap valued at less than the cash they currently hold, and without taking in to account their project portfolio. We wonder why.

We’ve previously questioned Neometals’ marketing strategy; however, today we’re questioning its latest in a long line of green projects. As of last week, Neometals has entered an agreement with unlisted (but public) Scandinavian mineral development company, Critical Metals, to consider developing a recycling facility to recover and process high- grade vanadium products from vanadium-bearing steel by-product in Scandinavia from SSAB. The green qualification has already been ticked off! The steel by-product is slag, not tailings, though we’ll get into that in a moment.

So, what exactly does the agreement entail? Reed states that what Neometals believes it has acquired is a “call option to acquire what is the world’s largest stockpile of high-grade vanadium slags.” The 27-month consideration period will allow Neometals to conduct its extensive dude diligence on the potential vanadium plant, which will result in a Feasibility Study to be completed by 31st December 2022. At this point, a final investment decision will be made. If Neometals agrees to go ahead, the company will enter into a 50/50 arrangement, with the certainty of a supply agreement from SSAP, the largest fuel maker in Scandinavia. Total CAPEX prior to FID will be A$5ML: a figure Neometals can easily afford, and one that fits into the project generator narrative the company has been pushing.

Slag vs tailings? Tailings is the waste rock at a mine after the raw ore has been processed to remove the metal, whereas slag is a glass-like by-product left over after a desired metal has been smelted from its raw ore. The process of dealing with the slag is not only immensely economic but is also a remediation process, as the glass itself will change colour and no longer be a sea-adjacent eyesore.

What is the upside in terms of revenue? The steel slag with vanadium content has a standard benchmark vanadium grade of 3.9% V2O5, 2-3X higher than any producer can make in a concentrate before a similar level of processing. There is no mining cost, no crushing plant, no grinding plant, no magnetic gravity separation plant, and no kilns for the traditional salt-roast-leach process. 50% of the CAPEX had been wiped out straight away. Moreover, while vanadium is a volatile commodity that hasn’t had its best few years, the macro story, including fundamental demand for stainless steel, and the potential growth of VRFBs, still places vanadium as a promising commodity.

Once the process is completed, what happens to the inner pile of largely calcium/iron-bearing residues? Reed states Neometals will take ownership and either safely dispose of it, or reinsert it back into the front end of the steelmaking process. The green thematic is consistent throughout Neometals’ operations.

Reed actually sees COVID-19 as the element that forced Neometals and Critical Metals to get the deal over the line when it did but also says it will have little impact on operations, especially considering mining is considered an essential service, and the population density of Australia is low.

We Discussed:

  1. Company Overview
  2. Innovative Business Model: Diving into the Details
  3. Agreement with Critical Metals: Who are They and What are the Terms, Commitments and Upside Potential?
  4. Tailings vs Slag: What’s the Difference?
  5. V for Volatile Vanadium: Concerns for the Commodity & Opportunities Ahead
  6. A Different Approach to Vanadium Mining: A Detailed Look at the Processing, Efficiencies and Bi-Products
  7. Green Mining Approaches: Recycling is Key
  8. Impact of Covid-19 on the Business
  9. The Future: Finding the Right Markets

CLICK HERE to watch the full interview.

Matthew Gordon: Good afternoon guys. How are you?

Chris Reed: Very well, thanks Matt. Greetings from down under. I’m joined today by our Chief Development Officer, Darren Townsend, and our Chief Metallurgist, David Robinson.

Matthew Gordon: Hi guys. Pleasure to meet you. It’s the first time I’ve spoken to you chaps. Well, I think you’re all holed up like we are at home doing your social distance thing; being responsible citizens there, right?

Chris Reed: That’s correct. I’m the only one in our head office today. So the CFO and I alternate days in head office, work from home or remotely. The rest: Darren and our chief operating officer and the financial controller sort of run a shadow management team in case we get Covid-19.

Matthew Gordon: Well, I was speaking to Darren just before you joined, he said that productivity is higher now he’s at home. That can’t be bad, right?

Chris Reed: Well, I must admit, you know, you do have less background noise and less interruptions and look, he’d be coming off a low-base [laughter].

Matthew Gordon: Okay, well, look Chris, we wanted to talk to you about the announcement that you guys have put out with regards to the high-grade Vanadium recycling deal because I think you are very much moving into this battery recycling space, this battery minerals space now, having been a miner previously. But why don’t we kick off and remind people where you’ve come from, what the background is and why you find yourself in this position today, by giving them a one minute overview please?

Chris Reed: Yes, Neometals is a project developer; we use innovation, essentially, to develop industrial minerals and advanced material projects for sustainable future. And so we targeted the EV and energy storage, you know, almost 10-years ago. And we went out and procured a Lithium project and we developed that into what is now currently the world’s second largest hard rock source of Lithium. We exited that project, we retained off-take from the Lithium mine. And so we’ve got a number of projects that, you know, are not really upstream; there’s a slight pivot away from the upstream, traditional hard-rock mining into further downstream processing. So we’re looking at a Lithium hydroxide refinery. Obviously, the Lithium battery recycling project is our main project: that’s taking the Lithium batteries at the end of their life. We’ve got the brand new Titanium, Vanadium project, which is an upstream asset, they’ve been working on a downstream processing technology. And this lightest agreement with Critical Metals to look at recovering Vanadium, essentially recycling a slag product from steelmaking, is consistent with that pivot away from upstream, and also in terms of recycling and you know, I guess becoming more sustainable.

Matthew Gordon: Okay. Now again, I just want to, before we kind of get into the detail of it, I want to again, if I can get your help to remind people, because we look at your business model and we think it’s really attractive. It’s kind of unusual. There’s very few people approaching this the way that you do. Because we get a lot of people coming on the show, telling us about what they’re going to put into a battery, and you guys are saying, well actually there’s, you still got to deal with stuff after batteries are made, you know, you’ve got your battery recycling project as well, which we’ve talked about on previous occasions. But can you give us an insight into your business model? Because you’ve got a lot of cash from the Mount Marion deal, but you’re spending it frugally by doing this project generator model. So give us an idea of what that looks like.

Chris Reed: Yes, certainly. So first of all, we identify a thematic that we want to exposure to, you know, which is the energy storage thematic and electric vehicles, that then drops down the commodities within that thematic that will be most impacted in a positive way. And so what then we do, we either acquire an opportunity in M&A, or we develop one internally. So the Lithium battery recycling technology was to develop the process to take those batteries at the end of life. We realised that we could see the Lithium battery plants being built. We could see the volumes of Lithium batteries that would ultimately hit the market. We knew statistically about 10% production, or a scrap in the production process, and that they have an effective life of 7,8, 10-years. So there was going to be the opportunity for these significant volumes of essentially, which is a, you know; an amalgam of lots of battery minerals or battery commodities all together. And currently, they are either being melted at pour recoveries or put into landfill, and that’s not sustainable so we developed that internally.

So what we tried to do is identify the opportunity, secure it, build the value in terms of, you know, the metallurgical test work to prove our advantages: our low cost nature, our high recoveries, and we take the risks there. Then we do the engineering studies, and then what we like to do is to bring in big partners to commercialise these at the optimum scale, which is quite often beyond companies of our size.

Now, we have a fantastic balance sheet, but we’re not going to roll the dice and put all of it into one project. And so what we did with the Lithium project; we acquired the Lithium project, we took the risk with the drill bit and made it bigger. Then we did the test work. We were able to capture a multibillion dollar company to build the world’s largest hard-rock Lithium concentrator with no up-front capital. We then took that as a package to the world’s fastest growing Lithium convertor Gan Feng, offered them to be a partner. We were able to ultimately build a plant four times bigger than we’d evaluated ourselves. We sold out on the way and we made USD$200M out of a USD$3M investment. And last Friday, we returned another USD$11M, taking our total returns to shareholders to over USD$55M over the last 5-years. So identify it, build it, monetise it, and return the value back to shareholders.

Matthew Gordon: Yes, thanks for that. Again, it’s something that we, when we first came across you guys, we weren’t quite sure of what you were, but you know, after investigation you look at dividend paying, that’s a lot of dividends.

Chris Reed: I can synthesize it for you: it is the highest return on invested capital in the shortest period of time.

Matthew Gordon: Quite nice. I’ve got nowhere to go with that.

Chris Reed: That’s right. It’s just arithmetic.

Matthew Gordon: Just arithmetic. But the other bit of the other component of that is that you spent USD$3M to be able to generate that kind of return. And that seems to be, and I don’t mean to sort of, oversimplify this, but that kind of cookie cutter approach to what you’re doing, I mean, this is what we’ve heard with the recycling story, and I think it’s what we’re about to hear now with the agreement with Critical Metals. So why don’t we get stuck into the Critical Metals agreement? So the announcement came out last week. In your words, tell us what it is that you’ve put together.

Chris Reed: So essentially what we’ve procured with our partner, Critical Metals is a call option to acquire what is the world’s largest stockpile of high-grade Vanadium slags. In that 27-month period we are able to conduct an extensive due diligence, and that will be in the form of a Class V, a Class IV, a Class III engineering study, which will result in a Feasibility Study to be completed by 31 December, 2022, at which point we’ll consider a final investment decision. If we decide to go ahead, Neometals and Critical Metals will own 50/50 equally in an incorporated joint venture vehicle, which will have the certainty of a supply agreement from SSAB, which is the largest steel maker in Scandinavia.

