Groundbreaking Economic Assessment at Davidson Project & Endako Acquisition

0:08 This is a Moon River's live event. I'm pleased to introduce their president and CEO for the first time on our platform, Mr. Paul Perizzotto. He will go through this presentation and this is a Q&A session. So please submit your questions in the chat in the bottom right corner and we'll address them at the end of the presentation.

0:27 As always, the summit is being recorded and will be available on 6 to watch afterwards. So without further ado, I hand things over to you, Paul. And yeah, just let me know when you wanna transition slides and I'll be happy to do so. All right, good morning everyone. And thank you very much, Kyle. We're very pleased to be introducing, for those of you that don't know us, we're a fairly new company, Moon River Capital.

0:52 Moon River is a publicly traded company. It's listed on the TSX Venture and the stock symbol is MOO. Moon River owns one of the highest grade molybdenum deposits in the world. It's located in British Columbia. It's called the Davidson deposit. It's located about 8km from Smithers, British Columbia. So it's very close to lots of infrastructure,

1:25 which is quite helpful. And BC is a mining-friendly jurisdiction, and so we have a really great location. Last week, we announced the results of our preliminary economic assessment, which I will get into in a few minutes and give you some of the details regarding that. So the last thing I kind of want to mention before we go to slide 4 is that our preliminary economic assessment has designed a mine plan that is very environmentally friendly And we all know that's really important in today's world. And we're planning on having all of the infrastructure for the mine underground with minimal surface disturbance.

2:16 And as a result of that, we will be using all electric bulk mining equipment, which significantly reduces carbon emissions. And also, people won't see the mining that's going on and surface processing that's often the case with lots of mines. So Kyle, I'd like to move to slide 4, please.

2:50 Just give me 1 second, folks. Yeah, come to the sixth platform here on your browser, Paul. I'm on slide 4 now. You'll go along on the same slide deck here. Yeah, but unfortunately I'm not on the 6 platform for whatever reason I'm having technical issues is as well. So because you're talking to me, we're on the platform, you just have to find the right tab on your computer. There should be a red circle and that's where I am. So in your browser, it may be Google Chrome, it may be Safari, but your browser, you will find us. There we go. Perfect. It's great. Thank you. Perfect. Okay. So apologies, folks.

3:41 So let me talk to you a little bit about our management team. The company is chaired by Ian MacDonald and Ian has a tremendous track record in the mining space, creating value for shareholders and stakeholders. He was the founder and chairman of a company called Blue Pearl that at one time had the Davidson deposit that we're going to be talking about. And Blue Pearl also operated the Indaco mine, which I'll talk about in a few minutes as well. I'm the President and CEO and I've been active in the mining space for over 40 years. I used to work for the Toronto Stock Exchange listing new companies on the exchange and I was a mining investment banker and most recently I've been involved with a couple of companies that have been sold. One was Nolant Resources, that has a large Nickel-Chromium deposit in the Ring of Fire. Another one is Arizona Star, that was acquired by Barrick Gold.

4:43 The rest of Our management team is rounded up by Lorna McGilvery, who's our in-house counsel, many, many years of experience. The Tong Ying's our CFO, also, you know, former PwC auditor with lots of experience. And our board is rounded out by Gordon Reed, who was a former chief operating officer of Cinterra. And Cinterra, as some of you may know, has a Mali business. And so he's very familiar with the Mali business. Jamie Levy, who is the president and CEO of a company called Generation Mining. And we acquired this deposit from Generation Mining and they're our largest shareholder, owning 27% of our outstanding shares.

5:31 Alice Murphy is an independent director on the board. She's formerly with PWC, a former CFO of Abber Mining. She has done work for First Nation communities and has been the mayor of a community in Ontario as well and brings a lot of experience to our board of directors. And lastly, I wanna mention, cause it's kind of important that Mark Wilson is an advisor to the company And Mark spent many decades working at Sinterra and he ran their MOLLE division. So it's great to have someone with his experience advising us. A little bit of background on Mali.

6:18 It's a very unique metal and it's a very important metal in today's society. It helps make steel stronger and more versatile and it's used for applications in the new economy in terms of electronics and things like that. But it's also really important in steel because it's anti-corrosive and it helps make steel a little bit stronger and easier to work with. It's important in pipelines. It's important in technology issues. It's important for wind turbines and solar panels and those kinds of things. For the last 75 years, Mali has been growing on average about 4.4% a year. The World Bank feels it's going to grow at least at 2.5% a year for the next 20 years, but more likely, as you can see on that chart 4.4 percent.

