Categories: Energy
Topics: General Energy

Medallion Resources (TSX-V: MDL) CEO Mark Saxon on Medallion's Role in the Rare Earth Supply Chain: “At the Right Place at the Right Time”

Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the President and CEO of Medallion Resources (TSX-V: MDL)(OTC: MLLOF), Mr. Mark Saxon. Mark, how are you?

Mark Saxon: Gerardo, good afternoon. Lovely to talk to you again, it's been a while.

Gerardo Del Real: It has been a while. You and I go back, I want to say, a little over a decade. Obviously, you're coming in as the new President and CEO of Medallion Resources. I know you from the Flinders and Tasman days back in the day. I did very well with both of those companies. 

Here we are now in 2020 with what appears to be the beginning of another rare earth cycle that obviously hinges a lot on the tensions between China and the US, and frankly, just the geopolitical backdrop that seems to be escalating every day.

Before we get into some of that, can you talk a bit about some of your background? Then let's talk about Medallion and why you've decided to join the team at the new position.

Mark Saxon: Yeah, for sure, Gerardo. Lots of parts of that question, I suppose. Thank you for the kind introduction. Yeah, that's correct, that we met each other about 10 years ago when we were discussing Tasman Metals and Flinders Resources. So those were two companies that were particularly focused on discovery and development in Sweden, particularly for graphite for Flinders, and rare earth metals for Tasman.

I was the CEO of Tasman Metals, I'm sure you recall. I have still lots of good feedback on the way things went for Tasman. We started the company at the typical range of $0.10 to $0.20, and we ended up at $6 because of a great discovery we made in Sweden. You don't get to do that in every company, but that was a great lesson on what can happen. We still talk fondly about that experience.

I've continued in the rare earth sector and continued to hone my craft, I suppose, and get to know people, understand the business very well. That's led me to Medallion Resources. So I've recently left a company, Leading Edge Materials, that I know you're aware of and put that into good hands, Swedish management. I was invited to take over from Don Lay who has been running Medallion for almost a decade. Decided to take this one on and see if I can contribute to the story. So it's an exciting time.

Gerardo Del Real: You are one of the most articulate and most well-informed experts in the rare earth space. You are someone that throughout the years I've always referenced when doing research, doing due diligence. Can you explain a bit about your background in the space and just provide a brief overview about rare earth elements and why they're so critical, pun intended, to the future of everything, frankly, right? The bottom line is, whether it's a smartphone or an MRI machine or an electric vehicle, there's industries that depend on these elements in the billions of dollars. Can you talk a bit about that, Mark?

Mark Saxon: Yeah, for sure. As you said, I've been in this market and this industry for about 10 years. It's an industry that is quite tough and it does reward perseverance. You see companies coming in a little bit late. You really need to build a relationship and you need to get to know customers and you need to get to know the supply chain. So not an easy one to come into. I think I've learned most of the hard lessons anyway.

But when you ask about rare earths, by themselves they're not that exciting. They're a row of elements that sit at the very bottom of the periodic table. If everybody remembers their high school chemistry, you maybe never even got down to that point. It was the last thought, I suppose. But if you imagine the periodic table as a whole, the top part of the periodic table are the metals that we know extremely well. We know the properties for zinc and copper and iron, and we know exactly what they do and how to make use of them.

With rare earth metals, they have some different chemical properties and they have quite unusual and unexpected chemical properties. One of those, obviously, that is very important to us is magnetism, that they can be made into very high-strength permanent magnets. Another one is that they can have a small amount of energy and emit light. So again, you don't need that in every circumstance, you're never going to build a bridge out of that material. But if what you need is the property to emit a small amount of light or to make something magnetic, then that's where you go.

So looking ahead,I think rare earth metals – and I'm stealing this quote – but they've been called the salt and pepper of industry, because you just add a small amount and it gives a particular function to another metal or an element or a compound to give it a very exciting and different function. So that means lighter weights, that means higher strength, that means, as you said, in EVs, it allows an EV to be lighter, which means that the battery can have a longer distance. If you think about, say, Maglev trains, where a train can sort of float above railway tracks, that's because of high-strength magnets. 

So there's lots of applications that are emerging and there will be many more as the research is done. I think the US and Europe as well need to be part of that story.

Gerardo Del Real: Absolutely. Now you joined Medallion as an advisor, I believe, back in June of 2016. Is that correct?

