CoTec Holdings (TSX-V: CTH)(OTC: CTHCF) CEO Julian Treger on Monetizing a Broad Range of Mineral Assets via Strategic Investment in State-of-the-Art Mining Technologies

 

Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the CEO and director of CoTec Holdings — Mr. Julian Treger. Julian, it's a pleasure to have you on. How are you today, sir?

Julian Treger: I'm great, Gerardo, and thank you so much for having us on today.

Gerardo Del Real: Thank you for taking the time. This story was introduced to me by my friend and business partner Mr. Nick Hodge who has a knack for discovering really unique business models and risk-reward propositions. 

And when I started digging into the story, there were a lot of boxes that were checked for me. The quality of the team — and I want to start there with your background in just a second — the share structure, the insider ownership, and the first-mover advantage. 

I want to get into all of that. But I think it's worth noting and highlighting a bit about your background because it's pretty extensive, especially given the early stage and nature of the current market cap for CoTec.

Julian Treger: Yes, and it is unusual for me to be involved in something of this scale. I've been investing in the natural resource space for the last 20 years. We put about C$500M to work, and we increased the value to C$2.5B. So we made about a 5X multiple of invested capital. 

And when I exited my previous role, where I was CEO of a public company in the UK doing non-precious royalties, I was looking at new opportunities. And it struck me that our sector is one of the few that hasn't been disrupted by technologies. 

Why isn't there a Tesla or an eBay of the mining space? And that is what CoTec is all about. That's what we're trying to invent and create here. It's a long-term project but it's super exciting and has a lot of opportunity.

Gerardo Del Real: You have a current market cap of just over C$30M, and yet, again, you have a history of success and so does the team, so does the board of directors, of monetizing assets for hundreds of millions of dollars and have transacted billions of dollars. 

So again, the early stage and nature of the business proposition is really, really interesting to me. For those that aren't familiar with how you plan to be, as you mentioned, the Tesla or eBay in the sense that it's disruptive of the mining industry, can you explain the core strategy of CoTec?

Julian Treger: The core strategy of CoTec is initially to identify really forward-looking strategies, which do move the needle, which change the way in which commodities are extracted. And by the way, these are super-green strategies. They use much less heat, they use much less water, and they're much cheaper. 

These technologies are much more modular than historical ways of doing things. And we've looked at around 300 of these and we've invested in three or four. We're looking at another one or two; we might do another two. Once we've got an investment in one of these technologies — and we do our due diligence carefully — we then try and apply them to assets that haven't been valued previously because they weren't economic. 

So it may be marginal mines, it may be mines that are closed because they're unprofitable. And a lot of it is about waste, the circular economy, and recycling; things that are seen to be actually liabilities but with the right technology are assets.

We aim to have interests in about 8 to 10 technologies in the end. But we aim to apply them to 30 or 40 assets. And in that way, we will build up, very quickly, a diversified business that extracts commodities very cheaply, and in a green way, at low costs from assets that were previously very expensive. 

And the best way to make money, in my view, from the mining sector is to buy assets cheaply. And that's what we are doing. So we have the first technology, and now we've got the first assets being developed. And I think we've already created multiples of the current market cap in terms of value, which we can talk about later in our conversation.

Gerardo Del Real: I think it's a perfect segue. I wanted you to touch on the technology for just a bit because, again, it's unique and it’s disruptive. But for a lot of people, when they hear the word disruptive, they may hear that and really not know what it means or what the first-mover advantage actually provides as to a CoTec shareholder. 

Can you touch on that a bit because I know the board of directors that you've put together? And your technology consultant, again, is someone that was the recent head of innovation for Rio Tinto. So with CoTec, we’re talking about a company worth C$30M, and with Rio Tinto, we’re talking about a company worth many, many multiples of that. 

I have to believe that the network that you have access to is going to provide you, again, that first-mover advantage both on the asset merger and M&A front and also on the technology.

Julian Treger: Well, first of all, I don't think what our business is worth is reflected by the market cap. I think the business is already worth a few hundred million dollars, to my mind, and that's why I continue to increase my shareholding in the business. And I think we can ultimately scale a business worth many billions of dollars. 

