Categories: Energy
Topics: General Energy

Patriot Battery Metals (TSX-V: PMET)(OTC: PMETF) CEO Blair Way on Pending Assays, MRE, Year-Round Drilling & Fires in Quebec

 

Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the president and CEO of Patriot Battery Metals, Mr. Blair Way.

Blair, great to have you on. We were going to catch up a week or so ago, but things have been fluid and so we decided to postpone that and I'm glad that we did because we have a lot to talk about this morning. How are you today?

Blair Way: I'm doing great Gerardo. It's not super happy with the current conditions up at site with the fire bans and that, but it's something we just have to contend with and we put a news release out today just to update the market on where we stood with everything, and some of the challenges that we're facing. But these fires are significant and with the wildfires are significant in Quebec and we need to let the government fight the fires and respect their request to stay out of the forest for now.

Gerardo Del Real: Well let's get right into it. There was an all clear at least for Patriot about a week or so ago and we knew that that could change and now there's a kind of put everything on hold update that's been issued and mandate that's been issued. So the optimist in me says hopefully Mother Nature does what Mother Nature does and in a week or two we're having a different conversation. Let me assume the best on that. How ready are you to mobilize once you get the all clear again, the helicopters are back and you're able to resume activities?

Blair Way: So the challenge is, we get an all clear into the forest. Whether that means the helicopters come back is another question, but if we get an all clear and the helicopters are back, we'll be back at it. We'll have our six rigs on the ground and because they're still there and we can just get started again, it'll take a week to mobilize everybody back up there, the trailers for the camp and those trucks can continue to mobilize the remaining transportable buildings that need to get to site for the camp construction. And we can also look at progressing the upgrade of our winter road to an all weather road.

So there's lots of stuff to do, but it is subject to when first, are we allowed back in the forest and second, when will the helicopters be released? Because those are not synonymous. In other words, we may get permission to the forest, but if they're still fighting fires down south, they're going to keep the helicopter because that's what they have to do. So the good news is, if it's only access to the forest with no helicopters, we can still start to progress the camp and we can also progress the upgrade of our road, which will then facilitate being able to do a lot of the drilling, especially in the fall without the use of helicopters or certainly be able to do some drilling without the helicopters or less helicopters. So it gives us a lot of optionality the sooner we get that road upgraded.

Gerardo Del Real: How significant and important is it for the company to get that road upgraded and to get that camp set up the way you want it set up? Obviously we're going to lose some drilling time due to just again Mother Nature, but how important is it to be able to offset that in the fall time if you're able to do what you want to do with the camp and that road?

Blair Way: Well those two are very critical. Having the camp, the reason having the camp is critical is because it's closer to our work area closer to CV5. So that combined with the access road means we're able to conduct our exploration activities relatively efficiently. We'll still have some dependence on helicopters, but if it's a foggy day in the fall, in the past, we have to basically stop drilling and get people back to camp. Whereas, with an access road that we can drive on, then at least the guys can keep drilling and they can be changed out by through vehicle change out rather than helicopter change out. So it gives us a greater deal of flexibility in what is traditionally a downtime for drilling. We usually stop by the middle of October, late October, and November and December are sort of no go zones. So by getting that road in place and having it all weather but obviously as the snow comes it can just continue to become, well it will be an all year usable road which gives us much more access to our work area.

Gerardo Del Real: So in a perfect world, we're looking at a situation where we have drilling pretty much year round is what you're telling me?

Blair Way: Exactly, yeah. There'll be... Even goose hunting season has less impact when we can drive. The reason for the shutdown is again because the helicopter is disturbing the hunt. So if it's just people driving on the road that doesn't create that problem. So running the rigs and that is not such an issue. So it certainly opens up the optionality to basically be able to drill most of the year round subject to big snowstorms or something like that. But yeah, very much opens it up.

Gerardo Del Real: Let's talk about the next four to six weeks. I mentioned I'm optimistic, I'm also pragmatic and when I read in a release that the company continues to work on the mineral resource estimates scheduled for release in late July, and that the wildfires have impacted some of the work activities, I'm using your language now of the assay laboratory, that tells me as I mentioned, it’s a fluid situation. So I'll say that if you are saying late July for that maiden resource estimate, I would be a happy shareholder to get it the first week of August. You don't have to comment on that. You can comment on where that resource estimate is now. But as far as the assays that are feeding into the maiden resource estimate, how is that coming along and am I off if it's late July or early August, do you see it going past that?

