Geopolitical and Economic Strife: Commodities Outlook for 2022

0:07 Good morning, everyone, and thank you for joining today's forum and summit on entitled Geopolitical and Economic Strife, Commodities Outlook for 2022. My name is Brett Richards. I'm the CEO of Goldshore Resources. And with me today on the panel are 3 very seasoned guys, Richard Williams from Bunker Hill, Mark Jarvis from Giga Metals, and Ali Haji from Aerosyn Resources and Ion Energy. So welcome you guys today. Thank you for kind of joining the panel. Thank you. So I think to put the context for the summit into view, I really just wanted to kind of highlight some of the, I'll say the macro view of where we are geopolitically and economically, and the timing for this and the subject matter couldn't be more pertinent.

1:12 We are in a macro political environment whereby we have the Russia-Ukraine tensions, situations, sanctions, we have the global impact of these hostilities and this war affecting supply chain. We have other large countries sitting and watching, China, potentially, North Korea, potentially, the Middle East, potentially, and seeing how this geopolitical tension plays out with the US and the EU. And we also have this very unique dynamic from a macroeconomic standpoint. We have this low interest rate environment that's trying to be pressurized upwards in a hyper inflationary environment.

2:03 And we just saw the first interest rate hike since 2018, 10-year treasury sitting at about 2.8, 2.9%, but we're seeing about 7% inflation, US CPI 8% for March. So we've got a negative yield on the 10-year Treasury bond and these situations are not sustainable. And we have this macro market situation right now, whereby we have

2:31 complete volatility. Everyone's familiar with what happened on Friday, Monday, Tuesday, today we've opened up a little green, but this everything bubble seems to be bursting and maybe it's bursting slowly, but We just had the worst week in the markets in about 2 years and the worst day on Friday and Monday in some time. But then we look at the impact on commodities and a lot of commodities, if not the majority of the base and base and precious are trading at a range that is anywhere from a 1 year to a 10 year high or longer. So, we're going to talk about that a little bit today and we're going to talk about how this impacts kind of on globalization and how it impacts on other things like electrification of vehicles, etc.

3:20 So I'm going to kick off the question with a question for Richard at Bunker Hill. Richard, maybe give us a description of you and your company before we get into it. Thanks, Brett. And again, great introduction. Yes, I'm Executive Chairman down at Bunker Hill. I'm sitting down in Idaho at the moment. I'm also on the board of Travalli Mining as Inc. Business that's managing a challenge in Burkina, very serious challenge in Burkina Faso right now. And then prior to that, this, I was chief operating officer at Barrick Gold

3:57 for a few years before Mark Bristow became the CEO and under his leadership has done wonderful things with Barrick. So now the project that we're running down here is a development project, a single asset company, Zinc Led Silver in Idaho, in the Silver Valley, Idaho, that we aim to be in production at the end of next year. It's a low CAPEX,

4:27 low pre-production CAPEX, certainly restart project offering high IRRs, as is often the case when you're leveraging 100 years worth of infrastructure and data. And our plan is to bring the mine into production and then unlock the significant upside by reinvesting that capital that we generate free cash back into the project and then developing it that way. And it's part of a broader plan to look at similar regeneration projects here in North America as a sort of source of significant value if you can crack the restart problems, which are often quite considerable. So that's sort of a little bit of me and a little bit of bunker, and we're moving pretty well down here in Idaho.

5:16 Yeah, great introduction, Richard. Given this macro environment that I've talked about, and we could all talk about this for some time. So you've got the geopolitical situation, you're in a tier 1 jurisdiction, you've got the kind of macroeconomic outlook, which is buoying up precious metals. How do you see this environment, both the political environment and the economic environment, how do you see this impacting on your business in the 1-2 year period? Thanks, Brad. I think I will just keep it down to our business because it's such a big question. But our particular business, this project we chose because of its potential to be operating in the lower core dial of the Costco, even though it's an underground mine and it's going to be 1500 tonnes a day to 2000 tonnes a day.

6:06 So in the macroeconomic climate, some of the pressures we're seeing, we're all seeing, which is input cost inflation. We obviously have to take it very seriously. But the actual legacy that we've inherited allows us to be not completely insulated, but significantly insulated from it. But we have to watch that. The other sources of insulation that we have, And again, you mentioned tier 1 jurisdictions, and I know you live in Ontario like I do, when you have the benefit of vast amounts of past investment in power infrastructure,

6:41 nukes in the case of Ontario, and hydro as well, But here in the Pacific Northwest, the hydro energy power costs are pretty low. And we're also just 5 minutes from the highway and have all the facilities we need in a tier 1 jurisdiction. So for that, we're also to a degree insulated from some of the inflationary pressures.

7:05 But some of the things that and also I should also say, because this project is that, you know, the global supply chain with the money going into mining, it's been pretty hard to get hold of critical parts and inputs for your projects, we've managed to do a deal with tech to take their processing plant, which is 140 miles away at Pend Oreille and put it here on site and it suits exactly what we need. So, by scavenging is, you know, probably not the general, the generous term for it, but making use of infrastructure and opportunities that exist locally has meant that we've, so far, look at our project and don't feel that we're going to be really knocked sideways by the inflationary environment that understandably affects other pieces. But when we look at the economics downstream, Brett, you know, obviously we love, when the model is love, of course, the current commodity prices.

