Categories: Energy
Topics: Lithium Stocks

Patriot Battery Metals (TSX-V: PMET)(OTC: PMETF) CEO Blair Way on New High Grade Zone, Drilling & Catalyst Rich Q4

 

Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the President and CEO of Patriot Battery Metals. It's been so long, Blair, I almost forgot the name, Mr. Blair Way. Blair, how the heck are you today?

Blair Way: I'm doing good, Gerardo. It does feel like it's been ages, but I guess it's a function of just how much has been going on and summer flies by in North America and people forget about us for a while, but I think we should be getting back on their radars again and everyone's back at work. September's behind us. We're in October and Halloween's coming, so yeah, we've got quite a bit going on.

Gerardo Del Real: Well, let's get right into it. I'm going to get right to the devil's advocate portion of the interview. The overall lithium market has been soft, not just for Patriot, for your peers and for producers that are spitting out cashflow. It's been a rough consolidation here recently. It looks to be bottoming to me. Despite that, you have been very, very busy behind the scenes and finally, again, publicly adding value, drilling away, there's eight rigs turning. There's an MOU with Albemarle. So there's a lot for us to get into. Let's get the latest piece of news.

You just announced a new high grade zone at CV13. Again, the grades are absolutely spectacular, right? It's world-class ... The devil's advocate portion of the interview is me saying, but Blair, it's only 12.7 meters, and I know this sounds crazy, but I've already heard it in the last couple of hours of 2.46% lithium, 7.6 meters of 3.82%. Anyone else puts out that news, the stock is flying. You put out the news. It's kind of like, okay, we'll see. CV13 looks to be shaping up like a nice load deposit, right? That's kind of the reaction that I've been seeing out there. Thoughts on that reaction so far?

Blair Way: Well, we've spoken about this a number of times. We're a victim of our own success, and CV5 is spectacular, but CV13 and the grades we're seeing there is also spectacular in its own way, but pegmatite occurs. It's this intrusive body that's injected into the country rock deep below a mountain chain two and a half billion years ago or whatever the number is. The way that it's put in there is by very nature unpredictable. However, when we look at this in comparison to many other lithium production scenarios or production deposits that are in production, these are meaningful intercepts and exceptional grades. I mean, people would be happy with these intercepts at a 1.5% grade or 1% grade. We're seeing 7.6 at 3.82. I mean, we're seeing 4.3 meters at 5%. That's pretty damn significant. However, the market has sort of been spoiled by the Nova Zone and CV5 and some of the bigger intercepts we see at CV5, but keeping in mind that this appears to be part of the same plumbing, the same pipe work that created CV5.

We just started drilling at CV13 and we found this flat laying relatively shallow. It lends itself to a very quick starter pit. Easy mining, easy extraction. The metallurgy is the same. We've got a DMS type deposit or DMS processing deposit the large spodumene crystal. So CV13 is looking great. We still have a ton more drilling around CV13, as you know, we're drilling westward from CV5 towards CV13 because we think it belongs to the same pipe work that we do think there's a connection there, but we have to tease it out with a drill bit, and that's a 3.8 kilometer gap. It took us the better part of a year and a half of drilling to define that 3.7 kilometer maiden resource. So we don't just close a 3.8 kilometer gap in an afternoon. It's a lot of drilling.

We're going to get there. We're working not only just stepping out as we work towards CV13, but we're also ensuring that we drill multiple holes at each location to get the most bang for our drill rig location. We don't just drill run hole and move it again, because that is expensive and unnecessary because then we have to go back and drill a 45 or 60 or whatever we need to do to continue to delineate at each drill site. So we are moving methodically. We're not going at a rate of knots at stepping out every a hundred meters so that as we drill with these multiple drills heading towards CV13 from CV5 that we're actually drilling it out to add tonnes, and we're providing updates on that on a regular basis. But we have eight rigs on site now, so there's a lot of activity going on.

We've got three rigs now at CV13. We've got four rigs at CV5, and we've got one rig at CV9. So keeping in mind, CV9 is about 10 kilometers away from CV13. CV9, early days. We're drilling it and we'll provide updates on that, but we're continuing to drill at CV9. We still have CV10, CV8, CV12. We have a lot of targets yet to drill. Meanwhile, the connection between CV5 and CV13 continues to be drilled to determine how or what that pipe work or connection looks like. So we have a ton of activity going. Poor geologists are getting pretty backlogged with core with this many rigs going, but we keep drilling until we can't drill anymore because of fog and snow and what have you in the fall. And then we'll start back up again in January, and the hope is in January. Well, the intention is January we'll have 10 rigs by the end of January, so we have a lot going on.

Gerardo Del Real: How much drilling has been completed to date?