Matthew Gordon: And how much will you have spent at that point to get to that point?

Chris Reed: So we envisage that the total investment prior to FID will be around AUD$5M.

Matthew Gordon: Okay. So it kind of maintains that project generator feel. It is the same level of spend. What are you, actually, let me start with, who is Critical Metals? SSAB, obviously, I think people will know; they are obviously huge – a billion dollar industry, but who is Critical Metals in all of this?

Chris Reed: So, Critical Metals is an unlisted Australian public company. Neometals is the largest shareholder owning approximately 15.4% of its issued capital. Critical Metals also holds a license for the Neometals Lithium battery recycling technology, geographically limited to Scandinavia, so Sweden, Norway, Finland and Denmark.

Matthew Gordon: Right. And is this the first time, I mean, it’s isolated to those countries. Is there scope to go beyond that at some point? I want to talk about scale in a second, but while we’re talking –

Chris Reed: At this stage for the Lithium battery recycling, we’re entertaining going exclusively for the non-licensed jurisdictions with German engineered SMS Crew.

Matthew Gordon: Okay. Okay. We’ll come back to that another time. So you’re talking about recycling high-grade Vanadium bearings steel from slag. Can you, again, just in terms of terminology, help people understand what the difference is between tailings and slag?

Chris Reed: Sure. So, in the steel-making process up at SSAB, they use iron ore and limestone in their smelting method. And so what is left is an iron bearing, a calcium product after they’ve tapped off the steel and that goes in for further processing. The slag, so to speak, gets cooled in pits, and then when it’s cooled enough they break it, put it in trucks, take it to another site on their plant, crush it, screen it, scalp some of the iron, the discreet iron, and stick that back into the furnace. The rest gets stockpiled as what they call LD slag. LD slag is the steel-making process that they use.

Matthew Gordon: And what typically happens with this? I mean, I’m guessing there’s going to be other people with other technologies which will process slag, right?

Chris Reed: Well, look, occasionally these guys sell the little bits here and there for road base. But essentially there’s nothing you can do with it. You know, what we’ll be doing is taking a material that has been stockpiled on these sites, recovering the Vanadium and actually changing its colour from black to white, and actually making it safe to store.

Matthew Gordon: So what’s the problem you’re solving for them? Obviously there’s a financial opportunity for you, you know, but you must be also in terms of remediation, et cetera –

Chris Reed: I think it does a number of things: certainly it removes visually a stockpiled black material from sites, and these steel mills are all adjacent to the sea. And you know, rendering them in an inert form that is safe for storage, either backfilling old pits or, you know other applications. You know, you are providing a remediation service of sorts. It’s obviously highly economic to do that in the process that we have developed.

Matthew Gordon: Okay. Let’s get into the terms then. So in terms of what it is that you’ve got today and what you think when the 50/50 joint venture is in place, what are your commitments to that financially? What do you think the upside is in terms of revenue and where do you think that can go?

Chris Reed: Yes, certainly, I think if you have a look at the purchase agreement that we will have after FID, which is a conditional agreement now, just to be satisfied, essentially, by our final investment decision. You know, we would purchase the steel slag with the Vanadium content, the benchmark grade that we pay is 3.9% V205, which is two to three times higher than any primary producer can make in a concentrate before a similar level of processing in a hydrolat circuit. So it has exceptional grade. One, you don’t have to build a mine and you don’t have to build a crushing plant, or a grinding plant, or a magnetic gravity separation plant, or indeed, you don’t have to build kilns for the traditional salt roast leach process. So in essence, you strip more than 50% of the capex straight away. You don’t take the mining risk. It’s already stockpiled. It’s been accumulated over 30 years and sampled almost daily. So, your confidence in the grade is almost without precedent. So you’ve got a very, very long life supply of a very, very high-grade material, and you know, ceteris paribus that should lead you to be at the bottom end, and certainly our project strategy is to drive this project to be the lowest cost Vanadium production facility in the world.

Matthew Gordon: So that, I mean, that gives you, I guess comfort; whether your lowest or lowest quartile, or even lowest decile, it gives you comfort that you’re going to be able to make margin where others can’t. Because, I mean, Vanadium is well known for being highly volatile. It’s been on a dip, I think it’s recovering at the moment. But it’s essential in the rebar, so you know, there’s a market for it. So are you at all concerned about the commodity itself or maybe getting into a project with that commodity?

Chris Reed: No, certainly not, if you are at that point in the cost curve. If you are anywhere north of the 50th percentile, it is a volatile commodity. I think the only more volatile commodity are fertilizers. But you know, having the high grade, the long life and like I said, all things being equal, the lowest, certainly the lowest quartile, if not the lowest. You know, being a low cost producer and innovating and always driving yourself down in that direction is the only sustainable long-run strategy that a miner or developer can have.

Matthew Gordon: Okay. And so talk to me about scale then, because if I look at people like Bushveld or Lago, you know, one of the two of the larger Vanadium producers in the world, their market cap is phenomenal. But you know, and we’ve also spoken to a lot of Vanadium, or wannabe Vanadium producers, who’ve got kind of lower-grade projects but who just can’t get into the market. I mean, what do you think the scale of the opportunity is for you here? You have obviously got 2.7Mt of existing stores. What’s the incremental production from these 3 sites? Or these 3 operating steel mills?

Chris Reed: So look, currently the contract with SSAB covers 2Mt of slag at which we would prepay to start off at the start of that contract 700,000t of slag from Lulea. The net additions per annum across the three sites are forecast to be 180,000t per annum. Initially, we will have a look at a processing facility that is capable of producing 200,000t per annum, sorry, of processing 200,000t per annum of slag. You know, if it’s got a head grade of just below 4%, and some of the recoveries, not that this is a production target, but you know, it will generate less; perhaps somewhere around 5% of the global Vanadium supply. You know, currently the Vanadium market would be growing by those sorts of percentages, and certainly at the lower end of the cost curve, you know, we do not expect anyone to negatively respond to our presence.

Matthew Gordon: Okay. And how did this deal come about? I mean, how did you find this?

Chris Reed: Critical Metals have been operating in Sweden for 10-years. They have a portfolio of iron ore and base metal assets there. They have some fantastic local talent on the board and in its management team. And it was through those relationships that we were presented the opportunity to evaluate the stockpiles. You know, we started off with a sledgehammer to crack a nut, and then we have optimised that into our current patent-pending flow sheet that generates the low-cost, the potential to achieve the lowest costs.

Matthew Gordon: Well, let’s talk about that because you’ve got these two clever guys on the screen here, Darren and David. So you talk about a sledgehammer to crack a nut, you’ve simplified and simplification means cheaper. So what is it that you’ve got that other people don’t? Why aren’t there lots of people doing this?

Chris Reed: I might throw over to Doctor Dave Robinson, we procured his services from the CSIRO, which is the Australian government-owned industrial research organisation. He has a fantastic background in Titanium-Vanadium and those sorts of metals. I might let him comment about, you know, what are the flow sheets that are generally used and why they won’t work here.

Dr. David Robinson: Thanks Chris. Yes, so the traditional routes of treating a slag would be most likely, most people would look at a pyro-metallurgical option. So putting that material, that slag, back into a furnace and reheating it. And trying to be more selective about pulling that Vanadium out, using a lot of energy.

My background is, as Chris said, much more hydrometallurgical, and so first my first thought was to hit this material, which is very alkaline in nature with an  acidic reagent, that is the sledgehammer that Chris referred to, and we can get a very good recovery of Vanadium that way. There’s some other downstream issues that make it less attractive and so we started thinking of a more sophisticated way of approaching it, and actually using an alkaline system that’s very selective for Vanadium leaching. We can get a very nice clean leach solution from that, and as Chris mentioned earlier, making the slag inherently more stable as well. So you’re converting a material that contains quite a lot of reactive lines to a material that’s much more stable, much more environmentally responsible for dumping or for putting it up in a hold. And at the same time, getting a very clean leach solution. And we are at the tail-end of developing and finalising that flow sheet, but we’ve got very good recoveries of Vanadium from the minor impurities that are there, and we’ve got a couple of options that we’re finalising right now in terms of the actual form of the Vanadium recovery, in terms of the most valuable for it and the lowest cost flow sheet that Chris has already mentioned.

Matthew Gordon: How long has that process taken? I mean, how much time, money and effort, and is it indeed now therefore proprietary to you?

Dr. David Robinson: The sledgehammer was a quick development so it was within a month we were ready to put a patent application in place. And the most sophisticated and collaborative flow sheets have probably been three or four months of board developments. And we have got that second patent application in place at the moment. So all up, probably six months for the test work.

Matthew Gordon:  And how much more efficient is it?

Dr. David Robinson: In terms of the Vanadium recovery, we’re getting good recoveries: we’re getting up in the 80% in terms of overall recovery for the flow sheet. It’s, if you use the sledgehammer, the acid approach, you can get a higher recovery, but you’ve got an awful lot more cost involved later on in terms of the recovery. So by far the most economic approach is the selective leach, and without disclosing any details, it’s a much more environmentally friendly process. It’s highly recyclable. So you’re getting a single passive reagent and then a waste, we are actually recycling that reagent. So the reagent sits and stays in the system many times and cycles. So we’ve got a whole lot of benefits in terms of the nature of the flow sheets that could improve the economics as well as the metallurgy.

