Giga Metals Town Hall with CEO Mark Jarvis

0:00 ♪♪ Good morning or good afternoon, depending on where in the world you're signing in from. I think good evening to us. I saw some folks from Europe log in, so thanks for joining us today. We're joined today by Giga Metal CEO and Director, Mark Jarvis. Mark, how are you today? I'm very good, Romeo. How about you? Good, good, awesome. So for the folks in the room, here's how today's gonna go. Mark's gonna give an introduction and recap.

0:26 Then I'm gonna post some questions, many of which were submitted via email in advance of today's presentation. But then we're going to jump into questions from the live audience. So there's a chat button on the bottom right of your screen that I encourage you to use at any time during today's presentation. We will get to as many questions as we can in today's shorter time frame. I got about a half hour, maybe a little bit more. But if for whatever reason we don't get to your question today, I will make sure the Giga team gets your question, gets back to you as soon as possible. So don't worry. And if you think of the perfect question to ask right after the event ends, as I often do, please do feel free to submit it afterwards. I'll make sure the Giga team gets it. Last piece of housekeeping. Today's event is being recorded and will be available on both YouTube and Six.com probably early this afternoon. But that's enough out of me. Mark, I'll throw it to you before we jump to questions. Great. Well, thanks very much, Romeo.

1:13 So just for a recap, I mean, it's been a pretty brutal year in terms of the nickel price itself, and that has led to difficulties for us, as with all the junior nickel miners or nickel explorers or developers, rather. So we do see some early signs that things could be tightening up. One is that the grades are dropping quite rapidly in Indonesia and they're in fact importing a lot of ore from the Philippines to Indonesia to process, and those grades are dropping even faster. So what that means is that the production costs go up.

2:00 So, you know, we're trading at a price right now where 40% of producers or more are losing money and that includes producers in Indonesia. So, you know, that's the bottom. Timing is another matter, but because of this beginning, I think of the cost curve going higher, that's gonna tighten things up. And we're hoping to see something this coming year in terms of being expressed in the price. Long-term, I don't think there's any doubt the EV revolution continues. And in fact, there was a recent development that I read about that makes the case even stronger. It was a newspaper report I read about a paper that had been published in one of the nature magazines by LG, the big South Korean conglomerate.

2:58 They've got a battery making division. And they, you know, just a bit of background with batteries, it's always been that you want more energy density because you want more range in your EVs. If you get more energy density by say, loading nickel onto the cathode, you get more range, but it also is more unstable. And so you end up getting the risk of thermal runaway. And that has been a limiting factor. Well, this new development by LG, they've developed a membrane, a nanometer thick. It sits between the cathode and the electron gatherer, and it lets electrons through until the temperature goes up. Once the temperature goes up beyond a certain range, it stops letting the electrons through.

3:52 And so and then if the temperature drops again, the membrane lets electrons through again. It reverts to its former state. This is huge. And so some of the experiments they did is they would drop 20 pound weights on battery packs and those that didn't have the membrane, 100% of them burst into flames and suffered thermal runaway. With the batteries that had the membrane installed, 70% of them did not show any flames at all. And the 30% that did have flames, the flames were extinguished very quickly. So this looks like it's a simple technological fix. They think it's scalable, and they're going to introduce it quite quickly.

4:40 And if you solve that thermal runaway problem, which LG appears to have done, now you can really load the nickel onto the cathode. And you can see things like EBs with a thousand mile range, not kilometer, but a thousand mile range. That's exciting. And That's exciting for the future of nickel as well. So just a quiet little story that kind of flies under the radar. But until you start thinking about the implications, it's kind of amazing. So in the meantime, what are we doing? Well, it's been things have slowed down on a development front because of the low nickel price. And so I decided there was a recent press release where we have brought fresh eyes in to look at all of our exploration data. We've got reams and reams of data.

5:37 We've got this huge mineralized ultramafic system and you know 80% of it is either completely unexplored or underexplored. And so we thought, well, let's let's see, you know, what are we missing? And we hired a gentleman named Dr. Steve Beresford. He came in, he agreed to come in, and I'm very excited that he did. He's a very busy guy. He's one of the top nickel exploration geologists in the world, bar none.

