Automated transcript · Written by software from the replay's audio. It can mishear names and figures; the replay is the record.
20:26 They take a lot of capital. Raising capital is a lengthy process. You need the permitting, which enough has been said on the permitting, but it's a lengthy process and then you have your development stage. So it takes a long period of time. We're all competing for capital. We're all competing for high quality stuff. But that's not unique to the United States. I think it's a problem facing the broader mining industry in the first world. You can get away with much shorter periods in other jurisdictions, like Mark has mentioned.
21:12 He mentioned Indonesia. But there's always room for improvement. But at this point in time, you know, I'm not going to say that the lithium industry in the US is facing any particular problems. I think there's been a lot that has been done to date from the federal government to assist. You would have seen one of our competitors that announced almost $700 million package of funding package from the government. And so there's a lot of assistance coming from the US government to get the lithium industry started. Thank you. I didn't read this or verify this, but I'm going to stick with you, Ram, on a question that John posed. GM recently made a major investment in a lithium mine.
22:04 Are there other automotive manufacturers' investments coming? Well, it's actually quite interesting, Kyle, because these manufacturers, they are facing a huge challenge, right? The only way that they're going to meet their targets is to secure supply. And the only way they're going to do that is through downstream investment. Right. So. So I don't want to I don't want to predict and I don't want anybody to read anything into what I'm saying. But, You know, I would not be surprised if we see motor manufacturers doing this.
22:56 I would also not be surprised if I see other industry players getting involved in the lithium space. And I wouldn't be surprised if I see some consolidation as well. Because this is in the United States, you only have 1 operating lithium mine. So it's very much an industry in the United States that's in almost in its infant stage. So there's going to be a lot of development. There's going to be a lot of investment and there's going to be a lot of investment and there's going to be a lot of change. And ultimately, it's going to be a big industry where big players are going to be involved in.
23:44 Thank you, and I'll actually leave it open for both Mark and Barry to reply for their respective commodities too in terms of automotive manufacturers' investment dollars in both copper and nickel. One of you gentlemen want to kick it off? Mark do you want to go ahead? We have been talking to a lot of automotive manufacturers as well as battery companies, you know, amongst many, many other players. There's so much interest right now at the strategic level that it's crazy to see the lack of interest at the retail and institutional level when there's so much interest at the strategic level. It's a puzzle that's going to resolve itself, I think. But what's interesting is I think the large auto companies know that they need to vertically integrate.
24:35 They're coming to that realization, but they don't want to get into the mining business. So, you know, building a large base metals mine, Our project, for example, is going to total about $2 billion. So you need money. But the challenge that they face is that the large car companies don't know the difference between a good project and a bad project. How could they? And I was starting to see, for example, there was 1 company in particular that they'd added a mining engineer to their staff. Well, that's a good start. But it was a mining engineer who had spent his career in oil and gas. So, you know, that was interesting. But there is another car company that we've talked to that now has a complete staff of mining engineers, metallurgists, and geologists.
25:38 And they're looking hard for Nickel. So, you know, you're starting to see a gradual evolution in the thinking of the OEMs that, okay, we have to vertically integrate. We don't want to be the miner, but in order to secure supply, we're going to have to own at least part of this mine and we're going to have to help it get built. And in order to tell the difference between the good projects and the bad projects, we need to staff up with the appropriate people. And that's, so that's all happening right now. I think other OEMs are starting to follow suit and that's a good sign. Yeah, I would add on that the picture is certainly changing for OEMs and for auto. And as a result, as both have mentioned, the level of engagement with companies like ours across that sector is changing and increasing.
26:31 You know, We happen to operate in Michigan where the big 3 are obviously the dominant industry. And yeah, they need supply and this is across all critical metals, obviously Lithium, Nickel naturally and Copper as well. All of those metals play a large role in charging stations, electric vehicles, not to mention alternative power supplies. So, yeah, securing that, I think is going to be very beneficial for those auto manufacturing industry and beneficial for us. You know, securing offtake and securing investment locally will be very critical and important to get the investment that we need. Thank you. And maybe I'm asking the wrong group of individuals here, but a lot of people are interested in these metals for the EV revolution.
