General Base Metals
Power Nickel (TSX-V: PNPN)(OTC: PNPNF) CEO Terry Lynch on Advancing a Tier-1 Potential Nickel Deposit in Quebec, Canada, via Fleet Space Technologies
Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the CEO of Power Nickel — Mr. Terry Lynch. Terry, it's been a bit. It's great to have you back on. How have you been?
Terry Lynch: I've been great. It's been a while. It's been too long. I guess we've passed through the COVID-era, I think. Now we're back into, hopefully, a mining bull market. Maybe it's time to reconnect and trade history lessons here.
Gerardo Del Real: Well, let's get right into it. Listen, I think you're spot on with your timing. And look, it was a tough resource bear market for quite some time. 2023 is off to the races in multiple commodities. I think by the end of this year, we're going to look back and be blown away by how many simultaneous commodity bull markets we’ll have going, right; different commodities all running at the same time.
And so enter Power Nickel. I think it's a great time to intro the story. I think it's a really fascinating story. There are a lot of angles that are new to me. And I know we spoke a bit off-air and I know you're excited about the company and the multiple projects. I just wanted to have you on.
Tell me a bit about what Power Nickel is looking to do, and then let's get into the specifics here in a bit.
Terry Lynch: Yeah, for sure. Obviously, with a name like Power Nickel, you'd expect it to be a nickel company and, in fact, we are. We acquired a really good nickel project just south and east of James Bay, Quebec. And Quebec is a really phenomenal jurisdiction. I don't know if you've done a lot up there but I believe it's the best jurisdiction in the world right now for searching for battery metals.
For this reason, the Quebec government has done a great job of infrastructure so that the roads are there. Our deposit is literally off of a major highway, and right across the road is a major Hydro-Quebec substation. Power is there; there's an airport 8 km away from a little village, so it's very well supplied. And the aboriginal partners, the Cree, are very pro-mining so you've got good community relations and all of that is sort of good.
But the big ticket now in Quebec is the two-for-one exploration financing, which you can't get anywhere else in the world. For every dollar I get from an investor, it becomes at least two bucks. And the drilling costs are very competitive because it's Quebec; lots of drillers. It's one of the cheapest discovery spots in the world, I think. And with the two-for-one financing, wow, it's a phenomenal place for enhancing shareholder value. We're really pumped about that.
Now, I can say to people when I talk to them about the story, I say all of that structural stuff and the great incentives and the great government support and cheap hydraulic power. All of that stuff is great. But it's not worth a can of beans if you don't have the deposit. As you know with mining, it's all about grade and quality content.
Basically, we've got this nickel deposit that starts at surface. It's an ultramafic deposit. And of the other ultramafic deposits in Canada, the analogies would be LynnLake, which is 22 million tonnes, and Voisey’s Bay, which is fifty-plus [million tonnes]. Right now, we have a historic resource of about 3.1 million tonnes. We acquired it about two years ago; 24 months or 26 months ago.
And then, we did our first round of drilling about 15 months ago in November or December of 2021. We had eight holes; seven of the eight hit. The grade is about 1.5%, 1.6% nickel equivalent, which is about 1% nickel, about 0.55% copper, 0.07% cobalt, and 1.5 grams per tonne palladium. Very polymetallic; quite awesome rock.
And the neat part was it showed that that historical resource was there and credible and which we always thought it was — but you still need to verify that. And then, that basically allowed us to develop a model of about 5 million tonnes. And then, the stock took off. We had financed it at C$0.25 and C$0.40 in 2021.
And then, we executed, and the stock went to C$0.30. And then, in Canada, the shorters came in and bashed it all the way back. And then, of course, the Russians invaded Ukraine and we went into the nuclear winter of last summer and fall. You’ll recall how ugly it was for juniors.
Gerardo Del Real: Yes, sir.
Terry Lynch: The stock went all the way down to C$0.09 and C$0.10. But we had cash and not a ton but enough to do another drill program. And we really felt confident that we could push it to a commercial status. For us, getting to commercial means you have to have a deposit of at least 8 to 10 million tonnes. That'll make you commercial and especially with North American nickel at 1.5%.
We basically went ahead and started drilling in September and, again, had a great response from the drill bit. We told the market… but that didn't make a bit of a difference. The market was still sleepy around 10 cents a share.
I went around to my big shareholders and I said, ‘Guys, look, this thing's cooperating but we need to get to commercial status.’ Because you know how it goes in mining… you're at zero; you're not going to be a mine; you’re not ever going to be a mine; until finally, one day, you are a mine. You go from a zero to a one, and everyone loves you, and you get the big price jump. I said, ‘That moment is going to happen for us because we're going to get to an ore body here. But we’ve got to get there tonnage wise.’
