Categories: Energy
Topics: Lithium Stocks

PMET Resources (TSX: PMET)(OTCQX: PMETF) CEO Ken Brinsden on Unlocking Multi-Critical-Metal Value at Shaakichiuwaanaan Project, Quebec, and the Road to Feasibility

 

Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the president & CEO of PMET Resources (TSX: PMET)(OTCQX: PMETF) — Mr. Ken Brinsden. Ken, it’s great to have you on. How are you today?

Ken Brinsden: My pleasure again, Gerardo. Thanks for having me.

Gerardo Del Real: Listen, I joked off-air that I’m trying to figure out why you have such a light market cap. The market cap is not where I think it should be. And look, let’s get right to it. We have a raging bull market in the precious metals space. Copper is perking up. Palladium is perking up. 

I’m of the belief that lithium is at an inflection point and that in the next six to twelve months, we’re going to see a market that reminds everyone of the value that PMET holds and is set to unlock over the coming quarters. I think the lithium market is at an inflection point, and I think PMET Resources is also at an inflection point. 

It’s clear to me — and I’d love more context on this — that the company is, for lack of a better term, hell-bent on delivering multiple potential revenue streams, not just lithium. Hence the name change. 

I’d love some color and context on the name change and the way you’re methodically unlocking the value that I don’t think is yet being recognized by the market but confident will be.

Ken Brinsden: Good on you, Gerardo. Yes, you’ve pretty much hit the nail on the head there. We’ve gone through the process of a rebrand, and what it’s meant to recognize is the incredible geology that Shaakichiuwaanaan represents for the future of the critical minerals world — not just lithium.

When you’re looking for these hard-rock lithium projects, you’re looking for your classic LCT pegmatite: lithium, cesium, tantalum. And the good news is that’s exactly what’s on show at Shaakichiuwaanaan — really significant scale and grade in each of those categories.

It’s rare to have all three. Often you’ll see lithium with a little bit of tantalum, or if you’re lucky, small amounts of cesium. But the scale of the geology at Shaakichiuwaanaan is just different, and it has real mass in each of them: lithium, cesium, and tantalum.

That is what has motivated us to focus on the bigger picture that we’re a critical minerals powerhouse, Gerardo. That’s really what we are. It’s not just lithium.

Gerardo Del Real: You’ve talked in the past — and more recently in news releases — about defining and outlining the potential in economic terms for each of those. How is that coming along?

You’ve also been keen to talk about wanting to partner with groups and companies that can help you target the European market specifically. 

I have to believe, with everything coming out of China — and as we discussed last time, China is now openly weaponizing its control over critical metals and the business model that comes with it — that you must be really confident in your approach to monetizing these different revenue streams.

Ken Brinsden: Yes, the geopolitical tension and how overt that is now getting is so much more apparent. China is an incredibly dominant player through the critical minerals sphere, not the least of which actually is in lithium as well — cesium and tantalum to a certain extent. 

I think that’s one picture to watch really carefully, Gerardo. It’s going to get pretty sporting, in my view, because of the dominance of China in global markets.

I’ve spoken as to how good the geology is. But ultimately, you’ve got to turn that into a mine. So our primary target is the focus on lithium via the presentation of our Feasibility Study, which is not too far away now, Gerardo. That’s pretty close.

But just to remind everyone, that’s lithium only. That’s the basis behind the premise for the first development of a mine. But we have these fantastic bolt-on opportunities once we’ve undertaken more testwork, some of which has already started.

We’ve started to publish that in the public domain and the economic studies that facilitate the next steps in realizing a co-product opportunity in both cesium and tantalum.

Because it’s unusual to have the combination of scale and grade in each, our view would be they are going to be material to our project. But they fundamentally require more work to realize, Gerardo, and you’ll start to see more and more of that in the coming months.