Matthew Gordon: Okay. And if I may, just one last question. So at the end of this process, what is left? I mean, you’re recovering from it, from the slag, so what, we know what you recover, but what’s left and what happens to that?

Dr. David Robinson: Essentially it’s a much more rich material that contains all of the elements except for the Vanadium. We do leach a small amount of the iron and a little bit of the silica goes into the solution, but very little else. So pretty much all of the calcium containing minerals that were there, most of the silicates, the aluminium minerals and many of the impurities that remained completely untouched and would probably not get on the central iron-ore which remains untouched as well.

Matthew Gordon: Okay.

Darren Townsend: It is worth mentioning too that it’s conventional equipment as well so even though we’ve got a patented process, it’s using just standard technology and standard equipment.

Matthew Gordon: Okay, fair point.

Chris Reed: For those that don’t know, Darren’s the engineer.

Matthew Gordon: Darren is straight in there.

Chris Reed: He has got to make what Dave says actually happen.

Matthew Gordon: Yes. Good luck. No, I mean it’s a fair point actually, because that was going to be my next question, which is, you know, it always comes back to IP and proprietary and et cetera, which is that new things frighten bankers because they’ve maybe not been done before, but you’re saying it’s kind of conventional technology, but your flow sheet works differently so there’s nothing onerous or to be concerned about with regards to how you go about and deliver this. Is that right Darren?

Darren Robinson: Yes, that’s right. I mean we’ve come up with, obviously, a novel process in terms of how it fits together, but it is using pieces of conventional technology. So there’s nothing there that’s concerning to me in terms of how we may move forward with the buildability of the flow sheet.

Matthew Gordon: And are you able to reduce costs as a result of the new flow sheet, or has that not really been a factor?

Darren Robinson: Yes, it was still working on our studies at the moment. I have cost studies, so they are work in progress, but early indications are that the flow sheet will give us some definite operating and capital costs advantages.

Matthew Gordon: Okay. And Chris, a question for you – so then you are left with this inner park, and you own it now, don’t you?

Chris Reed: Correct.

Matthew Gordon: So what happens to it?

Chris Reed: We will take ownership of those residuals. They are largely calcium and iron bearing residuals that are able to be either safely disposed of or reinserted back into the front end of the steel-making process from whence it came.

Matthew Gordon: Okay. I mean you mentioned that there a second ago, I’m trying to understand the green credentials here, because again, coming back to my point earlier, people tell us –

Chris Reed: I think, you know, you’re operating up in Scandinavia so the environmental considerations, so we had the sledgehammer approach and then we thought, well, you know, that works, it is attractive, we’ll deliver what we want. But you know, we are in a very pretty part of the world. We are adjacent to the ports and towns, you know, these towns have grown up around the steel mills and they’ve got ports there. And so we took care really to have a look at having the lowest environmental footprint. So whether that’s from a CO2 point of view you know, using a hydropower, the change in the medium that we dissolve the residue, the slag into, was really driven by the end-products that come out the back end, to make them – so you don’t want to put in a process so that the sledgehammer actually created a high volume of waste than we process to start off with because you try changing it from a metallic form into an oxide form, or indeed a sulphate form.

So we’ve tried to make sure, we were conscious that we wanted to have a product that was inert, that we are recycling as much as we can. The least amount of materials that we bring into the site and take out of the site the better. Green power. You know, in time we will make known a few more of the subtle other benefits that this process has. But, you know, we’re not looking at discharging it, we have a negative water balance, i.e. we are not discharging any liquid tailings into the environment that needs storage or subsequent treatment. And likewise with noxious gas or airborne emissions, that sort of stuff. So, you know, we’ve truly put our minds around this system; the sustainable future bit.

Matthew Gordon: Yes. Okay, thanks for that. And it’s kind of worth bearing in mind that that’s got to be a big part of your message here because you’re talking about with other, you know, you talk about the battery recycling project that you’ve got going on here and you know, this project ESG,  you’ve really truly got to deliver that. So I’d be interested in learning more about how you’re going about that as and when you’re able to release that.

Chris Reed: Yes, sure. I mean, rather than just saying we’re embracing the ESG reporting or whatever, I mean, we’re actually walking the talk. We are changing our business, changing the you know, we have pivoted away from the more carbon intensive upstream element of the supply chain to recycling before, and to get the recycling right before we ultimately develop any more upstream or downstream resources. It’s a model that we actually took off of Johnson Matthew; they don’t enter into a new commodity unless they can actually recycle that product. If you can do that, then you can work as far upstream as you like.

Matthew Gordon: That’s interesting. We’ve had a lot of requests to talk to a bit more corporate, socially responsible companies. So we’ve talked a lot to tailings companies. We were fascinated by your segue from mining into their space and seeing that this can be delivered. You know, we’ve spoken with the World Gold Council about what their expectations for companies are in terms of automated  battery vehicles within mining, etc, so this is fascinating. And do you think it makes economic sense to do this or is this just about being socially responsible?

Chris Reed: Obviously we are a listed company. We are here for our shareholders benefit. I don’t think they’re mutually exclusive. Certainly that we are targeting, like I say, the thematics, the commodities and then we are picking our position in those supply chains a little smarter than once we would have where we just would have bashed on with a more capital intense, lower margin, higher risk upstream mining operation because, you know, traditionally Australia has been a bit of a quarry for the world’s building blocks for the modern industrial world.

Matthew Gordon: Yes, and we can’t finish a conversation without talking about Covid-19. Obviously you guys are working at home at the moment, but you do have guys in the lab. I understand it from Darren that you are all still beavering away. Is that impacting your ability to get this agreement over the line sooner?

Chris Reed: Look, I would have actually said it may have been the straw that got it over the line that, you know, we had given them this contract there that, you know, we’ve got an exclusivity period. We’ve paid for that exclusivity period securing 27-months to get to an FID to monetise this for them. They’ve been sitting there stockpiling this for 30-years, so we’re actually going to turn it into money for them. In terms of the covid impact on us, I mean, we sold out of our upstream operation. We’ve got a lot of cash. We’ve been doing quite a lot of well, quite a lot of metallurgical test work across our core projects. They’re now moving into the engineering stages. We’ve finished a lot of exploration at Christmas. We’ve now been compiling the results, planning our next moves for those projects.

So, I mean, we’re not wasting the opportunity. And look, you know, we are a very strong company in terms of our balance sheet, our human and our financial resources generally, from the board all the way down to the receptionist. And so we will pretty much move seamlessly through the evaluation stages. You know, I understand in Australia they’re doing a pretty good job of getting on top of this early. I mean, it should come as no surprise. We are the most isolated country in the world with the lowest population density. So I wouldn’t put that down to, I mean, it’s some good moves from the government, but it should be taken as no way to try to say, we’re not boasting about that. It’s more geographical anomaly.

And the mining industry here is an essential service and the government is allowing those to operate because ordinarily we have probably the highest operating safety and health systems in the world. And so the addition of pre-testing, constant testing, social isolation or self-isolation and social distancing; when you’re flying in and flying out of a remote work site, you’re almost doing that anyway. So for us, we’re fortunate that I can see no material disruption. Some of the timelines and some of the milestones might move around a little bit. Certainly there could be disruptions in terms of the global macro basis but to get to FIDS, you know, we have multiple years of surplus cashflow. In fact, as a sign of our strength, we accelerated the consideration of a dividend that we’ve done annually for the last four years. We brought it forward by a month because we are in such good financial position, we’ve got more than USD$80M in available cash after the dividend. We have no debt. And so we can execute our plans to take all four projects through to final investment decisions without having any regard to our underlying balance sheets. So it’s not lost on us. We are fortunate and for everyone, you know, who’s not so fortunate, we do understand and feel for them.

Matthew Gordon: Okay. no, I appreciate that background. I do need to try and understand though, where this is going. So JV happens, you start processing, are you selling into the Chinese rebar market or are you going to be part of the European ecosystem? And where’s this going?

Chris Reed: Certainly the industrial minerals in the advanced materials attracted us because you don’t have the financial investors, right? So they truly are price value in use. And what we’re seeing across a lot of these commodities is a real bifurcation; in Lithium we saw China versus the rest of the world. If you have a look at Vanadium that is essential in producing high strength, low alloy steels, Titanium-Vanadium allies for aerospace; it’s non substitutable. And it’s increasingly becoming prevalent in energy storage – these VRF batteries. You know, the electrolyte and the batteries, 50% of the cost of the battery is Vanadium. You can’t call it a Vanadium redox flow battery without the Vanadium. So demand is growing and what we’re saying is that about 80% of the world’s Vanadium is coming out of China and Russia. And so when you have a look at aircraft air frames that are 18 to 20% now, in the new generations, Vanadium, Titanium alloy, the Vanadium, the master alloys either come from, you know, Bolong in China or VSNPO in Russia. So you’ve got Boeing and Airbus that are entirely reliant on, I will say, non-free-market sources. So for us, we would obviously look at geographically delivering into Europe and North America as those key markets if you’re operating up in Scandinavia.