I said, ‘We need to write some checks or I’ve got to raise money elsewise.’ But I'm thinking, when you gotta give it away, you gotta go back to the guys that brought you and say, ‘Hey guys, look, we like what we see. Here's why we like the deal, and we're going to put our money in. You should put your money in too.’ And that's what we did.
We raised a round of about C$4.2 million in November. The stock was around C$0.10 when we announced it. And we did use that two-for-one thing. We did a raise at C$0.20 and at C$0.10 and raised C$4.2 million. My family and I put C$1.2 million in so we, obviously, believe that this is going to be a mine and made a significant investment. And then we pressed. And, of course, the drill has been cooperating.
Our last assay that we had out in January had a 40 meter hole of 1.6% nickel equivalent. I mean that is a monster hole; a nickel top-five hole in the world last year. And I don't think that's going to be our best hole. I think we've got three or four other candidates that should be in that range. And nickel is sort of an interesting ore body to drill.
You get a fairly good feeling when you're drilling it because, visually, the rock is distinctive. It's this black garnierite rock that looks quite different than the other stuff you’d drill when drilling for gold or copper. And you can XRF it and sort of know it’s charged and get a pretty good sense of what you've got. It's all about the width. In this one section of our deposit, we’re getting sort of 10 to 50 meter intersections of nickel. That's phenomenal stuff and it adds tonnage really quickly.
We've been giving the street guidance, saying, ‘Hey, we're doing a full new metallurgical workup right now using SGS,’ who are leaders in that field, and that'll be ready by the end of April, early-May. And by then, we'll have completed our next phase of drilling here, and we'll update our 43-101. And we think we'll be reporting on an 8 to 10 million tonne project at that point in time on this one pod. And from our perspective, that makes this thing commercial.
Now what does that mean? Well, if you look at other commercial nickel deposits around the world — you could look at Talon Metals or Premium Nickel in Botswana or even look at Noront — and they basically sell for around C$50 million a tonne. That's what the market value is, it seems. And I think that's cheap. But it is what it is.
But you take that with us and we get the 8 to 10 million tonnes at that number, well that's C$400 million - C$500 million and we own 80% of it with Critical Elements (TSX-V: CRE)(OTC: CRECF) owning the other 20%. Well, that's a big number and we're about a tenth of that.
So if you believe we're going to get there, and we're basically saying we're putting our drill collars and azimuths out there so people can put it in and Leapfrog Geo it themselves and model it. It's not like we're trying to fool anybody with tricks. We think this is pretty much a layup but, obviously, we have to get it done. But the drill bit is cooperating.
And as between now and the next six months — as every two to four weeks as we get these assays out — we'll continue to de-risk this and people will start to say, ‘Wow, they've got another big hole and another big hole.’ And it's like the hits keep on coming. At some point, people will make the conclusion that this guy wasn't joking and that this is going to become a mine.
And I think the good news is that this is just the first pod. Every nickel sulphide mine in the history of the world — there's always been multiple pods. There's usually three or four or five pods. How do we find these other pods?
Well, besides using gravity and the usual sort of techniques, we've got something new now. I don't know if you've heard about this, but there's something in Australia called Fleet Space Technologies and they have this new approach called Ambient Noise Technology.
Gerardo Del Real: I was going to ask you about that, yeah!
Terry Lynch: It's very cool! These geodes that they put on the ground, they're linked and they upload to a satellite that Elon Musk put up. And this is how I discovered it; Elon Musk, I think, brought it to Talon Metals. And Talon Metals is where I saw the press release on this new technology that they were using to expand their nickel deposit there at the Minnesota and Michigan border. And I thought, wow, these guys are, obviously, a top technical team and they're not coming up with an announcement like that for some sort of stock promo… it’s because they believe it can advance the discovery process.
As a result of that, I reached out to Fleet and I went and got the white papers and got educated on the technology and thought, ‘That looks very good to me!’ But again, I'm not a scientist so I wouldn't make that decision. I brought it to my technical team, which is GeoVector Joe Campbell — an industry veteran. He's been around a number of great successes in his career. And Ken Williamson, who's been our 3D modeler.
And honestly, the guys were initially skeptical as most scientists are. And I said, ‘Guys, I get that. Just do the research and if you decide it's not good for us, great, we're not going to use it. But please do the homework. I'm paying you to do the homework because I read this stuff. The talent team is top-notch. They would not be doing this stuff if they didn't think it was adding value.’
They did the work; two or three sessions with the Fleet team and reading all of the papers, and they came to me and said, ‘Yeah, this will be really great.’ And basically, what it will allow us to do, in sort of layman's terms, is… think of it as almost like sonar.