8:04 We don't put them into our model. We stay with the long term prices to ensure that we can deliver the return in a safe scenario. But what we do have to take account of the fact is it's not just commodity prices and input prices. It's for us where we have to have our treatment charges and our refinery charges along with transport because we produce a concentrate that again, we have tech as a shareholder and we really and we have an arrangement with them to be concluded of course, that we want to be sending our concentrate to the trail smelter in British Columbia, but we do have to watch that part of it as well, because that can eat into margins. So we're not sitting here smug, Brett, but what I do say when you're looking at projects and again, as an investor, as well as looking into the next play we want to go to is if you are lucky enough or you're deliberate enough to try and get yourself into a low inflationary, for all the reasons I've outlined, environment,

9:04 you've got a better chance of riding through the bottom end of these tough parts of the commodity cycle or the macroeconomic environment. So again, there's no smugness here. There's a lot of humility. We're pretty lucky with what we've inherited, but you've got to keep very alert to the pressures that you've alluded to, Brett. Yeah, I think that's

9:27 a safe strategy at the end of the day. We all have very, very robust projects. And I see opportunity in these environments, but you're right, we have to stay humble. And there has to be a degree of humility going through this because anything can happen. And we always have to plan for the worst, plan for the downside. I'm going to turn it over to Mark Jarvis, Giga Metals

9:55 and the project. Mark, maybe give us an introduction about yourself and about Giga. I've been involved with this project since about 2004. What it is, is a giant, low-grade, open-pitable nickel and cobalt and sulfides deposit, which frankly has got challenging economics at the low end of the price range. And so I find myself with Giga amongst about 20 deposits worldwide that I'm familiar with that are

10:33 sizable, but that are undeveloped because nickel has been in the dungeon for the last decade. And then what's changed is, of course, the rise of electric vehicles. And that's a new source of demand. I mean, I think batteries went from 3% of Nickel usage about 3 or 4 years ago to probably about 14% now of Nickel use. And it's just going straight up. So it's a new source of demand, and the world is very enthusiastic about decarbonization, but if you're gonna make all these batteries, you do have to have the raw materials to make them. And we've hit that supply crunch just recently.

11:23 You can see it coming for 3 or 4 years. So, you know, Nickel has now moved to a price environment where, you know, it will incentivize the construction of these big projects. And by big, I mean, we've modeled, call it 35,000 tons a year for 37 years of nickel in an 18% Nickel, 1% Cobalt concentrate, just a beautiful product. And we probably got 20 to 25% of the total prospective rock drilled off. So it's just a giant deposit. It's challenging to get off the ground. We've got it modelled in stages where it's $1.4Bn to build stage 1, and then you double up with another 500 million, call it $2Bn all in. Because again, I note the inflation in the field.

12:23 You know, that's a challenging project for a small company. And we are trying to solve that problem, square that circle by finding the right partner to help us develop this. And rather than looking at the major mining companies right now, maybe later, but we're looking at the downstream users,

12:47 battery makers, and believe it or not, OEMs, car manufacturers. The lights are just coming on that if we build these gigafactories and we don't have our supply chain for raw materials figured out, we're going to have multi-billion dollar warehouses filled with expensive machinery sitting idle. You have to have Nickel and Lithium and all of the other raw materials or you can't make batteries. A year ago, I would have said that a car company thinking about investing in the mining business was pretty far-fetched. I'm thinking now that it may be an issue of survival for them. And I think that those lights are a very interesting time anyways in the battery space.

13:41 Yeah, no, I completely agree with you. And given this kind of macro, both the political and the economic situation, taking it the next step to globalization of these types of disruptive technologies like EV, obviously in this environment, buoyant Nickel price, $33,000 a tonne and plus or minus,

14:10 these projects are going to be quite meaningful and quite material to getting through that. Do you see the next 1 to 2 years sustaining? Do you see Nickel prices, do you see battery minerals generally continuing

14:29 to outperform and to increase based on the demand we're seeing? Well, yes, in general, I think battery metals are going to outperform because there is just this ravenous demand. I mean, all the prognosticators about electric vehicle uptake, even the most crazily bullish ones have been wrong on the low side. You know, history shows that this is going much faster than anybody expected. Now, in the near term in nickel, I don't know what to say. You still got this massive short, you know, the, you know, the LME nickel market was broken by this math short position by Mr. Bigshot, who, who runs, I think the second largest nickel producer in the world, but, but they produce Nickel pig iron, which is not class 1 Nickel and not deliverable to London. So this guy was naked short and he's still naked short. He's just found he's just found some back. So nobody knows what the price of Nickel is right now. In the near term, the Nickel market is still, I think, broken.

