Hertz Lithium (CSE: HZ)(OTC: HZLIF) CEO Kal Malhi on Advancing Flagship Lucky Mica Lithium Project, Arizona, Via Advanced Extraction Technology


Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the CEO of Hertz Lithium, a new lithium play for our audience — Mr. Kal Malhi. Kal, how are you today?

Kal Malhi: I'm good, Gerardo. How are you?

Gerardo Del Real: I'm well. Listen, you and I had a chat, an off-the-air chat, a couple of weeks ago. And obviously, we have some mutual holdings and mutual positions that have done well for us. 

And so I definitely want to talk all-things Hertz Lithium. I think it's an interesting company. There's some interesting technology that the company is tapping into, and you have some assets that I think definitely merit a discussion. 

But before we get into that, I would love to get a brief introduction for those not familiar with your background and just kind of how you got into the lithium space. Because I think it's better-lucky-than-good sometimes, and I think you've been a bit of both here in the past couple of years.

Kal Malhi: Yeah, Gerardo, I think the success in any business always comes down to the people that you get involved with and also what you do with the contacts and the opportunity. So I've been very fortunate. 

I've known Jody Dahrouge for a long time in the market so we've done a few projects together. And I got involved with Jody on Patriot Battery Metals before they started hitting at Corvette. So we're lucky. We're positioned in Patriot Battery through an investment issuer that I have that's listed on the TSX Venture Exchange called Coloured Ties Capital. 

We own about 1.8 million shares of Patriot in that entity; I also own Patriot personally. But I've been following what Patriot has done very closely and what the lithium space has done in general over the last two years. And as you know, it's about one of the few mining sectors that's alive right now.

So we're fortunate to be involved heavily. We have a big position in lithium throughout James Bay as well as holdings in Patriot and other investments through Coloured Ties. But with our knowledge in lithium, we acquired a project in the Arizona Pegmatite Belt in 2021 that has since become Hertz Lithium (CSE: HZ)(OTC: HZLIF). And we're now working aggressively at Hertz Lucky Mica property located within the Arizona Pegmatite Belt.

Gerardo Del Real: Tell me about why Arizona and what it is about that pegmatite belt that attracted you to the region.

Kal Malhi: Gerardo, we wanted to be systematic in that we are very heavily invested in James Bay. But we wanted to look outside and find something that was closer to the end users for lithium and wanted it to be something that's in a mining-friendly jurisdiction. 

And we didn't want to look for a monster deposit that would take years to become a producer. Even a small deposit in the area where we are, just outside of Phoenix, Arizona, is close to infrastructure. It's along what's been demonstrated to be a pegmatite belt; formally dubbed the Arizona Pegmatite Belt. 

And we acquired a property there that had been worked in 2016 before the last lithium financing dried up. And we were able to acquire that based on those merits of the property being close to end users, with infrastructure and historical results.

Gerardo Del Real: Walk me through how you view Hertz because I mentioned this patented technology, and you have some partnerships there that I think are pretty significant. Penn State University is pretty well-known to anybody that pays attention. And I found that aspect of it, the partnership to develop the patent pending lithium processing technology. 

Tell me how you view Hertz. Is it two parts… like one part technology company… or do you view it as a traditional lithium play that happens to have this other branch to it with the technology patent?

Kal Malhi: Like I said, Gerardo, we want Hertz to be a near-term producer of lithium so we're not targeting a monster deposit. Our Lucky Mica project is developing very well. We've got some neighbors that are listed on the ASX. 

And funny enough, our surrounding property is owned by a company called Patriot Lithium — no relation to Patriot Battery — but they're Patriot Lithium listed in Australia. So the name Patriot has been good to me. And they've been making several discoveries throughout their property which surrounds us on the eastern and western property borders. We've just hit the ground on our Lucky Mica project back on May 2, and we're getting excellent reports on our ground with three new pegmatite clusters north of our Luck Mica discovery. 

So the Lucky Mica project is a target for us to define a 10 to 15 million tonne deposit with a quick-to-market. And we've followed that up with partnering with Penn State. And our partnership with Penn State is to further develop and commercialize their patent-pending lithium extraction technologies from hard rock lithium sources.