Matthew Gordon: Are the Europeans pleased to see these sorts of things, these sorts of operations, these joint ventures? Because we talk to companies who are, you know, trying to tap into these big EU subsidies to kind of get things going. I guess you guys don’t have that problem, but have you had conversations or are they interested in what you’re doing?

Chris Reed: Oh look, we’ve had obviously keen interest, not only because we do have the world’s second highest-grade hard rock Titanium-Vanadium asset in Barambah, we spoke with most of the big players reasonably regularly. Certainly for, I know in Germany if you’re importing Vanadium into the steel industry, they have an import finance scheme as well as an export finance scheme, which is generally the UFK, or the German government guaranteed schemes. If you’re doing input financing, you essentially take your production times a long-term price, times the duration of the contract and divide that by four and that’s the amount that you can look to procure from German commercial banks with the German government backed guarantee. So, you know, security of supply for essential materials into one or more, I mean, we haven’t explored, obviously our relationship with SMS; we have explored import and export financing. We seem to think that the import financing happens a little quicker than the export financing. And so, yes, there are pools of money from a strategic point of view, you know, green funds, circular economy, ESG; this will tick all the boxes.

Matthew Gordon: Okay, thanks. Thanks Chris. So just to kind of sum up, because what I’ve heard is high-grade, highest grade you’re telling me, lowest cost, no capex, or relatively low capex compared to mining.

Chris Reed: And removal of mining risks. I mean, that’s where a lot of miners have got it wrong: that you stick so much money in the upstream mine and because you’re always getting pressured to do these things quickly, there’s some people who take, you know, unacceptable risks, or that could have taken longer or with more money, but you know, that’s delusionary stuff. So removal of risk,

Matthew Gordon: Okay. The ESG component – you’re telling me that you are part of that circular network within Europe and you think that you can get that funded from any funding, with you and your partner, that can happen from Europe. That’s what I’m hearing. Am I missing anything?

Chris Reed: Absolutely. Look, we are genuinely stoked with this opportunity. You know, we have 27 months to get through to an FID. I cannot see any fatal flaws at this stage and hence why I’ve been able to procure the board to authorise the staged expenditure of USD$5M. I haven’t been so excited for a project since I bought Mount Marion.

Matthew Gordon: I bet. Well, look, Chris, I appreciate it. And Darren and David, thank you very much for today; giving us that update on that agreement, and it sounds like exciting times. I’m genuinely really excited by the approach with companies like yourself and how they’re tackling this battery revolution and how they’re getting involved and where they’re inserting themselves. And you seem to be very focused on the making money bit, which is great, and delivering in a responsible way. I was really pleased to talk with you about the battery recycling component, but this one sounds even better.

Chris Reed: Yes. We don’t have to worry about going out and procuring the supply.

Matthew Gordon: Yes, no. Well done.

Chris Reed: In terms of battery recycling, you’re trying to pull out physically Copper and Aluminium, graphite, plastics, and then you’re trying to sequentially drop out the leftover Cobalt, Aluminium and iron waste. Then you’re trying to get out Cobalt sulphite, Nickel sulphate, Manganese sulphate, Lithium sulphate, recycle your tailing strength. I mean, it is unscrambling an egg. This is literally just cracking an egg and cooking it properly.

Matthew Gordon: There you go.

Chris Reed: And making sure you don’t burn the toast.

Matthew Gordon:  It looks like you’ve got a couple of eggs on the plate; both very good. I wish you well. Stay in touch. Please let us know how you’re getting on because obviously you guys seem to be quite fast moving and you’ve got a few projects in the portfolio, I know. So give us a call.

Chris Reed: We’re grateful for the time. You keep well. Everyone keeps safe.

Company Website: https://www.neometals.com.au/

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RNC Minerals (TSX:RNX) – The Dumont Nickel-Cobalt Project: An Exciting Option?

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RNC Minerals
  • TSX: RNX
  • Shares Outstanding: 608M
  • Share price C$0.31 (31.03.2020)
  • Market Cap: C$185M

Last week, Crux Investor explored the numbers behind gold-producer RNC Minerals’ encouraging Q4/19 results.

Now, fresh from an uplifting interview a few weeks ago with RNC Minerals’ CEO (TSX: RNX), Paul Huet, Crux Investor interviewed Johnna Muinonen, the President of Dumont Nickel (a subsidiary of RNC Minerals).

Nickel ore
Nickel ore

We were curious about how RNC Minerals’ former flagship project will be developed to add value for shareholders. RNC Minerals investors have been focussing on the company’s strong, stable gold-production, but have they been overlooking one of the most exciting elements of the story?

If RNC Minerals is a company that takes your interest, you may well want to check out our previous update from Huet. We’ve covered RNC Minerals with detailed investigative articles for much of the last year. Make sure you check them out.

Nickel, Nickel, Nickel

Muinonen is a nickel lifer. Her experience, expertise and enthusiasm was tangible during our interview. She has a similar level of passion and drive as her CEO, Paul Huet. That can only be a good thing.

RNC Minerals was originally known for its large nickel project, Dumont; it has the potential to be the 4th largest nickel sulfide project in the world (once ramped-up in a year 7 Phase II expansion). However, after RNC made its major gold discovery at Beta Hunt, the company moved its focus away from nickel towards consistent, cash generative gold. 51,090oz for 2H/19 at an AISC of US$1,144/oz is evidence this plan was prudent. While these results are strong, investors seem to have forgotten that RNC Minerals’ option on nickel at Dumont could potentially be a sizeable future value-generating event.

What are the key stats?

Potentially the 4th largest nickel sulfide project in the world, with a 30+ year Life-of-Mine

Scale is undeniably important, especially when it comes to Nickel investment

Nickel is the most important metal by mass in lithium-ion battery cathodes, which are commonly used by EV manufacturers. At present, nickel comprises a third of Nickel Manganese Cobalt (NMC) cathodes and 80% of Nickel Cobalt Aluminum (NCA) cathodes.

If the EV revolution is, indeed, to be a ‘revolution,’ the entire global automotive infrastructure will have to transform. This will require great change and great nickel demand, and this will only be satisfied by big projects. With the large scale of Dumont, RNC is priming itself to take advantage of nickel demand in the near future. In RNC Minerals’ Feasibility Study, released last year, initial nickel production in concentrate is projected to be 33ktpa ramping up to 50ktpa after the Phase II expansion. The estimated annual EBITDA ramps up from US$303M in Phase I to US$425M in Phase II: an average of US$340M.

Muinonen is very confident that RNC Minerals is well-positioned for when large strategic partners and operators come knocking on the door, as the +30-year LOM means that this project will produce through multiple nickel cycles.

Multiple EV Commodities In An Established Jurisdiction

The Feasibility Study states Dumont is the 2nd largest nickel reserve in the world, with 2.8Mt (6.1Blbs) contained nickel, and is the 9th largest cobalt reserve with 110,000t (243Mlbs) contained cobalt.

These are 2 EV-related commodities that have similar macro stories and fit into a coherent narrative. This makes the project easier to package and market. This diversification appears to de-risk the project, helping to avoid a reliance on a single commodity’s market conditions.

The project is located in the Abitibi region of Quebec, one of the world’s most reputable jurisdictions. This, again, de-risks the project.

Low-Cost Nickel Sulphide

Looking at the metallurgy of Dumont’s ore body, it is comprised of nickel sulphide, rather than nickel laterite.

Laterite ores require complex and extensive treatment: an extremely expensive HPAL process, whereas nickel can be extracted from sulfide ore by simple, cheap techniques, namely: pyrometallurgy.

Conversely, it should be noted that sulphide deposits are more expensive to find in comparison to nickel laterite deposits, because nickel sulphides are found deep in the earth’s crust. However, in the case of Dumont, this shouldn’t be a problem. Construction and operation of the mine and processing facilities could be made easier by the existence of excellent infrastructure, including roads, rail and access to low-cost power. It looks like a great setup economically.

The Feasibility Study places the initial CAPEX at US$1.0 billion. This no small figure, but for a project of this scale, it looks reasonable. In fact, the Dumont Nickel Sulfide project is in the low 2nd quartile of the cash cost curve.

Fully Funded Out Of Existing Cash Flow And JVs

RNC Minerals is currently churning out the cash, courtesy of its successful gold mining operations.

Adjusted earnings of US$13.7M for Q4/19 show just how far the company has come in record time. RNC Minerals has the cash to make things happen. We’ve already seen what having cash has allowed them to do. Expect more aggressive news soon.

In addition to the growing robustness of the company’s own cash situation, RNC Minerals is fully-funded at Dumont through to a DFS, FID, and construction, thanks to a JV with Waterton.

Fully Permitted

The Dumont Nickel Sulphide Project is ‘fully permitted’ and ‘construction ready’ courtesy of existing investment into the project. The Impacts and Benefits Agreement has been successfully negotiated with the local First Nation, and RNC Minerals appears to have avoided any of the typical hurdles mining companies have to face. This helps with costs and timing.

