Thank you for joining Noble Capital Markets Emerging Growth Virtual Equity Conference. I'm Mark Reichman, one of Noble's senior research analysts. Today we are joined by Mr. Duncan Roy, Vice President of Investor Relations at Power Metallic Mines. Power Metallic trades on the TSX Venture Exchange in Canada under the symbol PNPN, and on the OTCQB in the U.S. under the symbol PNPNF. Duncan, the floor is yours.
Great. Thanks very much, Mark, and thanks everyone at Noble for putting this together and everyone joining today. A very abbreviated story today, just given our time constraints, but I'll get through all the essentials and try to guide you in the right way here. Power Metallic is the world's highest grade copper and PGE, or platinum group element, discovery in the world at this point. We're actually just behind Stillwater as the largest platinum palladium play on the go here. It's a very rare discovery that we have. It's called an orthomagmatic. We're the 21st of those to be discovered in the world. The current 20 are the richest and most valuable mines in the world, led by Norilsk in Russia, and the last discovery, I guess, was about 18 years ago with Sakatti in Finland.
Very special, very valuable and let's get into this a bit more so you understand. Classic Pinocchio page. I'm going to tell you things I believe are true, but please do your own due diligence and go from there. The transformative moment for our company was a couple of years ago. We had a nickel discovery in Quebec. It was advancing nicely, but we were in at the end of our drilling budget. We had about 200 meters left, and we're typically drilling 400 to 500. We asked the geos, "What do you have?" They found a discovery, a whole bunch of goodies on surface and old mag data, about 5.5 km away. We drilled it, and lo and behold, third best platinum palladium hit of the year in the world, and it became this orthomagmatic discovery that we call Lion.
One of the standouts of Lion is just the grades and thickness that we're finding there. This chart shows that the five highlighted holes here averaged over 25 meters in intervals. The copper equivalent is a double-digit number, over 11%. Your typical copper project, the guys get excited if they hit 0.6, and we're a decimal place removed from that, so pretty significant. The Lion itself, this portrays it from surface down to about 610 meters. It is about 53% copper, 47% PGEs of that. Gold and silver account for about 13%. We recently did a MRE. It's an important document that we've put out. Basically establishes that there's a floor in terms of valuation for our company with upside unlimited at this point. Since the MRE came out, we've actually released two exceptionally good holes.
One was 5 meters of 5% copper EQ down around 750 meters. The second was about 5.7 meters of 14% copper EQ. These are deeper than the MRE covered in the recent report. Big picture, infrastructure is super important. If you have a resource in the middle of nowhere, you have to build all the infrastructure to get there and then get the metals out. In our case, we are in a completely different situation. Hydro-Québec really built this area up southeast of James Bay starting back in the 1960s. At this point, our property, we have a major highway that runs right beside it. We have a Hydro-Québec substation across the street, power lines going over our land. The town of Nemaska is only about 5 mi away. We have a regional airport that Hydro-Québec put together.
The James Bay Cree headquarters are there, and we use their accommodations and food services as well. I have to say, phenomenal relationship with the James Bay Cree. They have been instrumental in helping us out on a number of occasions, including with some key strategic land acquisitions that they have been involved in.
The bigger picture on this is that the Quebec government and the federal governments will give you tax credits and tax abatements for 55% of the cost of building a facility up here to turn this into a mine. We are looking at about a $200 million cost for that, which is incredibly low. It is going to be an awful lot of fun. Payback on this is estimated to be about a year or less when the IRR number should be in the 60+, but we will formally put that out when we complete our PEA.
That will be done sometime in H1, possibly by the end of Q1. That is our next 43-101 document being registered. Here is our original nickel property, and here is the Nisk Main. Polymetallics, to understand all this stuff, which few people do. It is an orthomagmatic, it is a subset of polymetallics. It is typically a combination of PGEs, copper, and nickel. If you look at our chart here, we are over here under Nisk Main, right beside Oktyabrsky. Oktyabrsky is Norilsk in Russia. We are very similar to them, and we are actually very similar to Morrison, which is the Sudbury Footwall deposits. That is about the only A8A comparisons that are out there at this point. Just a quick investment tip.