Mark Saxon: Yeah that's right, Gerardo. So I've known the story for quite a long time and enjoyed the company of the people and been part of their research and decided to get more involved over the last year. It's been a natural transition for me to sort of help out the company.

Gerardo Del Real: Where do you see Medallion moving forward? Obviously, Medallion has a tiny market cap. Where is the market cap today, Mark?

Mark Saxon: Yeah, so the market cap in Canadian dollars is $5 or $6 million. We're sort of at the startup kind of stage, I suppose, after a decade of trade. But I guess the company has many milestones in front of it. They're the things we're looking at over the next 6 months to achieve. 

The company is particularly technology-driven in the rare earth space. It doesn't own a resource, not like most Canadian junior companies. So we're technology-driven with a process that extracts rare earths from a waste by-product. So it's an unusual story. So we're working through technology milestones rather than resource milestones, but that gives us a real opportunity to move quickly. We don't need to open a mine, we need to install a technology. That changes the story a bit from Medallion compared to most of its peers.

Gerardo Del Real: How long has the team at Medallion been working on this technology?

Mark Saxon: So I guess in earnest, let's say five years, where they've had great support from the Saskatchewan Research Council, where there's been a lot of expertise to get things done. So there's been a real push over the last five years to sort of perfect the technology.

So the technology they're applying is one that has been used in part in China to process some rare earths. Medallion, the scientists, have taken the technology and made it more suitable for North American conditions. Lots and lots of process improvements that allow it to be sort of considered a transferable technology or something that would be more suitable for non-Chinese locations.

Gerardo Del Real: You just said it, there's a scramble right now for companies and supply chains and governments to find and establish an independent supply chain, right? Independent, critical metals supply chain. How does Medallion plan on contributing to that? And have there been discussions with the government here in the US and elsewhere about a collaboration or potentially being able to license or use the technology?

Mark Saxon: Yeah, for sure. Like you said, rare earths are a very hot political subject because, at the moment, the supply chain is very dominated towards Chinese suppliers. Really, it was a Chinese industry. Chinese government had a lot more forethought than most other regions. They saw the opportunities that were being provided from the chemistry of rare earth metals and made a lot more early investments and were a lot more aggressive in the sector. So they've managed to bring the mining, the processing and the end use of rare earths into China.

I think it's now time for other regions to get involved in that story. US is one, Europe is one, Australia is one, where we're trying to add value to the materials before they leave the country and ensure we have security of supply as well. So the US has been very active. At the moment, the United States is extremely weak in the rare earth metal supply chain. So everything that comes into the United States, whether it's for industry or for military, is coming from Chinese suppliers.

That's just the way that the supply chain is working and it has worked okay over the last decade, apart from some very well-known problems early in the decade. Without a supply alternative, the US has to be a price taker and also be in the hands of Chinese suppliers. There's really no way to push back against that if you don't have your own supplier. So the US is looking at ways to invest in the supply chain and to look at the barriers that are in the supply chain inside the US to see if an industry can be established.

Certainly, there's money available for that from Department of Energy, Department of Defense. Both looking at ways to give companies like Medallion and a bit of a push, give them the funding they need to complete their research, and secure a supply chain, which is very important for US defense.

Gerardo Del Real: Mark, I want to thank you for taking the time. I love being early to stories. You have a very, very solid share structure. You have a tiny market cap. Frankly, the company's involved in a space where the upside is much like Tasman back in the days. We talked about that success. Increasing value to a market cap that's around the $4 or $5, $6 million level is not very difficult to do if you're able to execute.

I got to say, I remember a time in the critical metal space where a team of the caliber that Medallion has in place would command a $30 to $50 million market cap, just based on the team alone. So, the upside is obviously pretty substantial. I want to bring you back on here soon to talk about the specifics of the technology, how you plan on advancing that. 

Is there anything else before I let you go that you'd like to add, Mark?

Mark Saxon: No. Thanks very much, Gerardo. I think that's a good overview of what we're trying to do. Yeah, I'd love to talk more about the technology, which is really where the magic is. The great job that Medallion has done in the past is putting the company in a position now for growth. Let's say the ducks have aligned in terms of the story that the US is more in need of these materials than ever before and Medallion is at the right place at the right time.

Gerardo Del Real: Well, I think your timing is excellent. Congrats on the new position. Let's chat again soon.

Mark Saxon: Thanks, Gerardo. All right, chat soon. Have a good day.