27:22 And I'm just wondering, I'm cautious when people get too hyped about an investment thesis. Is there any flaws in this thesis? Maybe we could play devil's advocate here. I'll leave it open for anyone to comment. I'll happily jump in briefly. I mean, I wouldn't say there's flaws. I do think that the world needs to move towards new power supplies. But that being said, can it happen as quickly as governments and corporates would like it to happen? Arguably not. So the pace to which we can move towards electrification, I think is one of the bigger challenges. Some of the projections are obviously very aggressive, but they need the support of mining supply.
28:10 So that is probably one of the bigger risks, I suppose, I would say. I think the other devil's advocate argument is the emergence of new battery technologies and and you know What could happen that's going to destroy, you know lithium-ion batteries and so You know for one thing from from my perspective from the nickel perspective the biggest competitor to you know, nickel based chemistries and the cathode is, you know, lithium iron phosphate batteries, which are an excellent technology. But it's heavier, less energy dense, also safer, and very suitable for sort of commuter cars. If you're not going to go on a road trip, you know, that's that's a very suitable technology.
29:03 And thank goodness it exists because nickel is already a bottleneck towards wider adoption of nickel-based chemistries in the cathode. There's also sodium batteries that are starting to emerge and we'll see how that goes, but they will never have the energy density of a nickel-based chemistry in the cathode. Nickel just has excellent energy density and there's really nothing that can compete with it. So yes, there are alternatives emerging for more short range electric vehicles, but if you want longer range, you still, there really is no alternative to nickel. Yeah, I think maybe just to conclude from my side, I fully agree with both Mark and Barry. You know, I often say if you look at where we were 35 years ago in the computer industry, when nobody has heard of a lot of the technology that we have today, computers were still running on DOS operating systems, and fast forward by 35 years.
30:19 So, I think for me, the 3 things that stand out is 1, what changes there are going to be in the technology, which I think is completely unanswered at this point. The second thing is, you know, how realistic it is to think that the mining industry could meet the demand side of the targets that's been set by governments. Now, I would argue that a lot of these targets that are being set are sort of incentive targets. So we set something aggressive if we miss it by a bit, that's still a good outcome. But I very much doubt agreeing with Barry, whether that's realistic to achieve those.
31:12 And then the third aspect that I think a lot of people lose sight of is that, you know, it's one thing to move from internal combustion engines into electric vehicles. But, you know, that's just one aspect of it. There's an entire infrastructure supporting transportation. You know, there's a gas station almost on every second corner. So all of those are going to have to be replaced. You know, and if you look at your, if you look at your electric infrastructure or your power infrastructure, you know, are we going to have to upgrade those? The answer to that is probably yes in a lot of instances. And that costs a lot of money too, and somebody's going to have to pay for that.
32:00 So I think when we talk about the change from fossil fuel to electric vehicles, that's just one part of it. The other part is the supporting infrastructure, which I think to a degree can be an even bigger challenge than just the swap over from the six-cylinder vehicle to electric vehicle could be. So there's a much bigger picture at play here. And the time that it's going to take and the amount of money that it's going to take in order to make that complete switch and the technology that's gonna be required In order to optimize this and get us to the end point, I think is to a large degree being completely underestimated by the decision makers on the political front. I did want to add a comment after what Bram was saying about the problem with infrastructure.
33:06 I'll say it if Barry is too modest to say it, but that's another gold case for copper. The infrastructure to support the electric vehicle transition is so reliant on copper. And that's why I'm not in the copper business, but as an investor, I'm in copper. So, yeah. Yeah. And I mean, adding on to that, Mark, you know, it's like I've touched on, how realistic is it for us to claim that the mining industry can actually meet that demand? You know, It's going to take a long period of time just to discover deposits that are worth piling these billions of dollars in to mine.