If you guys ever see a news release where we have published pictures of core, geos will spot the mineralization in it easily, but know that there is probably some pretty good assays coming down the pipes in six or seven weeks. When we made this discovery, it brought a lot of significant attention, especially in the mining world.
To that end, we now have 17 different billionaires on board. But for this crowd, I think we will just focus on the mining people that are here. Robert Friedland has led our last three deals. Significant investor and also buyer in the marketplace. Rob McEwen has been in for four deals. Eric Sprott came in recently. We just did a CAD 28 million financing. Gina Rinehart, richest person in Australia, she bought in the open markets right after we made this discovery. She asked us to come buy 10% of the company.
We said, "Sure." We were trading at about $ 0.35. We said, "You could do it for a $ 1." We were sitting on all these strong assays, and she balked at that. We said, "Hey, just go buy in the market," which she did. She took it up from about $0.35-$ 0.75, and after we put those assays out, we went on to roughly $2 a share. Nice to have some smart guys on board. The financing two years ago that we did, or sorry, one year ago, $50 million. That gave us the money to do a 100,000 meter drill program. We did about 60,000 of it last year. We're finishing up the 40,000 as we go into the end of the year. Look for constant news from the labs on assays coming out here.
You want to invest with guys who know what they're doing. You can have a great project, you can have a great technology or invention and you have a bunch of morons running it, and they'll burn it to the ground every time. We're in a fine boat here. The top guys like Terry and myself are on the money side or financial side. At the bottom are mostly your key geos. Number one person I would highlight for sure here is Dr. Steve Beresford in the middle. This guy is probably the foremost mind out there on orthomagmatics and polymetallics. He's got a great CV, three huge successes. First Quantum, MMG and IGO, where he was the geologist or Chief Scientific Officer. He's a Western Mining guy. That was the company that got taken over by BHP later.
He shared that in the same time with Joe Campbell, our VP Exploration. Joe's a bit of a legend, too, in Canada. He found one of the big Agnico projects that's up in the Canadian Arctic and was instrumental in developing that. The third guy here on the geo side to pay attention to is Christopher Beal. Frankly, for us to bring him on board and announce him as one of our guys is basically telling the market that we are not going to be doing what a typical junior does. They go out, they have some exploration success, they make things shiny, and they sell it to an intermediate or a major and call it a day. They miss out on all the real money and the action. Chris is currently in Australia. He's worked for some of the majors like Teck.
He will be running internally our PEA program, and then he'll be the guy responsible for building the mine facilities that are there. One other character on the bottom here, not on the geo side, is Seamus O'Regan. He was a former federal government Minister of Natural Resources and Energy, and also Indigenous Affairs. At some point you go from the world of rocks to the world of bureaucracy, and we hope that he's going to be helpful in that endeavor here. I'm going to fast-forward through a couple slides here to get to some important things. One of the things that we're doing that's interesting here is using technology, and we use typical borehole EM, airborne EM, and ground EM. The hydro lines create some issues with that.
We also have used ambient noise tomography or ANT, and lately we are using a new technology that guys like Rio Tinto and Fireweed have had a lot of success with. It is called Muon. This is where we get into sort of "Star Trek" stuff. Muons are these subatomic particles that fly through the world. They have been going around the whole world for eons. They pass right through Earth. Some guys have figured out that muon subatomic particles move at different speeds in different densities of rocks. They figured out a way to measure that, and it is capable of being used as a discovery tool. We started using Muon right beside the Lion discovery. Half of it covers Lion, half covers some virgin territory. It takes a bit of time to get the data. We get a Polaroid picture.