They bounce it in the ground and it comes back with, effectively, sound maps. And, I guess, every mineral has a different density and a different type of wavelength on a sound map. And so they take that and they correlate it. It's highly effective when you have existing scientific evidence.
We, obviously, have the drill collars with the actual results every few meters or whatever, and they can correlate their data with our drilling data and get a real accurate visualization of the current deposit.
And then, that becomes a signature to see what's, obviously, around the current deposit. You can say, ‘Hey, are there other areas that we can tap into? Are there possibly some deeper zones that we've missed?’
And then, they can also use that signature — because we're working, right now, one sq km of a 45 sq km land package — to go to the rest of our land package and say, ‘Hey, are there other signatures out there?’ Given the propensity of every single nickel sulphide mine having multiple pods, it's highly likely we're going to find other pods using these techniques. And then, obviously, we can supplement the seismic and the gravity just to confirm. And then, we drill.
It's a pretty exciting story when you think of what we've already proven that we've got and where our valuation is — which is like creating 10 cents on the dollar — and yet it's got all of these upsides. And the stock is cleaned up. We’ve finally broken through. And we've had to deal with some shorts along the way, and they're an annoying group of bastards — but it is what it is!
One of the things that we're doing is we're going to be spinning off our copper-gold projects in BC and Chile. And that'll be great because — in addition to enabling us to provide separate validation of the value of those projects — it also creates a bit of a barrier for the shorts because it'll be on a different exchange. And that will make it more difficult for them to paper over these not delivering the stock. So that'll be problematic for them.
But the other thing we'll be able to benefit from is, interestingly enough, the Fleet Space Technology approach was first used in West Australia in the desert there to explore for copper and lithium very successfully. And I said, ‘Well, I know they’ve got caliche in West Australia, so are you guys able to see through that?’ Because in Chile, that's our big problem is you’ve got caliche, which is this mineralized limestone that's the base of the sand dunes — and it obstructs the seismic and gravity signals.
It's hard to make a regional play in these sand areas because it's really tough to get through there and get accurate data. And you usually have to have blaster rigs go down and put the sensors down and get the data that way. But it's super expensive. I mean, we're talking in Chile, we've got 4,000 hectares; 8,000 hectares. These are the size of the city of Toronto. These are monster projects. You need to have a regional play in them.
But with Fleet, they've been able to see through the caliche in West Australia. After we're done with it at NISK, the plan is to put it into the spinco company and get down to Chile and, hopefully, have some luck there on the regional plan. So some exciting stuff and all very doable and all tracking. It's a great time to be getting educated on the Power Nickel story and on the nickel space and all that we're about.
Gerardo Del Real: I’ve got to say, Terry, I don't disagree with your assessment of Quebec being a top-notch jurisdiction for exploration development and mining. I think it's really emerged. Kudos to everyone involved there.
And then, the second thing I’ve got to say, it's a fascinating story from multiple angles, this Power Nickel story. What I really like about it is it seems like with all of the catalysts and the pretty aggressive drill program that's ongoing, we're going to find out whether or not this sinks or swims within the next, probably, nine months. Is that accurate?
Terry Lynch: Yeah. I mean it's swimming… the drilling is ongoing. I think that's very accurate and I think people can just watch it. And I think that's why we posted the drill collars and the azimuths because there are a lot of people now that have the capacity to actually model this stuff themselves. I don't know if you’ve ever played around with Leapfrog Geo, Gerardo.
Gerardo Del Real: Sure, absolutely. I'm not very good at it, but I've done it.
Terry Lynch: I'm sure some of your friends have too. But what's cool is that there are people out there that used to be bank analysts or investment bank analysts and whatever, and are now running their own money or whatever.
These are the Thinput guys. They're experts and they've got crazy names on Twitter — but these guys are sharp. They know their stuff. They're as good as any industry investment analyst and they're able to model stuff. You can't fool these guys… and why would you want to? Just give them the data, let them work it. And if they can get that data, they'll make the analysis themselves and see that, ‘Wow, this looks pretty bloody hot!’
When we announced the Fleet Technologies deal, we posted the drill collars for Hole 23 just to show people the ongoing progress. And those are hot nickel collars. If you're a nickel guy, you look at that and say, ‘That's some good rock!’ So it's interesting. It's a pretty exciting time because you know how hard it is to find an ore body. It's bloody tough. It's super rare. And so now that we've got one, we're pretty pumped about bringing it home.
Gerardo Del Real: I'm looking forward to seeing more results. I'm looking forward to you proving up the tonnage. I'm really looking forward to the potential for a drastic re-rating. And it's great to have you back on, Terry. I'm looking forward to chatting again.
Terry Lynch: Alright, Gerardo, great to catch up with you and continued good luck. Ciao for now.
Gerardo Del Real: Appreciate the time. Thank you.Click here to see more from Power Nickel