Blair Way: We have certainly in the order of 25 to 30,000 meters just since we've started again, and certainly, I think 2023 we're over 30,000 meters already. We still have a lot more meters that are yet to be drilled. And then of course in 2024, the winter season last year we had five rigs drilling, basically utilizing snow roads. This year we'll have 10 rigs. The five rigs, I think we did 30,000. The number is just under around 30,000 meters last winter. I think this winter we'll do something pretty comparable for the same number of rigs. So with 10 rigs, we're certainly optimistic. It'll be somewhere in the 50, 60,000 meter range. So it's a big number of meters we're drilling.

Gerardo Del Real: You mentioned in the news release the importance of having some optionality as far as starter pits, right? I've speculated publicly that this team is fully capable and willing to take this to production if the largest shareholders in the board doesn't ever agree on the buyout price that it wants to get, and I've been pretty public about that target as well. We're nowhere near that share price wise right now. But as far as the thought that if you don't get that price between now and whenever an offer happens, you're willing to take this to production. How important is the optionality to start with several different starter pits as opposed to having to start by draining the lake, which is still, for whatever reason, an issue of contention for some people.

Blair Way: The whole premise of how we start the development of this deposit is defined by how we define the deposit. Now, CV5 at 109 million tonnes is more than enough to start a very significant production scenario, a production scenario along the same scale or a little bit larger than what Pilbara Minerals in Western Australia currently produces. That's the broad sort of target that we see for CV5. Now, clearly we're not going to put the lake at the front of what we have to do. In other words, that's not the critical path. What we will do is a lake permitting and requirement to drain part of the lake in order to access part of CV5, which is under the lake. A considerable part of it now is not under the lake, and as it continues towards CV13, that just opens up the optionality for a more sensible or more staged and practical development of the thing.

So firstly, even to drain the lake, it requires a small bund or a form of dam, but it's really just a bund to stop to define the area that the pit would be on one side. On the other side is the lake and the material and the water that would be diverted around. So it continues through the natural drainage to the north and to the south. So that bund, you need material for it. So ideally, you don't want to just go out and start a burrow pit. You want to be able to utilize as much of the material that you were already stripping away in order to get at the deposit. So the logic is that you use your starter pits to find as you're stripping towards your starter pits, that material is a form of ... It's referred to as waste rock, but it's not really waste in the context of toxic waste or waste that is other than the fact that it's non-mineralized material.

So the non-mineralized material can then be used for construction. So you could crush it, you could utilize it in a number of different ways in order to build the bunds in order to have your plan for draining the lake maybe at year three or year four or whatever the number is. So the concept of the lake being drained hasn't changed, but the necessity for it to be the first thing we do, what we've identified now with CV5 continuing to the west quite a distance away from the lake just means we have that optionality. CV13 also, it's a high grade plug. Maybe that's where you start because it's always nice to put high grade feed into your first years because of certainly an NPV calc, which is not the end all of all ways to value a project, but you put your high grade stuff in there, that'll make your numbers work better and therefore the economics work better.

But at the end of the day, being able to start with a pit that is going to be an area that we're stripping in order to extract material. So it's an efficiency to be able to extract that material in order to build the infrastructure that we need in order to drain the lake. So it really has always been our desire. That was the way we would approach it. We will still permit it as part of the permitting process. We're not going to delay permitting it. However, the normal timeline, the expected timeline for a permit to drain the lake is in the order of the two and a half years we've articulated through various communications and we don't see that changing, but is always nice to have that optionality. If for some reason it takes a little bit longer, then we can accommodate it without any real issues because the processing facility can be put in place.

The tailing storage facility can be put in place, the starter pit can be commenced. You could stockpile some of that material until you're ready to build the infrastructure to drain the lake. So again, it just gives us the correct optionality in order for us to define the best and most efficient development scenario for the Corvette property. And of course, regardless, we certainly are heading down the path of the expectation that we are going to be doing it, but either way, by de-risking it and demonstrating the viability or feasibility of such a development, that also builds incredible value, which is of course building shareholder value for our shareholders, which is our primary objective here.

Gerardo Del Real: You have an MOU, speaking of technical acumen, with Albemarle, and obviously I'm not going to ask you to comment on some of the things that have nothing to do directly with Patriot in regards to Albemarle, but as far as Patriot, how is that relationship working out? How are things coming along on that front? I know there were some time milestones that were put into that MOU, so I know that people want an update there.