Gerardo Del Real: I don’t know how much you’ll want to opine on this or share but I have to believe — if I’m a Volkswagen or if I’m a Tesla or if I’m one of those kinds of companies — I have to be looking at the metals mix here, the jurisdiction, and the timing with China doing what it’s doing… and I’d want to have discussions. 

Without asking you to name names, are you having active discussions with potential offtake partners — not just for the lithium? I know the Feasibility Study is coming, and it’s important, and I’m excited for it. It’ll provide a window. But there are other high-value metals here that I have to believe companies are keen to target.

Ken Brinsden: Yes, that’s true. You’ve seen the deal with VW’s PowerCo, which was motivated by a pretty consistent view across industry downstream in the lithium world that says we need to diversify our supply base. In particular, it makes sense to access projects and product offtakes that are readily accessible for North American and European markets. That’s what’s really motivated the relationship between VW’s PowerCo and ourselves.

By the way, we’re really happy with that relationship, and we firmly believe they’re going to be a great partner to our project. But it doesn’t stop there. There are other players in our industry who are focused on very similar issues. They all suffer from concentration risk through the Chinese supply chain.

Let me give you an example. The Koreans are a really good one because they’re already very heavily invested in North America: several battery-making facilities, several cathode-making facilities — they’ve really dived in deep. But it’s fair to say they’re exposed to the Chinese market because, for most cell makers, a lot of their value-added raw materials are coming out of the China supply chain.

So they think about diversification of that supply chain, a level of localization — and that’s why Quebec, and Canada more broadly, is seen as really logical jurisdictions to be looking out for key projects.

How do we feed that? Well, basically, that comes through consistent, and we would argue “solid” engagement with those players downstream about what the future of our project can look like. And it is absolutely our intention to continue with that engagement. That’s a very logical path to pursue because, of course, we need more customers and ultimately, we have to finance the mine development.

When you think about a big project like ours, the logical pools of capital that are fundamentally going to help and be constructive to our development are key players from within industry… and, now, also governments.

Governments are interested for all of the reasons you alluded to earlier, Gerardo. There is sensitivity in Western economies about their exposure to the Chinese supply chain, and it’s in their interest to further diversify their economies as well. That’s why you’re starting to see some interesting moves, especially in the U.S., but it’s also happening back in my own country — in Australia — and I know it’s happening here in Canada.

Everybody’s focused on trying to ensure that we get the right projects into production. And governments, at least on the face of it, are prepared to lend right to that.

Gerardo Del Real: There seems to be a newer sense of urgency than there was in the past by governments, right?

Ken Brinsden: Yes.

Gerardo Del Real: How is PMET taking advantage of that as it relates to the permitting work, which I know doesn’t get the kind of headline that people like to see but it’s so critical, pun intended. How is PMET developing that, and how is that coming along, Ken?

Ken Brinsden: Yes, we’ve been really happy with how that engagement has unfolded. In our part of the world — Quebec and in the James Bay region — you have that really important relationship with the Cree being the sole First Nations group in the James Bay region. 

They have a very sophisticated system working alongside the province of Quebec for the purpose of the progressive-yield project, and we’ve been really happy with how that engagement has unfolded. We enjoy the relationship with the Cree as they are a fantastic group to partner with.

The other piece of really good news that’s emerged is the federal interaction. And here, the feedback is actually really interesting. In essence, as per our public disclosure, the feds have said that they will happily align their approvals process to what’s called COMEX/COMEV, which is our part of the world for Cree approval and the province of Quebec. 

That is really good news and actually, I think, a reflection of the rhetoric that Canada’s been sharing about trying to ensure sensible approvals processes that, of course, are doing the right thing for sustainable development, but equally, they’re not double-dipping, and they’re not creating circular loops for the purpose of approval.

They’ve just outright said to us that, ‘We will, in effect, match our federal approvals process to the COMEX/COMEV process.’ So we see that as a really constructive step because, ultimately, it’s just helpful to the timeline that we’ve already published for the development of the project.