6:10 But he was very, very interested in our project and went through all of our data. He's identified several potential exploration targets, several types of targets, including what he calls a Volkovsky style, massive copper and magnetite deposit that is potentially underneath our attic zone. And our attic zone is an area that I had written off. So it goes to show you what fresh eyes will do. This is very interesting. There's also the potential for a massive sulfides

6:44 in various areas that he's pointing out. And then there's also the potential, he says he would be surprised if he didn't, if we didn't see brush or pipes within the larger cloud of low-grade sulfide nickel. And these brush of pipes would contain, you know, semi-massive sulfides. And we think we can see one on our mag data already, but we're getting our mag data reprocessed right now, just to, you know, modern processing is so much ahead of even where we were 15 years ago. And we'll get a more definition on these types of targets. And there's other target types as well. So we're starting a process of evaluating the exploration potential.

7:31 And I'm talking actively to partners, who are sort of a mid-sized production, metal producers

7:42 about an exploration program, about getting involved on that basis. So this is very interesting. I mean, these are the sort of targets. We're not going for base hits here. We're going for home runs. And if you could find a small high-grade mine within the system anywhere, the leverage it has to the rest of the system is phenomenal. If you could start off with a mine that you could build for, let's just say $200 million instead of

8:13 1.9 billion, you could get that up and running, get your cash flow going, that can lever the giant buy off the ground. So anyways, in short, I'm not in favor of kind of waiting around for the nickel price to go up again. We're taking a more active stance. So that's where we're at. I'm happy to take any questions now. Awesome, thanks Mark. Now I know a lot of questions came in over email in advance, so folks in the chat, just gonna go through some of those first before we jump into these. But please do keep them coming. Like I said, we'll try to get to as many questions as we can today. So anything that's on your mind, let us know. So I'll get started with a couple. Mark, first one, and I kind of touched on this already, but what options are on the table for partnerships you're seeking for the next phase of Turnigin?

9:04 Well, about exploration, we're talking to mining companies because battery makers and automobile makers are not into that. For development, we are talking to a battery company. The car makers, frankly, we had quite advanced discussions with some of the car makers, and then they went away. They've been bruised by the EV business, the legacy car

9:30 makers. I believe they'll be back because it's existential for them. If they don't do what the Japanese did and get control of their supplies, the raw material supply chain, there's no way they can compete with the Chinese. And you know, What are today huge car companies could become very small companies 10 years from now. But for now, they're just brutes. They all jumped in, they all made EVs at the same time. They made too many of them and they made them too expensive. So it was irrational exuberance. Now I would say that the car companies are suffering from a rational fear. So it's 1 extreme or the other. You think these big corporations are rational?

10:14 They're run by people. They're run by people. So. Sure. Yeah, it's interesting tracking the market. I remember the analyst predictions for EVs 10 years ago, and now I think they're going in the other direction, being way too conservative about their predictions. So it's been interesting to see.

10:28 I have one question about the future of nickel prices. So to kind of zoom out to go macro for a second, as the world gets increasingly more grim, and this is a combination of a lot of questions that we got over email. Do you think it's likely that North America, so not just Canada, but the continent, takes steps to really secure more independent nickel sources over time? Oh, I think people have to. I mean, you can't rely on China for your nickel or your batteries or your EVs. I mean, It's a fairly aggressive military enterprise at this point. And so, where does that lead? Who knows? But it would be a huge mistake, I think, to rely on China for anything. You really do have to develop, you know, In a macro sense, you've got to develop alternate sources of supply for everything, I think.

11:22 Otherwise, strategically, you're making a mistake. So, sort of like Europe made with Russia by relying on Russia for energy. You know, ouch!

11:32 With China, it's more than just energy. I mean, it's not really energy at all, but it's batteries, it's cars, it's raw materials, it's rare earths, It's all sorts of things that you just really, they're becoming an increasingly unreliable part of it that way. Okay, no, it makes sense.

11:54 I'm curious, zooming back in, when a partner is secured, what is the route forward at Turnagain? What should investors expect as the next step once a partnership is secured?

12:09 It depends on the partner. I'm very interested, as I say, in doing some exploration. Just very methodical. We're putting together a 2-year exploration program that includes drilling. It's very methodical. It's iterative.

12:29 Right now, we're doing our mag reprocessing. The results of that will drive further decisions about work we do next and you know where we go next. We know we want to do a gravity survey that will be the details of that will be dictated by the reprocessed mag. We know we want to do ground EM surveys, what's called loop EM. Don't ask me how to do all this, but but apparently this stuff can see quite deep And things again have changed just in the last 15 years since we were sort of really actively exploring.

13:11 So that's one thing. If it's another type of company, Like if we do the kind of deal I'd like to do with the battery maker, well, that would fund development. So we can go ahead with our development program as well. And the one does not preclude the other. There's room for everything.

