Mining, Investment & Environment: Insights From the Field

0:08 Hello, everybody. My name is Matthew Mickelborough. I host the Junior Resource Investing Podcast and joining me today for a CEO panel organized by SIXX is Terry Lynch, who's CEO of Power Nickel, a nickel explorer operating primarily in Quebec, and Sasha Jacob of Ceylon Graphite, a graphite explorer operating in Sri Lanka. The world of mining is changing rapidly, driven by the evolving priorities of its investors. An increasing emphasis on ESG-related themes has come to dominate discussion in the industry and the stock market in general. Inflows into ESG-themed ETFs have ballooned from a few billion dollars just 5 or 6 years ago to a now cumulative total of nearly $400 billion. Fully 99% of CEOs in a recent international survey agreed that sustainability is important to the future success of their business.

0:56 And that growth mirrors the rapid impact ESG has had on the mining sector. But beneath all the hype and buzzwords, what does ESG actually mean? And what does authentic ESG actually look like, particularly in the mining world? Is ESG just a cynical ploy, as some critics accuse it, to greenwash extractive industries that are by their very nature environmentally destructive? Or is there a real and increasing need for improving mining industry best practice?

1:22 Is there room for true stakeholder capitalism where all people impacted by a project have a voice in it? And perhaps more importantly, How do you make room for it? So what does ESG truly look like, especially in the small cap explorer world? Terry and Sasha, I look forward to this conversation, discussion, welcome to you both here. Good to be here. Thanks for having us. Thank you. So let's just start with this and maybe Sasha I'll have you start this one off here but just you know any good conversation start with definitions right I'm sure everyone here is familiar with ESG but why don't you tell me Sasha what does ESG mean to you perhaps and why does it resonate with you specifically? Well for me personally I mean almost my entire career has been in ESG, probably even before the acronym was developed. So I was the first investment banker in Canada to focus on renewables, done about $8 billion of equity financing in that sector.

2:18 I ran an investment deal, and it was a full-service investment deal that focused on the area and focused on strategic minerals and battery minerals as well as renewables and clean tech. And prior to that, prior to being an investment banker, I was actually part of the Mykaris team as a senior advisor to the Minister of Energy, and really from the policy side, have been involved from the very beginning, from when the first carbon report was ever initiated

2:46 back, I think it was 1996, 97. So this has always been a cornerstone for me and for the work I do in my career, and it's extended now into what we're doing with Saline Graphite. Also on the Policy side, I should just mention briefly, I was heavily involved there as well. On the E side of things, I was vice chair of the World Wildlife Fund. I'm currently chair of Nature United, which is the nature conservancy in Canada, which is the world's largest conservation organization. And through those, I was heavily involved in policy development all the way up to the UN SDG development in the environmental area. And on the S side, I was on the board of Plan International, Plan Canada, and Plan International, which is the second biggest development agency in the world and one of the largest shareholder organizations in Canada. And that is very heavily involved on the S side.

3:39 And I was just named also chair of Plant Catalyst, which is the for-profit ESG Innovative Finance arm that is a lot more to be talked about in the next few weeks. So, been heavily involved in that area. And as a cornerstone of that, any project that we've ever been involved with as principal has really held these 3 areas with very high regard and have been a focus for us. And Terry, do you wanna jump in there? Yeah, sure. I mean, I think for myself and for Power Nickel, environment, social and governance, which are the ESG is, you know, really part of the core being.

4:25 And it's really always been good business to be, you know, careful with the environment and protective of the environment. We are all, after all, citizens of this earth. And I actually have never met a miner that isn't a really super pro-environmentalist and usually a wildlife explorer in many ways. So The mining sector has historically gotten a bad rap for what happened in this country 50 years ago and very little in the current generation. But obviously around the world, there's different sets of practices and no doubt mining not policed properly or not adjudicated properly can lead to some very horrendous results. And we're certainly seeing that.

