Gerardo Del Real,
Editor
Oct. 25, 2022
While the broader indices, gold, silver and base metals are all in consolidation mode, lithium prices are on fire – up over 500% in the past year. My largest personal holding, Patriot Battery Metals (TSX-V: PMET)(OTC: PMETF), is on to what I believe will be the most significant lithium discovery in decades, with the potential to define a Tier-1 lithium district in mining-friendly Quebec.
The stock has pulled back a bit during a required quiet period as it prepares to list on the Australian Stock Exchange (ASX) – a market that understands and is eager to accumulate top-tier lithium stories and a market familiar with newly appointed Non-executive Chairman Ken Brinsden, who recently advanced Pilbara from a junior explorer to one of the world’s leading lithium raw materials players with entry to the ASX 100.
Pilbara now commands a US$10 billion market cap.
The recent pullback in Patriot shares presents a compelling opportunity for those that may have missed the first run up.
I caught up with CEO Blair Way about what comes after the next month or so and why he and the team are so bullish on the Corvette Lithium district.
Enjoy.
Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the president and CEO of one of the most exciting lithium discoveries, possibly in decades, Patriot Battery Metals of course. This is Mr. Blair Way. Blair, how are you today?
Blair Way: Doing great. A little worn out from marketing here in Australia. But yeah, we've had an amazing couple of weeks. And yeah, the discussion about the scale and significance of what we have here has certainly been part of those discussions, and it really is quite spectacular.
Gerardo Del Real: Let's get right into it. I reached out for a couple of reasons. One, you and I speak regularly, right? Between myself and five other friends of ours, we have between four and five million shares that we are sitting on. These are long-term shares that aren't being sold anytime soon, including the one that become freetrading in December that everybody's talking about. And so, I wanted to reach out just to get an update on where things are and map out the next several months. We've seen a pullback in the share price. Subscribers, and readers, and followers of mine have reached out with some questions. So I thought, "Let's get Blair on here." Let me play devil's advocate a bit and get right to it, if that's fair and you're receptive to that, Blair.
Blair Way: Absolutely. I'm aware of some of the concerns. And obviously, the concerns with the share price being played around with. Yeah, it's great to be able to talk through and maybe allay some of the fears that maybe are driving some of the movements we're seeing and the share price as well.
Gerardo Del Real: Well, first off, let me ask you about the drill program before I get into my devil's advocate stance. How is that coming along?
Blair Way: As we are well into fall, mid-October was the timing for when we'd stop the drilling due to weather and access with helicopters, and downtime, and guys having to sleep in the sheds over the winter, or over the evenings because the helicopter couldn't bring them out to do a crew change. So, we're pretty much there. The rigs will be shut down in the next couple of days. But again, the drilling has gone as we've anticipated. We're going to be exceeding the 25,000 meter mark I think for this drill program. Obviously, we started out with a 20,000 meter plan, but a lot of our 25 cent warrants have come in and that's funded some of the additional drilling we've done. And then, of course, now we just recently raised the 20 million flow-through to continue on with the drill program.
So, we're wrapping this drill program up as we speak. We'll be tidying up the cores, getting the last few cores to the lab, and then start preparing for the winter drill program. And of course, it's going to be a bigger program. So, we actually are doing some work-up at site to prepare for being able to process more core more efficiently. We're going to ramp up with a more aggressive program this winter. I believe, it'll be safe to say, it'll probably be the most aggressive drill program in the lithium space, certainly in Canada, with the target of five rigs on the ground by February. We'll start with the three we have in January and ramp it up to five. We'll have a snow road, so we think we'll get some efficiency there. So, we have a lot laying ahead of us. We're wrapping up this, what's now been our 25,000 meter drill program. We're happy with what we're seeing, and continue to see what we expect to see.
Gerardo Del Real: There's been some confusion about whether or not there would be any assays released between now and the ASX listing. It was pretty clear to me from our previous conversations that there would not be. Am I incorrect in that?
Blair Way: Yeah, yeah. I've had that same confusion. I've had a few people reaching out to me as well. And yeah, because of the fact we're in a listing process, there's actually a mandatory financing, which is where we have to get a 300 investor distribution here in Australia. So during that financing, just as we did during the flow-through financing that we just closed for C$20 million bucks, we cannot put any material news during a financing. So unfortunately, and it's frustrating, we will have assays flowing in. And what happens is, we tell the lab during this period, "Do not send the results to us, but keep working. Don't stop working.” It's not going to stop the processing. It just means those assays are not sent to us until we're ready. And by the looks of it, with the process laying ahead of us for this ASX listing, the prospectus will be filed shortly. All going to plan, that'll be the end of November.
So, we do have a gap. We're going to have a gap, which I guess to make it clear, there'll be no assays out during this period whilst we're working through the ASX financing. But what it does mean, look out, because as soon as the ASX financing is through, we're going to have another bucket of assays to put out. And then, there'll be another bucket probably after Christmas, or into Christmas and after Christmas as a drill core from the holes that we're just wrapping up now we'll be processed and sent to us.