Blair Way: I don't think so. We're continuing to push the lab. They did have some impact by the fires because it limited some access for equipment that they needed. I don't know all the details, but essentially, it created some delays on these last batch of assays, but it's only a couple holes. So I think we can manage it, but again, we're targeting the end of July, but if for some reason a couple days later I just don't see that being a huge issue. It is what it is. We've got fires that have impacted everything to do with our operation, a very modest impact on our maiden resources. It’s not, I don't think a big deal. We'll get it done as quickly as expedient as we can. And at the end of the day we got to get all those assays in and put it in the model and we'll get it sorted out. So we'll also have a press release so when those come in they'll also be press release, but they're probably still a couple weeks away.

Gerardo Del Real: You actually have a lot of irons in the fire here for the next several months. As it relates to news flow, there's assays pending as you just mentioned, there's an exploration update that once Mother Nature cooperates, we're going to be seeing, there's the maiden resource estimate, which again, I don't see any scenario in which it comes under triple digits. And again, that'll be just a peek. I think I was chatting with somebody and I think Pilbara's initial one was something like what? 50 million tonnes or 60 million tonnes? And so starting off with triple digits as a sneak peek to me, will be a heck of a start. Set the table and lay the groundwork for the next several months, you have a very prospective portfolio of properties as well that eventually I'd like to see as a shareholder I'd like to see spun out in some shape, way or fashion. So a lot of questions there. And then I have a lot of questions for you that have been coming in via the Twitterverse here over the past week or so.

Blair Way: Yeah, there's lots of fun questions coming from the Twitterverse, that's for sure.

So yeah, obviously we've got the next batch of assays, we've got CV13 met results will be coming in. So that's coming in as part of our news flow. We've got the maiden resource, we have updates and progress reports on the camp, the road, the drilling and how that'll all progress through the summer. And then that leads into later in the year as we progress into project description to be submitted to the government, both federal and provincial, to kick off the permitting process. There is an awful lot laid out ahead of us and it's really just sort of coordinate that and working with the government and the fire bands and respecting that.

But we have some good opportunities here compared to some of the other explorers in the area that don't have, doesn't have a snow road, doesn't have the ability to get to their property without helicopters. So thats certainly is something we see as being favorable and we'll work that to our greatest advantage to ensure we get the most work and do as much catch up as we can when we do get back on the ground and maybe we hit it a bit harder and bring in a couple more rigs, but these are all things that we're evaluating. How do we utilize the additional access and get the opportunity to do catch up in respect to making up for lost time this summer?

Gerardo Del Real: You have again, lots of catalysts here in the near term. You touched on a metwork release on CV13. Thus far, and obviously I'm not asking you to share anything that hasn't been made public, but thus far what have you gathered from the metwork on CV13 as it compares to CV5?

Blair Way: Visually this spodumene and the spodumene mineralization appears to be similar. The metwork is what we have to do in order to validate that. So when those results come out, they'll obviously be shared and that will be one of the upcoming news releases in the next few weeks. So yeah, I think the results were just getting some of that coming in now. So certainly we expect the market to be pleased with the outcome on those. But yeah, we'll have to wait till we get them out.

Gerardo Del Real: Excellent. Someone asked about the infrastructure holes. I think it was like some 13 kilometers north and so I'm imagining that those were technical in nature, but I'd rather you answer that than my speculation, right?

Blair Way: Absolutely. That's where we are putting in our camp. So part of our camp activities, we do have to do some geotech holes around it just to assure that we're putting the camp on ground that's stable. And also we are doing some for water 'cause we're going to have to put a water well in there as well. So again, it was sort of hydro geotech holes.

Gerardo Del Real: Excellent. Lab turnaround time. Someone mentioned, and look, I get it, I'm a shareholder that's got a pretty substantial holding, it's a pretty good chunk of my net worth. I want quick turnarounds like everybody else does. I also understand that delays typically are associated with really great holes and really great results. So I don't mind that part of it, but is there anything being contemplated for once you get back on the ground and things normalize again to expedite the turnaround? Or is it just nature of the beast that if you keep hitting with above limit results that you're going to have delays until you get to the actual assay?

