Categories: Energy
Topics: General Energy

Patriot Battery Metals (TSX-V: PMET)(OTC: PMETF) CEO Blair Way on Share Price, Drilling for Rapid Resource Expansion & New Discoveries at Corvette

 

Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the president and CEO of one of the most naked shorted stocks on the Venture Exchange – Mr. Blair Way, of course, CEO of Patriot Battery Metals. Blair, how are you this morning?

Blair Way: I'm good. How are you doing?

Gerardo Del Real: I am doing well. I joke a bit, but listen, as a long-term sticky committed shareholder that still has a substantial portion of my net worth and stock, the bulk of the position, the bulk of the original position in Patriot, it has been, I got to admit, it has been frustrating to see not just the shorting of the stock because that's pretty common and we have pullbacks in the lithium spot price and we have pullbacks in the sector, and that's part of the course, shorting part of the course.

But the numerous conversations that I've had, and I know you're not going to comment on it, but I will, off the record with a lot of people in the know, it's clear to me it's not just shorting. It's naked shorting and it's being done on a pretty grotesque level. It'll pass. I understand it'll pass. The endgame is not in doubt. You're delivering the goods. I try to explain to family and friends that also have a substantial portion of their net worth in Patriot stock that the endgame doesn't change, the interim, there's no crystal ball. The shorts can go for quite a bit. They can also be surprised with things. We'll see how that develops here in the next couple of months.

But in the meantime, you just had an update and I thought it was a really opportune time to get out there and have a conversation about what you are delivering on, which is everything but the share price right now. So if you want to comment on the rumors, great. If not, let's get right into the update because it was a substantial one.

Blair Way: Yeah, it's hard to comment. Look, shorting goes on in every company and you have to just deal with it. It creates liquidity and it does have aspects that are positive, but certainly, does appear to be some fairly negative sentiment across the market. And I think some shorts are taking advantage of it and I think maybe some of them are a little more creative than others. But we will persevere.

And, of course, this update is really about the business at hand and the business at hand is we're maintaining a good strong treasury, which then supports our ability to continue to grow and expand what we have at the Corvette property. As we've mentioned in the news release, we've got our five rigs on the ground. We're heading up to seven, and we'll head up to more than that for the winter program. As we know, the winter program with the snow road, we can get pretty efficient. With our camp being closer to the CV5 area or to the Corvette property, we're able to be more efficient drilling.

So we have so much work laid out ahead of us with respect to just drilling. We're extending CV5 to the west, to the east. We're drilling out CV13 for its maiden resource there. We're looking at CV8 and 12, 9 and 10.

Now, CV9 is certainly one of our favorite targets and it always was. It's just CV13 was bigger, so we drilled it. CV9 is next, but again, CV10, CV8 and 12, there's still tons of targets and it's all drilling. And this is over between the western, most westerly extent at CV10 all the way to CV4 so it's over 20 kilometers. So it is a ton of drilling when you start walking out a hundred-meter space so you got to prioritize.

And that's really what we're doing and this news release is an opportunity to update people on the drilling. We will provide updates on some of the results from the drilling once we get our NI 43 report file. The guys are flat-out getting all that stuff finalized and to properly assess all these drilling intercepts and put out a cohesive and comprehensive update on the actual intercepts and the like.

We'll provide that later. That'll be in September after the NI 43 is released. But a ton of activity going on and, like you said, we'll continue to work to deliver the value on the property. And shorts will do what the shorts do, but the market will get it.

Gerardo Del Real: Well, listen, let's get right into it. It took about $45 million to take Patriot from a 16 cent stock when I wrote my first check to a $16, $17 stock in about a year and a half or so, right? We've had the pullback recently.

But what shouldn't be lost on anybody, including myself, and even I have to remind myself sometime, is that you have $150 million in the treasury, you have more money coming in from the exercise of warrants. So I mean, just common sense to me says that now that you've figured out more of the geology, you understand the structures, you understand the Greenstone Belt, you understand what you're poking holes into and that you're taking hundred-meter step-outs on a lot of these targets, it should be easy in my mind to simplify what the next 12 to 18 months look like, right?

And I understand the retail fear of the share price pulling back. Frankly, this is the way the stock has traded since the very beginning, right? You make new all-time highs, you retrace 50%, then you make new all-time highs and it happens again.

So on the drilling, I know there's been some confusion on assay results, and I know some of that has changed because the technical report needs to be filed before you could actually start delivering some of those, the way that I understand it.