15:34 I mean, the LME is trading again, but it's very thin. Everybody knows about the short position. But, you know, I just think, you know, in my own thinking, longer term, we're going to see a Nickel price somewhere between say $24,000

15:51 a ton and $32,000 a ton. This is a range that will get large projects built. And Nickel has to be in that range or the large projects won't get built. So it's right, right. Those moments where things are kind of obvious in the market. Okay. All right. We'll touch on that a little later on because I want to kind of talk about globalization and the impact of a number of things relative to that. But Ali Haji, thanks for joining the panel. Ali, maybe tell us a little about yourself and about your company and your lithium project in Mongolia. Yeah, absolutely. Thanks for that, Brett. My name is Ali Haji. I'm the Chief Executive Officer and Director of both Ion Energy as well as Aranjin Resources.

16:40 Ion Energy is a lithium play in Mongolia. We have 110,000 hectares of highly prospective lithium brine in the country. We've had grades of up to 1,502 ppm at our Baobai Old Project. That's about 20 kilometers from the Chinese border. In Sukhbaatar province, we're talking about renewable energy.

16:58 The province of Sukhbaatar is building 1 of the largest wind farms in Asia. So you would be able to use renewable energy to ultimately mine the lithium resource there. Our other asset, Urgak Naran, is in Dorngovi province. It is very much a paleo solar. In fact, I've just returned from Mongolia. I've been in Toronto for less than 12 hours and was fortunate enough to do a site visit there. That's in Dorngovee province where the government is building an oil refinery as well as a power plant to serve Oyu Tolgoi and its needs. So Lithium, very highly prospective.

17:29 From a Copper perspective we have 2 licences in country as well. One is Sharga, an exploration license where we've seen over 1% Copper and 1g per tonne Gold over 15.4m with only 2,221m drilled thus far. Our secondary asset is Bayan Under where we've had 57,000m drilled, very close to the Oitolboit trend. Some of the larger intercepts there 7.4% copper and about 37.9 grams of silver across 126 meters. So very highly prospective stuff. But importantly, you know, I seem to be the only bunch of companies or group of companies that would be directly tied to geopolitical strife, given we are sandwiched between China and Russia, and we know that Russia and Ukraine are in the midst of more than a tiff at this point. So our position in Mongolia has been somewhat impacted by the pandemic, which I'm sure we'll talk to in the future here or over the course of this panel.

18:23 But importantly, I think it would be prudent to note that despite the conflict in the north, Mongolia's GDP or economy is vastly driven by mining. And as a result of that, both Russia and China that absorb goods and services from Mongolia have opted to ensure that that flow continues. 80 to 90% of Mongolia's exports are from the mining space and they primarily go into China. And so if you were to disrupt that supply chain, you would ultimately be hurting those end consumers. And in the case of what Mark mentioned, the OEMs, we've seen a fair bit of interest to partner with some of those OEMs for ion energy already. So having that sort of strategic metal, despite being in the geopolitical region that might be considered risky,

19:08 has really allowed us to weather those storms. And a sister company, yet independent company by the name of Step Gold, is a gold producer in Mongolia. And despite their proximity to the Russian border being just over 50km, they've still been able to get their Cyanide and continue their production efforts in-country. That's where we are in terms of our current state. We're excited and energised after the last site visit And we see Mongolia as a country that's currently insulated, but as we know, things can sort of progress in either direction very quickly. Okay, great. Yeah, thanks for that. You know, now putting into context, you know, the macro view and not talking about the geopolitical view, but more the commodity view, lithium, obviously a very key battery mineral, your secondary products and your secondary projects, it feels like free upside, but lithium again, has the has the headline of the day today. How do you see this current environment driving battery minerals and driving kind of value for your, for your project?

20:19 Sure. Lithium prices today in China, you're looking about a $75,000 per LC ton equivalent. Obviously pre-pandemic times, that number was somewhere between 6 and 8,000. So it's a massive increment in terms of what we've been able to see over the last 2, 2.5 years here. But again, there is no formal market. Everything is done based on contracts for the lithium market. You're not going to see us on the LME, not yet anyway, but they will get there. I think we're seeing this massive sort of run here as a result of

20:51 the vast amount of money that's been printed by the governments around the world to incentivize this clean green energy revolution that we're in the midst of, but that price should settle. And relative to the rest of the world and our ability here to be sitting in 4 different locations, having a conversation and essentially HD tells you that technology is growing exponentially. And as a result of that, you will start to see unconventional resources come online, resources that would otherwise not be economically viable. And it's my view as well as the view of some of my advisors that that 75,000 per ton cost is not viable. The government cannot continue to absorb that cost and give you subsidies to allow you to acquire a vehicle. If these prices continue, then the equivalent of a, call it a mini Cooper, would cost upwards of 100,000 US, and that's just not sustainable. So the prices will start to come down here. It's my view and the view of my advisors. I think where we are today obviously makes some projects look far more attractive than they would be if the price was lower.