13:29 You know, so the answer is both. I mean, Right now, things are pretty quiet, but things could get very busy next year. I'm hoping to have some clarity well within the first quarter of next year. Okay. Yeah, great. I appreciate that. Here's 1 from an investor. They note that you've addressed it in previous Q&As, but they want you to revisit it today. And that's in light of a U.S. Concern over the tailings pond risk at Copper Mountain's operation and what they describe as the past disaster at

13:59 Mount Pauley. They're curious how GIG is addressing concernings about tailings for future operations. Well, it's a really good question and I'm, I'm happy to answer it again. We've been paying a lot of attention to the tailings and the design that we came up with in the PFS is extremely conservative. It's like safety first. It's not the cheapest design by a long shot. We're paying more for the sort of, I would even call it in some ways overengineering.

14:28 And then also the tailings design is a large beach, small pond. So it's not like a lot of deposits where you really want to get your tailings underwater due to acid generation. We don't have an acid generation problem with this stuff. These are basic rocks. And so the pond, if you look at a 30-year layout of our tailings, is small and it's central and it's a long ways from the edge of the dam. So you don't have this big pond covering everything and brimming over at the top of the dam because they had Mount Pauly. So, you know, and it's a real concern for the First Nations that live downstream of us. So, you know, we've known that all along and, you know, fortunately, we've got good relations.

15:22 They're certainly willing to listen. They're basically business friendly, but they do not want the Turnagain River to be threatened. I understand that. We understand that. So we've been paying a lot of attention to that from the beginning. And it reflects in the design we came up with for the PFS. And then you add to that safe design, the fact that as these large beaches of silicate sand are spread out in the tailings management facility, they will absorb CO2 from the atmosphere. In a process that we can measure, it's significant.

15:57 As they absorb the CO2, so you've got 1 good thing happening, The sand also goes through a cementation process. So it's hard to imagine a more stable or safe tailings management facility. That's great. No, I appreciate that extra context. I know we've gone over it, but I think it's the kind of thing that's useful to revisit. So appreciate you running through it. One question from an investor, they want to know if Giga expects or is looking for, or could seek any financing from the Pentagon or other US government bodies. David Tenenbaum Well, We're certainly alive to that. The trick with a lot of that is that you've got to have matching funds. So I think once we've got the next partner on board, we can get more active with that.

16:42 We've had communications with a number of funding agencies.

16:46 We just need to get a little bit further advanced to where we've got, okay, here's $10 million. Will you match it with $10 million?

16:55 And that's just how it works. No, no, appreciate that. One person reached out to ask, given the outlook on tariffs and nickel needed for EVs, wants to know your personal level of confidence that Turnigin can come online to deliver materials in the 2030s.

17:12 Oh, I think that's the right target, particularly given the delays that we're suffering because of the current low nickel price. You know, I'm hoping to have this in production by, you know, 2030, 31, that kind of time frame. You know, and, you know, But also related to that is, we've got a new administration coming in in the US.

17:38 Now, do you think he's going to apply 25% tariffs to nickel?

17:43 I mean, you have to believe that they're willing to shoot themselves in the foot. And I don't think they're that stupid. I just don't believe that. You can say the same thing about oil. You can say the same thing about electricity. We export a lot of electricity to the US. They're going to throw a 25% tariff on that, do you think?

18:06 I just don't see it. Now I think that perhaps some of the incentives to buy EBs might go away. It depends, because Musk is in there, Elon Musk is in there. Who knows what will happen? But bottom line is I don't think it will actually even be a factor in terms of our development timeline. Hey, no, appreciate that. This is another question that just came in over email actually. Looking forward throughout the, while we're on the 2030s, during production, is there any concern or preparation for an inflationary environment that could be more excessive than you're anticipating as far as costs? This person talks about hyperinflation for a while and wonders how it might affect mining operations that are in production.

18:53 Well you know in general when you have an inflationary environment things that are real hold their value. That's why people buy gold but you know it's like they say things that you can drop on your foot, retain their value. Real estate is a good place to be. But also base metals, precious metals, those are all good places to be because they will at least keep track with inflation.

19:18 If everybody's operating costs go up, then you need a higher price of nickel or else mines will shut down. It's that simple. So, Yeah, that's my answer. Generally, we will at least keep pace with inflation in terms of that. Yeah. No, perfect. Appreciate that. Raziel in the chat asks, if you could comment on the possibility of Mitsubishi Corp perhaps advancing funds with a repurchase option in the future, something like what Sumitomo did with IAMGOLD at Kote?