So when are we anticipating initial assays? You have 35 holes done over 10,000 meters that have already been completed. I can't wait to see some of the numbers on the extensions and the step-outs, and I really can't wait to see what CV9 looks like when you start drilling that. So give us some timelines just to be accurate, just for the sake of shareholders that are wondering.

Blair Way: Yeah. So the drilling that we've done, it's over 10,000 meters now since we started after the goose hunting season breakup. And then we, of course, had the stall or the delay during the fire ban or the forest entry ban. So we have done now the 10,000 meters. Now, a few of them were done prior to the fire ban, but the majority of them after.

So those samples have only just been possible to start shipping to the labs. We did fly some of those samples down. When the fire ban came, we had samples sitting at site. We're like, "Well, let's see how it pans out." Well, it took, it ended up taking longer than we'd hoped. So we did fly some of those samples to the lab so those are going to be the most recent or the most current assays to be coming out. They're starting to trickle in.

But again, we're not going to release two holes at a time. We're going to get a bunch and put them out so you can put out sort of a comprehensive package of data, rather than have this sort of drip feeding. Back in the day when we were only drilling a few holes at a time or we only had two rigs, it was sort of more typical that you'd put out a few holes or five or six holes. But now where we've got seven rigs drilling at a time, there's a lot more data coming in so you process, package it up.

So to answer the question with respect to assays, none of the assays will be available for real discussion or putting out in a press release until at least in the second half of September. Once we get the NI 43 out, believe it or not, there's still a whole bunch of review and processes that have to ensure. Like we put the data out in the news release, that is part of the process of finalizing the report.

But the report is a massive document and once people, it'll be up on SEDAR and it has to have many, many checks by all the various players within the geological group and department, as well as with management and board and everything. So there's a lot of bandwidth used to get this report filed. We have 45 days to file it from the issue of the news release. So timing for that is it'll filed with the exchange before and up on SEDAR before the middle of September.

So once that's out, then we're sort of unencumbered again and we can get back to work on processing the current data, which is getting the assays where we are looking at the drill intercepts and providing a meaningful and comprehensive sort of update on that.

The fact is we are drilling, we continue to drill. We've stepped out a number of a hundred-meter step-outs to the west of CV5 and we will continue to step out and at CV13, we're drilling and infill drilling there to define that resource. Later, in probably be, well, mid-September, I think we'll be able to get the rigs on CV9 and then also the other one on the barge, which will be to the east of CV5.

So the drilling is all-encompassing now, so it's a couple rigs to the east working CV5 to the east, couple rigs to the west, working CV5 to the west, a couple of rigs at CV13, and then the other rig floating around at CV9. Ideally, we will also get to 8 and 12 and 10, but again, depending on timing and the weather and all those things.

We look and we feel that we will have an opportunity to drill later into the season this year by converting our snow road to an all-weather road. It'll allow us to be able to gain access, have our drill crews have access to the rigs without depending on the helicopter. The helicopters had become quite unreliable due to the weather changes in about mid-October when the fogs come and then they're unreliable so you need to either stop drilling or you need to have some form of different access.

So that's what we hope with our all-weather road. We'll be able to continue to use a number of the rigs well into November and possibly into December, somewhat dependent on weather and snow and all that stuff.

Gerardo Del Real: Blair, you and I have known each other for some time and I think people mistake that for you and I being friendly, to the point where I won't ask you questions that you probably don't want to answer, which I end up doing in almost every interview, which is funny to me, right?

But I want to ask you something, I don't know if you can comment, but I do want to clarify this for the market. When I look at some of the chat boards and I talk with some friends and I talk with some family that have a significant vested interest in seeing this play out and seeing this, if it is bought out eventually, being valued at a fair price, the worry that I hear amongst the retail crowd is that there will be some opportunistic offer that Patriot and its major shareholders can't protect against.

And I want to be absolutely clear with the market, if you'll clarify it for us, if you're able to, do you have the votes and the commitment from the major shareholders to block anything that isn't what the large group that owns the bulk of the shares would recognize as a fair offer? And I have my opinions on that. I'm on the record as saying anything under $40 really would upset me. Thoughts on that?

Blair Way: Look, the market, I mean, it is a free market. However, for anyone to make a hostile move, they have to get a fairly sizable position. For them to get that sizable position, they're going to have to buy up a very tight market. You look at our trading volumes, they're not that high if someone needs to accumulate, let's say, 25 million shares in order to get to a meaningful position where they can make that sort of assault. So the only way they can achieve that is to convert some of our existing shareholders to maybe cross some blocks over to them.