But unlike most technology companies, we aren't doing what is common in Silicon Valley. We're not using AI or facial recognition or sensors. We are really looking at the problems, which our team knows from having worked in the sector for many, many years as to how we can extract and process commodities in a better way. 

And we are focusing, at the moment, on three commodity sets. One is green steel, one is green copper, and the other is rare earths. And I think also, hopefully by luck and also by skill, we’ve selected areas that the Chinese are less able to manipulate because a lot of the battery metal inputs have really been disrupted by predatory pricing from China over the past couple of months.

That's not a problem we are facing. And so we are looking at technologies in the sector with which to process very fine materials, including the recycling of magnets and the leaching of copper from low-grade deposits. These are ways in which we can actually have an advantage over others because the technologies are patented. And there are ways we can also get to revenue much more quickly than traditional mining would be. 

These days, it takes about 20 years from discovering an asset to bringing a mine to production. We think that, by using these technologies — restarts and reworking waste — we can do that in three to five years, which is warp-speed relative to the way in which things have been done in the sector. 

It’s also a way for the West to plug the gap in critical materials, which is becoming more and more of a security issue. And many aspects of the US government are very interested in what we're doing.

Gerardo Del Real: I think you're going to have a wealth of government support. Because of the depressed environment that we're coming out of in the commodity space, I think, clearly, there's going to be a pretty spectacular opportunity to handpick assets that can quickly, quickly bring revenue streams. 

You mentioned that kind of three-to-five year timeframe. Walk me through what the rest of 2024 is going to look like as far as catalysts go. Also, you touched on increasing your share ownership, and I couldn’t help but notice that management and the board own over 70% of the outstanding shares. Is that still accurate?

Julian Treger: Yes, I think that's accurate. I own around 40%, and I'm planning to gradually increase my shareholding to closer to 50%. I can't go above 50% because we have just under a hundred million dollars of tax losses, which we would lose if there was a change of control. But I'm super optimistic and happy to continue supporting the business. 

And to get back to your question, there are multiple catalysts, and we'll see how they fall during the course of the year. First of all, we are looking, on the technology front, at one or two new technologies, which we’re super excited about that have applications to multiple commodities. We'll see if those come to fruition. 

And then, running through the asset base, we expect during Q2 to have an announcement on our MagIron stake. The MagIron project has a $2B NPV; CoTec owns 17% of that. As we get it up and running, there may be some dilution but there'll be a lot of value creation. So we'd expect something there. 

We are doing a study to launch our magnet recycling business in the US. There'll be lots of developments on that front as we hire a team, identify locations of the sites, and get contracts from suppliers of the e-waste. And that business will also be developing in the UK, Germany, and other parts of the world. So just that business, I think, will have a lot of news flow. 

We’re also doing a study, which should come out in the next couple of months, on our first waste reclamation site — an iron ore site in Quebec. Once announced, that’ll be super interesting. We’re also negotiating on some other waste sites in Ontario. 

And then, finally, our last major technological investment was a new way of leaching copper. It normally takes about a year from the time we make a technology investment to identifying the first asset that we can apply the technology to. And hopefully, in Q3 or in the latter part of this year, we'll announce our first copper project, which will be the beginning of a copper division for us. 

So lots of catalysts to look out for in the coming months.

Gerardo Del Real: Well, it's exciting times. I love the due diligence process. Something that stood out, aside from the 70% management and board ownership, is you mentioning that you looked at some 300 assets — and of those, you selected three. That should communicate, I think, to our audience the due diligence process and how serious the team takes the assets that are rolled into the portfolio. 

Julian, it's been an absolute pleasure. You have a lot of news. I think that you and I will likely be chatting sooner rather than later. Anything else you'd like to add to that, sir?

Julian Treger: I think the due diligence is a symbol of us investing mostly our own money. We're very careful, and we're very ambitious. The board has many CEOs and veterans on it. And we are super excited about the path in the months ahead, and I look forward to updating you as we make further announcements, Gerardo. 

Gerardo Del Real: Thank you, sir. I think you're hitting the sweet-spot of the commodity cycle. I think your timing is absolutely perfect. I love the share structure, the team, the business model, the first-mover advantage… and I think it's going to be a pretty profitable and fun run. Thanks again, sir.

Julian Treger: A pleasure. Speak soon, thank you.

Gerardo Del Real: Cheers.