Categories: Base Metals
Topics: General Base Metals

Power Nickel (TSX-V: PNPN)(OTC: PNPNF) CEO Terry Lynch on Advancing the Flagship NISK High-Grade Nickel-Copper Sulfide Project via the Drill-Bit in Mining-Friendly Quebec, Canada

 

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, we're overdue for an update. A lot has changed since the last time we spoke. First and foremost, how are you, sir?

Terry Lynch: I'm great, Gerardo. It's been a nice summer and, obviously, a big start to the year. And we sort of took a little time off just to gather some energy, and we've been executing. We’re looking forward to the fall season. I think it's going to be a corker of an end of the year… so excited about things.

Gerardo Del Real: I couldn't agree with you more. Listen, when we started this year, you and I had a conversation, and we talked about how you have to buy when no one is buying, and you have to buy ahead of a discovery hole or that catalyst that gets people's attention. 

I think the stock at the time was trading around C$0.16, C$0.17 per share. And since then, you've had a couple of discoveries. You recently hit a high; you almost hit the C$0.90 per share mark. And you have the attention, amongst others, Robert Friedland and Rob McEwen. 

So a lot has changed in the last several months, and I want to start there. I would love for you to get us an overview of what's gone on in the last few months and what's attracted all of the attention. And then, we can talk about what comes next.

Terry Lynch: Yes, 100%. Obviously, with a name like Power Nickel, we're in the nickel business. And our original discovery was based on an ultramafic rock formation. And we were following up on that about a year ago where we had stepped out 5.5 km to the northeast of our current site, which we call NISK Main. And we drilled the discovery hole where we had 60 meters; we had almost eight meters of 1.5% copper and one ounce PGM. So a pretty amazing hole.

Of course, we weren't expecting that, right? We drilled on an ultramafic formation; an old EM anomaly. It’s the right thing to do. But we made this discovery that we weren't really interested in. We weren't set up to follow up on it right away because it was a winter target so we had to wait until January to get back in there. But we were always quite keen on it, of course. And we had covered it with good geophysics. We had the Fleet Space Technologies over it, and so we knew exactly where the plates were and where the target was.

We started drilling in January of last year. And by February, we had drilled 8 or 10 holes as it wasn't very deep. You'd go in at 16 meters, and you'd be done at 80 meters. And then, the next one would be 100 meters and done at 120 meters or something like that. 

We posted a picture in February [see presentation] when the market was still sucking. I think the stock was around C$0.20 or something. And I basically said, 'Look, we've made a material discovery here… this is unbelievable rock… here are the pictures of it… we don't have the assays yet but it's the company's opinion that this is material news for us' because I knew I needed to get this out just to be full, plain, and true on the public side.

And, of course, the market just shrugged it off. We did a financing there because we needed some hard capital as we had raised a lot of exploration dough but needed some hard funds as well. And the family and I ended up getting most of it ourselves. 

And it was great for us because we knew it was going to be good news. And eventually, the assays started to come out, and we had several holes of more than 10 meters and more than 10% copper-equivalent. Some of them were more than 20% copper-equivalent. I mean, these are goldilocks holes. 

As Robert Friedman said when I was meeting with him in New York and pitching him on the investment, which he already had a bit of; he had already entered the stock in a small way, but he said, 'Well, I've never seen a copper hole like that with the PGMs… it just doesn't happen.' 

So he says either one or two things happened. He says, 'Either you've salted the core or it's a duck-billed platypus.' I just laughed. He says, 'Look, obviously, you wouldn't be here if I thought you'd salted the holes. I know you don't even handle the cores so it's not you. What's happened is something that shouldn't have happened but it has happened. In my experience in mining, when that happens, when the unthinkable happens, that's very good news. That's why I'm at the table.' 

So that was sort of his thesis on it. And, obviously, he came in and took half of that financing that was done at C$1.25 a share. And through using the good exploration benefits in Quebec, we were able to make that happen where Robert invested, really, at C$0.66, the funds invested at C$1.25 per share. Robert bought his position at C$0.66, and the fund guys are able to give the benefits to their investors, and they reduced their tax from 54% to 40%. And everyone's happy.

Robert's got a buck twenty-five working for them in the company, and the tax benefits were given to the people that needed those, so that was good. And then, of course, Rob McEwen followed up his earlier investment at C$0.25 by stepping up for another 20% in this round at the current rate. Rob is one of the legends, as you know, and he's a very savvy early-stage investor. You're not going to fool these guys. They understand the risks in the game, and they're very educated. They've got great insight and great consultants. 

So getting those types of people on our side, and two major mining funds, finished off the deal, and CVMR, so it was really just a great institutional round for us and gave us a lot of equity to work with to really see how world-class this can be. And I think we will see shortly how great this thing can be. But that was the storyline behind them investing.