21:50 But we are in a jurisdiction where we've been able to operate quite cheaply. The necessary sort of labor requirements are already in country. And a result of us going to Mongolia was taking foremost lithium brine hydrogeologists with us to train the groups there, but also get an understanding of just how good the skill set is with respect to something that has never been done in Mongolia. So, I think we're pretty insulated from that regard. We have yet to see the result of our exploration program, which I believe will be ready to us in about 3 weeks time from Murgak-Naran, but we are fairly well insulated in that regard, Brett. Okay, good. If I rewind the clock 12 months, maybe even 24 months, there was a lot of talk

22:35 about globalization. There was a lot of talk about electric vehicles, infrastructure globally across America, across Canada, through Europe, and other parts of the world. It seemed like there was no imbalance to it, yet the supply chain for battery minerals, the prices continue to go up. And I remember cobalt going up to upwards of $50 a pound, $100,000 a ton. And there was discussion about that, because do these commodities, do these commodities actually get priced and price themselves out of being a battery mineral because of the cost at the end of the day? As you said, is somebody going to pay $100,000 for a for a for a mini Cooper?

23:20 Probably most likely not. And are there alternative technologies or other disruptive technologies that can replace, you know, whether it's nickel, cobalt, whether it's lithium, whether it's manganese, whether there's a combination of some battery mineral that keeps the weight down, keeps the charging times up and keeps the range as high as possible to make it viable. Do you see, and this is more of a question for Mark 1st, Mark, do you see nickel kind of pricing itself out of this environment, or are you comfortable with $25,000 nickel going forward? Can you make money at those numbers?

24:01 And is that going to be a relevant space for EV going forward for the next 10-years?

24:08 I see the real problem with Nickel, less as price, obviously that matters, but as supply. You cannot bring enough new nickel on stream fast enough to support the EV revolution. It's just simply not possible. And, you know, a lot of these big projects have long timelines. So what is happening? I mean, really, the 2 commercial technologies are nickel based chemistries for batteries, but also lithium iron phosphate batteries. And there was, you know, some news recently that half of Tesla's cars in China use LFP batteries. This is a perfectly fine technology.

24:55 Thank goodness, in fact, for LFP. People ask me if I'm worried about LFP supplanting nickel. I don't think so. I, you know, I think LFP allows the electric revolution to carry on, but inherently it's good only for certain uses. If you're driving your car around in a city and you never leave that city, LFP is fine. It's fine for buses, it's fine for forklifts, it's fine for, you know, taxi cabs that drive around in a city and it's good for applications where you don't need a lot of range And it's a technology where we can recharge many, many times. It's a very robust technology. But if you want to go, you know, load your family in the car and go for a drive out in the country, you're not going to want to do it with an LFP. You're going to want a nickel-based chemistry because nickel has the energy density that you need.

25:52 And really, those are the 2 technologies

25:55 going forward. I mean, there's all sorts of stuff going on in, you know, garages and universities and so forth, all sorts of experimental battery technologies, but none of them are anywhere near commercial development. They're nowhere within 20 years of commercial development, if ever. So those are the 2 that you've got. My view is that as fast as you can develop nickel resources, they will get snapped up for the higher end of the EV market.

26:30 Away from that is the speed at which we are going to transition into EV, albeit optimistic, and decarbonization goals by 2030 in some countries and 2040 in other countries, is probably going to be stretched out because of what you say, supply, available supply. And, you know, and with supply is obviously going to be pricing as well. But in that 10, 20 year period, are we going to see new technologies that compete for that space? Are we going to see, you know, graphene kind of play a play a role in that? We're going to see other disruptive technologies, you know, play a space. I don't I don't think we have an answer for that, but it's interesting because Ali has

27:16 probably a component of LFP and you have a component of kind of nickel chemistry-based batteries, and the speed at which we get there is probably going to be dependent on supply, as you say. But throw in the geopolitical situation. Now, Tesla has almost gone all in, leveraged themselves in China for manufacturing facilities, and now we have a very protectionistic type world based on the Russia hostilities and the war in Ukraine. Now we're starting to see everybody kind of retrench and pull back a bit. And maybe the geopolitical situation has a role to play in it. But, you know, Ali, I put the question to you, you know, do you see kind of the 5 to 10 year outlook for lithium, A, supply, and B, demand? Are they going to meet each other?

28:11 Or is there going to be some weird dynamic here where price takes the technology out of play or is there going to be enough supply? I think I can answer that 1 of 2 ways. 1, the fact that,

28:27 like Mark pointed out very rightly, so that lithium is not going anywhere in terms of technology. It's been around for 50, 60 years. The inventor of the lithium ion battery now holds a Nobel prize. This thing has shown itself to be a stable technology that's not gonna blow up and sort of consume anybody around it. It's a tried and tested technology that will continue to be used. If you look at the sort of macro aspect and are we going to see lithium get priced out of that technology. I would argue not. Absolutely not. I think lithium is here to stay for at least the next 20, 30 years. And I say that because it is a vastly abundant resource. The pricing today at 75,000 tons is completely unviable because we would not be able to move towards this clean, green future.