Bonuses

There are several additional optimisations that further transform the economics of Dumont for the better:

  1. Implementation of an autonomous truck fleet – This could increase efficiency and cut costs to a sizeable degree.
  2. Larger-scale initial project phase of 75ktpd – If RNC Minerals scales up this project from day 1, this will undoubtedly generate even more intrigue from nickel investors.
  3. Sale of magnetite by-product – Just like cobalt provides commodity diversification, magnetite does too. Magnetite has robust demand and monetising this by-product could make every metre of drilling much more profitable.
An open charging port on a dark grey electric car.

The last fact to remember, and this is perhaps the most important, is that the Dumont Nickel Sulphide Project is not even the primary focus of RNC Minerals anymore. The enormous potential upside is an undervalued and unappreciated nickel option that has yet to see any reflection in RNC Minerals’ share price. Should they consider spinning out the JV to get the market to recognise the value?

If retail investors are looking for exposure to the upside of the EV & battery revolution, RNC Minerals is definitely worthy of some attention.

Company Website: http://www.rncminerals.com/

If you see something in this article that you agree with, or even disagree with, please let us know in the comments below.

Any advice contained in this website is general advice only and has been prepared without considering your objectives, financial situations or needs. You should not rely on any advice and / or information contained in this website or via any digital Crux Investor communications. Before making any investment decision we recommend that you consider whether it is appropriate for your situation and seek appropriate financial, taxation and legal advice.

The RNC Minerals Company Logo.

Blackstone Minerals (ASX: BSX) – If we both pull together, tomorrow’s sure to come (Transcript)

The Blackstone Minerals company logo
Blackstone Minerals Ltd
  • ASX: BSX
  • Shares Outstanding: 192M
  • Share price A$0.14 (17.04.2020)
  • Market Cap: A$27M

Interview with Scott Williamson, Managing Director of Blackstone Minerals (ASX:BSX).

Blackstone Minerals: a nickel-cobalt-gold (battery/precious metals) company looking to get into production within the next 3 years. Ambitious.

Blackstone Minerals is an ASX-listed junior, exploring the Ta Khoa Nickel Project in Vietnam, the BC Cobalt Project and gold and nickel projects in Western Australia. The primary focus is on Ta Khoa, which previously operated between 2013 and 2016. Williamson claims the previous owners sunk over A$130M into the project; this creates an obvious disparity with Blackstone Minerals’ market cap, A$27M, which had been steadily falling away but has made a comeback in the last few weeks. The share price stands at A$0.14 today. Blackstone Minerals is looking to bring the project back into production and take advantage of the inbound EV revolution, by feeding the nickel concentrate into nickel sulfate for the Li-ion battery industry.

What’s the big news recently? A deal between EcoPro, the largest cathode manufacturer in Korea and second-largest globally, and Blackstone Mineral was announced. The binding share purchase agreement outlines a commitment for A$6.8 million at a 62% premium to Blackstone Minerals’ 30 day VWAP. EcoPro will end up with 17% of Blackstone Minerals shares. Looks like a smart piece of negotiation.

Williamson thinks the market will take a while to process the significance of this transaction and is perhaps a little unaware of how large a player EcoPro is. Williamson sees EcoPro as the “perfect partner,” and hopes it will reveal its value over time.

Blackstone Minerals is on track for its maiden resource in June/July. This will be followed by a PEA in August/September. Williamson sees this as a catalyst moment where the market will realise just how much nickel has been left behind, and how economic the first ore body will be. The money will also be used to explore other ore bodies, but the main focus is to move all the studies through to a bankable Feasibility Study. Blackstone Minerals is fully funded to this point. The cost structure at the Ta Khoa Nickel Project is impressive; to put this into context, drilling costs A$60 per metre, as opposed to A$300 in Australia and A$500 in Canada. The nickel orebody itself is twice the grade that Blackstone Minerals was expecting at 1% nickel. Williamson describes this nickel as a “significant tonnage…” that will “deliver a 20-year mine.”

Williamson is currently conducting metallurgical test work in order to assess the potential monetisation of the byproducts (platinum, palladium, gold, rhodium, copper, cobalt) at Ta Khoa, but he is confident all the metals will be economic and add an extra 20% revenue on top of the nickel.

What is the CAPEX looking like at Ta Khoa? c. US$100M for a downstream processing facility, plus additional capital to upgrade the concentrator. Williamson is confident Blackstone Minerals will “land below” A$200M total. Williamson claims this is very competitive. He also insists that EcoPro will not accept anything less than achieving production within 3 years. Will this additional pressure help or hinder Blackstone Minerals?

We Discussed:

  1. Company Overview
  2. News Announcement: Negotiations and Terms. What did EcoPro Buy into?
  3. Market’s Reaction: What has the Share Price Done and What’s Stopping Investors
  4. Vietnamese Assets: Why Did They Shut Down and What are the Plans Going Forward? Monetising the Bi-Products
  5. Low CapEx Compared to Peers: Getting into Production
  6. 2020 & What Investors are to Look Forward to
  7. Financed ’til Production (?)
  8. BFS Timings: Who’s Financing the Studies?

CLICK HERE to watch the full interview.

Matthew Gordon: Hello Scott. How are you, sir?

Scott: Williamson: Good thanks, Matt.

Matthew Gordon: Where are you in the world at the moment?

Scott: Williamson: Yes. So in the self-isolation mode in Perth with my family and yes, trying to stay away from the streets and stay safe.

Matthew Gordon: Yes, we spoke to couple of guys in Perth yesterday and they said they have glorious weather so it’s not too bad a place to be holed up, right?

Scott: Williamson: Yes, it’s great.

Matthew Gordon: Why don’t we kick off with the one-minute overview and then we will get into some of the more recent news.

Scott: Williamson: Yes. So yes, we’re Blackstone minerals. We have a portfolio of battery and precious metals assets across the globe. A flagship asset is the Ta Khoa Nickel project in Northern Vietnam. That’s a previously operating mine, so it had operated between 2013 and 2016. And the previous owners sunk over USD$130M into the capital infrastructure. So our focus is to bring this mine back into production. A little bit of a different strategy to the previous owners of that asset. And we’re looking to, I suppose feed this Nickel into the Lithium ion battery industry. And we’re looking at to, I suppose, work with strategic partners to develop the industry processing which will move this Nickel concentrate into a premium product, which is Nickel sulphide for the Lithium ion battery industry. So yes, looking forward to the next stage of that process.

Matthew Gordon: Fantastic. Fantastic. Let’s see. We talked back in November when you were in London for a conference there, and we sort of went through the history and so forth and people can refer back to that interview, because you had a few other assets around the world; obviously the cobalt which obviously, market conditions meant that it makes sense to park that up and focus on your Nickel assets. So let’s do that today. You have just announced some rather good news, haven’t you?

Scott: Williamson: Yes. So we’re placing a strategic shareholder in EcoPro. EcoPro is the largest cathode manufacturer in Korea and the second largest in the world. EcoPro’s main customers are Samsung SDI and another group called SK Innovations. So these are two of the biggest battery manufacturing companies in the world. And so they really are very well-positioned now, with a USD$6.8M investment at a 62% premium to market. And I think that premium just shows that these, I suppose, larger battery players, are focussed on a longer term future, and this EV revolution isn’t slowing. And if anything it could actually be heating up a more so as the economy moves back into sort of stimulus mode.

Matthew Gordon: Okay. So, obviously, USD$6.8M is a nice my sum of money to get and I want to talk about what you’re going to do with that in a second, but a premium like that; what was that conversation like? What are they buying into? What have you said? Because I think a lot of people want to know how you go about negotiating. So tell us about it.

Scott: Williamson: Yes, so I suppose the premium is there because we believe that’s a suitable premium to bring in a strategic partnership. So the partnership is, I suppose, around them potentially over time getting access to the Nickel. So at this stage it’s a fairly early investment for them. It’s a small investment. They do end up with a 17% shareholding in Blackstone, but we believe that the premium is fair and reasonable because it’s a strategic position that allows them over time, they will have access to the metal that they need for the Lithium ion battery industry.

Matthew Gordon: Can we talk about the terms around that one? Because that’s what I was really getting in it to because what have you had to give away to get a premium like that? Because for them it’s not a lot of money, okay? It really, really isn’t a lot of money. For you, it’s meaningful and it’s a step change potentially in terms of what you can do to release the potential in Vietnam, right? So what have you had to give away?

Scott: Williamson: So, they will have a board position; so the EcoPro will have a position on the Blackstone board. So that’s one thing we’ve had to give away. The other condition prescient is that we have to exercise the option to own the Ta Khoa Nickel project, so we will exercise that option which is USD$1M worth of Blackstone shares we will need to give to the vendor. The other thing I suppose is that there’s a ‘best endeavours’ sort of a relationship here where we now move to this next stage, which is the joint venture on the downstream processing facility. So it’s not a formal sort of, I suppose, partnership at this time, but the next stage would be to now move towards this partnership where we partner on the downstream processing facility and we both then move to that next stage over the coming 6 to 12-months.

Matthew Gordon: But that’s all upside for you, right? I mean obviously you’re able to pay the previous, or the current owner of the asset. Giving a board seat away – so what? But then are you saying, well, we could potentially do something further downstream? That’s great for you; you’ve got a big partner with big pockets who are strategic as well rather than just being ‘dumb money’, as I think they usually call it, and that’s great for you. But why have they paid you so much? Do they feel that they’ve taken up some kind of option there? Was there some kind of race going on?