7:23 Last week we announced we were very pleased to announce the results of our preliminary economic assessment. The purpose of a PEA is to allow us to continue to do more work and determine if this project is worth spending more money on. And the answer to that is a resounding yes. So the results of the PEA indicated that the after-tax net present value of the deposit, you know, using an 8% discount rate and a long-term MOLLE price of $21.50, you know, and by the way, that's the two-year trailing average for MOLLE and it's currently trading at $20 and almost close to $0.50. So the NPV of the project is $602M and that's just from producing moly.

8:17 The mine life is estimated to be 20-years and produce an average of 10Mlbs of aluminum per year. The capital to build the project, including $110M of contingency is $575M, So it's less than what the NPV is. And the average cash cost is just under $10 a pound. While the all in sustaining costs, which includes things like working capital and other things, is under $11 a pound. And so you can see there's a good margin there from where today's MOLLE prices are and what the all-in sustaining costs are.

9:03 And as I mentioned earlier, there's a low carbon footprint. And that's really important because, companies need a social license to operate today. It's not just about going in and extracting minerals and making money. You have to ensure that you're doing what's right by the local community members, the other local stakeholders, and do your part in ensuring that the environment is properly looked after. And I think what we've designed with this mine, hits all of those buttons. Just some further information about the mine.

9:53 Once we're in operation, we estimate it would be about 3.3 years to get payback on the operations. We'll employ over 207 employees at the mine site when we're in full production. We estimate that the annual taxes that we'll be paying would be, sorry, the cumulative taxes that we'll be paying will be over a billion dollars over the life of the mine. And you can understand the multiplier effect of that is also very important for the local economy and the province of British Columbia. And lastly, and extremely importantly, in our view, is that the PEA doesn't include any by-product contributions.

10:42 And the reason that that's important is we know that this deposit contains tungsten, rare earths, gallium, which is quite, quite valuable these days, and copper. So we are going to be doing some additional work in the summertime to do some metallurgical test work. We're going to take some fresh drill core and do a little bit of drilling and get some fresh drill core and do some metallurgical test work to see what the recoveries could be for tungsten and gallium and rares. And we're hopeful that this could significantly impact the costs of producing moly. And that would just increase the value of the asset.

11:34 It would ensure that if there's ups and downs in the Mali price as there has been over the years, that it would smooth those out and ensure a profitable mine. So we're cautiously optimistic that the by-product contributions could be very significant to ensuring the long-term viability of this asset.

12:02 This next slide is a schematic of what the operations would look like. We would be driving 2 tunnels into the backside of Hudson Bay Mountain. The front side faces the town of Smithers. So we're gonna go in on the backside and that hopefully will mitigate, and help with the quality of life and the people in Smithers. And we're gonna locate our processing facilities underground. And so that's really helpful because the tailings that are produced in extracting the molly will remain underground. We're going to use them as backfill for the various areas that we're going to mine the deposit using bulk mining, electric equipment.

12:57 About 3 quarters of

13:00 the tailings will be used as backfill. The other 25% will be dried and there'll be stacked outside on the back of the mountain, minimizing, eliminating the need for a tailings pond and minimizing the disturbance on ground. So we're pretty excited and pleased about that. To give you an idea, the deposits are over 2.5km wide and deep. And all of the different and the various stoves that we're going to be mining are about 180,000 tonnes. So it's a fabulous ore body to be mining. And having the highest grade moly deposit or one of the highest grade Mali deposits in the world is quite beneficial I think to helping us establish a long life profitable operation.

14:02 Just to kind of give you a bit of context, that's where the deposit is. It's on the east side of the Hudson Bay Mountain, and that's where it's located. So it's just to kind of give you a bit of a sense of where the deposit is in relation to the size of the mountain where we'll be mining.

14:25 So this next slide is to help people understand the Mali market and what Mali is used for. And you can see that most of the Mali production is used in steel and steel alloys. And that's not going anywhere anytime soon. And we expect that that's gonna continue to grow. China is a big producer and consumer of molly. They seem to be, from the information that we're aware of, almost at an equilibrium now with respect to how much moly they produce within China and how much they consume. Now, we all know that 80% of the world's moly comes from copper mines.

15:17 A lot of these copper mines are starting to get to the end of their life.

