Power Nickel (TSX-V: PNPN)(OTC: PNPNF) CEO Terry Lynch on CVMR Investment to Fund Feasibility Program at Power Nickel Nisk Project


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. We're overdue for a catch-up. How are things treating you this summer, sir?

Terry Lynch: Good, Gerardo. Great to hear from you. And it's been a weird summer in some respects, but business-wise it's been great. We've been making lots of, I would say, operational and strategic progress. Obviously the fires were a bit of an issue that cost us a few weeks, and that was weird. But it's been all over, hasn't it? But it has been also a decent summer, so it's not gone too badly.

Gerardo Del Real: Excellent. Well, listen, it's two different types of companies out there right now that I'm speaking with. There's the companies that want to put everything on hold and are hoping for a better market and are hoping that September and the summer doldrums going away actually invites some more speculation into the space. And then there's companies like Power Nickel that despite the summer doldrums continue to deliver major value-adding catalysts throughout, not waiting for the market to come to you, but making sure that you're adding the value now, so that when the re-rate is there, it's substantial. And listen, you just got CVMR investment to fund a feasibility program at the Power Nickel project. I've got to congratulate you on that because I know that's a big, big value-add down the road. Can you explain the mechanics and the structure of the deal? Because if you read through the release, there's a lot of layers and context, and I want to make sure it isn't lost on everyone.

Terry Lynch: Yeah, for sure. So basically the principal deal was with CVMR. So CVMR wanted to make an investment, and their whole perspective is they're pretty much the top technical nickel producer in the world, or certainly amongst them. So they produce such things, as in Sudbury where we had the Super Collider, they have the $10 million pure nickel tubes there, the 59s, they made those. You're an American, Gerardo, you'll like this. Your 100 dollar bills that you've got so many of in your wallet, they made the nickel plates that made those. And it's really cool with their powders. It's pretty much impossible to knock off the US greenback now because if you look at it with a magnifying glass, there's layers to all those images now all done with their nano powders. So you can imagine the scrutiny one would have to go through to be handling the nickel plate for the US government, no doubt.

So pretty cool, but they're huge in aerospace, 3D printing, obviously batteries and whatever. So they have a huge desire for class one nickel, because what they need to make their products. So we got introduced through a banker, a friend of mine who knew them well. And we started to get to know them, went through the pathway. And so what he said is, "Look, Terry, there's many ways to skin the cat here,” but to make a mine, you have to have an ore body, and you have to have quantity and tonnage and grade, and then that ore body has to be profitable to manufacture into finished products. So he said, "What you get in a feasibility study is basically the tonnage and the grade is what you're finding. You're going to keep on doing that. What we need to do is find out just how profitable it is going to be to mine your ore and turn it into finished products." That's what the feasibility study does, brings those two sides together.

So we said, "We think this is going to be a mine. We don't know yet how big it can be. That's what you're going to determine here over the next couple of years. But in the interim, we can get started on advancing this because we need the nickel now. We don't need the nickel in 10 years. We need it soon. So let's expedite things. You don't have to go through PEA. You don't have to go through pre-feasibility. We can cut to the chase if we really think this thing's going to go."

So it was a pretty interesting conversation and a bit eye-opening for me. But when I sat down and looked at it, I checked it out and I said, "Yeah, you can do that if the guys are prepared to go there." So we thought, well, why wouldn't we? The world needs to be more creative to get these materials to market sooner. So here we've got somebody who's prepared to do that and has the expertise and the bench strength and the staff and whatnot to make it happen. They have many plants, 18 plants around the world. So one of your big things in prototyping in the feasibility studies, you actually prototype a plant. Well, it's a lot easier to do it with somebody who's actually got 18 plants. They can make this a lot more economic.