Gerardo Del Real: Walk me through what the second half of this year looks like for Hertz. It doesn't sound like you and the team want to waste much time. It sounds like, as you mentioned, you're hitting the ground running and you're really looking to drive Hertz not just higher in terms of share price and market cap, which we'll talk about in a second, but in terms of just advancement towards that production goal that you stated.

Kal Malhi: Yeah, Gerardo, we're a little bit of a different beast than a lot of junior lithium companies, which are usually starved for capital. We're kind of fortunate that we have a good start with our Patriot Battery wins and some of our other wins. 

We're also funded by my private company, which is Bullrun, as well as Coloured Ties Capital, the investment issuer. On top of that, we have a very strong relationship with Canaccord Capital who did our IPO raise. And we just started trading two months ago.

So unlike a lot of companies that are starting out, we do have access to capital. And we believe we've got a start in the lithium sector with our Lucky Mica project as well as our license to develop extraction technologies with Penn State. And with that start, we've just commenced trading, like I said, two months ago. We did our IPO at C$0.125; we're trading around C$0.30. And we plan to leverage that going forward. 

And we started with good historical results from our project as well as our neighbors; Patriot Lithium in Australia is on our surrounding property. So everything is looking good for aggressive results from Lucky Mica as well as with Penn State.

Gerardo Del Real: How is the share structure? I understand you have roughly just under 31 million shares outstanding and I think just under 50 million fully diluted. Is that correct?

Kal Malhi: Yes, and again, our share structure is different than a lot of startups. We're able to fund a lot of our high-risk capital without having to dish out 10 or 15 cent stock. 

We funded Hertz with Bullrun Capital and Coloured Ties and Canaccord Capital providing a lot of the seed capital. So our share structure is, as they say in the industry, very tight. We don't have a lot of stock sprinkled on the street. 

And we're all vested in this deal to make Hertz a strong lithium company going forward. So our structure, really, has been intact right from day one through to right now. And our IPO was very much an ‘invite only’ kind of a scenario.

Gerardo Del Real: You have a tiny market cap; roughly C$10 - C$11 million. Walk me through the next couple of catalysts that shareholders and our audience and people that are newer to the story can expect.

Kal Malhi: Gerardo, I was at a Canaccord conference in Palm Springs where I met a lot of Australian lithium representatives that were either affiliated with Canaccord or other well respected firms. And there appears to be a lot of appetite to get involved in our projects in Arizona as well as Penn State. And I think we can use our capital structure to grow Hertz Lithium responsibly. 

And we're currently looking at other projects to help complement what we're doing. And, unfortunately, I can't guarantee anything will come of it or speak too much but I think we're going to be able to leverage our strength in the capital markets and this great start that we have with Hertz. And make Hertz a very strong lithium concern and be based strictly in North America and not be subject to some of the political issues that come from outside of North America.

Gerardo Del Real: You're well capitalized, you have a good structure, you have capital markets experience. You are in a belt that has good historic results but is relatively unknown, I think, to a lot of people in the lithium space. And you have this partnership with Penn State that I think is going to prove really, really beneficial moving forward. 

Kal, it's an absolute pleasure having you on. Anything else to add?

Kal Malhi: Gerardo, I think anybody that's in the lithium space, if they can attach themselves to Patriot Battery, is a good thing. And I've been fortunate. I was involved in a deal called Patriot One back in 2019 that reached a C$700 million market cap on a concealed weapons deal. So I was fortunate to get involved with Jody on Patriot Battery. 

And funny enough, I've been followed on our Lucky Mica project by Patriot Lithium. So we're writing the Patriot name in a big way into lithium, and now we want to turn Hertz into a big lithium name. So we're in a very good position in the lithium space, and we've got a very strong shareholder base and capital markets access.

Gerardo Del Real: Looking forward to having you back on and looking forward to seeing the progress. Thank you so much for your time today.

Kal Malhi: Thank you, Gerardo.