So we have assays, probably 40-odd holes now pending. The last of those will be somewhere in probably mid-January. And of course, by mid-January we're going to be drilling again. So, we're going to be in the world of pending assays probably for some time to come. But yes, right now during the month of November, or the remaining time here in October and month of November, we won't have any assay results because of the ASX listing process.
Gerardo Del Real: All right, here we go to devil's advocate portion of our conversation, Blair. Why wouldn't I sell my stock now if I think that the share price is being played with? And, let me give you my speculation as well. This is something that I've heard as well. That there's a perception that because you're doing a financing associated with the prospectus for the ASX listing, that it might be a big-ish financing that will allow funds to come in and establish a robust position. Is that going to be the case? Am I going to be sitting on my shares upset that I didn't sell into this sell-off, and then see a huge financing come down the pipeline from this ASX listing?
Blair Way: There does appear to be some rumors about how all this is going to play out. I mean, again, I thought we had touched on the concept of this whole ASX listing. A large number of our investors are Australian-based, so probably in excess of 50, 60%. So this financing that we have to do under the ASX listing process is really almost an administrative process. So, we'll do what we have to do in order to get our 300-person distribution. And certainly, the way that people have been playing with the share price, it does feel like they think there's some sort of big financing coming ahead, and that couldn't be further from the truth. We've just done a big financing. We're funded for our drill program with flow-through, and no one can have any doubt as to what that funding is for.
We have access to hard dollars through our warrants that come in, our C$0.25 warrants. So, this financing with the ASX listing is to achieve what we have to achieve, which is a 300 distribution. And we'll do, I want to say, it'll be a modest financing just to get the job done. It's not going to be any sort of gargantuan thing. It's a few million dollars and nothing more. We actually haven't finalized that yet, but it's not some sort of massive financing coming down the pipeline. It is to get our 300-person distribution, which is a requirement under the ASX listing process. And that's really the limit of it. I mean, we don't need any more money at present. We are sufficiently funded for our winter program. And why would we want to do a dilutive financing at this stage?
Gerardo Del Real: Good. That keeps a smile on my face. The delay in receiving assays isn't going to change the nature of the assays. I have my internal model. I have a resource roughly between 135 and 160 million tonnes just based off of the assays that we've seen thus far. Clearly, there's a lot more upside there. I saw Canaccord come out with a report with a $9.75 price target. I saw another analyst report that had a minimum, and I thought this was conservative, a minimum resource of 99 million tonnes at roughly 1.15% lithium. Again, I peg it higher than that. But, when are we going to see a resource, in a perfect world, given all of the activity that's going on with the drilling and the assays that are pending?
Blair Way: It's a great question, Gerardo, and it's probably one of the questions I get when I do my road shows and it comes up every time. And look, we will have sufficient data to put out a resource in Q1 next year. So, all the assays from this drill program that we're wrapping up now, we can draw the line in the sand. The most recent news release on assays has a 2.2 kilometers. And people can do the math on that. We do expect triple digits. I'm always a bit cagey on numbers because I'm not allowed to state numbers as you know. So, we believe triple digits are going to be the case. But, it is a bit of a quandary because by the time we're producing that resource we're going to be drilling, we will have been drilling for a week or two. And we're going to be continuing to extend up the lake towards CV4.
So, if we keep seeing what we expect to see at CV4, do we just ignore it and put out the resource anyways? Answer to that is probably yes, but we do feel we're going to be in triple digits by the end of Q1 with the results that we get to-date. And if that's the case, then that's the plan. But yeah, so we are aiming for end of Q1 to have some form of resource out. But as I said, it is frustrating because we're going to have drill data, and it's not going to go in that resource because it'll be too early. So, it's drawing that line in the sand. And strategically, we are aiming to draw that line in the sand, and that will be the end of Q1 as sort of the target.
Gerardo Del Real: I'll go ahead and assume for you, a triple digit resource. I'm excited by the exploration upside. How are things going at CV13, and are we going to see drilling on some of the other targets because again, this is a district, right? This isn't a deposit, it's a district-scale play here. What does that look like? What's the exploration process look like?
Blair Way: Well, as you know, we have 50 kilometers of strike this summer. We did field work where we identified and extended our understanding of the existing outcrops and turned them into clusters. We found more and more material and outcropping around them. So, we basically have these sort of six clusters of which we've really only drilled into CV13 with 9, 10, 12 holes. But the bulk of them have been in the CV5 corridor heading up past CV1. And, we have so much more prospectivity to work on even beyond the clusters that we've identified. We still have another 20-plus kilometers to do field work on next year on ground that we haven't had boots on really hardly at all. So, there's still tons of blue sky beyond what we already have.
And we're going to have our five drill rigs this winter. They're going to be getting in the CV5 corridor area and the CV13 area. We'll have one rig, basically to test some of these other clusters. And then, I expect by summertime, some of these other clusters are going to need more than one rig as well. So, the potential for growing this thing, sort of to a scale that we've never even imagined is quite substantial with the clusters that we have that need to be drilled.