Gerardo Del Real: Well, C$20 million is a heck of an endorsement, especially when it comes along with the names that decided to write a check here. What comes next? You clearly, clearly believe in the project, the quality of the discovery, and the future of it. How do you allocate that C$20 million and unlock further value there?

Terry Lynch: Yes, so along that path, one of the interesting things we did was when we made the initial discovery hole, my son, who’s a serial mining investor and used to be an oil and gas analyst saw a video from Dr. Steve Beresford where he’s basically talking about his philosophy on finding giant polymetallic deposits. And that's really what Steve’s all about… this guy’s pedigree is pretty impressive to say the least.

He was with Western Mining, which was Australia's version of Inco before it was taken over by BHP. He then left and became chief geologist at First Quantum when they had their big move. Then, he was at NMG and then IGO. So this guy has had several successes in his career spending upwards of C$300M to C$400M exploring for polymetallics. 

If Steve’s not the leading guy in polymetallics, he's certainly amongst those guys. And so my son watched this video and said, 'Dad, I think this guy is in the hunter-mode of his life… he’s really talking about NISK… you should try and reach him… you're good at reaching people that are tough to get to.'

Gerardo Del Real: Right.

Terry Lynch: So I reached out, honestly, through LinkedIn. I’d been spending all of that money on LinkedIn all these years and basically thinking I should just drop the $80 monthly fee.’

But it paid for itself, right, because I reached out and sent him a couple of our press releases on some of the nickel but also on the polymetallic hole. And he wrote back and said, 'Well, that's pretty interesting.' So we had a conversation, and he said, 'What's the next plan?' I said, 'Well, unfortunately we didn't anticipate the success on the polymetallic side so we weren't ready to conduct any program because it's a winter target, and we need to prepare for it.' 

He says, 'Okay, well let's touch base after you do.' And so, obviously, once we started to crank out the holes, and we saw the successes, we started to talk in February, and I showed him the core, and I said, 'This thing is going to be spectacular.' And he says, 'Yeah, it’s going to be spectacular.' So we started chatting. We did a technical review, and we got him to agree to come on as a technical advisor.

So he did, and then we fit him into a schedule. He hopped on a plane and we met him, and he went up to the site for a week with our team. We’ve got Ken Williamson who's a top-tier geo and PhD and the VP of Exploration for us. He was at Red Lake with Rob McEwan, and he understands that area really, really well. 

He was the first guy that designed our initial discovery program at NISK so he has a lot of domain expertise on the rock up there. And then, we used GeoVector, which is one of Canada's top one or two, I would say, geological consulting firms. And they give us the bench strength that little guys like Power Nickel usually don't have in terms of having thirty-odd geologists. Those guys have that. So we've had that team to execute for us on the drill rig, managing the core shack, and doing all of the things that they can do very efficiently.

Money-wise, it’s actually cost-effective for us because when you hire employees, they get around 80% benefit on the flow through stuff, whereas, with consultants, it’s 100% so the margins aren't that much. So we're basically hiring world-class people that we couldn't otherwise attract to such a small company, through GeoVector, and they've been able to execute on that. And they’re the guys who came up with the concept of drilling the Lion Zone hole. So they've been fantastic.

Steve was up there with them, and, unbeknownst to me, I didn't know that the GeoVector guys were all ex-Western mining guys. So all of a sudden Steve gets there, and all of the data is set up exactly the way Steve's been trained to set data up. So he says, 'Well, that's the first time that's happened that the guys have done things right… with everyone else, I used to spend two or three months sorting stuff out.' 

So he hit the ground running. And he just loved what he saw to the point where he came up with the program we're executing right now. It’s about a C$10 million exploration program over the next eight months.

And that has already started. We're a month and a half into it. Steve's view is, 'Hey, listen, we've done a great job… we've made the discovery and we're continuing to expand the Lion Zone.' 

Steve sort of has three theories as to what's happening here. He says, 'Most likely, NISK Main, which is 5.5 km to the southeast, is directly connected to the Lion Zone, and we'll need to prove that subsurface… it’s very uncommon to find polymetallic deposits but they can be very, very big.'

He believes a strike length of 5, 6, 7, 10 km can happen. This thing can be that monstrous… so that's obviously music to our ears. But he says that the second most likely scenario is that there's another nickel-sulfide prospect that we haven't yet discovered that's underneath or close to the Lion Zone.

He says that because we've got high-grade nickel in the Lion Zone results as well —  and we haven't talked about that a lot but it's in there; the 2% and 3% nickels — that quite often in the polymetallics what happens is you’ll have your nickel sulfide zone underneath that deeper zone somewhere between 500 meters and a kilometer deep, maybe even a kilometer and a half deep. 

