Power Nickel (TSX-V: PNPN)(OTC: PNPNF) CEO Terry Lynch on Building a Billion Dollar Asset


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, great to have you back on. There is a lot going on. Let's get right into it. How are you today?

Terry Lynch: I'm doing great, Gerardo. Always a pleasure to get back on the air with you.

Gerardo Del Real: Well, listen, you just announced some really solid final drill results from the Fall 2022 drill program and initial results from the Winter 2023 program. I want to talk about the results and I want to talk about the project. It's in... It's near, I should say, James Bay. We know that James Bay is becoming a major, major center for attracting capital. The government has been incredibly supportive in Quebec of mining and wanting to expedite its permitting. And there's been some news recently that I think, we chatted a bit off-air, kind of flew really under the radar and so I want to start there, if you don't mind.

Terry Lynch: Sure, yeah. No, let's start there. So we were chatting offline. I was saying that the market has not noticed that about three weeks ago the federal budget in Canada and the provincial budget in Quebec came down and the major planks of those budgets, really one of the major planks in both of them, was in the federal budget, they're going to provide a 30% tax credit to build the mine and mine equipment and the Quebec budget up to 25%. So just think, overnight, up to 55% of the mine cost is going to be paid for by the government. That's unheard of.

With a bankable feasibility study, you can finance the mine with 30% equity. So now you've got 50% equity. So honestly, for companies like Power Nickel who trade, I don't know, our market cap's $20, $25 million US, something like that, our mine... To build a mine that is a high-end nickel mine would cost $400 million. You can build a base level one for 225, that just makes nickel matte and condensate. What you want is to get into the powders, anodes and wire business, that's really where the battery stuff is and that's where the high margins are. That's a $400 million thing.

So if somebody's just said, "Hey, Power Nickel, by the way, if you'd make it to be in a mine, you're going to get $200 million." Hello! We're trading at 20. That's ridiculous. And it didn't move the stock. The stock's actually come down since then, even on great news, but we'll talk to that later. But generally speaking, that's not just applying to Power Nickel, but people like Critical Elements, Nouveau Monde Graphite, anybody who's building a critical mineral mine in Quebec is eligible for these grants and tax credits. So that's just staggering and honestly they're all off since then. I don't know, nobody's translated to the investors yet, Gerardo, is my view.

And yet, it is a budget pitch. It's not law yet. But when it's your major plank and it's overwhelmingly positively received by the public, chances of that not happening are slim and none, really. But until it's done, it's not done. But that would be the one risk. But generally speaking, it's amazing. It should be definitely trading at some premium because of that.

Gerardo Del Real: No, look, if finalized, and I think you used the right word premium, if that is finalized, I can see mid-tiers and majors really willing to pay a significant premium for quality deposits and projects that are being built in the region for the simple fact that a lot of the cost will be offset. So I definitely thought it was important to touch on that point. Definitely something to keep an eye on. And look, you have a new discovery 800 meters east of the main zone. You also had some good numbers. You mentioned the stock selling off a bit. If you believe that nickel demand will continue to be what everybody expects it to be, I think it's a heck of an opportunity in the stock. Do you want to speak to the results here recently?

Terry Lynch: Yeah. Obviously the results were basically another great intersection, 16 meters north of 1.5% nickel EQ. That's a great nickel intercept. There's just not many like that in the world today. That follows our 10 meters of almost 3% and 40 meters of 1.6%. If this is not just one, and one and done, every assay released, we're putting out some big intersections. And like I've said to people in the release, I said, what we have here is a river of nickel that we've currently got and it's about a kilometer long. And when you're testing the river of nickel, you're hoping the river is as wide as possible and as deep as possible and as cloudy as possible, cloudy being the grade. Now of course, the river doesn't always cooperate.

Sometimes it turns and you miss the river. Sometimes it's a bit narrower than you'd like. But then that's what exploration drilling is all about, is basically testing those parameters. So we're testing those parameters, but in each case we're finding major intersections with high grade. Of course. Now we're trying to figure out, well, how wide is it at that intersection? Because we already know how deep it's going to be. So that's what you're trying to do. You can go left and you can go right and then that's ultimately going to get to your true width. So we see a pathway just within our internal modeling that we're going to be able to... When we update our 43-101, we're going to go between 8 to 10 million tonnes, is our feeling, of about 1.5% Nickel.