The area that we're working on, the CV5 corridor, we have a ton of work laid out ahead of us. And I keep saying, it's drill, drill, drill, and that's what we're going to do. Drill out our resource, move that forward down through the development cycle of doing studies – PEA, PFS, FS. Go through the permitting process. As you know, we've started the environmental baseline monitoring, looking at what it'll take to build a plant and mine around the CV5 corridor. But that's not where it ends, that's just where it starts. We still have a lot more to drill.
Gerardo Del Real: Minimum financing for the prospectus and the ASX listing. That's music to my ears. Assays pending, drill program continuing, aggressive drill program, the most aggressive drill program ever coming up next. And then a resource by the end of Q1. Does that just about summarize it all up there, Blair?
Blair Way: I guess the other thing we didn’t touch on is the fact that there's a bit of fear mongering about the $11 million financing shares, which the investors locked up for 12 months. And that has a warrant attached to it. So there's a big lump of warrants and shares that become free trading. And I think, there is some fears of, "Oh, everyone's going to take their win and just move on." Well, you and I have spoken about this a number of times. I meet with these investors that came into that financing, and they get what we have here. I don't see anyone getting out of this deal anytime soon. We still have a big runway ahead of us. People go, "Oh yeah, but you're $500 million bucks, that's great."
But you look at some of our comparables, especially when you look at comparables in Australia or Australian-listed companies with assets in Canada, we still have bigger runway ahead of us. And, these people that came in on this financing are not talking about the first dollar that they've ever made, they see the bigger picture here. And I don't expect any, or very few. I mean, some people will take a little bit of cash off the table, and we're going to need that for liquidity down here anyways. And those shares can be brought down into the ASX pool, which will be great. We need some of them sold down here, so we create that pool. But the majority of people I've spoken to are hanging on, and they're hanging on for the same reason that you and I had spoken about. We're just not anywhere near where it's time to exit this thing.
We have so much interest in what we have on the ground, both from majors in the lithium space, and other major mining as well as chemical companies. We have something that is at the scale now that it could feed the North American market for decades, and could well feed the European market, because neither the European nor the North American market really appear to have anything that substantial to provide alternatives to the current supply chain, which is all these critical materials coming from China. And there's a huge push to find alternative sources. An, we believe we have the potential to be that alternative source and solve that problem for a lot of the OEMs or the various chemical plants, cathode makers, battery makers and OEMs. And, we have to prove it.
And we are proving it now with drill programs, but I think we're certainly demonstrating that as we move forward. And the other thing is, Gerardo, it was only eight months ago that we financed really, or eight months ago that we started really drilling in earnest. Before that, we did a very early stage, which you participated in that first financing where we did a very early stage, very high-risk drill program. And we found the start of what was the CV5 corridor. People thought we were crazy. "Why are you drilling way out there? What are you doing that for? You're trying to connect CV5 with CV6, that's two or 300 meters, that's never going to happen."
Well, then we looked at CV1, which was 1.8 kilometers away. "Well, that'll never happen." Well, now we are where we are. And, that was less than eight months ago when we started drilling. And really, it's been since March that we have started talking about it, because I had to secure all the ground. We're now 100% owners of a 50-kilometer trend. We've got a drill program that's just laid out in front of us with another C$20 million of flow-through to go, or sorry, a C$20 million financing of flow-through to carry us through the winter and into the spring. I mean, I don't know how much faster we can go. And I think we've had an incredible 12 months to get to where we are, and we have an incredible 12 months ahead of us and beyond.
Gerardo Del Real: It's been a fun 12 months. I can't wait for the next 12. Just to be clear, you've had discussions with chemical companies and you said something interesting, right? You said, not just lithium majors, you said major mining companies. I've got to ask you before I let you go, are we talking major mining companies from other sectors that are inquiring?
Blair Way: You would be amazed at the interest level that we're seeing. I would like to be flattered by the fact that we have something pretty spectacular, which I think is part of it. But, it is amazing to look at some of the major mining companies that maybe are in different commodities or what have you that are demonstrating interest in this space because of what we're seeing down here in Australia. We're seeing hard rock lithium spodumene concentrate producers selling and making incredible amounts of cash flow. And people are saying, "Oh, that's just for short-term, that can't be sustainable."
Well, how is it going to change? The demand curve for battery materials is increasing. The supply is not really changing. There's no real indicator that there's going to be some big massive solution here.
So, certainly for the short to mid-term, this sort of pricing is here to stay. And, it's going to take quite a bit of time for that to change. And so, as you can imagine, there are other companies that are quite successful mining other commodities, and obviously they're miners, so they know how to do it. So, it is surprising some of the discussions I've had, and they're all really interesting. And, I'm not making any commitments to anyone. We can do the work we need to do to build the value here. But, it is really incredible to see the way that the whole landscape of commodity and mining, and the sort of critical materials, battery materials, how that's influenced the whole space, not just the battery material space.
Gerardo Del Real: Very, very interesting. Blair, thank you so much for your time. Appreciate the thorough update.
Blair Way: Always great to catch up, Gerardo. Happy to share the wisdom and the world of our Corvette property up in Northern Quebec. And yeah, always happy to talk about Patriot Battery Metals.
Gerardo Del Real: Exciting times. Thanks again.
Blair Way: Thanks, Gerardo.
Gerardo Del Real
Editor, Resource Stock Digest
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