And it sits there, and it's basically the oven where some hydrothermal action came by and then basically moved it to surface. And that's where the copper sulfides are located, and it’s where you get the high-grade copper. And he predicts that we'll find zones that'll be high-grade gold, high-grade silver, high-grade platinum-palladium, and high-grade zinc. He says that this is what happens in polymetallics.

He asked me because when I was first explaining the story to him, I said that I didn’t really have a great analogy. It's not like Voisey’s Bay because you've got the gold and the silver and the high-grade copper. And it’s not like this gold deposit of the base metals. 

Steve says, ‘I get what it's like.' I said, 'Oh good… what's it like?' He says, 'It’s like Norilsk.' I'm like, big smile, right? I'm thinking, wow, this god of the polymetallic world just said that we’re like Norilsk. He says, 'Listen, I'm not saying you're the next Norilsk… but if someone wants to find the next Norilsk, it would start exactly like this.' 

So I mean… that's a hell of a start.

Gerardo Del Real: Absolutely.

Terry Lynch: And the reality is, if you look at Sakatti, which is another great polymetallic discovery that Anglo American has in Finland — 30 to 40 million tonnes of high-grade nickel-copper-PGM in Finland — he’s saying, very much like that. He says, 'This would be my expectation that that is sort of what we want to find here… it could be really big.' And so that's why he joined. 

He says that when you have an opportunity like this to find a really world-class asset, you’ve got to go at it in a certain way. You need to have a process. He’s been through it before and believes that cherry-picking the drilling is not the most cost-effective way to make a discovery.' 

He says, 'You've been pretty lucky so far, and it's pretty good, and you've done the right things… we've got this one mine shoot we’re working on… these shoots come and then they go and then they come again… so the first part of the exploration job is to find these shoots and their extensions.' 

And we're going to find multiples. Steve says, 'They’re tricky to find but there's a pattern to them… this is the way to go.' So that’s what he recommends doing, and, obviously, you wouldn’t bring in a world-class guy like Steve and not listen to his recommendations.

So this summer, we're drilling over 8,000 meters. We're drilling almost 4,000 meters of it specifically for sending down-hole EM's to understand the structure better and to vector out from there with the EM's to identify these other shoots and the extensions and then to be able to build them more cost effectively. So that's what we're doing.

In conjunction with that, we're conducting a ground EM program and a gravity program that'll allow us to really tie this all together. And we're starting to step-out between the NISK Main Zone and the Lion Zone. Eventually, we are going to connect these things and understand what's really happening there. 

It's going very well. Obviously, we're still doing some drilling at Lion, and we're extending that both to the west and at-depth. So we'll have some more, we think, happy pictures to give to folks.

We're nine-for-nine on our pictures, Gerardo, and none of them has moved the dial when I put them out there. At some point, I think people will figure out we’re actually not bullshitting when we put those pictures out. Maybe it'll be the 10th or the 15th… I don't know… but eventually they'll figure it out.

So that'll be coming… and then, eventually, we'll get these assays out as well and go from there. We're certainly stoked about what we're seeing on the exploration side at NISK.

Gerardo Del Real: Well, look, you have an exciting discovery, you’re cashed up, you have some big names backing you, you've clearly strengthened your board, and you have an aggressive drill program. You have picture number 10 due imminently. I'm excited for that, and I'm looking forward to seeing you at Beaver Creek. I know you and the company will be out there. 

Congrats, Terry. I mean, nothing happens in this space, and then it happens all at once. And it seems like you’ve really got a tiger by the tail with this one. Anything to add to that?

Terry Lynch: No, I think that's pretty much it. People ask about what's happening in terms of news flow, and I’ll give them a little bit of a rundown. So we've got the last assays of our winter program that should be out early next week, which will be, I think, more good news. 

Then, there’s the CVMR Feasibility Study that's been done, and that's going to come out after Labor Day. We haven't talked a lot about it lately just because of the dominance of the drilling results. But we've done a lot of work on that.

And we just came back from Korea with CVMR where we met with the major Korean battery metals people there. And I think there's going to be some very interesting developments on the nickel side of the business for us with CVMR. And that'll be coming out post Labor Day. And then, of course, we're off to Beaver Creek. 

So lots of exciting developments for Power Nickel. And I think given that the summer doldrums are here and the stock has come back a bit, you're buying cheaper than Robert Friedland and Rob McEwen… so it’s probably a hell of a time to be checking out Power Nickel.

Gerardo Del Real: Looking forward to ending the year on a strong, strong note. Lots of catalysts. Terry, thank you so much. Looking forward to doing it again.

Terry Lynch: Great, Gerardo. See you at Beaver Creek.

Gerardo Del Real: Alright, see you there. Cheers.

Click here to see more from Power Nickel