General Base Metals
Rockridge Resources (TSX-V: ROCK)(OTC: RRRLF) CEO Jonathan Wiesblatt on Macro Copper Take, Hitting High-Grade at Knife Lake & Exploration Upside
Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the CEO of Rockridge Resources, Mr. Jon Weisblatt. Jon, it's great to have you back on. How are you, sir?
Jonathan Weisblatt: Doing great, Gerardo. Always a pleasure to join you.
Gerardo Del Real: Let's talk a bit on-air. We talked a bit off-air about the fact that we're in the midst of tax loss selling season. The FANG stocks have seen over a trillion dollars wiped off their market caps. There's volatility left and right. We have an inverted yield curve that hasn't been this inverted since the early 1980s, and we just had a Fed statement that started off as seeming dovish and by the end of the press conference turned out to be a little bit more hawkish than what I think even Mr. Powell bargained for.
With all of that being said, we spoke about the fact that the better management teams in the space add value when no one is looking. And you just had some news where you've intersected shallow high-grade mineralization that included 2.32% copper equivalent, over 15.75 meters starting from 13 meters depth in hole 29 at the Knife Lake Copper Project. It's a lot in the intro. I want to get your take on the macro situation, and then I'd love for you to tie that in - because you're the perfect person for this -as to how that relates to our bullish thesis on commodities like copper.
Jonathan Weisblatt: Yeah, so a lot to unpack there, Gerardo. Let's start with the macro, and what an interesting time. I don't believe that there's anybody managing capital professionally or many operators operating inside public commodity companies that remember the early 1980s, which was the last time you saw extreme inflationary pressures and a rapidly rising interest rate cycle like we're seeing right now. So the operating environment and the game has certainly changed for most.
And so let's take a look at what exactly is driving the macro. So rapid inflation, I mean, consumers are seeing it at the grocery store, the gas pump, and generally just about everywhere, and soon to be mortgage payments due to rising interest rates. And that is having a profound effect on other macro asset classes like the US dollar, which has been parabolic for the better part of 2022 and consequently, as it always does, has had a negative impact on most of the commodities and the commodity complex at large, including the price of copper.
So where do I see the upside for the commodity cycle? Predominantly, I believe that demand for commodities at large - let's get to copper in just a second - but for commodities at large will remain quite status quo for the next several years. It is very rare for commodities such as crude oil, where you see consumption on an annual decline. In fact, it has only occurred twice in my lifetime. Copper, base metals, they're a different beast altogether. Their consumptions, they ebb and flow with demand from mostly emerging markets, like places like China, and China's a really good case study. China's been in lockdown for greater than two years due to the COVID-19 pandemic. I would expect that that country is going to have to lift some of their restrictions, so demand for base metals should rise. So consumption, I think, is going to be fairly status quo.
Where I think we're going to get the real inflection for the commodity cycle is on the supply side. There has been an extreme under- and I underscore the word extreme, extreme underinvestment in the commodity complex for almost a decade, since the last cycle. When you have underinvestment, limited CapEx dollars, it becomes very difficult to bring the next marginal, a pound of copper, barrel of oil, ounce of gold, out of the ground. And if you have tight supply coupled with sociopolitical issues in parts of the world like Latin America, Russia, where these base metals and commodities commonly occur, it is a recipe for significant and extreme price reaction. If you were to overlay base metal demands, specifically copper, for battery metals, for electronic vehicles, electric cars, you layer that baseline over the consumption curve with the supply being as tight as it is, I am suggesting to you that there is a better probability of an extreme price response to the upside than there is to the downside.
So we are setting up very favorably for the macro environment for base metals, specifically copper, over the next decade. So we are very well positioned at Rockridge to participate in that rising tide, that rising sector. And given that we are focused on the Knife Lake Project, which is in Canada, a socioeconomic, politically safe jurisdiction, we have a resource of greater than 200 million pounds of copper at decent grades, shallow. It's setting up really nicely for Rockridge investors over the next several years. So I'm super excited about that. So that's my macro top-down, and then that's where we kind of stand on Rockridge from a macro perspective.
Gerardo Del Real: Great take. Let's talk about Rockridge. Let's talk about those 200 million pounds, right? Copper's right around that $3.50 level consistently here over the last couple of weeks. That seems to be a near-term floor. Both you and I have very, very robust copper price targets and vision for the future. 200 million pounds... what's the market cap of Rockridge right now?
Jonathan Weisblatt: It's sub-10 million at this point in time. So if you look at your enterprise value to resource in the ground... How do I put it? It's a mind-blowing valuation for sure. And we're not alone. The commodity complex, junior resource stocks, many projects, great ones, mediocre ones, and even the poor ones, they've all been lumped into one trade. So we're not alone in this, but the valuation is quite extreme here.
Gerardo Del Real: Here's where it gets really exciting for me with Rockridge: the 200 million pounds that are shallow with very decent grades, that's all fine. It's great. It's a heck of an anchor as far as valuation goes. But the exploration upside is what really excites me. You're in a district and a jurisdiction that is seeing a lot of investment despite the bearish sentiment. There's a lot of capital that has come to this part of the world here recently, and the exploration upside for Rockridge in this part of the world is fantastic. Can you outline what this most recent drill program did for the understanding of the geologic model as it relates to future exploration?
Jonathan Weisblatt: Yeah, sure. Let me try to unpack that, Gerardo. So we completed 940 meters roughly over six holes. Assays have come back from four of those. The results at the Knife Lake deposit, they continue to exceed expectations. So the grades continue to remain robust at very shallow levels, which indicates to us that the deposit continues to evolve and potentially expand. So we really like the results that we're seeing there. We continue to, again, prove out the shallow high grade characteristics of the deposit. And things at Knife Lake are really... they're on track.
However, the exploration upside in and around the region is where we really get excited. So we continue to remain optimistic that further work at Gilbert, which is one of the exploration target areas we have focused on in the last few drilling campaigns, is warranted. And it fits our working thesis that this is a part of a much larger remobilized VMS system. So all indicators are pointing towards more copper, more VMS mineralization in and around Knife Lake. These types of deposits are... they're typically not one-offs. They typically occur in clusters. And the more work that we continue to do, the more advanced of an exploration program that we continue to throw at the region, the higher the probabilities of success we believe that there are. So we continue to backfill that exploration, that exploration model that you spoke to. And really, that's what we're going to continue to do going forward.
Gerardo Del Real: What comes next, Jon?
Jonathan Weisblatt: So we're going to look to advance exploration in the spring and summer of next year. We continue to work the geological model at Knife Lake, super excited about that. And as you suggested, we're always looking for ways to create shareholder value in the market, especially when valuations are this depressed. So my pipeline of opportunities remains quite full. We're always evaluating new and interesting things to do for our shareholders. So please stay tuned, and I hope your audience continues to remain excited about the story.
Gerardo Del Real: Looking forward to catching up again, a lot to unpack in this conversation. I thought it was well, well done, and I'm looking forward to the followup. Thank you so much, Jon.
Jonathan Weisblatt: My pleasure. Always looking forward to coming back.
Gerardo Del Real: All right, chat soon.