Blair Way: As you know, we've spoken about it before. We've been friends with Albemarle for some time, and this strategic investment and the MOU as we work towards defining a possible relationship to feed Corvette into an Albemarle owned chemical plan, the relationship just continues to grow. They've been an exceptional group of people to work with. Their level of commitment to the progress of this MOU has been nothing short of spectacular. They're genuinely a great group of people to work with, and I think we get along really well and we remain very optimistic as a result of that. There's been engagement at all levels through the organization at Albemarle, all the way up to the CEO with Ken Brinsden and myself. We couldn't be happier with the relationship and we continue to remain very positive about the future of the relationship. So yeah, it's an excellent process that we're going through and the correct resources or the right resources are being brought in to move this forward as efficiently as we can.

Gerardo Del Real: That all sounds great. I'll leave that there. CV9, I have to ask you about CV9. It's a target that the geos, yourself, on a more amateur side myself, just by the looks of previous sample numbers and the size of it has had a lot of people excited. How are things coming along there?

Blair Way: The drilling is going great. We have had a drill there for a few weeks now. We know the spodumene bearing pegmatites there, and as it was, whenever we drill these targets, it does take a little while to get our head around the configuration. Each cluster has a different configuration. So we have been drilling there. We have been hitting spodumene bearing pegmatite, so we're happy with that, but we will be sharing some of those once we get a reasonable collection of data. And I think I've mentioned this before, when you have this many rigs when you're only drilling one or two rigs, it's pretty easy to sort of collect that data and present it. Whereas when we have eight rigs, they're drilling all across the property at different sequences. So you want to sort of collect a bunch together and say, "All right, here's what's going on at this end of CV5 or the other end of CV5 or at CV13," which is what we've obviously done for CV13.

And you collect the data you present first, the drilling data and intercepts, and then as the assays follow through. But if you could imagine all of this information is coming from multiple areas on site now, it actually takes a lot more time now to consolidate it, consolidate the assays, one's missing because maybe it had to go to over limits or whatever. So you're pulling these things together and then you can present. So at a point in time when we're comfortable with the data that we have collected, we will provide more drill data on CV9. We've just done it for CV13. We're probably due for one at CV5 again, as we continue to drill to the east of CV5. Plus, we're doing infills at CV5. The infill holes are very interesting because we're continuing to validate or gather more data as we infill.

But some of what we're encountering there is still pretty impressive because you're obviously drilling in areas that is familiar, but we're still drilling in new holes in that area. So we're seeing healthy intercepts with spodumene crystals, for example, and things like that. So we will provide those sort of updates as well. But it is just a little bit more complicated now consolidating so it comes out in a nice cohesive package that the market can digest and absorb. So we will continue to ... I mean, we have drill data now, whether it's just updates of the actual drilling and intercepts as well as assays continuing to flow. And I'm not going to promise that there's going to be assays every week, and I'm not going to promise that there's drill data every week because clearly that gets misinterpreted. But we have a lot of news flow and there'll be lots of news flow on many aspects of not only the drilling updates on how we're going with camp getting in place, the road being upgraded to all weather, just how we're progressing as we continue to grow the company.

And even though some people may not find it that exciting, that when we get the camp and our new camp is in place and operational, that actually is exciting because it allows us to control our destiny, allows us to have more rigs, allows us with a shorter travel time, reduce dependency on helicopters. So it means our drilling dollars are more efficient because the drilling is now based on land-based drilling, not dependent on helicopters, those sort of things. We'll still always have helicopters. There'll be the remote clusters that still need the helicopter to fly rigs in. But even that where we're looking at a rig, we have a rig with tracks at CV9 to help us move the rig around instead of having to dismantle it with the helicopter and then move it in pieces and put it back together again. And the challenges and delays that that can create if something doesn't quite get bolted together right. So there's just the normal process is that we are improving our efficiency at site as we continue to grow what we are defining at site.

So for example, the camp on the road are super exciting because it allows us to do more in less time. And again, those are all important. We're expanding our drill core processing. Right now we're designed for five rigs. We have eight. So as you can imagine, we're backing up. We are building for the extra five that we're adding. So we'll have two banks of five rigs core processing, which means multiple drill, multiple core handling sheds, multiple core cutting, multiple core processing in order to get it bagged up in a timely manner to get it to the lab. All these things are what result in what we gain greater and greater control over with our own camp, with our own road, all that sort of stuff. We don't have to move core with helicopters anymore. We'll be able to use pickup trucks and things like that to move it. Again, more efficient. So we just continue to head down the path to getting better and better and more efficient at what we're doing.

Gerardo Del Real: With the relationship that you're building and clearly by the sounds of it is going well with Albemarle, how important is it that the metallurgy thus far at CV5 and what you've seen at CV13 appears to be similar, if not identical, and how important is that just moving forward, that that actually checks out and does what it's supposed to do?