You get an image after about three or four months, and then you get another one more fully between nine and 12. We are getting close to getting our first images on this stuff. The key is if their methodology and science correlates with our rocks, then we can use this as an exploration tool. It is pretty interesting thing to be doing. Very quick, Fireweed used this in British Columbia. On the left-hand side of this project they drilled 80 some odd holes. They employed Muon in the same fashion. Muon found new rocks over here on the right. They ended up only drilling three holes and doubled their reserve. That is the hero story for Fireweed. Not to say it is going to work the same for us, but it would be nice. Down here is our property. We have Nisk over here. We have Lion here, Tiger.
If this is successful here in this quadrant, we know that we have got about a 14 km stretch of mineralized targets to go after, and that is what we will do with the Muon. One of the things that we produced a couple of months ago that was definitely a blockbuster, was our metallurgical results that were done by SGS. SGS thought they were the best they had ever seen.
Copper recovery is at almost 99%, platinum and palladium in the mid 90%s, and gold and silver in the mid 80%+s, plus incredibly strong. When we put this out, it basically I think telegraphed to the market that Lion was going to be a mine. With our MRE, the numbers came up sort of conservative. What we got advice from by SGS was that Lion looks fantastic on the numbers. The MREs are typically pretty conservative in how they analyze things.
The recovery stuff at Nisk Main with the nickel was crappy actually, to be frank. What SGS says is take the ore you have got from Nisk Main, which is mostly nickel, batch it up with the copper centric stuff from Lion, and you typically get a much higher enhanced recoveries. If that is the case, which we will know in about seven weeks with their report, then that will potentially materially increase our MRE and resource size. This is not a faint hope kind of thing. It is done all the time in Norilsk. It has been done in Sakatti and a number of other major mines, so it is a fairly standard thing to be able to do. But we just have to prove it up. Obviously, you guys know the commodity world is looking pretty strong, especially on copper.
Although obviously with the backup on yields in the last week or so, you are seeing a bit of commodity price pressure. Big picture here on the company. High net worth guys like I profiled earlier, like McEwen, et cetera, they own about 19% of this company. Terry Lynch and his family own almost the same amount. The numbers go up a bit higher with the board of directors members. We have a strategic investor involved here, and we have a number of excellent institutions. Point out something here on the left side, we have a market cap just over CAD 300 million today. It is sitting on about 30 some odd million warrants. Those are held typically by the top five investors that are out there. We expect those to be exercised and it will bring in about CAD 10 million-CAD 12 million into the till.
We just raised CAD 28 million a couple of months ago, so we are in very good shape. One of the other things that is going to happen here shortly is that we will be getting listed on the NASDAQ Exchange. That is likely to be second week or so of November. Two criteria for us to complete our registration there, we have to formally post our MRE documents. We press released it, but they will be listed under SEDAR in the next, call it a week or two. The structure for going on NASDAQ is going to be an ADS product. I know them from my brokerage days back in the 1980s, that they are ADRs or American Depository Receipts. So it is basically a unit. We will likely use 10 shares of Power Metallic for each ADS that they have to list.
NASDAQ has asked us to do a $15 million financing to ensure that there is decent liquidity for this listing. So that is a key thing for people to look at. We have downtime in the year twice, for spring break and moose hunting season. Moose hunting season is almost over. We typically do not drill at that point. But this year, an unusual move, the James Bay Cree let us continue drilling with a couple rigs on both timeframes. We have basically got about 41 weeks of the year of exploration work. The MRE is solid and we think it can get increased. PEA coming out either H1 or possibly Q1 of next year. Our metallurgy looks great. Since we got this property, we expanded from 43 sq km to over 300 sq km.
At this point, we own seven of the eight major targets, and we are in negotiations to buy the eighth, I would say, at this point. That will possibly double our land position as well. February of last year, we spun out our assets in British Columbia and Chile, 50% to our shareholders. We retained 50%. That vehicle is now public.
We will give it a helping finance here in the next couple of weeks, and they have got some excellent targets in northern Chile. We will be drilling those in the new year. We are getting an awful lot of attention from majors like Agnico in the last little while. Very interesting. We have also expanded our footprint in Saudi Arabia. We will have some news releases out on that fairly soon. We have done a great job in getting land and help in one of the new frontiers for mining. That is essentially our story.