29:13 But as more supply comes on board with the advancements of technology, including direct lithium, as well as the extraction from various clay deposits around the world, you're going to start to see this sort of subside a fair bit. The price will come down to I'm not going to speculate because that's, you know, not That's not my job. That's the job of market speculators, such as Benchmark and what have you. But I will say that it will come down. I will say that we're gonna continue to use that technology for the next 30 years or so. And ION's specific strategic advantage is being located a mere kilometers, a mere matter of kilometers away from the largest consumer of lithium on the planet today. Okay, yeah interesting. I find this sector fascinating because there's so many kind of flexes to it relative to supply, relative to demand, relative to the technologies that are being developed for electric vehicles.

30:10 And then you have the infrastructure side of it as well that also has to be supported. And it's keeping Copper up towards $10,000 today. But in reality, there isn't enough Copper supply to meet that demand over the next 20 years either. So again, commodities

30:28 just running on steroids here. And then I go back to you, Richard, you know, looking at where we are today, you know, give us your view of gold, silver, give us your view of the precious metals space as far as pricing goes. And what do you think is going to drive it? And what do you think is going to keep it where we are today or send it in one direction? Yeah, no, thanks, Brett. And I'll just, before I answer that specific, I'll just add, I think, to the very good points that Mark and Ali have made is, I think the downstream battery solution over the long term will be diversified. Mark's quite right, and Ali's quite right to point out that the current technology, particularly for automotive solutions, favours the metals that I just outlined. But the actual broader power solutions, which also includes powering cities and towns and static infrastructure, will be beyond just those metals.

31:24 And the reason I sort of introduced it to there is you've got diversified power solutions. So when we look at what we're producing, not everybody would characterize zinc, lead, silver as part of the energy transition, but when you have a deep, detailed look at the technology, you'll discover that actually over time it is. And so we end up being with this metals in the nexus between infrastructure and power and precious. And silver is a great one for that because not, you know, an inconsiderable amount of silver is used in electronic and power solutions. And one part of that, 1 very well-known part of that, obviously, is photopathetic cells. But silver, the price of silver isn't really driven by industrial demand. It's driven by its power, if you like, its financial power, as a store of value in the same way that gold is when facing inflationary pressures, real inflationary pressures, and when facing uncertainty.

32:28 And into that space comes the specifics of your question, which is, what do we think gold and silver is going to be doing in in these very uncertain times? Well, typically and again, it does come down to the definition of inflation, real inflation versus nominal, but it typically in an inflationary environment on this gold and silver does very well and you're seeing that. But it's often offset by interest rates because people are looking at return on interest rates, treasuries and so on and so forth as an alternative sort yield for an investment that gold and silver doesn't provide. And you're seeing that playing out a little bit now where we're in this environment that you correctly characterized, Brett, of increasing interest rates over time. So people, the large amounts of money that moves around in and out of these things will be looking at that. And then the other source of inflationary pressure and golden precious is geopolitical uncertainty.

33:29 And quite evidently, with the war in Ukraine, combined with what you've said already, which is a certainly in discussion terms, I'm not saying in real terms, a wish to move away from the globalized supply chain, the global supply chain, irrespective of politics that we've benefited from since, well, since the 80s. All of that is creating the type of uncertainty that should be good for gold and silver over the long term. And again, Brett, you know the timeframe. I remember when we were at Barrick, we were trying to ensure that we could make money at $1,000 Gold. And when I read people today going, oh my God, Gold's dropped below $1,900. It's a bleak situation where Gold was $1,900. Well, we did, but we didn't even know.

34:24 So you have a supply effect on that side, of course, because what happens is a lot of money will flow into gold projects that will bring a lot more gold into production, silver into production, but on assets that might not be sustainable should these very high prices come down. So, we've got to do something about that. Know, I ring that sentiment exactly. I remember back, I was at Kinross at the time, early 2000s, just after 9-11. We started to see gold take off. And I remember I was in Brazil at one of our projects called Pericatu and gold price was $256 and we were making $70 an ounce on that. And I look back at that and I use that as my internal kind of benchmark because the economic environment and the commodity environment, they can't be mal-aligned for long.

35:31 There has to be margin. There has to be the supply. There has to be the demand at prices that are going to make money. Otherwise, we're not in business. Then we saw gold run. Yes, we saw higher inflation back in 2001, 2002, 2003, 2004, 2005. And we saw it run to $1,900. And to your point, we were doing project assessments at the time at around $1,000 gold, maybe $1,100 gold, when gold was trading 15, and it traded up to $1,920 on, you know, ironically enough, September 11th of 2011. And that was the kind of the peak day, the peak time for gold. But we are still doing project assessments of 1000 dollars and Barrick was very conservative in doing the same thing. And people said to me, well, why don't you just raise the bar, raise the needle, and you'll get access to large projects, large deposits, because your origination test, your litmus test is going to be on a higher base, a higher gold price. And we just simply said, no, we can't do that because we felt the range of gold and silver was going to trade specifically down.