Gerardo Del Real: What do the next several quarters look like? I know there was a recent site visit. I’ve spoken to several people that were at that site visit. They all came away with what they described as a renewed sense of context for how important the project is and the potential scale of it. That’s what I’ve received as feedback. What comes next? How do we explain that to everyone moving forward?

Ken Brinsden: Yes, spot-on, Gerardo. Thanks for that feedback, and yes, we’re really happy with the attendance too — the diversity of attendance, the combination of analysts from the banking and brokerage community, and investors themselves. It was really well attended and we received positive feedback.

What do you get out of a trip? Well, honestly, it’s that once you’re onsite, you can appreciate the scale of the geology and the co-product opportunity with the cesium staring you there in the face in the outcrop. And then also, I think something else that people take away is what we’ve already invested in site infrastructure: our base camp, the workshop facilities, drill-core sheds, the access road.

Let’s put it this way, Gerardo; it’s not a two-bit show. It’s a genuine investment in the future of a very large and long-lived project. People come away with that impression when they visit the site.

What else are we working on? Well, of course, you’ll see the results of the lithium-only Feasibility Study. We’ll outline the development case in more detail, including bolting on those co-product opportunities in the coming period whilst we’re going through mine authorization. And we’re not shy about talking about our engagement with industry. That is something that we are really focused on. 

Ultimately, we see our project — because of its scale and its long life; nominally 20 years but probably more if you’re prepared to keep drilling — attracting the right sort of partners that ultimately create a consortium approach to the development of this big project that helps anchor the right industry in Europe and North America.

Gerardo Del Real: Exciting times. I’m really looking forward to the next six to twelve months. Again, I do think we’re at an inflection point. Before I let you go, I have to get your thoughts on the lithium market. 

You’ve been through this, and you’ve done it with companies in the past. You’ve seen these types of markets ebb and flow, bottom, and then all of a sudden the violent downturn becomes a violent upturn. Where do you think we are in that process?

Ken Brinsden: I have absolutely no doubt that the market has already bottomed and that we are through that part of the cycle. The next step is the demand surprise to the upside. You might even go as far as calling it a demand shock.

And there’s logic to why that’s going to happen. Two key points to share: First, China  has done an amazing job lowering the cost of cells. The reason that’s important is it grows the addressable market. What does that look like? Well, it means more EVs penetrating global markets. 

You don’t see it as much in North America but I can assure you that, for the rest of the world, sales of EVs are actually surprising to the upside. As much as some of the rhetoric in the media might say otherwise, the truth is that, around the world, they’re going nuts — and China is a big winner in that. 

The most important one, though, is energy storage. Because the cells have become cheap enough, it’s now compelling to install batteries as an alternative energy source. Why is that? Well, it’s actually really simple: the world doesn’t have an energy generation problem. What it has done is it has built generation capacity to deal with peaks in the morning and peaks in the evening. But for the rest of the day, you’ve got idle capacity. Well, guess what? We’ve got an energy storage problem.

All you have to do is run those generators at a higher overall level or plug in more renewables and store that energy. That’s actually what’s happening because it is now an economic proposition due to how cheap the cells are becoming.

That demand shock, in my mind, is likely akin to what we saw in 2022 — or even the second half of 2021 — and it’s because China has already built the capacity. It’s underutilized today. Cell-making capacity in China is only using about 60% of what they’ve built. Imagine if that other 40% gets switched on — and it will. They’ll switch it on.

Once those cells are contracted, where are they probably going to go? Well, I’d argue into energy storage all around the world. Hence, I think we can be optimistic that demand surprises to the upside, Gerardo.

Gerardo Del Real: Fascinating times. Fascinating stuff, Ken. Always a pleasure. Thank you for your time, sir.

Ken Brinsden: My pleasure, Gerardo. Thanks for having me.

Gerardo Del Real: Alright. Cheers.

Ken Brinsden: Bye-bye.

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