Scott: Williamson: Yes, well that’s a good point. So what they do realise is that they’re not the only ones that were talking to. So we’re talking to other Korean buyers; major battery manufacturers, so they have realised that they’re not the only one in the room here. And we’re also talking to other, I suppose, mining companies as well. So we made it fairly clear to them that we are open to talking to all parties, and so they’ve jumped first, which is great because they’re entrepreneurial and they saw the opportunity, but they also realised that they couldn’t put any real, I suppose, difficult terms around this deal because we would have potentially moved onto the next party that we’re talking to. So they understand that they’re not the only ones. And they need to tread carefully because we’ve got the metal and the Nickel that the suppliers need to produce these batteries. So they have played it very smartly, and so they now have the jump on the rest of the pack but they are by no means the only one that we’re going to deal with over time.

Matthew Gordon: Okay, that’s interesting. So you’re saying that there’s no kind of right of first refusal in there? There’s no options on this, whatever this downstream deal looks like. They are not secure in that sense. All they’ve done is paid you a premium so that you think that they’re a fair partner. But in a commercial world you’ve still got choices because there’s nothing in your, what you’re telling me is, there’s nothing in paper which ties you down to EcoPro moving forward other than they have got 17% of the company? That’s quite good. That’s quite good for your shareholders.

Scott: Williamson:  They are very happy. So that, and I think the reason we were able to get a deal like this is because of the fact that there’s not many assets like this left around the globe. And particularly because our capex potential is much lower than our peers, and we talked about this last time. So they see this as an opportunity whereby they have to, yes, they do have to tread carefully because we do have options here and we have an asset that will deliver before a lot of our peers. So it’s got that ability to produce that Nickel that’s required in the next two to three years. A lot of our peers will struggle to deliver in that time line because of the capex hurdles, and obviously even more so now with the difficulties in the capital market.

Matthew Gordon: Yes. Okay, well, we’ll talk about the asset in a second if you don’t mind. Okay. So what’s the reaction been like in the market to this announcement and what’s the share price done?

Scott: Williamson: Yes, so we went up, we’re not trading anywhere near the issue price of the shares to EcoPro, so we, I think we’ve got intra-day about USD$0.06c. The shares will be placed at USD$0.17 cents. So I think it’s a fair reaction. I think the market will take some time to digest this. And I’m not sure that the market understands who EcoPro is, and over time, it’s not a big name like Samsung or LG, but over time people will do the research and realise that this is one of the major prize in the cathode industry globally. So this is the perfect partner for Blackstone. So yes, I think we’re in a market where you’re going to get profit-taking and unfortunately we saw a bit of that today, but we’ll say what tomorrow brings.

Matthew Gordon: Okay, well I guess it’s down to you to tell the story, right? Because I was the same: I was like, who is EcoPro? I just didn’t know, but I think once you know, you get some sort of comfort that they will probably, if you deliver, want to follow their money, as you say to secure some kind of offtake agreement or other agreements.

Okay, let’s talk about those assets then. You’ve talked, you told us that it has already got USD$130M sunk into from previous mining operations, can you just remind why it’s shut down and what you’re going to be doing going forward?

Scott: Williamson: So, it shut down at the bottom of the Nickel price. So USD$8,000 p/ton Nickel price when the mine was put into care & maintenance. The reason it was put into care & maintenance was also the fact that they actually mined the first ore body and depleted it and they didn’t do any exploration outside of that first ore body. So there was no exploration conducted by the previous owners. They left behind 25 exploration targets, which we’re now moving through and we’ve just drilled out the first of those 25 targets. The first target is called the Ban Phuc deseminated ore body. We believe that will be mined for the next 10 to 20 years. And so that’s the other reason why we’re able to, I suppose, entice or attract these end-users is we’ve got a mine that justifies a significant investment from the end-user because we can deliver the Nickel over the long-term. So, a lot of our peers who have smaller mine lives and won’t be able to justify building that downstream processing facility, which we’ll now look at.

Matthew Gordon: Okay. So what I want to talk about is, obviously, what you’re going to be able to do with, well, whatever amount of that USD$6.8M is going to go in the ground because you have got quite good grades. I mean, over 1% on average, across the board looking at some of the drill results. So that’s pretty good. What you don’t have currently is a sense of this scale of this; how big this could be. So what are you going to do with whatever money that you’re going to spend from the USD$6.8M?

Scott: Williamson: Yes, so we’re still on track for our main resource in June, July this year, and then we’ll follow that very quickly with a scoping study, or a PEA, as they call it in Canada. And that will be the moment where the market realises how much Nickel has been left behind, and how much, or how economic that first ore body could be. So they’re two key milestones. The USD$6.8M will also be used for exploring other ole bodies, but at the same time, we’ll also move these studies all the way through to a bankable Feasibility Study. So with USD$6.8M, we’re actually funded all the way through to complete a bankable study.

Our cost profile, or cost structure in Vietnam means we can get a lot more done. We’re drilling at USD$60 p/m versus in Australia that would be USD$300 p/m or yes, in Canada that was USD$500 p/m. So we can do a lot more with the USD$6.8M in Vietnam than people with the similar amount would need to invest in Australia.

And we we’re confident we can get all the way through to a bankable study, and  that’s the idea of this capital injection from EcoPro is them saying, how much do you need to finish a bankable study? Here it is. Bang.

Matthew Gordon: So, you probably won’t answer this, but the results will come out in May, June, July sometime, right? That the scoping study. What do you know today? Are you encouraged by what you see in terms of where this ore body sits in terms of what do you know about it? What can you tell us?

Scott: Williamson: Well, what we can say is that yes, I think we’ll go back to your first question, the 1%, Nickel: we’ve got a significant amount of this 1% Nickel, which is incorporated into our discovery zone. That is twice the grade that we were expecting, so we are happy with anything around 0.5% Nickel. As you know, there’s some of our peers that are looking to mine even less than that or lower grades. So we’ve got a significant tonnage. These higher grades will deliver a 10 or 20 year mine. So it’ll be an economic mine also because we’ve got the Platinum, Palladium, Gold, Rhodium, Copper and Cobalt. By-products will deliver up to 20% extra revenue on top of the Nickel. So there’s 80% of the revenue that comes from Nickel, we’ve also got all these other metals in it.

Matthew Gordon: How do you know you’re going to be able to economically create by-products with all of those different commodities?

Scott: Williamson: Yes. So we are doing that metallurgical test work now, the previous owners didn’t assay for PGE, so this is a new part of the mine that wasn’t previously understood. So we’re doing that initial work now and we are confident that those metals will all float into the concentrate, and so you will be able to monetise that.

Matthew Gordon: Where does that confidence come from, Scott? Because obviously many, many companies think that until the metallurgic work is done. So what do you know?

Scott: Williamson: Yes, we’re done early bench scale test work, yes. So we need to do the numbers around that. At the moment we don’t know who the customer might be for Palladium or Rhodium. There is a bit of work to do but we do know that we can recover them.

Matthew Gordon: Right. Okay. So back to the scale question: what do you know  today about how far this goes out? I mean how much historical drilling data have you got, for instance?

Scott: Williamson: So we’ve got, I suppose the things we can talk about, we’ve got a 1km ore body. It’s 500 meters wide. There’s multiple millions of tons, so multiple tens of millions of tons of economic Nickel sulphide in the first ore body. So if we were to build a 2 million ton per annum concentrator, we might be looking at a 10 to 20 year mine life. So yes, those are the sort of numbers we’re looking at.

Matthew Gordon: Okay, and I know you haven’t done the scope of study, your PEA at the moment, but you talked about being funded through to BFS. What type of capex numbers would we be talking about? Because again, you’ve references low capex compared to peers who may be talking about USD$1BN to kind of get sulphide projects a little bit cheaper. So what do you know?

Scott: Williamson: Yes, so what we can say is that the numbers are still looking very competitive: circa USD$$100M for a downstream processing facility. We would still need to upgrade the concentrator so there’s another capital spend there, which we’re still doing the work on, but I’m confident we’ll land below say, USD$200M total. So yes, we’re still 20% off a HPAL scenario. So yes, we’re aiming for that 10% to 20% compared to that billion dollar HPAL plant, which is our main competitor.

Matthew Gordon: Right. Okay. Yes, I mean it’s very, very different. I think we’ve done enough interviews with people talking about the difference in laterites and sulphide ore bodies. So, USD$200M market cap again, where would you, I mean, because you’re going to tell me you are getting into production in the next two, three years. Right? That’s pretty quick. In the scheme of things.

Scott Williamson: Fortunately, I’ve now signed up EcoPro, and they are not going to accept anything less, and they’re going to keep me accountable to that. And that’s fine because with my background being mining engineer, I’m happy to go forward with this. And the good thing is now we’ve got the funding partner, so that won’t be a bottleneck. So going forward, finding one big bottle neck, we obviously need to push very quickly through these studies and then obviously we don’t want to be cutting corners on any of that drilling and metallurgy, and so there’s a lot of study work. There’s still 12 to 18-months of studies here and then we can build in 2022, and mining in 2023. So EcoPro will probably will make me accountable to that, and I’m happy because as long as they keep funding it, I can deliver that.