36:40 The thing now, as I mentioned earlier, is we're now at kind of $2,900 gold. We've been trading around $1,800 to $1,900 gold. We had a couple of spikes up, but we're not seeing that big pullback. And I'm not saying that, hey, you know what, you know, I'm going to start using doing project assessment 1800. It doesn't work like that. But I think we're just in a new trading range now for gold, much like we saw, you know, gold ramp up from $250 all the way up to $1,900. But it also pulled back to $1,000. And I just don't think we're going to see the pullback because of these other economic situations that we have as well. So I agree with you, Richard. I think we're in a very unique time, but there always has to be that kind of margin build in. And I'm gonna ask you another question right now, because when we started talking about decarbonization and alternatives and initiatives, And yes, electric vehicles are a part of that.

37:38 I was listening to, and I think it was Mark talking about this some time ago, it might have been a pre-Christmas speech he had, whereby he talked about mining capacity needs to be, and reserves need to be 40% greater than they are today, 5 years from now and 40% greater, 5 years beyond that to meet the demand. And yes, that is about decarbonization initiatives, it is about the infrastructure required for EV, and it is about EV. And if we think that we're going to be able to do that, then I would say that this will be the greatest mining boom of the last 150 years. But the drawback to that is capital available for that. And when you're trying to raise capital today, can you go out and even good projects that are having difficulty raising capital? So this paradigm between having the capital available, having good projects available, and this big run required to support decarbonization, EV. Kind of, what's your view on that, Mark? Are you, do you see a problem in the future of access to capital for your project? And you've got a monster, you've got an absolute big one? You know, this is the problem. If you're a traditional mining company, you are probably evaluating nickel projects at 6 or $7 a pound and saying, can I make money at that price?

39:04 And if you're doing that, there is not a single large project in the world, including mine, that you're going to build. And so that source of financing, The mining companies are a little slower, I think. They're very conservative. I mean, especially with large projects, if you're going to spend more than 1 billion to build a mine, boy, you know, you need to be careful. But, you know, you just reached that conundrum where, you know, it's very clear to me that Nickel prices have to move sustainably higher or you're not going to have enough Nickel for the EV revolution. Full stop. So something's got to give. And that's part of why we're mostly talking to downstream users and then saying to them, look, you've got to invest at the project level here.

39:56 You've got a big project like this. I mean, to get from where we are to shovel ready is somewhere between 40 and $50 million, just to do all of the work at the property, all of the engineering and metallurgy and to do the environmental assessment because we're in Canada And that environmental assessment project process is not trivial and it's expensive. So, you know, you have to adjust your thinking, you know, I believe, or else you'll forget about EVs. And the other thing is, is that the Chinese are building Nickel projects and have been building Nickel projects with economics that no Western company would accept.

40:46 You know, Ramu, for example, is considered the most successful HPL project of the last 20 years. I think they're in year 12 or 13, and they're getting close to paying back the CapEx. No Western company would do that. But in the meantime, the Chinese have got this lovely, you know, long term supply of nickel and cobalt, you know, that that that is at a price that you can predict the operating cost. You know, this is a strategy that means that China is basically going to, or has been, killing everybody else in terms of batteries. You have to go to China. In terms of raw materials, you have to go to China. They figured out lithium. They figured out nickel and they figured out cobalt. They're a big presence in the Congo.

41:34 And they don't care. No. And, you know, I lived in the Congo for 4 years recently. And, you know, the presence of Chinese is quite large. And they're built and rode Initiative in order to supply themselves, again, protectionism, in order to supply themselves for the next 50 years of critical minerals is a strategy that we and the US just kind of are starting to adopt. Ontario just adopted the critical mineral strategy. Canada will do it generally fairly soon. And it was adopted by US Congress. So, you know, we're trying to follow their suit. We're a little late, but they've got access to a lot of these things.

42:22 My concern is that, are we going to be able to kind of generate the mining capacity and is the capital there to do it in the timeframe of which we need to do it, because otherwise there are other implications of climate change, there are other implications of geopolitically. So it is a bit of a dance. Maybe Ali, Give me your view, because you're in a very sensitive part of the world and very fragile to a certain degree. But are there any issues or barriers of entry for you to access capital to do what you need to do at the end of the day. Yeah, and I think that I was waiting for you to pivot over to me for that one. In terms of capital and access to capital, I think it's evident we're seeing a number of red days across the market here today. We've continued to see a run up that that, quite frankly, cannot be sustainable. A lot of these equity prices are massively overinflated.

43:19 A lot of the companies that have valuations that are just out of this world is unsustainable as well. So that correction was due, it was par for the course and it has occurred or is slowly occurring here. And like you said, is it a bubble that's bursting rapidly or is it 1 that's slowly sort of leaking out as a balloon? My view is that access to capital will become harder as the potential investors become more sensitive to the inflationary measures and rates around the world. They'll start to move to safe havens, dividend paying stocks and things of that nature as opposed to things that might be deemed high risk. So access to capital for us, I think at this stage, thankfully we are fully funded. We have a number of upcoming catalysts that will ultimately allow us to claw back some of the losses in our equity, which potentially could lead to the warrants converting and recapitalizing the company. So in that regard, ION is not sort of in a pinch here as far as raising the necessary capital from a macro view perspective.

