Rare Earth Stocks
Monumental Minerals (TSX-V: MNRL)(OTCQB: MNMRF) CEO Dr. Jamil Sader on Drilling for Rare Earths at Jemi & Lithium in Chile
Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the CEO of Monumental Minerals, Dr. Jamil Sader. Jamil, it is great to have you on. You had some news, and let me caution, it's preliminary, but it looks good. You provided an update on your heavy rare earth element project in Mexico. There's a lot going on in the space, not just for Monumental but in the macro, and so I wanted to get into that. But before that, how are you, sir?
Jamil Sader: I'm doing well. Beautiful weather here in Vancouver, and like you said, we've had some really good results at Jemi. We're still in the middle of drilling, but I really expect that when we get the assays back, they'll be as good as what we think we see in the core.
Gerardo Del Real: Well, let's get right into what you see in the core. First and foremost, how many holes have been completed?
Jamil Sader: So, to date, we have drilled 12 holes and working on lucky number 13 right now, depths of range of anywhere from 50 to a little over 300 meters, and we're keenly watching that lucky number 13. And if it is indeed really lucky, we'll drill a little bit more, and/or perhaps drill one more hole beside it. So we're getting near the end, but very good results so far.
Gerardo Del Real: Well, when you say very good results, tell me what that means. I read the release obviously, and look, I've been in and out of the rare earth space. I certainly don't have the background that you have, but I've been around the space since 2010. I did well with it the last time that China decided to weaponize the critical metal supply chain. And so I want to get into how it seems like it's headed in that direction again, but what are you seeing in the core that has you and the team so excited?
Jamil Sader: So, these are fairly shallow holes. They're anywhere from 50 to a little over 300 meters, and in those holes we've seen eudialyte, and that's the main mineral that hosts both light and heavy rare earths. But we've also seen monazite, which is light rare earths. We've seen xenotime, and that's a yttrium mineral, and yttrium is used in aluminum and magnesium alloys. And we've seen these more or less in the dykes and sills. We've intersected these quite commonly and we think that once we get the assay results back that it will confirm these minerals and some of the results that we see through visual inspection.
Gerardo Del Real: Now you mentioned drilling lucky hole number 13, hopefully lucky hole number 13, and possibly drilling another one depending on what that looks like. How many of the 12 to 13 holes have you seen this type of mineralization in? Is it just one or two? Is it a one-off or are you seeing it consistently throughout the intrusive bodies?
Jamil Sader: It's pretty consistent throughout the holes. Some of them have... Most of the mineralization that we see are in dykes and sills, and so it is consistent. But of course some holes will have a greater concentration of these dykes and sills that have intruded into the host rock compared to others. But pretty much every hole we have seen some mineralization.
Gerardo Del Real: Well, that is encouraging to say the least. When do you anticipate to have assays back? I noticed that you sent them to ALS in Mayan and in my home parents' home state of Zacatecas Mexico. When do you anticipate those results back?
Jamil Sader: Well, we sent those in about two weeks ago. So we are hoping that we will see results in the next two to three weeks. And again, at that point then we can start and make plans for potentially a phase two of the project. We can assess what we have, start to look at better tweaking our models on what we think is there. So it's very exciting times.
Gerardo Del Real: Excellent. Now let's get into the macro. I mentioned China weaponizing the critical metal supply chains, and they did this back in 2011 and it was relatively short-lived, but man, was it a very profitable run for me. And so it can turn on a dime, you know that the industry can turn on a dime. We've seen China recently ban technology for manufacturing REE products. And so to me, the logical next step, if they really are going to weaponize the critical metal supply chains the way they appear to want to is to ban the actual rare earth elements as they did the last time. How do you see things playing out and how sensitive do you think North America is to the potential of getting cut off from the most reliable source that we have for a lot of these right now?
Jamil Sader: I think the rest of the world outside of China is very sensitive to getting cut off from rare earths. China is the number one producer of rare earths all the way from the shovel, so digging it out of the ground, to these manufactured products, and in fact the rest of the world is quite far behind China to the point where even groups like MP Materials, they have to send their ore to China to be refined at this point. So we are very sensitive to it and we have actually seen recently the weaponizing of critical metals. It was just in the news recently where China banned the exported metals that are used for semiconductors, specifically gallium and germanium. So the question comes up again, "Well, could rare earths be next?" It's happened before, it can happen again. There's no end in sight for the trade disputes between China and the West. And then to top it all off right now, the Chinese economy is actually struggling quite a bit. And so they're more incentivized than ever to protect their economy. So it could get quite interesting.