Blair Way: Absolutely. You're obviously lots of armchair sailors predicting, pontificating on how and what things should happen and I try not to comment on that, but at the end of the day, we're putting a whole pile of material in with the labs. The labs are processing them in actually a pretty timely manner. But as these holes are distributed throughout the deposit, throughout the CV5 drill area, it just means when we get the data in the interpretation in order to bring them out into a coherent news release, takes time. And additionally, as you mentioned, when there's a high assay then they have to go back for retesting and validation again. So these are all good problems to have. I'm sure if everybody really wanted the fastest assays then they'd probably be the crappiest assays. So the lab is actually doing a pretty good job. They've had a couple of times that there's been issues and labs are not perfect sometimes in the early days it was trucking issues.

We've been able to solve that and we are working with the lab for over limit testing and stuff. We're coming up with processes that is improving on that, but they're also getting a ton of samples and they've got to work through them and they go in batches and they get processed. It's the complex process to get these things through. We need to ensure that they're 100% correct, we can't just hope that it's right and then put press releases out. That's just not how it works. So we have, and always have been very thorough on this and the assays will take the time that they take. And to be honest, again, I'll restate the labs have been doing a pretty bang up job and if we have over limit issues, well that's just the way of the world, we can't, I'm not complaining about over limits.

We just work with them and we will continue to drill and we will continue to get assays and we'll continue to collect them in batches, and put them out and then put in a coherent interpretation so the market can understand them. I notice the market often gets confused by the press releases we do put out the technical content is quite deep. So we see the market sometimes not sure what to do and often we see complaining that it gets released in Australia before it gets released in Canada because it's got to be released somewhere. And typically the market in Australia seems to be able to interpret these results. They're more familiar with it. They've got another 5 to 10 years of looking at news releases of lithium explorers and that's a good thing. But we just have to keep putting them out and helping the market understand what we have.

Gerardo Del Real: I couldn't help but notice that Rio Tinto has decided to throw some $65 million or so into the James Bay region for some properties that a company had, they optioned some properties. And again, I mentioned the robust portfolio that you have outside of Corvette. I can't imagine a scenario because of how fertile Corvette is, where you're taking time to drill any of the non flagship properties and that flagship being Corvette. You got your hands full there, but I did mention the potential for a spin out and unlocking value for shareholders there. Is that something that's been talked about or contemplated at all? Given the fact that the market has assigned some pretty attractive valuations for some properties that frankly I think aren't up to par to some of what you have in the portfolio under the Patriot banner.

Blair Way: For sure. And I didn't avoid the question earlier on, we just got sidetracked. But yeah, we do have a number of properties that are certainly meriting looking at either spin out options or some other solution. There has been quite a bit of incoming interest for option agreements or things like that. But again, we are focused on the Corvette property, but we've got Hidden Lake up in Northern Territory, we've got the Pontax property and then we have the Idaho property. So there are properties and we are looking at scenarios on managing that, but also, we believe in these properties, have a 40% holding in the Hidden Lake and there's a work program that the 60% partner will be releasing in the near future. So we're obviously privy to that, but respectful of their processes as well. And with Pontax, there has been the required field work that we've had to do, but it's definitely a lower priority. But in order to maintain our property holdings, we do do some work down there. We will provide further updates on that. But as you can imagine, all of these activities can be quite distracting and we want to maintain our focus on Corvette and ensure that we don't confuse the issue.

And finally, I guess in regards to Rio Tinto coming into the James Bay region, I mean it's something that's to be expected, they are obviously interested in the space. I don't think there's any mystery to that. And yeah we will see. To me it looks like a very clear exploration play. I'm not sure if it's a huge acquisition in the context of the lithium space, but it certainly demonstrates that they are interested in the lithium space and from an exploration point of view. And yeah, we'll see how the world grows in that respect. A lot of the bigger companies are expressing their interests in lithium and also we're seeing a bit of M&A activity, which is good for the space. And for now, we just focus on the job at hand and demonstrate the value. What we have at CV5 demonstrate what we have at CV13, maybe CV12, and 9, and 10. We have a lot of targets to drill this summer and into the fall. And as we build value then that may possibly be of interest to some of these other players, we'll do our job and we'll see how they do their job really.