Happy to take any questions if we have time, and go from there. Thank you for your patience.
Hey, Duncan. We do have a few questions. The maiden Lion resource 4.75 million tons with more than 85% classified as indicated, but it excludes drilling completed after April 19. Where do you see the greatest opportunity to expand the resource, laterally, at depth, or through additional near surface mineralization?
Yeah, very good question. The answer is basically all directions are open. What we've been active on is doing some much deeper drilling.
Lion
at Lion. The MRE went down to 610 meters. The two assays that we put out earlier were down in the mid-700s, and we've drilled down to 900 at this point. We're releasing assays from that. They're in mineralization, and we believe they're going to be kind of fun, so theoretically, and there's too few holes to really make a conclusive argument, but that basically increases the size of the reserves potentially by 50%. We're going to drill as deep as 1,200 too in the next little while, following up these 900 meter holes. We think that's the fastest path to expansion of the resource. But we've also got some other assays from different areas that we've done exploration work. One's called Black Panther. It's early days, but we might be onto another project there and there's some other locales too that we're actively exploring.
The Muon's going to help us as we look laterally on Lion and it will take a little bit more time before we get the results on that.
What about grade? Because the 4.75 million tons, that was roughly, I think, 3.9% copper EQ. Some of the results for those deep drilling, from the deep drilling program, the grades were very healthy. If the current MRE represents just the upper portion of Lion, what would your grade expectation be as you go deeper?
Well, two parts to that. I will answer the second one because it is the easiest. As we have been drilling deeper, it has been getting richer and richer.
Yeah
and concentrated. That is pretty exciting. At some point, you have to find the kitchen that created this hydrothermal. Right? We are not there yet. On the first, though, is for people who do not know, it is a third party evaluation of your resource, and they are very conservative. Two aspects that I would bring up or three, actually. We were sort of disappointed in the final number, but they do a top cut or they basically take out your highest grades, as if it was like a bell curve. Not necessarily applicable to the kind of environment that we have. They also use the cut off grade on the bottom of 0.35. If you are a copper company and you have 3.35 as your grade, you are ecstatic. You got a mine.
They took a whole bunch of data out that we thought were going to contribute to the resource size. There's also a whole bunch of drilling that we did just to the west of Lion that were not totally connected to the main body. Muon will help us discover the links, but they were just drilled to the side. They were not included in the resource calculation either. It's just the nature of the beast. Basically tells you that we've got the goods to have a high grade open pit mine to start and go from there. All that stuff is a positive and it's a base.
Well, I'm going to slide in one more question because it's one that I get as well. How should investors think about the role Nisk could ultimately play alongside Lion, particularly if the metallurgical work shows benefits from blending the two ore types?
Well, in some respects, we think that they're somewhat connected.
Okay.
We think mineralization goes the way through. But if we're able to cook the ore properly, a la SGS, then we've got basically a second exploration program to get cracking on.
Yeah.
We basically stopped our drilling at Nisk Main because the Lion stuff was so valuable.
Right.
Not that these are real numbers, but comparable is like finding $200 rock versus $1,200 rock. Where do you focus, right?
Right.
SGS comes back with a positive report, then we are going to turn around and do a whole bunch more drilling to get Nisk Main further developed. At this point it is at surface down to about 500 meters, 400 meters- 500 meters. We have had a bunch of work done with ambient noise tomography that show halos on either side that are comparable in size and then two subsequent halos on either side of those that are about half the size of where Nisk is right now. There is an awful lot of potential for us to ramp up the size of Nisk Main. It was not so long ago that nickel was a four-letter word. It started getting a little more valuable. This is going to be a rewarding process for us to do as well.
Yeah, no, Lion is very exciting. Well, Duncan, thank you so much for joining us today. We really do appreciate it.
Thank you very much. Mark, always good to chat with you. Sorry about technical difficulties earlier, but the world's the world. Off you go. Thanks everyone for your attention.