15:25 And so we think there's a real opportunity here for us to be a primary moly mine to take advantage of what we hope will be an increase in Mali prices over the coming years. As I mentioned earlier, molybdenum is used for the modern economy. And I mentioned wind turbines is also required in nuclear power plants. It's used in geothermal applications. It's used in pipelines. It's used in cars. And it's primarily in cars, it's used for combustion engines. And we all know that the world is transitioning away from combustion engines. However, the electric vehicle cars have a lot of batteries in them that make the car very, very heavy. And so there's many applications for moly in steel because it's stronger and lighter to be used in electric vehicles as well. So we're really positive on the long-term outlook for Mali.

16:41 This slide just gives you an idea where Mali is produced around the world and certainly there's, it's demand is growing everywhere.

16:59 I won't get into a lot of detail on this slide here, but it's to reinforce the point that I'm trying to make with respect to where's Molly gonna come from over the coming years and what's the status of deposits that have been identified with Moldeptinum. And I think this positions the Davidson deposit for development quite favorably.

17:32 As I mentioned several times, this is the highest grade deposit, one of the highest grade deposits in the world and you can see how favorably our grade compares

17:48 to other mines. And for those of you that are familiar with mining, grade is so important because it really enhances the viability of the deposit.

18:06 This slide shows what our resource is. And it's a very large resource, excuse me. And looking at it, we're using a grade of 0.41%

18:26 Moly disulfide and that could be expanded. The tonnage that we mine can be expanded in the life of mine if Mollie prices continue to rise as we hope they

18:45 will. Our corporate, Lastly, our corporate structure, we just under 33 million shares outstanding. Our largest shareholder is Generation Mining and they own 9 million shares or just over 25% of the company. The board and the management team owns over 20% of the company. So we're obviously aligned with shareholders in that regard. We just started trading with this asset in November of last year. And there's one other piece of news that I need to share with you that isn't on our PowerPoint presentation. And that's that a couple of days ago we announced

19:36 the acquisition of a 25% interest in the Indaco Mali mine that's located about 200km southeast of the Davidson deposit. The Indaco mine is a mine that Ian MacDonald, our chairman, is quite familiar with because he was the former president and CEO of Blue Pearl Mining that owned the asset for a number of years. It's been on Karen maintenance since 2015.

20:11 However, it had a new mill upgraded and installed in 2013 that and installed in 2013 that can produce 55,000 tons of moly a day. It's a deposit that's owned 75% by Sinterra and the other 25% is owned by a company called Soljit, a large Japanese multinational company. And we are acquiring this 25% interest subject to a 60-day right of first refusal from Soljit, from Sinterra by being paid $43 million.

20:53 And all but 2 million of that money is gonna go into an escrow account to fund future reclamation and care and maintenance costs. Now, obviously, we were hopeful that we'll be able to get this 25% interest, And our view would be to

21:18 then work with Sinterra to do some studies to evaluate what the cost would be and the returns in putting this deposit back into production. And that's our presentation in a nutshell. We're very optimistic with what we've accomplished in the last few months. And we're in the MOLLE game, and we're looking to create value and work with local stakeholders to make this company a thriving success. I'm pleased to answer any questions that the audience may have?

22:08 Yeah, thank you, Paul. And thanks for your flexibility. I know this was an unexpected technical issue on Ian's front here, and I know he has a lot of knowledge in the new acquisition. So we will go to the Q&A chat. Maybe it's worth recycling this once we get Ian back, but unfortunately he won't be joining us today. For anyone that, you can submit questions here. I don't see any yet. So we will just give it a minute here. Yeah, let me see here. I did write 1 or 2 down here. Oh, I was reviewing your PEA while preparing for this interview. And I noticed you're looking at doing electric and all electric fleet for this. Do you want to discuss the differences between a typical diesel powered machines underground and the performance, the initial cost, if it's vastly different at all, but maybe touch on the electric fleet.

23:10 I don't have specifics on cost, but the benefit of electric mechanized, automated and mechanized. So, it's safer, it's very cost effective and you don't need diesel and you're not paying carbon taxes and you're not impacting the environment. It's a tremendous benefit to the community, to the company and to the environment by being all electric. There's, given that there's been other mines in the area where it's located, access to power, hydropower is relatively inexpensive, less expensive than diesel.