34:01 And we're going to become, my personal view is that disruptive technology in the mining industry is going to become critical for us in order to meet the demand side. The traditional way of mining is simply not going to do this for us. You're definitely going to need technology just like you've had, you know, disruptive technologies in all other, in most other sectors of the economy, we've had disruptive technology. In mining, we've been exceptionally good with incremental technology, but we have not been good with disruptive technology. And I think now is the time that we're going to have to start looking at that and have to start adopting that if we've got any chance in order to meet the demand side that we are facing with this push to change over to the electric vehicle concept.
35:04 That transition is going to require significant investment. And I think that's why I'm trusting and hoping we'll see new pools of capital, obviously both from state and federal perspectives, and naturally the private markets, but also the OEM stepping in. I think if we do have any chance of doing this, it needs meaningful investment. Exactly. But the problem with the mining business is that, and it's structural, the mining business doesn't much like new technology unless it's incremental. And there's a very good structural reason for that. Any significant mine is going to cost $1Bn to $3Bn to build, if it's of significant size. And you're not going to spend that kind of money on a risky new technology that hasn't improved out yet. And that's just, you know, we're, you know, as, as, as Brian says, we're very good at incremental improvements, but we're not good at big phase changes.
36:01 And it's for that reason, it's, It's the risks are too large. In the oil and gas business, if you're spending 1 million or $2 million on a well, you can try new tech. And if it fails, well, you haven't lost a couple of billion dollars. So it's just, it's structural. But the other way that supply is gonna be achieved, Bram, is that in every commodity, there are large deposits that are not economic at low commodity prices. But as the commodity price increases, you get to a point where the internal rate of return justifies building the mine. And I think we're certainly seeing that in the Nickel business.
36:48 You've got large, low-grade, sulphide open pittable Nickel deposits. You've got these laterite deposits processed using HPEL. They're getting built. The economics are terrible at low nickel prices. But if you get towards current prices, suddenly there's a strong economic case to build these things. And I know that in copper, There's large, low-grade copper deposits that have been sitting there for years undeveloped. There's probably a good business case for someone younger than me to go out and accumulate a bunch of marginal economic deposits that have size, because basically the price, in my view, has to move to a level where the marginal deposits get developed.
37:42 And maybe I add to that, Mark, the price, as you say, has largely, I'd say, arrived at those points. And I see, from a Copper perspective, seems to be at a minimum flooring there. So for Copper is taking a floor in and around the $3.75 to $4 Copper price. That's actually a point at which a lot of marginal deposits start to see life. You step up 425 or 450, those marginal deposits, and truthfully, I'll include ours in those, have significant leverage to that Copper price, very small Copper price movements. The last number of years have seen significant inflation on input costs. So naturally, the commodities need to meet that in order to have that incentive price to make the construction decisions. It has been interesting to watch that even the larger base metal players haven't quite made those big decisions. But I think as price goes up and I think as we're at $4 plus, I certainly think this year is interesting in that there's some things in the background on potential global recessions. Obviously, the US banking system has a modest crisis on its hands. But when I think those dissipate, I think commodity prices will just charge on and allow companies to make those development decisions.
39:01 Yeah. Look, just in response to that, I fully agree that we need the incentive pricing to support these marginal deposits. But, you know, we're in a high inflation environment And Barry, you've actually touched on it. You know, I'm starting to not look at incentive pricing, but rather incentive margin because of the cost creep that we've seen. And for us, it's been in the industry a long time. I remember when I entered the mining industry, we were mining copper very profitably at 65 cents because your cost to producing was about 35 to 42 cents. So it's that margin that I think is more important to me than the actual price because of the cost creep and inflation.
39:53 But there are going to be other structural challenges that we have in the industry. One of it is the availability of skilled staff. You know, we've been struggling with incentivizing and getting younger people excited about the mining industry. So they are going to be structural challenges. And I do want to come back to the point where I think that you are going to, we are going to be become dependent on technology in order to allow us to profitably extract these marginal deposits. And I think we're also going to have to focus more and more on recycling opportunities where technology is going to be the key and also the reprocessing of dumps. I think those are also going to have to come back into the equation, especially in the shorter term, because of the long period of time it takes to bring large operations into production.