19:50 Well, okay, you have to understand with Mitsubishi Corp that they are very risk averse. They're quite entrepreneurial for an extremely large company. It's a great team we're dealing with, but what they want as a next step is they want to get a larger mining company involved. And because they don't want to build the mine, they don't want to operate the mine. That's not their modus operandi. They like to have a minority interest. They will help finance it. They will help get it built, but they

20:20 do not want to be hands on in that respect. So, so they're looking for a larger mining company to get involved. And in fact, they're being very helpful in terms of introducing us. That, quite high levels within the mining companies. You know, higher levels than we could approach as a junior. So, you know, that's where it is. I believe ultimately that they will end up with about 20 or 25% working interest from the current 15. But we need to help ourselves first. Sure. No, appreciate that.

21:00 Jacques from the chat asks, just jumping back to exploration, how much drilling is there planned and perhaps budgeted for next year?

21:08 Well, we're not there yet. What I'm hoping that we can do, because we don't have the budget for it yet, Just to be clear, that's what we're working on. That's what I'm hoping to get accomplished in the next couple of months. Once we've got it, I would hope that, first of all, there's the mag, then there's going to be Lots of geophysical things that we're doing, you know, gravity survey and ground EM surveys were indicated. Then the next step is drilling. First you want to, drilling's expensive, so you want to do the less expensive stuff that helps you refine the targets. And again, a giant economic mine, like a Boise's Bay,

21:51 is physically quite small. And in a system this size, it'd be quite easy to miss. And I would absolutely hate that. If for some reason, we got bought out too cheap at some point, and then whoever ended up with it found Boise Bay, it would just about kill me. So you know, that's why I'm really happy that we've gotten Dr. Beresford involved. He's quite excited about, you know, some of the possibilities here. So you know, now I hope that we would get to drilling. My intention would be to do some drilling by the end of the first year of exploration, once the targets are defined better. And then year 2 would be a bigger drilling year.

22:38 Okay. I appreciate that, Huffle. And yeah, I think I would lose sleep if somebody scooped Boise Bay out for me. That's enough to keep you up at night for sure. Or even Bokovsky, which is a big copper mine in Russia. By the way, a copper target. This is quite interesting. We've got this area where there's, you know, we've got soil geochem in the attic zone that's all anomalous in copper, platinum and palladium. It's just not enough grades to chase, but he thinks the system's trying to, he thinks there's something, massive sulfide system at depth, somewhere below 250 meters.

23:24 That's really exciting. That would be that would be a home run. Sure. I know it's exciting stuff. Mark Peterson from the chat asks, and we kind of touched on this already, but we'll just run through it one more time. He's curious which auto companies you are courting or have courted and for what part. And also if you see a deal like General Motors did with Lithium Americas. I'm not sure. I mean, Our policy is we don't talk about the specific companies that we're talking to or have talked to. It's covered by confidentiality. I can talk in general, But I'm afraid I just won't get specific. Yeah, no, that's great. Toby Funley asks, at what nickel price was the PFS?

24:09 And is curious, what's the minimum average nickel price, I assume, over the course of production to make the project economical? The price we used, and again, this was published October of 2023. It was finished in September, was $9 and 75 cents a pound, which at the time, I mean, nickel was, was bobbling around between 11 and $12 a pound. So it looked conservative at that time. The long-term average price of nickel at the 20 year average price of nickel in 2023 dollars. The last I looked was about $11 a pound. And so, all of those numbers will justify getting this built.

24:58 Base metal mines don't need the same level of internal rate of return as a precious metal mine. Like, say you've got a gold mine that's high grade, but you've only got a 7 to 10 year mine life, which is true in a lot of cases. You better have a high IRR because things will go wrong in the early years and sometimes in the later years. So you better have a really high IRR. If you've got a 30-year mine life, which we do in our PFS, and you can see visibility where it's going to be more than 30 years. I mean, our reserves in the PFS are about two-thirds of our indicated resources. And then we've got another, you know, another equal amount to our reserves is in the inferred category, and then it's open beyond that. So this is this is, you know, it's at least a 30 year mine is what I would say. And, you know, there's a possibility it could be a multi generation mine. With that kind of project, you know, this a long term project, you can you can do a smaller IRR.