44:16 Absolutely. I think it would be quite difficult for any junior miner, let alone 1 with a very early stage project such as ourselves, to go out there and raise capital, given the current market. Okay. Yeah, it's a fair statement. And I will reserve the last 10 minutes for questions. So if anybody in the audience wants to submit questions, please do so and I'll try and get through as many as I can. But I'm going to switch gears a little bit. It's very relative to the political situation. It's very relative to the economic situation. But we heard all last year, the impacts to our businesses, COVID, the pandemic, it's an impact, there's no doubt about it. And everybody has been impacted in some way, shape or form. And many of us have had it. But as a result of that, and what was going on in China, we saw a significant slowdown in the global supply chain in delays. And depending on what stage of development you're in, it had an impact. And Richard, has the spin-off Black Swan events from the environment we're in, whether that's the pandemic or whether that's supply chain delays, how did they impact your business last year and up to today?

45:31 Well, you're right to highlight the pandemic effect on the supply chain. And what we're seeing, Brett, is that being compounded by the current geopolitical and macroeconomic piece. It's like a series of waves arriving on the beach and the out where they all come together rather than just in sequence. But I'd say that the effect on our business, I'll go back to a point I made earlier is, and again we're relatively at the moment, relatively insulated from it, but we are a small business. But I'll connect that reality to the very, very good capital access to capital points that Mark and Ali and yourself have made here.

46:17 Because when you're in the junior market, you may be insulated from it, but the capital markets just look at everybody the same way on first glance. So when we're a little old business like us and we only need sort of, you know, short of $60 million of pre-production capital, which is completely at a different end of the scale from what Mark is doing. You would have thought that given where you know, got high returns that there wouldn't be any problems there. Well, you know, as you know, Brett, you're having to be sitting in that little dip in the Lassonde curve pre-production. Access to capital is always going to be hard. But the pandemic and the way in which the providers of capital view risk has affected us. And so we've actually got to work a lot harder to make the economic case to the normal capital providers.

47:11 And then the other piece, which again, Ali really benefits from being in it with a product that is very exciting to the market right now. Is getting your equity value to a point that is appealing and lowers your cost of capital there is pretty hard. Because again, people have been taking money out of mining stocks and putting it elsewhere and are yet to come back in again. And the other capital point I would make, and I made it on a previous panel here, is ESG has been wonderful for improving all of our, I should say, operating performance and the way in which we look at ensuring sustainability. But I haven't observed that that's produced any benefits at all in terms of access to capital.

48:01 The impact funds, the green capital funds, the ESG funds, none of them at this particular moment in time are looking into mining as part of the long term solution. But what Mark said, I think is really interesting, and he's quite right to highlight it. And it's early on. This is that those downstream users of metal, from car manufacturers to battery producers and so on, are starting to move upstream and be serious players in the mining capital markets. And if they don't do that, or if there isn't an adjustment elsewhere in the capital markets, we miners just simply aren't going to be able to get the metal out of the ground to meet the needs. So, again, I'm sort of complaining a number of the points that were made. Yep. From our little perspective, because we are small, having gone from a big company to a small company, you know, it's a great humility exercise and you've got to get it just right.

48:58 You make some very good points in terms of access to capital? Yeah, the the the actual capital markets were very different in the 80s and 90s and 2000s when we we were we were out there and trying to meet shareholders, meet new investors, raise money, you would go to London, New York, Toronto, Vancouver, maybe Dallas, maybe Switzerland, and you'd see 80% of your shareholders and 90% of the people who were going to buy your stock. They were institutionalized, They were funds, they were large, they were focused and specific or generalist, but they were there. Today, that environment for junior mining, it really doesn't exist. So meeting these decarbonization goals, meeting the capital requirements for all the junior mining companies, sub 500 million market cap companies to actually excel to the point of production decisions is even more challenging.

49:53 So, and I agree back to your point, we saw a paradigm shift from institutional to retail or wealth management style of investors. I think what we're seeing now when we get into project financing, we used to be able to go to banks and raise 200 million on the back of some equity, 200 million in debt. You can't do that now, it's not accessible. You go high yield or you go to the higher forms of capital and then refinance when you get into production, that's a paradigm shift. What Mark described is exactly right. We saw it in the steel business, vertical integration. The actual producers are going to work their way down to the actual consumer. You know, Tesla will be a major shareholder of Mark's company, because they have the distribution, they have the manufacturing, they have and then they ultimately have they have the distribution to the end user. I think we're going to see that. If we don't get access to capital like we once did, and I don't think we're going to, we're gonna have to see different paradigms of I'll say the structure, which is gonna really, really include vertical integration.

51:04 I got 10 minutes left and I've got some questions here that people have asked. The first one, I'm going to combine a couple of questions here. The first one's for Ali and for Mark, and I'll direct it to Mark first, is that, are we going to see other, you know, other elements like hydrogen, like moly, like, you know, somebody brought up graphene I mentioned earlier, are we going to see other disruptive technologies based on new elements enter the marketplace to make these premium batteries? Are they going to replace your product at the end of the day, Mark? Certainly not in the next 20 years. I am actually a huge skeptic about hydrogen.