Our existing shareholders understand the mandate that we have in front of us with respect to the Corvette property and our shareholders support our endeavors to drill this thing out and demonstrate the scale. And, yeah, the ability for someone to do something beyond those shareholders' I guess consent or approval is almost inconceivable. I'm not sure how someone could accumulate 20 million or 10 or 20 million shares just on market. If they did, we would see a significant movement in share price, which is then, essentially, would have the same end result. So I think we're pretty secure. We have a very strong supportive shareholder base that supports what we're doing with respect to drilling and proving out what we have at the Corvette project.

Also, the other thing is the majors generally don't, the type of buyers that people are thinking are out there hovering and doing all these things from the Gordon Gekkos and those sort of guys, but those, the Gordon Gekko guys are now the short guys. The people, the big mining companies that are coming in, they're generally not just going to be sneaking around buying on market, trying to acquire a position of strength unless they know for sure they can get it.

And look, the general consensus is that we have a very significant shareholder base that supports what we're doing and, therefore, will continue to back us to do the work that we're doing on the ground at Corvette. So most sort of informed companies are aware of this and are aware of our endeavors. And the market that we're seeing now with the pressure, and we're not the only company under pressure. There are other, even Pilbara Minerals come off the boil a bit. I mean, God, they have $3.3 billion in the bank, so the greater market is a bit off the boil as well.

However, we do feel that we've probably taken on a little more pressure than some of the others and the reality is it's still not going to create any opportunities that could put us into, I guess, a compromised position with respect to some sort of hostile approach. We think we're pretty well protected. And, again, our best protection is to continue to drill, continue to build value, and the market will follow.

And look, it's Canada. It's a bit of a doldrum and this year in Canada has been particularly slow. You talk to any of the folks up in Canada, they're having trouble, they're having trouble tracking people down. So I think we get into Labor Day. I remain optimistic that we're going to see a trend in the right direction and, yeah, people will look back on this summer and go, "Holy crap, that was a crappy summer for the market."

And we're seeing things in China that feels a little manipulative. So you're seeing lithium hydroxide values and stuff dropping, but they're still significant. Yes, it's gone from $8,000 to $4,000 or something like that, but it started at 500 bucks, went to 8,000, has dropped to four. And even that feels a bit manipulative because that's sort of what happens. China has a summertime slowdown. It has the Chinese New Year slowdown and then has a summertime slowdown where it's a little bit easier to sort of have a bit of a play with some of those sort of overlooking pricing. It's a very opaque market and certainly discussions we have with the chemical companies and others does not indicate that there's any real sort of long-term downward trend here.

What we're seeing is the normal annual movements or market sort of variance over the period of the 12 months in a year, but it's not some sort of doomsday thing. The space is still very strong. There's still a huge demand. You're seeing other companies here in Australia taking off with the discovery for the same reason that we have. There is a massive demand for lithium and there's no indicator that that's going to change anytime soon.

And when I mean any time soon, in the next decades because the space, the OEMs are busy and working on building EVs and sourcing batteries and they can't pivot from that. That pivot is probably a 10-year pivot and they're only just swinging into the EVs and the demand that that's creating for lithium has just begun.

Gerardo Del Real: Back to Corvette, CV9, you mentioned being excited about it. You've mentioned also being excited about 8 and 10 and various other targets. How aggressive do you plan on being?

You talk about seven rigs by mid-September. That's a couple of weeks from now, that flies by. We talk about the technical report being filed by mid-September and maybe assay results by the end of the month, that flies by. How aggressive are you going to be at CV9? And does a lot of that depend on what you find?

Blair Way: Yeah. So what we have at CV9, and we put a picture in the press release, again just to remind people. Because for us, we're always sort of aware of what we have, but with all the other companies and other activities that are going on, I think people forget that when we talk about a pegmatite outcrop, it is a spodumene pegmatite outcrop. It's not just pegmatite.

And they're big. Like CV9, you can see the picture we put in the press release where people standing on the outcrop and then the helicopter in the mid-ground, and then the other part, we have the ladder. In the background is the bigger part of CV9 in the background. So it's a sizable cluster. We're not talking about an outcrop the size of a truck. We're talking about outcrop the size of a couple semis parked together.

So it's significant. We want to drill it. Keeping in mind you don't just put one drill hole and go, "Oops, that's all we got." If you look at how many holes we've had to drill around CV5 to truly prove up what we have, it does take a lot of drilling. So we're going to end up doing some scissor holes so you drill from both sides because you never truly know what the strike and dip is of a pegmatite intrusive body until you drill a few holes in it, what its surface expression, especially around glacial till. It gives you no real true indication of strike and dip so it will require a few holes.