26:08 And they do it all the time. What they're doing with the HPEL in Indonesia, it's not a high rate of return. In fact, there are mines that are considered quite successful that still haven't paid off their capital costs after 13 years. But they accept that to get into the game. No, I appreciate that extra context. One question that came in over email that sounds like a disgruntled Ontario mining investor, but they ask, what's the permitting timeline in BC and is it shorter than Ontario's 7 years? That's a very good question. Everybody is saying the right things, okay?

26:54 We just met the new minister of mines for BC yesterday. I wasn't able to be in the meeting because I was not in Vancouver, as you know, but that was a big off of discussion as permitting. You know, it would be nice to think we could get it done in 2 years, but you know, that's not the history. It's a good goal though. You can do a proper environmental assessment in 2 years if everyone's paying attention. And it's partly at the federal level as well. It's got to do with a major project, you have to deal with the federalities as well as the provincial. Now there are mechanisms where the province can take over the permitting from the federal government, which is a good thing.

27:42 But at the federal level, they're talking about trying for a two-year turnaround. And they're also talking about funding the departments that would turn it around. One of the problems with permitting is, you know, the company does its job, you send the environmental report to the regulators, and they don't have enough staff. So it ends up rotting on someone's desk. That's really the problem. So governments have to do more than talk. They have to actually fund the ability to turn things around quickly and give the departments that do that the resources that they need. And they're talking about doing that.

28:28 There's a strong political push to make Canada the hub for battery raw materials. And so in particular, they're interested in moving quickly. So we'll see. It's always a problem. It's always something that you have to push, but it's solvable. I'd rather be frankly in Canada than the US where it's almost impossible to build a mine except in certain states like Nevada. Yeah, no, that's true. I think a lot of Canadian investors don't realize how hard it is in most of the states actually. So it's useful to remind people. One question popped in on email and I know we're close to the half hour, so it won't be too many more. Somebody wanted to do a compare turn again to other nickel operations in Canada in terms of both size and grade. Well, our grade is low. Our size is huge.

29:17 So I mean, Boise's Bay is a high grade mine, but they're underground now. They've already done the easy part. They did the open pit high grade, which was extremely profitable. But now they're underground, it's more of a struggle. The Sudbury Basin, where a lot of nickel is historically being produced and is still produced and it's, you know, basically it's the Ballet show and the Glencore show. Ballet took over Inco, Glencore took over Falconbridge. But it's ever deeper, it's, you know, it's high-grade underground mines, but they're going deep now. And it's like every mining camp in the world, You take the shallow stuff and the highest grade stuff first, because you want to pay off your CapEx and, if you can't and so ever, ever deeper, ever more expensive, I don't know what, what their break-even is right now.

30:14 But I know that, BHP, which was in a similar situation, their break, even cost was a $20,000 a ton. We're currently at around $16,000 a ton. And I suspect, But I don't know for a fact that their break even in the Sudbury Basin is probably closer to that. It's probably higher. They're probably losing money today. And if they're not losing money, then they're just barely breaking even. So Our project, if it was built and running, would actually be making money at today's prices. Not a lot, but we would be profitable. Okay, cool. Thank you. Just to wrap up today, and I always love asking these questions, just to get your insight into what you're thinking for next year, What are you most excited about for 2025?

31:04 Well, I've got a bit of exploration in my blood and I'm really excited to go exploring again. If we've got something hiding in here that's like a jewelry box or something, I want to find it. And so to me, that's exciting. Development is sort of 1 step at a time, and it's a trudge. Exploration, especially with these kind of targets is just a lot more fun. Sure. That makes sense. Well, looking forward to a year of both thrills and trudges at the same time. And by the way, just one final note is that what I'm finding is, you know, as I'm talking to certain mining companies, it's not a bad pitch. I mean, if you're if you're an exploration company, typically, you go, okay, we've got these targets, you know, we're swinging for the moon, you know, and if we hit this massive, If we don't hit, we got nothing. OK, that's that's the typical exploration company.

32:11 In our case, we're going exploring. And If we hit, it's massive. But if we don't hit, we still have what we've always had. And the Nickel price will come along at some point and carry this project to production. That's great. Well, looking forward to what's going to go on next year. Mark, thank you so much for your time today. Of course, everybody in the chat, thank you for adding questions and for those who shot them in over email and just for joining us today. Like I said, the replay will be available this afternoon and I'll make sure that Team gets transcript of all questions so they can reach out if there's any follow-up everybody. Thank you so much and mark Thank you for joining me. Well, thank you Romeo. Thanks everyone for attending