41:04 You know, I think you've raised a really good point, Bram, in terms of skilled personnel. And it ties in with another obstacle to this whole electric vehicle revolution in North America is a lack of refining capacity. And so, you know, I mean, you know, we could model. And in fact, we've looked very hard at modeling a POX facility to process our own concentrate into MHP, which is a form of nickel and cobalt that the battery makers desire very strongly. And we could do that, But at a remote location, you know, you need highly skilled personnel.
41:54 And so, you know, I think that it's unlikely that we would ever build a refinery at our deposit. The refinery where we are should probably be in a place like Prince Rupert, Kitimat, Trail. You're not, you know, highly skilled personnel don't want to fly in, fly out a couple of weeks at a time to a remote location. So and part of what's missing from the whole government discussion about the supply chain is refining. I mean, there's just not enough in North America and that needs to be addressed as well. Exactly. Exactly. Thank you guys for keeping the conversation going while my connection dropped, but that was great. I appreciate it.
42:42 I guess we could jump into some questions from the audience to keep it flowing here. John had a question. What effect is the Federal Reserve's raising interest rates have on raising capital, I guess, through a debt perspective, but if anyone wants to chime in on that. Well, you know, we're looking long-term and we're very fortunate to have a partner like Mitsubishi Corp because they do have the financial depth. You know, they've got a couple of banks in their group. They've got one of them in particular specializes in financing mine construction. So hopefully this, hopefully the Fed can get inflation under control and we return to more normal rates of inflation. Maybe it's, you know, maybe the new normal is 3% or something like that.
43:38 But we've gone from a situation where it costs nothing basically to borrow money, if they will lend it to you, to a situation where there is a real cost to money. And so that is a headwind, but I don't think, you know, it's normal. We've returned to a more normal environment. Mines can get built in any environment. Yeah. Yeah. And maybe just to touch on what Morg is saying, there is, I think the key is, obviously it increases your cost of capital, But the key here is that these investment decisions are made over, you know, for operations that's going to last for 40 years. So we always look at your long term return on capital and not at the short term movements that we're living through today.
44:36 Yeah, I think that's fair to say. Also, you know, construction capital is often more short-dated as opposed to traditional corporate debt as to when you get into production. So often what you're seeing is capital for the purposes of construction, having that 2 to 3 year window, but being converted and naturally, susceptible to what interest rates are at the given points in time. So It does have an impact, but it's as I think as Mark mentioned, it's not unusual. It's part of the business and shouldn't have a dramatic impact on our ability to finance if if our commodities are moving in the right direction. Thank you. And Warren has a question here about the makeup of batteries. So this might be more directed toward Brahman and Mark here, but does lithium silicon beat all other combinations?
45:25 8 minute charge time and no range loss to cold weather. Group 14 is already selling to Porsche. Well, I don't know if Mark wants to answer that, but I'm unashamedly going to dodge that question. I'm not a technical expert, so I would leave that, happy to pass that on to my in-house technical experts, but I wouldn't want to elaborate on that. Okay, and I will caution that I'm not a technical expert either, but I do have access to technical experts. I've got a friend of mine, just somebody that I've known for 30 years named Dan Blondel, that's CEO of a battery technology company called Nano 1.
46:12 He's extremely plugged into all the research programs around the world into new tech. He really keeps his finger on the pulse. And I did mention the sodium batteries before. That's a real technology, it's coming along, but it will never have the energy density of a Nickel-based cathode. It just doesn't hold as many electrons. So it's looking like a good new technology. We'll see how it goes. But it's not the established technology that Lithium-Iron Phosphate is. Thank you, Mark. And Mark, you touched on the mining industry being slow to change because of the factor of it just being a capital-intensive industry.
46:58 And we have time for one more question that Steve has here, and it's more directed toward Brom though. What is your view on the new lithium extraction methods? He says, claystone lithium mines versus direct injection versus conventional brine extraction and spodumene production. Would new methods be commercially viable versus the less expensive traditional methods? Well this comes back to my previous comment, right? There's going to be a lot of technological change over the next 20-30 years, So I'm not going to say that none of these technologies are going to work. I mean, in Century Lithium, we're applying new technology and we're doing that very effectively.
