Categories: Base Metals
Topics: General Base Metals

CoTec Holdings (TSX-V: CTH)(OTCQB: CTHCF) CEO Julian Treger on MRE, PEA & 2024 Catalysts

Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the CEO of CoTec, one of the most unique resource speculations in the space, CEO Mr. Julian Treger. Julian, great to have you on. How are you today?

Julian Treger: Very well, Gerardo, and so wonderful to be on your program again.

Gerardo Del Real: Well, let's get right into it. You just had some pretty impressive news. Given the 30 million-ish market cap that you have, you announced an initial mineral resource and a PEA, a very positive PEA, by the way, for your iron tailings project in Quebec, Canada, part of a multi-pronged strategy with several projects.

Can you go over the context, the basics of the PEA, and the mineral resource estimate? And from what I understand, there's a lot of upside there, so I definitely want to get to that part in the second half of the conversation.

Julian Treger: Yeah, absolutely. We bought the rights to a old tailings deposit in Northern Quebec, which was from an defunct mine. It's very much on strategy for CoTec to look at recycling waste and do so in a super green fashion, and we felt that there was great potential from the site. We've spent some time and money getting external validation from competent persons, and that shows that roughly for a $60 million investment, we get a $60 million NPV around a 30% IRR, but that's after very conservative tax assumptions, no real carbon credits.

And what's interesting is that that really just covers about half of our deposit because we are dealing with tailings and waste generally, not like mining, where you have to have lots of drilling. The deposits are quite uniform in quality, so we think that the NPV is well north of a hundred million dollars when that's taken into account. And that is just the first stage of a plan to find other sites regionally and then build ultimately a pelletizing project with the technologies we're invested in. So we think it's the beginning of something quite large and, as you say, relative to our tiny market cap, you can see just from one project, there's many multiples of upside that are now being agreed on by external experts.

Gerardo Del Real: Can you speak a bit to the cold bonding technology? Because I find that pretty fascinating. It's not common in the space that we hear companies using the business model that you're using. I think obviously it's unique. I think you have a great moat. You have first mover advantage and a lot of these projects and deposits. But can you speak to that specific technology and how that could help enhance the economics of it?

Julian Treger: Sure. Well, the cold bonding technology is, as you say, a unique world leader. What we do is create pellets at around ambient temperatures. So rather than 1,200 degrees, which is the traditional way of making induration pellets, the carbon footprint of this technology is much, much lower. And ultimately when carbon credits become more uniform, there's going to be a significant economic incentive to use this technology.

It also uses, because of this, a much cheaper way of building the plant so the capex is around 20% of traditional ways of doing things. The opex is slightly higher, but overall, we believe it's very competitive, particularly given the emphasis on reducing carbon footprints. In fact, we think it's going to be very difficult to build any more traditional induration pellet plants. So we think this is the future. We've tested the material from Lac Jeannine at binding solutions and the resulting pellets were very attractive.

But we probably will identify one or two more sites in Quebec or in Ontario and use those two or three sites to supply a central space for the pelletizing, which is sort of a second stage after the concentration for these high quality iron that we're going to be producing.

Gerardo Del Real: You're also rushing to get a feasibility study ready. Can you talk about that a bit?

Julian Treger: Yeah. I mean, what we've done is the first study which shows that this is viable. This will be followed by a further study. We'll have to do more drilling, more detailed work. We also have to tie down the logistic costs. So it's very much a work in progress, but it doesn't stop us identifying other sites in the meantime, which we think are complementary to this one. So we will be and have been having discussions with the governments in Quebec and in Canada about how this can really make a difference to them.

One of the interesting aspects is that they're on the hook for the rehabilitation expenses of sites like these, which are orphaned. The original owner went into closure a long time ago, and those obligations amount to many billions of dollars. We think we can really help the provincial and central governments reduce this contingent liability with these opportunities to recycle these sites. So it's very exciting for them as well.

Gerardo Del Real: What comes next? We talked a little bit off-air and I mentioned that you have several irons in the fire. We talked about the minuscule market cap. I don't think it's a coincidence that you're the single largest shareholder and continue to add at current levels, but what comes next for CoTec?

Julian Treger: Well, I think now that we're out of the closed period, I'll probably keep adding to my position. Because as you can see, just from this project, once you add in the size, the double the size of the deposit plus the pelletizing just from this little project, you have something worth a couple of hundred million dollars. And then we want to find other projects.

We're particularly excited about our magnet recycling business, and we'll be announcing the results of a similar study in Q4, and that has enormous potential. We are looking at other interesting technologies. We just announced appointment of a senior, a lady very well-connected in Washington to help us with our magnet recycling business. So there's lots of developments. We'll do an update for the market. And of course, we also own 17% of an iron ore deposit and plant in Minnesota, which have billions of dollars of value and replacement value. So it's all pretty exciting and lots to be done.

Gerardo Del Real: Looking forward to having you back on. Great work, sir. I don't think it's a coincidence that you're taking the same methodical and tactical approach that you have in the past that has made you and shareholders and partners countless, millions and hundreds of millions of dollars. Congratulations. I'm looking forward to hearing from you soon.

Julian Treger: Thank you. Thanks for having us for an update and speak soon.

Gerardo Del Real: All right. Cheers.

Julian Treger: Have a great weekend.

Gerardo Del Real: You as well now.

Julian Treger: Bye-bye.