Matthew Gordon: Well, fantastic. If they keep funding it, great – happy days, you can focus on running the business, not running around the world, chasing money. Right? Not that we can at the moment, but yes, you know what I mean. So if I look at this project, I need to understand it from an investment perspective, okay? That’s what people watching here are trying to work out. It’s like what am I buying into? So you’re saying it’s a quick to production, low capex, high-grade Nickel project. Obviously you’ve seen a bump in the shares today, it hasn’t really done much prior to that because you’ve been working out what you’re trying to be and what you’re trying to focus on, what you are trying to do. What can shareholders look forward to this year, or even next year in terms of proper catalyst moments?  Because I think that drill results come and go and no one cares. Right? But what are you going to be able to tell people which is going to significantly move this company along? What are those big moments?

Scott Williamson: Yes, I think the first one would be that main resource; so we can really wrap some numbers around the resource: tons and grades. And you will see the grade of these by-products as well. So that’ll be June/July. And then the scoping study is probably the biggest milestone because that’s when we start to put NPVs around this. So I’ve already told you about capex, but where we’re obviously aiming for NPVs that are multiples of our capex number. And so there will be a moment here where we are reminded here, when people realise that the market cap, whether it is 20 or 30, we are talking multiples of USD$100Ms of NPV here. So that’s the moment where the market goes, okay, so there’s an NPV of that, they’ve got the funding partner. There’s already been a mine built there before, so there will be a mine there again. It has to sink in eventually. So yes, the key milestones will be the scoping study, the mined resource – that’s when the institutional investors have to come in and say, well hang on, this is going to be a mine again. So, yes, I think it’s when we wrap the numbers around it. And obviously it’s very difficult to do that until we do the formal draw process and all  of that. That will come.

Matthew Gordon: No. Okay. You covered a lot of the right parts there, I mean, I guess the big one that people are looking at is obviously the fact that you’ve got a partner. Are you going to be brave enough to say you’re fully funded through to production?

Scott Williamson: The conversations we’re having are that they still want us to bring our own capital. And the reason why is that they don’t want to be left holding the baby. And there’s a great story; it’s the Ambatovy mine in Madagascar, Korea blew themselves up putting themselves up. Korea learned the hard way. I don’t want to be left holding the baby here. And so they do want us to bring our own capital to the table. But you could almost say that it is fully-funded because within Korea I think we can bring all that capital to the table. And so we’ll start working with other players as well here. So yes, we’ve closed, but we’ll still need conventional capital markets at some stage.

Matthew Gordon: Okay. Which you expect to get from Korea or elsewhere in the world?

Scott Williamson: Well, there are pockets of money out there and they are harder to find, those that can invest in this type of opportunity. And so we’re hunting those down at the moment. There’s a chance that we could fund this almost entirely through Korean money but that’s not a good strategy either, we need to expand and look at all the options.

Matthew Gordon: Yes. I think you referred earlier to your optionality around the funding is important to you in terms of negotiation or else you’ll find your money all of a sudden it gets quite expensive if you’re reliant on one partner. So I think that makes a lot of sense to me. Okay. So lots and lots of good stuff there, Scott, appreciate you coming on and telling us all about it. Obviously you have moved things on significantly from even from November to today; it’s only four short months, we actually, it will feel like very long weeks at the moment with this confinement. But you know what I mean. I look forward to hearing about the scoping study and any of these other results as they come through. But you’ve identified quite a good asset there. I hope you hope you can get all the way through to this BFS quickly. What’s your timing on that actually, the BFS?

Scott Williamson: 12 to 18-months from now, I think we can deliver that. So the scoping study – as soon as we can, so sort of August, September. PFS soon after. The conversion from scoping to PFS will be fairly quick because most of our, we are hoping that most of our resource will be in that indicated category so we can convert to PFS quickly. There is a lot of work to get into that bankable stage, which is part of the plants and yes. And so that’s a 12 to 18-month process.

Matthew Gordon: Actually, you raised an interesting point, before we go is,  would EcoPro fund any pilot or demonstration plants, or is that going to be part of the larger funding?

Scott Williamson: Yes. So by that stage, we probably would’ve, I suppose, built our partnership to a formal like a SPV type scenario where we would actually fund that together.

Matthew Gordon: Okay. Enough said, Scott. I appreciate your time. I know it’s getting late there, time for a beer I suspect, so I’ll let you go and do that. Stay in touch and give us a call.

Scott Williamson: No worries.

Company Website: http://blackstoneminerals.com.au/

If you see something in this article that you agree with, or even disagree with, please let us know in the comments below.

Any advice contained in this website is general advice only and has been prepared without considering your objectives, financial situations or needs. You should not rely on any advice and / or information contained in this website or via any digital Crux Investor communications. Before making any investment decision we recommend that you consider whether it is appropriate for your situation and seek appropriate financial, taxation and legal advice.

The Blackstone Minerals company logo

American Manganese (TSX-V: AMY) – Is This Battery Recycler Really Better Than The Rest?

The American Manganese company logo.
American Manganese
  • TSX-V: AMY
  • Shares Outstanding: 181M
  • Share price C$0.13 (27.03.2020)
  • Market Cap: C$23M

Crux Investor recently interviewed Larry Reaugh. He is the President & CEO of Lithium-ion battery recycling technology company, American Manganese (TSX-V:AMY). The interview was very interesting, and perhaps a little controversial.

Our most recent interview with a manganese company was our interview with the Managing Director of manganese developer, Element 25 (ASX: E25), Justin Brown. We’ve interviewed other manganese companies in the past; it may well be worth watching. There are also some manganese-related articles on our platform.

It might also be worth watching our interview with project developer, Neometals, a battery recyling company we think is very promising, but Reaugh thinks isn’t transparent with the market.

American Manganese Inc. is a critical metals company focussed on extracting cathode materials from lithium-ion batteries via recycling using its RecycLiCo™ Patented Process. Just what does American Manganese have going for itself that its battery recycling competition doesn’t?

We Discuss:

  1. Company Overview
  2. The American Manganese Backstory
  3. Cash Position, Pilot Test Results, and Plan of Actions to Attract Funders
  4. The Business Plan
  5. Conversations Driving American Manganese Forward
  6. Imminent Raises:
  7. Management Share Position: Are They Buying More?

Company Website: https://americanmanganeseinc.com/

If you see something in this article that you agree with, or even disagree with, please let us know in the comments below.

Any advice contained in this website is general advice only and has been prepared without considering your objectives, financial situations or needs. You should not rely on any advice and / or information contained in this website or via any digital Crux Investor communications. Before making any investment decision we recommend that you consider whether it is appropriate for your situation and seek appropriate financial, taxation and legal advice.

The American Manganese company logo.

Neometals (ASX: NMT) – Entering the European Battery Circular Economy

Neometals Hero Logo
Neometals Ltd.
  • ASX: NMT
  • Shares Outstanding: 545M
  • Share price A$0.16 (09.04.2020)
  • Market Cap: A$87M

Crux Investor recently interviewed Chris Reed; he’s the CEO of battery mineral-related project generators, Neometals (ASX: NMT). He was accompanied by Darren Townsend, Chief Development Officer, and Dr. David Robinson, General Manager.

We’ve followed the Neometals story for a year and released several interviews with members of the management team, in addition to some articles.

Cooking-Cutting Success

The green economy is fast approaching and will need end-to-end solutions that meet the needs of demanding consumers.

Supply chains will be scrutinised and interrogated. Miners and battery manufacturers will need to have answers.

A photo of a black Tesla Model S.

As a project generator, Neometals identifies battery-mineral related opportunities, assesses their green-credentials and then funds it through R&D to design and engineer a solution for the market. If it passes the muster, Neometals begins the process of developing them with expert technological leadership, before inviting market-leading partners to JV with them to share the financial risk and also to share their partner’s network and distribution capabilities. Once the project is developed through pilot stage, Neometals then makes its final investment decision (FID): continue further, or sell its stake for a large profit. All projects fit neatly into a clean, green narrative, and as manufacturers face increasing pressure from funds and investors to assess the ethics of their supply chain, companies like Neometals could benefit further. Locate potential, procure it, develop it, rinse, repeat. The Neometals project-generator model seems to be able to unearth value in the market.

Neometals’ management team’s track record of success extends from the Mt. Marion Lithium Project; they timed their exit to a tee, selling their 13.8% stake for AU$103.8M. The total sale took Neometal’s equity and dividend return to A$200M from just A$3M investment. The market has not cottoned onto the Neometals story; the company’s market cap is valued at less than the cash they currently hold, and that’s without taking into account its portfolio of projects.

We’ve also recently interviewed them about their battery-recycling project. It follows the same model. A modest investment to develop a flowsheet to recover battery metal via a hydrometallurgical process has seen them sign an agreement with SMS Group.

Vanadium Recycling

In this most recent interview, Crux Investor investigates Neometals’ latest green project.

As of last week, Neometals has entered an agreement with unlisted (but public) Scandinavian mineral development company, Critical Metals. The two parties will jointly consider developing a recycling facility to recover and process high-grade vanadium products from vanadium-bearing steel by-product in Scandinavia. We’ll get this in there nice and early: it’s green. That’s one category ticked off the list!