24:01 So it's a tremendous benefit to the company by using electric mechanized equipment. Thank you. Barry has a question here. What is the ideal timeline to production regarding the Davidson deposit? That's an excellent question. Thank you, Barry. We're estimating 6 to 7 years. We don't know specifically, but that's the best guess. We have to collect environmental data for a couple of years. We have to do a pre-feasibility and feasibility study. And then it's going to take some time. We're looking to put the tunnels in to get to the ore body. And we're examining various ways that we could shorten that timeline.

24:49 That's part of the further studies that we're going to be doing. We're gonna do everything we can to minimize that timeline, obviously. But I think today, as we speak, without more information, we're looking at 6, 7 years to do that. And Rock has a follow-up question for that. Do you and your team intend to bring the project into production yourself or what is the strategy on that front? No, I think we want to bring the project into production ourselves. We're owners, we have experience operating, we're going to have to hire more people obviously because we're a new company and just getting going. But no, we have to take this on ourselves to advance this. That's not to say that if someone comes knocking on our door and wants to enter into a transaction of some sort with us of course we're going to listen but for the time being we're our mindset is that we're we're bringing this into production.

25:51 Maybe you can touch on the strategy or the division of the company in regards to this recent news about the acquisition of the Indaco project. Sure, so the way we're thinking about this and this is subject to a lot of subject to is we don't know what Centera is going to do with the right of first refusal but our vision is it's going to take a few 6 7 years to get the Davidson mine into production. And we believe moly prices are going to continue to go up. So you know, and DACO is there, it's got a 10 to 15 years, we need more work, a potential mine life still there and depending on the price, it could even be more, we don't know. So we think it warrants a study to have a hard look at that, to put that back into production.

26:49 And our assumption also is that that could be done in a fairly short order and not with a lot of capital compared to most mining operations given that it's already, it's on Karen maintenance and it's got a mill, so it's going to need a bit of work. So, that opportunity working with Sinterra, if they don't exercise their right of first refusal, could create near-term cash flow for the company. So, we'd like to see a study done, if we're fortunate enough to acquire the interest, we'd like to see a study done if we're fortunate enough to acquire the interest, we'd like to see a study done to evaluate putting this back into production. So that would give us, if that happens, that should give us some cashflow while we're developing the Davidson deposit.

27:39 An individual in the chat is wondering, will you be negotiating to acquire Sentara's interest in the project? We, It's too soon to speak to that, quite honestly. We just don't know what Sinterra is going to do at this point in time. So it's kind of premature for me to speak to that. Excellent. We'll give it one more minute here for questions in the chat. But go ahead and provide any closing statements. Again, my apologies and SIX's apologies for the technical issues here. We will try and get Ian back on again and maybe we can reschedule this, but any closing remarks, Paul, before we close things off here?

28:26 No, you know, the only thing I'd like to say is, thank you to those participants that, you know, were able to make today's call. We're available at any time to reach out to us directly if someone wants to ask further questions. We're trying to build an operating company. It takes time and it takes patience, but I think we're putting in some really strategic steps in doing that, where we can create value and work with the local stakeholders to meet their obligations and their needs as well. And so our view is we need cashflow as soon as we can.

29:15 Thank you, Paul. If you don't mind sticking around, we do have a couple more questions in the chat. Sure, happy to. Did you get interest, do you get interest off the escrow funds? Yes, we do. Yes, we do. So if I could just sort of elaborate on that, I may have skipped over that and I apologize. So the transaction closes, $41 million of the 43 is going to go into an escrow account and 2 million is gonna go onto Moon River's balance sheet. Of that 41 million, it's going to go into an escrow account. Part of it is going to be used to fund ongoing care and maintenance costs. Our assumptions are in our negotiations that that should cover our care and maintenance costs for 4 to 5 years. The balance of the funds are going to be used as for reclamation bonding and so any interest that we generate on those funds we can use for general corporate purposes.

30:21 Thank you for that. That's a great question. I don't know for sure. And another individual is wondering about a meeting in Toronto where they can meet with the team next week in PDAC, during PDAC? So we, that's correct. I think there's through 6, there's the ability to sign up to meet with us at our office in Toronto on Tuesday at 2 p.m. And 3 p.m. Depending on what the, you know, what the turn on and the demand is. Maybe go onto the SICS website to register for that. Definitely feel free to reach out to us if you have any difficulties at all, we'd be happy to facilitate that.

31:06 Paul, I appreciate this so much, thank you for your time and for everyone that attended today, thank you. But yes, thank you very much and enjoy the rest of your day.