Blair Way: Well, the benefit of that is the work that we're doing with respect to the lithium hydroxide plant and the Albemarle processing. They're taking our DMS produced obviously at the laboratory level or pilot the lab, so little pilot plants that produce the DMS concentrate for us. They can take that concentrate and utilize that in order to define what their hydroxide processing looks like. The fact that we can see that CV13 DMS product is pretty much identical to CV5 DMS product, and as I said before, it certainly appears that there's very good connectivity or likely connectivity between CV5 and CV13. What it means is then we're going to see if the metallurgy is the same, it means that that hydroxide facility will be able to process material from a much wider scope or range of what we are defining at the Corvette property.

So it's great because you don't want to have sort of ... Let's say you were in a different scenario where CV13 was a completely different metallurgical product. It would still be a concentrate, but had different metallurgical properties that would create two different types of chemical processes possibly to make the hydroxide. So we're just fortunate that we have this appear right now to have this very good consistency, which is almost, I think we've talked about before, from the edge of western edge of CV13 to the eastern edge of CV5. It's over 10 kilometers now. So to have a 10 kilometer trend and obviously drilling it out and connecting it, but if it is indeed as we think it is, that's a nice big trend that has very consistent metallurgy, which will mean it has very consistent processing with respect to a hydroxide plant, and that just makes life a lot more efficient.

Gerardo Del Real: When do we anticipate seeing some more exploratory drilling outside of CV9?

Blair Way: That's a good question. Right now, we're probably going to save that until the new year simply because every time you pick the rig up and move it, it creates more complexity. We are almost approaching the end of October. In years gone by, we were done drilling by now. It does look like the weather is quite different this year. It's not as wet, so we're not seeing the fogs that usually shut down the helicopters. So we still believe we have a few more weeks left on the ground. So we're not going to just go and put a hole or two on CV8 and have to sort of shut it down. So these remote clusters need to be done with the helicopters and we'll be able to helicopters another couple of weeks. So those that are remote cluster drilling will be saved for the wintertime and the new year.

We do have an opportunity with the road being upgraded that we are still working through the timing. And then weather is a bit of a ... Is that we hope to be able to continue to run a few rigs, which we'll be generally doing infill drilling at CV5 into November and December. But this is sort of a week by week weather by weather sort of decision. But every week that we can run into November and even up to December is weeks that we make up for in some respect that we lost during the summer fires. And the infill drilling, it's important obviously for us to continue to upgrade the existing resource, but from a news flow point of view, I know I possibly could follow some of our peers that love to keep press releasing the same holes that are like five meters away from each other over and over again. We're not really going to do that.

We feel the market is well-informed on the CV5 resource and we'll continue to drill. We will provide some updates on them, but again, we're not going to try and over promote that we drilled a hole beside the hole that our maiden hole, which was whatever it was, 150 odd meters at 0.97%. We're not going to drill a hole 50 meters away and get the same basic intercept, which we expect and shout that from the treetops. It's what we expect. We will characterize it as that just so that people can remain comfortable that the model that we've defined for our inferred resource is staying together, which we certainly are expecting it to do so. But again, we're not going to promote infill holes. We're going to continue to share our exploratory holes and as we continue to grow CV13 to a resource or what have you. But yeah, so we will be doing more infill drilling probably November, December until the snow and/or weather stops us and then start back up again in January with the five rigs heading towards 10 rigs by the end of January.

Gerardo Del Real: A lot of moving parts. Blair, I suspect that the next time you and I chat won't be weeks or months from now. But hopefully it's weeks and not months, right Anything to add to that? It's been great as always.

Blair Way: It's always great to catch up, Gerardo. I think it's always putting things into perspective for people or for listeners to just understand. We built CV5 resource that we have now at 109 million tonnes on essentially $40 million and 56,000 meters, round numbers. We commenced drilling in August with over $150 million in the bank, and now we're working up towards 10 rigs. So there is a lot coming down the pipeline and people can make their own interpretations. We're well funded, we're not going back to the kitty anytime soon. This funding that we have gives us a runway well into the better part of 12 to 18 months. So we have a lot laid out ahead of us.

And I just think it's something that the market probably hasn't made that connection as to just how significant our current funding situation is, especially given the share price is kind of in a crappy place. And it's a function of the market. It's a function of lithium pricing, but what goes down and what goes up always moves around. The market is constantly moving, and I think we're seeing something close to the bottom. And my expectation is we're going to see the numbers in China start to reflect that. And again, it'll be similar to what we saw in the past where things start to take off again. And here we are drilling with 10 rigs, so we're exceptionally well positioned, I think.

Gerardo Del Real: Couldn't agree more. Thanks again. Appreciate it.

Blair Way: Thanks, Gerardo. Great to catch up.

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