47:48 So there is a place for technology. In Century Lithium, we've got a clay deposit and that's working well. Who knows which one of these technologies are going to emerge over time to overshadow the others. But I can only speak for what we have and what we have is new and it's working exceptionally well. So but they could be others emerging. So I'm not going to discount that. Thank you. So You guys spent this whole hour talking about the macro and I appreciate it. I think everyone can say they appreciate the insight, but I do wanna give you guys a chance to plug your company. So just 2 minutes max, we only have 10 minutes left here, but why, if someone's interested in your said commodity, why should they consider your company? And we'll start with you, Barry.
48:54 You're on mute again. So let's start. Thank you. And it's been fun to speak with the fellow panelists. Yeah, copper is a metal that's needed, as is lithium and nickel. So it's a matter of can we supply it and Highland Copper thinks we have a very strong path to get there. We have 9 billion pounds of copper in the ground in Michigan State, a state in the country supportive and in need of domestic supply. Obviously, they're very in favor of resource independence. So critically, we have our permits in hand. I think that's the biggest selling point of Highland Copper. One of our 2 assets has all 7 state permits needed within Michigan. So the timeline is truly in our hands. And if you take a look across the landscape, certainly in the junior sector, I don't think you're going to find another company that has a fully permitted project, certainly in the US or arguably even in a tier 1 jurisdiction.
49:54 So that is our biggest distinguishing feature. We're on a path to a construction decision in 2024. So we really look to take advantage of Copper price movement by being produced in 2026. And that would allow us to step into development of our second mine in Michigan, which is only 60 kilometers away. So forming a complex of sorts. It's a larger and even better mine, a past producer of 50 years. So we really just have a solid trajectory to corporate growth at arguably the exact right time. Thank you. And Bram, why don't you talk about Century Lithium? Yeah, so just at a very high level, you know, we're in feasibility stage at this point in time But we've got a 40 year plus deposit We've got the infrastructure.
50:45 We've got the water resource, which is critical because we're in a desert environment. We've got strong management, and we're looking at being in production over the next 3 to 4 years as well. And more critically is that we are not aware of any environmental issues that might crop up. So as far as I'm concerned, for a project like ours, we're ticking all the boxes at this point in time. So watch this space. It's a very exciting project. Thank you, Brom. And Mark, for Giga Meadows, please. Well, as we talked about earlier, we're in the class of very large, low-grade deposits.
51:34 But the Nickel price, that's what that gives the investors leverage. I mean, if you take a huge deposit and you just incrementally raise the price a bit, you've got a huge amount of production at that higher price. And the depreciated net present value just ramps up very quickly. So that's from a pure investment perspective, that's what it is. It's like a call option. And when I say large, we've got currently about 1.5 billion tons in the measured plus indicated category, which is, we're working on a PFS now that we expect to have out in June. That should be enough for around plus or minus a 40 year mine life at a high rate of production.
52:22 This deposit is maybe 20 or 25% drilled off, it's completely open. So this could be a multi-generational project. And then of the large deposits of the world that are sitting there and develop, I will venture to say that we have by far the lowest technical risk. And the reason I say that is that 99% of the nickel and cobalt are contained in Pamlundi. And so, you know, crush it, grind it, float it. This is not a copper porphyry, but if you look at the financial model, it looks exactly like a copper porphyry. So, And it looks like a particularly simple Copper porphyry in terms of risk.
53:11 And then with our partner Mitsubishi solidly on board, We're looking for other strategic investors at the project level to help fund the next stage all the way to the shovel ready. And it's a very exciting time right now. And I can tell you the retail market and the institutional market couldn't care less, but the strategic market cares very much indeed. So very exciting times and a very, very low price. Thank you all for having this great discussion today. I appreciate it. I know the audience appreciates it. We see a lot of love in the chat section there. I also want to thank everyone who submitted questions today to keep it engaging. And for today, there is going to be a recording available to watch on demand from this panel. So please look out for that in the coming days. Thank you gentlemen, and have a good day.
54:05 Well, thank you, Kyle. And I want to thank my fellow panelists. It was a great discussion. Thanks. Thank you, everyone. You