So we're getting a hell of a deal in getting this feasibility study done, and how it's financed in order to take advantage of the significant incentives out there in Quebec for critical minerals was we did it so that we would be able to benefit from this effectively two-for-one deductions that are available. And so for every dollar they put in, we really get $2. And so at the end of the day, they'll put in several million dollars, and we'll pay an equal number of dollars in cash for the feasibility study, but still a great value proposition for us. Then they'll end up with an equity interest, and we'll end up with a very good understanding of just how profitable this project would be in a mining plant scenario.

They will look at it in three ways. They'll look at it from a hydrometallurgy smelting, but also their process, which is a chemical metal vapor process. And it's an interesting process from what I understand. I've actually seen the plants and stuff, and they atomize the nickel, and then they re-atomize it. So it's actually the most environmentally friendly process. That's one of the things we're trying to do at Power Nickel is to deliver the world's first carbon-neutral nickel mine. So having that process be so environmentally friendly is really a great start. And then obviously because we're powered by Hydro-Quebec green electricity, and because it's an ultramafic deposit, which naturally sequesters the CO2, those things can all come together. So those are all part of the decision-making process that we went through in working with CVMR and ultimately getting to this agreement.

Gerardo Del Real: No. Well, listen, the CVMR investment is obviously a major, major endorsement to the project. What comes next, Terry? What else do you have going on here for the last four months of the year? There's always something going on.

Terry Lynch: So we've been using the ambient noise tomography, which is a very cool space technology really that Elon Musk put these guys in satellites, and they've brought it all down. So what it does is it's been giving us really great 3D images of our deposit, and we're seeing why we miss on certain holes and why we hit and where we might hit some more. And so the guys that are doing that right now, they've been doing it for about four weeks. I'm going to do a podcast sometime probably early September with some of the Fleet Space Technology guys that are doing this for us, and we'll, I think, show the world some of the cool stuff they're doing and how we're using it. I think that might be interesting.

And generally speaking, we're drilling. We started drilling about a week ago, and we're following up on basically trying to extend the deposit at depth because it definitely looks like it's going and keeps on running, so in some of our best grade areas, we're looking for that. And then obviously we've identified also it's a seven-kilometer ultramafic sequence, and we've identified a number of other what could be the next pods. So we're trying to start to clip those. And then obviously towards the end of September, we'll start to drill on where we had that eight meters of the one ounce PGMs at 60 meters. We'll definitely be following up on that.

So if you look at it from an exploration play perspective, just pure exploration, it's super exciting. You've got this core. Maybe we're going to have eight to 10 million tonnes, and we hope to get that 43-101 out probably end of September, early October. That's the timeline right now. And that's just one pod. But nickel sulfide deposits, the way they work is that historically there are multiple pods. So we've gotten certainly some indications where those other pods are, and maybe there's pods for kilometers, who knows? I was just in an interview about an hour ago, and I said the great part about ... In my mind, I'm an asymmetric investor. I know you are too.

Gerardo Del Real: Absolutely.

Terry Lynch: We take risks, we're in the risk business, but we don't like to take big risks. We like to take little risks, but we like to have big rewards. And so that's what I like about this project is that right now you look at what we delivered with the drill bit last year. For sure, this thing's worth more than where we're at today, just on what we've already tapped. Guys like CVMR recognize that, and that's why they're investing. And that's industry. They're a private company. They could care less what happens to the market. So they're investing because they think they can make money, period. No other reason to invest. But the neat part is that's just the start. This thing could be really big, and it's like you're not paying for it. And when you're an investor, that's the magic, and that's what you want.

Gerardo Del Real: Absolutely. Terry, I'm looking forward to seeing this thing grow. I'm looking forward to seeing you advance the new partnership. Great work, as I mentioned up top. Have yourself a great rest of August, and I suspect in September you and I are going to start chatting on a more frequent basis. Anything to add to that?

Terry Lynch: No, I think that pretty much captures it all, Gerardo. Have a great rest of the summer yourself and say hi to Nick for me.

Gerardo Del Real: Excellent. Absolutely. Take care out there.

Terry Lynch: Cheers. Bye.

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