Gerardo Del Real: Well. I speculated four to six weeks ago that there would be the possibility of a major coming in and wanting to take a public interest in the company. That hasn't happened yet. And again, kind of like my minimum $50 price target when it happens really is inconsequential to me because the bulk of my shares are going to sit right where they're at. So if it happens this week or it happens next month or two months from now, really doesn't make a difference for long-term shareholders. What does make a difference is the approach of the company. And you've talked before about having a team now, and a board that is able to take Corvette and model multiple production scenarios. I got to believe you've had those conversations, Blair. What does that look like in the most pragmatic of scenarios? Let's assume no major comes in and buys you out. Let's assume, I know controlling shareholders have enough to block an offer that isn't satisfactory, which obviously is a bonus. So let's assume you decide you want to go into production, capture the sweet spot of this lithium cycle. What does that look like?

Blair Way: Well, it really is just a standard production scenario. We heading down the development cycle in order to get into production. So you go through typically PEA, PFS, FS. Now do we follow that pathway, exactly? Certainly it'll culminate in a feasibility study that will definitely happen. And yeah, we progress through that during the feasibility study that allows us to work through all the various de-risking processes of permitting, environmental, and all the like. And then it really is procurement and design, procurement and construction.

So we believe there's a scenario which will enable us to be permitted for construction somewhere around 2027, commissioning in 2028. That's the path we're defining. And that's de-risking the project, demonstrating that it can be a significant project. And the production scenarios we're looking at are certainly on par with some of the larger production scenarios that we see in Australia. People can draw their own interpretation from that and we will provide some guidance on that in the future. But we're not quite there yet. And that's really some of the work that is underway this summer and into the fall as we progress through that development cycle of study work and defining the project and then being able to de-risk it. And that builds value, regardless of how this evolves. Every day we look at how to build value on this project, whether it's through additional exploration or through de-risking it, demonstrating the ability to probe at all these things are significant.

Gerardo Del Real: How's the treasury looking?

Blair Way: It's good. I mean, as you know, we had a pretty significant raising in March. We've got quite a fistful of warrants that are coming in, 75 cent warrants that are expiring by the end of the year. Many of them are coming in earlier simply because of the different tax regime that exists for Australian warrant holders compared to Canadian warrant holders. So we're in a good spot. The only good thing coming out of the wildfires is our burn rate is significantly lower.

Gerardo Del Real: No pun intended.

Blair Way: No, we are definitely burning through less in that respect. So that's all good. But yeah, we're looking forward to getting back on the ground and getting at it.

Gerardo Del Real: Excellent. So what I gather is accelerated drill program. Once you're able to do that, flexible on adding rigs, if the weather and conditions permit you want the camp, you want snow road, that would extend the drilling season for the first time ever and make it year round. Assays pending, maiden resource estimate pending. Didn't sound like there was a significant delay plan for that maiden resource estimate. You mentioned maybe a few days later into July, first few days of August. Anything else that you'd like to add there, Blair?

Blair Way: No, I think we've touched on all the key points. We're obviously working with Mother Nature here and she doesn't always cooperate. And we're doing everything we can to work with that, and to work with the authorities and make sure people's health and safety is taken care of, and it's a tough time in the province and we'll do whatever we can to make sure we do the right thing for sure. And we'll get back to work as soon as we can get back to work.

Gerardo Del Real: I mentioned there's some assays pending. Any hints on when those might be coming?

Blair Way: I prefer not to give hints after sailor's trying to predict what I'm saying. So we'll let them throw something ridiculous up there. We'll get them out as soon as we get them available. And look, it's all feeding into the mineral resource so they're not far away.

Gerardo Del Real: Excellent. Blair, thank you for your time. That was a thorough update. It's appreciated as always. And best of luck on the Mother Nature front. Obviously we're all watching and hoping that drill program aside, everything goes smoothly. I know the equipment's been secured, I know on that front everything's taken care of. So let's just hope everything passes through and we get back at it here and we're back to focusing on drill holes and resource estimates and not safety of personnel and life, right?

Blair Way: Yeah, absolutely. We got to do what we got to do and we'll, as I say, we'll get back on the ground as soon as we can.

Gerardo Del Real: Appreciate it, Blair. Thank you so much.

Blair Way: Cool. All right. Talk to you later.

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