General Base Metals
Rockridge Resources (TSX-V: ROCK)(OTC: RRRLF) CEO Jonathan Wiesblatt on Bargain Hunting in a Copper Bull Market
Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the CEO of Rockridge Resources, Mr. Jon Wiesblatt. Jon, it's great to have you back on. How are you today, sir?
Jonathan Wiesblatt: I'm doing great. Happy Holidays to you and I hope you have a wonderful new year, Gerardo.
Gerardo Del Real: Very kind of you. Same your way. Listen, every time I have you on, because of your background, and hopefully you could touch on that just really briefly for those people in our audience that aren't familiar with it, but because of your background, I always have to get your macro take on the copper space. You and I had a brief chat before we got on air here, and we talked about how we both pride ourselves as contrarians, but it's kind of hard to ignore the math that is developing around the copper supply demand equation. And so can you touch on your background a bit? And then I would love to hear your take because, again, it's hard to argue with the math and, man, does it got me giddy for 2023.
Jonathan Wiesblatt: Yeah, sure. And again, thanks for having me on the program again. So just very quickly, the background is a two-decade career as an analyst, an equity analyst here in Canada, and then the vast majority of my time spent as a portfolio manager, an institutional portfolio manager. Ran a number of large funds, some of which were housed in some of the largest resource organizations in the world. I had the chance to really learn from some of the best, and you can go look up my resume and you can see some of the names that I'm referring to.
So over that period of time, I had a great ... Growing up in Canada in the financial sector, you must pay attention to resources. It makes up such a dominant percentage of the weighting of the TSX, the S&P/TSX. And so we spend a lot of time talking about energy, mines, metals, precious metals, base metals. And so if we want to just dig into my overall view on base metals, there's been some significant change since we spoke last.
We're starting to see that the Chinese government is starting to open up that economy, and I think expectations of that has really started to make its way into the base metal markets. That's what we're talking about. You've seen copper really move from the three and a half dollars level where it found very nice support and it's trickled its way up into the $4 per pound range. So as we were discussing before we got on the call, copper is really setting up nicely for the new year.
However, it's not about 2023; I believe it's about 2024 and beyond all the way through to 2040 if you look at most of the analyst numbers and the expectations. If you believe that the demand story, which is the decarbonization theme, the electrification of the global auto fleet, if you believe that that theme is on trend, then there could be demand increases by greater than 50 million metric tons by 2035, or greater than 50% demand growth between now, 2023 and 2040, which is significant. Very rarely in my history as an analyst, as an investor, and now as a CEO of a public copper company, have I ever seen some numbers as staggering as those.
The other thing that is worth pointing out is that many analysts are discussing peak supply in 2024. I don't really like to talk about peak supply, but the writing is on the wall that supply is in dramatic decline. If you look at all of the largest global copper mines, yields and grades are in significant decline. These mines have been unable to add significant amounts of pounds of resource to their resource statements, and we're starting to see production rates come off.
The reason for that, Gerardo, as we've discussed, is there's been a lack of significant capital investment into these major global mining projects for many, many years. On top of that, there has been limited amounts of CapEx that's gone into drilling and exploration for new resources. So at the end of the day, we're going to potentially see deficits of copper supply of up to 10 million tonnes by 2035, which would drive price expansion significantly. So that's kind of the setup for next year and beyond for copper.
Gerardo Del Real: Meanwhile, Rockridge sits near 52-week lows. You just had a 15.9 meter intersection of 2.35% copper equivalent. Mind you, it's starting from 13.8 meters depth. This of course, at your Knife Lake copper project, you have a resource in place. I completely agree with you on the supply demand fundamentals. I think on the supply side, 2024ish, we're going to have a situation where it's going to be all hands on deck. And again, I think with tax loss selling season and how depressed a lot of company valuations are, there are some phenomenal bargains out there, including Rockridge if you believe in the copper thesis. Can you talk a bit about the recent news and what comes next in 2023?
Jonathan Wiesblatt: Yeah, but before we talk about the drill campaign, let me just add one more layer to the onion on the macro and projects like Knife Lake. So Knife Lake fits on almost 57,000 hectares, a virtually unexplored ground in some of the most robust exploration territory for these types of VMS style deposits, which host significant amounts of base metals like copper. It is going to be these projects, not just specifically Knife Lake, but these projects in aggregate over the next 10 years where we need to find greater supply to meet that growing demand threshold. So that's why projects like Knife Lake in provinces like Saskatchewan and countries like Canada, very sociopolitically safe jurisdictions with excellent mining infrastructure, this is why we are so excited about projects like the Knife Lake.
So back to, you mentioned a couple things about 52-week lows and about our resource statement. We did a resource statement a number of years ago now when copper prices were significantly lower, we have greater than 200 million pounds of copper resources at almost a 1% grade overall. And if you look at our enterprise value today relative to the size of our copper deposit, including some additional very prospective assets inside the company, you'll see that we are just trading at a significantly low valuation.
So I think that there is a ton of opportunity for investors looking for junior resource plays in good jurisdictions like Canada, that have good resources, shallow, solid grades, economic grades, to really come into Knife Lake, I mean into Rockridge to make a very good return on their capital. So love the story still and really think the stock is setting up well.
As for the drill campaign, overall, it was a very successful program. As you know, we drilled about a thousand meters; we intersected rock at Gilbert West, and that is one of the exploration targets about a few kilometers away from the maiden deposit that that intersection of rock is associated with copper mineralization. We know that we're in very, very prospective grounds, and the story going forward is going to be the continued development of the maiden Knife Lake deposit. But more importantly, it's the 11 target zones that we've identified through a vast array of VM testing, that that's going to help us to drive growth in the deposit going forward in the area going forward.
So we're really confident with additional drilling. We'll get into something at Gilbert Lake in the future, and we're going to continue to do some more exploration work over the coming months. The drill program at Knife Lake, again, was very successful. It was several infilled drilling holes, which as you identified, returned very solid grades at very good depths. Grades were exceptional. We increased the geological understanding of the deposit yet again, so super excited about that. And there's still so many under ... I can't emphasize this point enough, there's still so many underexplored targets at the property, and there's many, many years of work to be done. So we're very, very excited about the future for Rockridge and the Knife Lake Project.
Gerardo Del Real: Well said. Agree with every point. Have a great holiday and we'll be chatting, I'm sure, quite often here in 2023. Jon, thank you for your time and your take.
Jonathan Wiesblatt: My pleasure. Thank you, Gerardo.