51:50 It's hard to store, It's hard to transport. You can't mix it with anything that will give it an odour like you can with propane because it kills the ability to burn it. I just don't see Hydrogen. Any of the other technologies are nowhere near commercial production. So certainly for the next 20 years and longer, the answer is no. Okay, and somebody has asked about your thoughts on direct lithium extraction in the US. Is the technology viable? Is that a question for me or Mark? It is a question for both of us, but Ali you hit it first. Sure, I think it is viable. I think I mentioned that earlier on in the conference that the technology associated with the extraction of lithium is growing exponentially. We're seeing unconventional resources come online, including clay.

52:40 Hopefully it starts to become something of a viable interest. But yeah, absolutely. DLA is an extremely viable option and an environmentally less impactful option for the extraction of lithium ions from brine. Okay, Mark, any thoughts there? Well, that's beyond my expertise. Okay. I've got a question about something I brought up earlier about the Canadian government's critical mineral strategy and it follows suit with the US 1. Richard, any thoughts on it? I had some meetings with provincial legislators a couple of weeks ago and the Minister of Energy and Northern Affairs. And my view was, why isn't gold and why isn't silver on the critical mineral strategy?

53:25 Gold is the number 1 employer in Ontario for mining. And it's the number 1 employer for First Nations and Indigenous people in Ontario. So why isn't it critical? And I'll pose the question to you and bring in others as well. That's a really important way of phrasing the question, actually, Brett, because it comes down to what the government is seeking to value in terms of when it defines something as strategic. And what you've outlined is the, and we find this in the ESG world when talking to capital markets, is the impact that mining can have on communities and economies is enormous. And you mentioned gold in Ontario is a very, very good, good, good example of that. But it's not on the critical metals list because what's driving the critical metals assessment is security of supply for industrial transformation or energy transformation.

54:19 We've actually got Senator Rich, who's the chair of the Energy Committee, here on site next week, which is exciting for us. But they have put things like zinc on the critical metals list and so on. But as anybody, you know, respectfully, that speaks to a government official associated with what they're going to do next is their response is as much as we can. And as much as we can is always slightly less than what we'd want. So are they going to, are they going to, we don't have the issue here, but elsewhere in the United States, are they going to look at, you know, improving the, or speeding up the permitting process? That's one of the big constraints on the development and supply of metal. It's very complicated and politically very, very difficult to do. But that's one area. Are they going to help us with lowering the cost of capital and the government funds becoming available potentially?

55:16 Well, again, we see here a little bit about that in Canada and friends are trying to get stuff moving in Saskatchewan are having those types of conversations, that's good. Are they gonna give you tax breaks and other things? Are they gonna help you use government funds to train workers? All of these things could be useful. But when I look at the global supply chain for certain metals is, is the government going to enable, I'm looking at the time Brett, I don't want to take up too much of your time, but the establishment of refining capacity outside China, because of course, we've all benefited from the fact that the refining capacity moved from being global to being centered in China. And that's allowed us to have a relatively low cost metal supply around the world.

56:10 People talk about adjusting this supply chain. And of course we can get a lot of minds moving pending all the things we've just outlined, but where's the concentrate gonna go? If you're worried about China, I mean, again, I'm not taking that as a personal point, but if you politically are worried about, you know, China's control over supply chain, you actually have to do some investing in the downstream refining capacity. And again, giving you a clue of the type of competition as we all have, it's very hard for governments to sort of listen to the shopping list and say, oh, I'm now going to do 10 things and it's going to make your life easier. But it's certainly part of the discussion that I don't think was happening, say, 5 years ago. And whether we'll see a lot happen from it, well, we all live in the real world. Governments do what governments do, and it's very complicated problems to solve, but at least it's on the table now and that's helpful and we'll see.

57:16 I think our government in Canada, the government in the US could benefit from having industry think tanks where these views actually get heard. And then they actually get applied into whatever the chain looks like as to what has to happen from a government and from a public-private partnership level and from a private level. You know, what has to happen for all these things to work? We can generate all the concentrate that we want. If we don't have a place to smelt it, that's economically viable, then it doesn't make much sense. And if you don't have the power to do that smelting at reasonable cost, 10 cent kilowatt hour versus 90 cent kilowatt hour today for diesel, it doesn't make sense. So all these things, it's a big puzzle at the end of the day. And on that note, I'm going to kind of wrap this up.

58:08 We've had a really good discussion today on the geopolitical situation and how it links to kind of the economic strife that we're seeing, and hyperinflation, and all of these events around the world. But one thing it does mean, I think, mining is not going anywhere, whether it's decarbonization or whether you actually need minerals, you need mining and You need this to grow in an environmentally and a sustainable and an ethically proper way. But we need it. And not only do we need it, we need more of it. Thank you for spending the time today to hear our views on the geopolitical and kind of economic situation, how it impacts commodities and how it impacts a project specific in certain jurisdictions of the world. But thanks for your time and we look forward to the next one. Thanks.

59:00 You