50,000 contained nickel tonnes, you'd be a mine today. That's going to be over 100,000. And we're not done yet because honestly, this is an ultramafic deposit, the last two ultramafic deposits of consequence in Canada, were Lin Lake, 22 million tonnes in Voisey’s Bay, which over 50. We're going to be in that mix. We're going to be between 20 and 50 million tonnes. I'm predicting that right now, and that's going to make us a billion dollar deal.

And here we are, 20 million bucks and it's like, it's not like we’re hoping to find something, we bloody found it. So it's like, holy shit man. It's like, and we got the money now we're not raising. So financing risks off the table. We got the cash, we're funded to do our next leg of exploration, which is we've pretty much finished on the main thing.

What we're doing now, the next thing, we just finished an Airborne EM, which for nickel massive sulfides, electromagnetic is really good because it catches, because obviously massive sulfide is highly magnetic, so this catches this magnetic signal. So we've, that's been really good. We've picked up on that. We'll be releasing the results in probably in the month in May. And it looks super exciting for this five and a half kilometer section of ultramafic that we've mapped so far. We've only drilled on one meter, one kilometer, so there's a lot more to explore. So we're really pumped about that. And then the other thing we're doing is, I can't remember when we talked last time by, I talked about the fleet technologies, the ambient noise, tomography. Did we talk about that?

Gerardo Del Real: We touched on it a bit, but I think it's worth revisiting.

Terry Lynch: Yeah okay. So basically it's basically sound mapping. And so they'll do that first over our existing deposits. So they can very easily correlate what they're seeing, what we know is scientifically there because of the drill bit. And then they do this sonar pulse into the ground, comes back as a sound map, allows them to correlate those images so you can get a real time vision of that deposit within four days of them being on site. And what's good about that, if you saw in the release, we sort of showed the map of the river and it's quite a squiggly, like rivers are very windy and turny, and it doesn't go in a straight line. So you have to be aware of where these turns are because that's where big chunks of the deposit are. And obviously sometimes they're not where the geologists think they are. But this technology will help us find more turns if we missed them.

So we can add some more to our current deposit. And then the other thing it does is it creates a signature of where we know that this is good rock and then we can look both below this current deposit because often nickel is stacked, so there could easily be another layer or two of rivers of nickel underneath this that we could go down and find targeted. And then of course, we're only working on the one kilometer of this five and a half kilometer sequence. So we're going to obviously check out the rest of that. And then we got a 45 square kilometer package that we're going to do it on.

So, it's like I said at the outset, nickel sulfide mines never come in one pod in the history of the world. We've got one pod now that's going to make us commercial, but we're going to find other pods. So this thing's going to be, in my mind, it's going to be big. So it's like, yet you're buying it for one sixth to one 20th of the comparable price of other nickel sulfide deposits. So it's like, it's a Gerardo Del Real deal.

Gerardo Del Real: You mentioned it being a, wanting to turn this into a billion dollar deal, you mentioned the market cap at 20 million. There's a whole heck of a lot of runway between 20 million and a billion dollar valuation. You look, if you're halfway right, there's a whole lot of runway here. Terry, it's always great to have you on. I'm looking forward to having you back on here soon and definitely looking forward to more results.

Terry Lynch: Yeah, and what's good, Gerardo, between the next two months, there's going to be releases almost every two weeks. It's like we've got more assays, we've got the spin out that's going to happen. We've got the airborne technology, the fleet, and there's, there's a big surprise coming that's going to be super positive. So anyway, it's a great time to be looking, trust me.

Gerardo Del Real: A lot to keep an eye on. Definitely worth the due diligence. I encourage everybody to take a peak at projected nickel demand. Obviously James Bay is on fire as a destination, as I mentioned, up top for new capital, for exploration, for big, massive, large scale discoveries. And you seem to have the goods, you seem to be confident about what the future holds. Terry. I love to hear that. Looking forward to having you back on and seeing how that shapes out.

Terry Lynch: Yeah, that sounds good, Geraldo. Just as a note, the confidence is real. The last biggest investor in the last two rounds, you're talking to him. So our big five shareholders have each put in each, the last two rounds we're like 70% of the round. So the core shareholders who know the most are investing the most. That's a good sign.

Gerardo Del Real: It's a great sign when the management and insiders eat their own cooking. Terry, great to have you on again, chat soon.

Terry Lynch: Thanks, Gerardo.

Gerardo Del Real: All right. Cheers.

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