So we'll drill CV9. If CV9 goes as we expect, we may not get to 8 and 12 or 10, but we may end up deploying a rig maybe from the CV5 extension or something. We have to be able to respond to it. So right now the plan is we'll keep drilling CV5 east and west and we'll target CV9.

Things that could change that maybe is the weather is favorable, so it means we can use a helicopter. If we can use helicopters later into the year, then we can drop a rig on some of these other ones. If not, then we're going to focus on the rigs that we can use, which are ones that are on the barge and the ones that are skid-mounted around CV5. So it's the logistical aspects that drive some of our processes as much as what we would like to do. But we have made the decision to put a rig on CV9 first and, again, as you drill it out, then that defines how much drilling you're going to do there.

And as winter comes, obviously, with the helicopter, we can start plunking rigs back down in areas that we can't get to with the trail, but we can get to with the helicopter. So most likely, some of those other satellite outcrops, the other clusters will be tackled in the winter drilling because we can use the helicopters to move the rigs around.

But if we have a favorable fall and it's not super snowy or it's not too foggy, then we may get an opportunity. But right now, I would, I guess, count on the fact that we'll be drilling CV5, CV13 and CV9. If we get lucky, maybe we put a couple holes in some of these other clusters. But if not, we'll do it in the winter drilling when we get back there in January.

Gerardo Del Real: You talked about favorable tailwinds for the lithium sector for not just the next year, not just the next couple of years, but the next decade potentially. Quebec is getting a lot of attention. Some news on the macro side recently, battery manufacturing capacity being increased or at least announced to increase here almost by the week, right?

What's your take on all the investment capital that's coming into the region, how that bodes for Patriot and shareholders?

Blair Way: Well, this just sort of feeds into my point that I made earlier, is that there's no indication that there's anything, but an upward trend in demand. All of these activities, the North American supply chain is just being built out, sort of as we speak, and will continue to be for the next five to 10 years.

If you plan on building a lithium hydroxide plant, it takes you the better part of four years from where you sort of permit it to when you've actually got it qualified for a battery manufacturer and there are battery manufacturing companies looking at setting up in Quebec or Ontario. We've heard Northvolt, we've heard Volkswagen Group, we've seen Ford and some Korean companies looking at cathode plants that's been signed off in Becancour. We've already got GM and POSCO doing a cathode plant at Becancour. You've got Livent starting, have broken ground on their 33,000 tonne-per-annum hydroxide plant in Becancour.

So there's a lot of stuff happening and it's that momentum. We are building momentum. And, of course, you'll have your ups and downs in that momentum cycle, but it is definitely pushing forward and we're seeing an incredible level of interest on all aspects, whether it's chemical companies, battery companies.

And, to be honest, our best value-builder right now is to just keep demonstrating this thing has the scale to solve that supply problem that currently exists in North America. If you build the same sort of the scale of capacity that we see in China, that China has been servicing their Chinese auto industry, as well as a lot of the offshore auto industry, and they're both growing so you're looking at a very similar scale, a build-out in North America.

If you've seen in China, it took China the better part of five to 10 years to get there. But their consumption, I mean, they consume all of pretty much all of the hard rock lithium that comes from Western Australia now is all heading to China or to Southeast Asia anyways, between Korea and China.

So that capacity is being built in North America. What's going to supply it? You're not going to turn it off to China and ship from Australia to North America. You're going to see the need for that in North America and we think we have definitely got a handle on a large part of that with the Corvette property, and we just have to keep drilling and demonstrating the scale. We've proven up 109 million tonnes at 1.42%. We need to prove up a lot more than that, and we remain confident that we will, given the scale of what we have at the Corvette property.

And we sort of take it for granted now, but it is one big property. It's 50 kilometers long. We own a hundred percent of it. We are funded with $150 million in treasury to continue to drill the targets that we continue to identify. We're still doing drill targeting for a good 25 to 30 kilometers at 50K. We haven't really stepped foot on the ground.

So the prospectivity of what we have on this whole 50 kilometer trend, we have drill targets that we are going to be pushed to get at this year and next year, or in the next 12 months. But there's going to be, we expect to be more targets beyond that. So the scale of what we have and the solutions that that provides for the North American supply chain for battery materials is significant.