We wanted to get into the detail of the deal: what exactly could it mean for the company and investors? Reed stated that Neometals has acquired a “call option to acquire what is the world’s largest stockpile of high-grade vanadium slags.” The 27-month consideration period will allow Neometals to conduct its extensive due diligence on the potential vanadium plant, which will result in a feasibility study completed by December 2022. Upon the finalisation of this study, Neometals will make its FID.

If Neometals decides to proceed, the company will enter into a 50/50 arrangement with Critical Metals, which will be reinforced with the certainty of a supply agreement from steel giant SSAB, the largest fuel-maker in Scandinavia. In fact, Critical Metals has already signed a 10-year term with its own Swedish subsidiary, Recycling Industries Scandinavia, who will initially purchase 700,000t of waste slag from SSAB, followed by a minimum of 200,000 dry tpa. Reed remarked that the total OPEX prior to Neometals’ FID will be A$5M: a figure Neometals can comfortably afford, and one that slots perfectly into the project generator narrative that has provided the company with such success.

Tailings VS Slag

Investors need to understand the key differences between tailings and slag.

Tailings is the waste rock at a mine after the raw ore has been processed to remove the metal, whereas slag is a glass-like by-product left over after a desired metal has been smelted from its raw ore.

Neometals’ recycling of the slag is extremely economic and acts as a remediation process; the glass itself will change colour from black to white.

Another Smart Play

We then moved onto the stuff that really matters for investors: we needed to know the potential upside in terms of profit.

Reed was keen to explain that the steel slag with vanadium content has a standard benchmark vanadium grade of 3.9% V2O5, 2-3X higher than any producer can make in a concentrate before a similar level of processing.

The real advantage is that this product is sitting at surface and carries no mining risk, with a grade that would get most miners hot and sweaty. There is no mining cost, no crushing plant, no grinding plant, no magnetic gravity separation plant, and no kilns for the traditional salt-roast-leach process. “50%” of the CAPEX had been wiped out straight away.

Stainless steel rods
Stainless Steel provides a constant demand for vanadium

However, will investors be worried about the commodity itself? Is vanadium an intimidating risk? We’re not so sure. While vanadium is a volatile commodity, the macro story, including fundamental demand in stainless steel production, and the potential growth of VRFBs, still positions vanadium as a promising commodity that can make investors plenty of money.

We had a key question for Reed that could have undermined the project’s holistic green credentials. Once the recycling of the slag heap has been conducted, what happens to the inner pile of largely calcium/iron-bearing residues? Reed states Neometals will take responsibility for it, either safely disposing of it, or reinserting it back into the start of the steelmaking process. The green thematic seems consistent throughout all of Neometals’ operations and the management team continues to impress.

COVID-19

Moving onto our final question, and focussing on the most pressing issue of our times, how is Neometals coping with COVID-19?

Oddly, Reed sees the pandemic as the element that forced Neometals and Critical Metals to get the deal over the line when it did. Reed states coronavirus will have a minimal operational impact; mining in Australia is considered an essential service. In addition, the low population density of Australasian countries has allowed them to combat COVID-19 better than the more densely packed European countries.

This vanadium recycling deal with Critical Metals looks like another inspired play in the Neometals playbook. High-grade, lowest-cost, high-margin, ESG credentials, no mining risk, low-CAPEX, and in the European circular battery economy. Investors will need to consider if the Neometals proposition is part of that solution; we think it is.

Company Website: https://www.neometals.com.au/

If you see something in this article that you agree with, or even disagree with, please let us know in the comments below.

Any advice contained in this website is general advice only and has been prepared without considering your objectives, financial situations or needs. You should not rely on any advice and / or information contained in this website or via any digital Crux Investor communications. Before making any investment decision we recommend that you consider whether it is appropriate for your situation and seek appropriate financial, taxation and legal advice.

Neometals Hero Logo

Blackstone Minerals (ASX: BSX) – A Major Strategic Partner The Market Hasn’t Noticed?

The Blackstone Minerals company logo
Blackstone Minerals
  • ASX: BSX
  • Shares Outstanding: 192M
  • Share price A$0.14 (08.04.2020)
  • Market Cap: A$27M

Last week, Crux Investor interviewed Scott Williamson; he’s the Managing Director of Blackstone Minerals (ASX: BSX). Blackstone Minerals is a nickel-cobalt-gold (battery/precious metals) company looking to get into production within the next 3 years. That’s certainly an ambitious stance!

There are numerous articles and interviews on the Crux Investor platform relating to nickel, or the EV revolution. Why not check some of them out? You won’t regret it.

Blackstone Minerals offers a low-cost, high-grade, bulk-tonnage nickel project in Vietnam, and now it has brought a major backer to the table. But why hasn’t the share price moved? Williamson is targeting nickel + co-product (platinum, palladium, gold, rhodium, copper, cobalt) production within the next 3 years, and claims the company’s new major partner will hold them to this commitment.

We discuss:

  1. Company Overview
  2. News Announcement: Negotiations and Terms
  3. Market’s Reaction: What has the Share Price Done?
  4. Vietnamese Assets
  5. Monetising the Bi-Products
  6. Low CapEx Compared to Peers: Getting into Production
  7. Plans For 2020 And Beyond
  8. BFS Timings: Who’s Financing the Studies?

Company Website: http://blackstoneminerals.com.au/

If you see something in this article that you agree with, or even disagree with, please let us know in the comments below.

Any advice contained in this website is general advice only and has been prepared without considering your objectives, financial situations or needs. You should not rely on any advice and / or information contained in this website or via any digital Crux Investor communications. Before making any investment decision we recommend that you consider whether it is appropriate for your situation and seek appropriate financial, taxation and legal advice.

The Blackstone Minerals company logo

RNC Minerals (TSX:RNX) – The Dumont Nickel-Cobalt Project: An Exciting Option?

The RNC Minerals Company Logo.
RNC Minerals
  • TSX: RNX
  • Shares Outstanding: 608M
  • Share price C$0.31 (31.03.2020)
  • Market Cap: C$185M

Fresh off the back of our uplifting interview with the CEO of gold producer RNC Minerals (TSX: RNX), Paul Huet, Crux Investor interviewed Johnna Muinonen, the President of Dumont Nickel (a subsidiary of RNC Minerals).

You may also want to check out our last update from Huet. We’ve covered RNC Minerals with detailed investigative articles for much of the last year. Make sure you check them out.

RNC Minerals investors have been focussing on the company’s strong, stable gold-production, but have they been overlooking one of the most exciting elements of the story? The Dumont Nickel-Cobalt Project could offer investors exposure to the EV revolution, as nickel and cobalt demand are projected to swell. RNC Minerals will look to monetise these assets once the time is right, and nickel and cobalt markets are favourable.

Cobalt has some ethical concerns, and a contributor has covered these in detail on this platform.

Investors will be clamoring for information about Dumont, and Muinonen was happy to oblige, providing Crux Investor with plenty of nickel nuances and cobalt considerations.

We Discuss:

  1. Overview of Dumont Nickel
  2. The Nickel Market: The Impact of Covid-19 and What’s to Come
  3. Positioning and Differentiating Dumont in the Market
  4. Greener Mining Solutions Being Applied at Dumont
  5. Timing on Monetising Dumont: The Ongoing Conversations
  6. Fully Financed: How Long Will the Money Last?
  7. Feasibility Study: The Highlights

Company Website: http://www.rncminerals.com/

If you see something in this article that you agree with, or even disagree with, please let us know in the comments below.

Any advice contained in this website is general advice only and has been prepared without considering your objectives, financial situations or needs. You should not rely on any advice and / or information contained in this website or via any digital Crux Investor communications. Before making any investment decision we recommend that you consider whether it is appropriate for your situation and seek appropriate financial, taxation and legal advice.

The RNC Minerals Company Logo.

Element 25 (ASX: E25) – An EV Player That Wants To Be Taken Seriously

The Element 25 company logo
Element 25 Ltd
  • ASX: E25
  • Shares Outstanding: 92M
  • Share price A$0.11 (27.03.2020)
  • Market Cap: A$10M

Crux Investor recently interviewed the Managing Director of manganese developer, Element 25 (ASX: E25), Justin Brown.

Element 25 is an ASX-listed manganese junior focussed on the development of the 100% owned Butcherbird Manganese Project in the southern Pilbara region of Western Australia.

We’ve interviewed manganese companies in the past; it may well be worth watching. There are also some manganese-related articles on our platform.

Element 25 has a lot to say for itself, but the market doesn’t appear to be listening right now. Why?

We Discuss:

  1. Team Experience
  2. Nobody in the Market Cares for Element 25: What are the Reasons?
  3. The Numbers: Financing, Facility Deal, Cash Position and Burn Rate
  4. Plans Going Forward: Studies to be Done and Knowledge on the Economics
  5. Manganese Market: Big Players, Supply & Demand

Company Website: https://www.element25.com.au/site/content/

If you see something in this article that you agree with, or even disagree with, please let us know in the comments below.

Any advice contained in this website is general advice only and has been prepared without considering your objectives, financial situations or needs. You should not rely on any advice and / or information contained in this website or via any digital Crux Investor communications. Before making any investment decision we recommend that you consider whether it is appropriate for your situation and seek appropriate financial, taxation and legal advice.

The Element 25 company logo