Gerardo Del Real: That is an interesting thesis. It's an interesting outcome if that is indeed the direction it goes in for many, many reasons. And so obviously there's a rush here in the US and in North America to establish a domestic critical metals supply chain. It's going to take us many, many years before we get to the point where we can call ourselves independent. And so obviously something I think everybody in the resource space should be watching. I am very, very bullish in the lithium space and I can't let you go before we talk about your Laguna Blanca project in Chile. It's the primary focus in Chile at this point. And the last time that you and I spoke, we mentioned that there was some fear tactics being used in the media about the potential for the nationalization of lithium, which I thought wasn't a fair characterization of what was coming out of the government from Chile, though I must admit they did themselves zero favors in the wording that they chose. But it doesn't appear like Chile is nationalizing lithium. Can you speak to the situation there and that project?
Jamil Sader: No, they're not nationalizing lithium, but I can very much understand where people might get that idea from. But what I can explain is that there are really two aspects. There's the Salar de Atacama is leased land and is strategic to Chile, and then there's everyone else. And we sort of fall into the everyone else category. And what we know from the government so far is that they're going to start issuing the special lithium operational contracts or CEOLs starting in early 2024. And we still don't have all the information yet. So this is why I do understand why people think that Chile is nationalizing lithium.
But what we do know is that either it could be an agreement with Enami, which is a state copper company or it could be a royalty tax structure. And the way that I think about it is that whether either/or, it's basically six of one half dozen of another. And just to give an example, for copper and Chile, if you're a major copper producer in 2024, you're going to be paying nearly 47% in total taxes and royalties and so on. If you're lithium in Argentina or Australia, you pay around 35%. So we kind of think that either/or, six of one and a half dozen of another, we're probably going to be in that range.
There is no nationalizing of lithium. And further to that, I would say that there has been a recent bill that has been put forth by the majority party in the Chilean Constitutional council, which would essentially make Chile a grantable mineral substance like copper. So basically it would be, as a miner or as an explorer, you would treat it the same as copper. So there still are changes there, but I think that Chile is taking kind of a cautious approach and they want to make sure that they do this right. They want to ensure that they get the benefit that the country deserves for their mineral wealth, but also that they are able to draw in and bring in foreign investment and really so that everyone can make money out of it.
Gerardo Del Real: It's clear to me that what Chile really wants is a partnership with a lot of the companies that are going to be operating within its border. And so if that's going to be the case moving forward, how does Monumental navigate that? Is there a scenario that you and the team has modeled as to how a potential partnership might actually work to the company's advantage?
Jamil Sader: Yeah, so we've been talking to the government, we've been talking with various experts, policy experts in Chile, and what we see is that once we're able to drill, once we have our community engagement finalized, then we can go to the government and say, "Hey, what do you want to do with us? How do you want to structure something?" And I think that engaging the government at this point is really the best way forward for us.
Gerardo Del Real: Well, I'm looking forward to seeing what those details look like. I know it's definitely a work in progress as to standardizing what those agreements are going to look like. Because look, let's be frank, they're going to look different for producers than they are for explorers, like a Monumental. So hopefully you're able to come back and provide us some more context and clarity as that situation develops and as those agreements are starting to be standardized and finalized. Anything to add to that Jamil?
Jamil Sader: All I would say is that for Monumental overall right now we have an excellent cash position to continue to carry out our work at Jemi as well as our work in Chile. We are in a very good position and we keep tuned in for more news in both countries, in both Mexico and Chile.
Gerardo Del Real: We talked off-air, we mentioned how a good chunk of the people are outside as they should be. I hope people make the most of the summertime and the sunshine, but I think the Monumental story is definitely going to gain some traction, especially if the assays come back at Jemi and actually match the excitement that the team has about what the core looks like visually. I'm looking forward to having you back for that, Jamil. Thank you so much.
Jamil Sader: Thank you so much, Gerardo.Click here to see more from Monumental Minerals