And the market gets it. We have a great market cap now, but I think the market is still a little bit fickle about is it really happening? Look at what Ford, General Motors, Volkswagen Group, BMW and Mercedes are all selling EVs now, and those EVs are powered by Chinese batteries. That's changing and that's really where we fit into that change. And we're not only going to be, I think Corvette will be putting, the Corvette property will be putting materials into European EV batteries, as well as North American EV batteries.

Gerardo Del Real: I've long said that a good portion of Corvette is likely going to be one big blob that's continuous and that pinches and swells. Have you seen anything thus far to disprove that?

Blair Way: No, we're seeing, I mean, it is a pegmatite intrusive body. By it's very nature, it is like your toothpaste when you squirt it out on the desk. It's not perfectly symmetrical all the way along.

But it does have connectivity, and we've seen that in this maiden resource so it's 90% of the resources in one pegmatite body. I'll throw my favorite new phrase out there. It's a pegmatube. Just like a toothpaste tube, it's a pegmatube and it's a tubular shape of pegmatite that pinches and swells. Just as I said, as you squeeze a bit of toothpaste out on the desk, which you should never do, but if you do, that's what it sort of looks like.

But that's really what we're seeing and we're seeing connectivity. You'll see the odd falls in here and there, and you'll see the pinching and swelling to depth and laterally. And we're continuing to see the pegmatite wherever we drill and a spodumene-bearing pegmatite.

Gerardo Del Real: I would encourage everyone to take a look at Figure 1 on not the most recent release, but the one prior to this new one, with the spodumene pegmatite clusters, and just take a look at the mapped spodumene pegmatite outcrops. Look at CV4 and look at CV5 and look at CV13 and look at CV12. Then look at CV9 and then look at CV10 and you'll notice that all of those have mapped spodumene pegmatite outcrops.

Now, I'm not saying they're all connected, but so far, I haven't seen anything that leads me to believe that they're not. What's the distance between the CV4 pegmatite cluster and the CV10 pegmatite cluster, Blair?

Blair Way: It's over 20 kilometers. So it's huge.

Gerardo Del Real: Yeah. And you haven't seen anything thus far that says that it's not one big pegmatube, as you like to call it?

Blair Way: Yeah. Certainly, we're seeing it's a Greenstone Belt. It's clearly a section of that ancient basement of a massive mountain, mountain chain backdating. In size it was the size of the Himalayas however many billion years ago. All of this stuff was injected deep in the bottom of the mountains as they were being built and then have been since eroded away, formed the Canadian Shield.

Yeah, it's a pretty significant trend and we see no reason that they're not connected, and we need to drill a bit to demonstrate that there is connectivity or certainly just define it along that trend.

Gerardo Del Real: Blair, thank you for the thorough update. I hope that your technical report has additional cross sections. I kid. Anything to add to that?

Blair Way: No. I guess the only one thing I might add is there has been a lot of rhetoric around the fact like last year, when the shares came free trading, that they're all going to get blown out and the market's going to blow up.

Now everyone's obsessing about the warrants that are now going to be exercised and are continuing to be exercised this year. And there's all this talk that they're the same things going to happen.

And the key for people to understand, two things. Firstly, the warrant holders and shareholders are significant shareholders that understand the value of what we have here at the Corvette property. They're not in a pump-and-dump scheme where they're just trying to blow their shares out as soon as the warrants come free trading or what have you.

So combining that with the fact that most of them are Australian-held, in fact, all of them are Australian-held, and when you exercise a warrant and get the underlying share, you have to hold them for 12 months to get a capital gains tax reduction, like what you get in Canada or most of North America, you have to hold them for 12 months to get a 50% reduction on your capital gains impact. Whereas in Canada, you can buy a share and sell a share the next day, and you still get that same capital gains break of 50%, so you're only being taxed on half of that gain.

That's not the case here. So again, that's another reason why it's unlikely or highly unlikely why any of these shares that are a result of these warrants being exercised would be blown up the next day. Because if they were going to do it, they could have blown those shares out that have been free trading now for a better part of eight months or whatever, seven months or, no, nine months now. So yeah, there's been sort of fear and mongering about that and it's something, I guess, a hangover from what happens often in Canada when warrants are exercised, they're blown out the next day.

So that's my final parting comment is we have a very strong shareholder base and they'll continue, are continuing to support us in our endeavors to prove the Corvette property is indeed what we think it is, which is a world-class, tier one, top-tier deposit, lithium deposit.

Gerardo Del Real: I know there's a lot going on behind the scenes, as there always is. Excited for the next several months. I think it's going to be a really fun rest of the year. Thanks again for the time and the update, Blair.

Blair Way: Thanks, Gerardo.

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