5:15 So On the social and governance side, I think, again,

5:20 mining operations operate in communities. If you are a miner and you're planning just to roll into a community and not engage with the community and not be a part of it and deliver some positive impact for them, I think you're going to be sorely disappointed on your process. And so we just think it's, you know, a good, not only good ethics, but good business practice to, you know, have that consideration in mind. And there's some interesting developments. I was in New York last week or 2 weeks ago maybe at an SME conference and I listened to Rob McEwen speak. He's got a very interesting mine project in Argentina in the high Andes.

6:06 ESG is a very big issue down there. If they don't do it right, they just won't get a permit. He's got a very visionary approach there. That mine looks like a resort hotel.

6:18 They're going to grow all their own fruits and vegetables up there. They've got a totally amazing approach to turning it into an engagement with the environment and a way to explore this area that probably would never have happened. And, you know, sort of a rethinking of mining. He actually hired, you know, one of the more progressive architects to come up with it, you know, and obviously not a not a mine designer at all. But I think, you know, that's the leadership that the sector needs. We need to start thinking more about how do we make mining more part of the community as opposed to just some dirty, messy, smelly, stinky thing that needs to be hidden in some backward place that we don't want to go. Because it doesn't have to be that way and it's not even necessarily economic for it to be that way. So that's sort of our approach. The governance stuff has always been there, you know, and I think everyone who's running a public company, especially in Canada in mining, you've always had to have very high standards of governance And we've always been amongst, I mean, we're certainly the highest employer of the Aboriginal people in the country, like something like 10% of the mining workforce is Aboriginal and these are mining is very high paying jobs and we welcome that engagement.

7:32 So I think, yeah, a lot of this stuff is common sense and the forward thinking companies are doing it. We were the, I think we're the first guys to do Drill Green which was a Carbon X. It's a very interesting

7:48 carbon innovator. They're basically, I would call them a white labor. They do have some of their own projects, but generally speaking, they pick up projects that need help in financing. They help them get their carbon sequestration processes going and then they merchandise the credits for them to people like ourselves. And for our drilling, for example, we expect we're gonna do 40,000 meters of drilling in Quebec this year. So our drilling costs went from $200 a meter to 225 cents. So it's not like crazy money, $10,000 to be basically carbon neutral with VERA certified credits. I think more and more of that, I understand from talking to some other peers, that they're looking to do the same things. And I think, you know, the mining sector has always had, you know, in this country, a very good track record with, you know, 1 or 2 exceptions, but generally a very good track record. And I think they're bound and determined to lead the charge.

8:43 So I think we're coming in through some good space for Canadian miners.

8:48 Well, yeah, the times are changing. I think you're right there, that there's an increased priority and increased emphasis for sure, especially in relation to recent histories. But I think Terry, there's something I wanna latch onto there. You talk about it being good economics and it being good business sense. So it's not just this expensive moralizing, maybe that some people accuse it of, but it actually does make sense in a business, from a business perspective. Starting with Terry, then back to you, Sash, after, I mean, Terry, you want to maybe, like, what are some of the practical benefits of ESG? Well, I mean, for example, I mean, you know, sort of showboating my own company, Power Nickel, which I'd be proud to show, but, you know, for example, in nickel, because of our location in Quebec, primarily because obviously we're across the road from major hydro-Quebec substation.

9:34 We'll be able to use green hydroelectric power to power our mine. So that'll really help us to create, we think, the greenest nickel mine in history. And then we have ultramafic deposit. So as it turns out, ultramafic tailings naturally sequester carbon, and there's some things you can do to it in line before they go out on the tailings pile to make it enhanced sequesterization. And then in the design of the facility, there's some things you can do up front that you can mitigate any sort of affluent that you're discharging, et cetera. So it will cost a little bit more in design, but What we'll have at the end of the day is we're going to have, you know, maybe the cleanest nickel in the world. Okay. So, and probably carbon neutral nickel. So I know from it being in,

10:24 in South Korea and speaking to a number of the, battery manufacturers, like the big 7 over there, I was over there maybe 6 weeks ago. And, they're very interested in, in, in tying in with clean nickel, because right now they're, they're unfortunately buying most of their supplies from the laterites in Indonesia and the Philippines and not throwing those guys under the bus and sure they're doing the best they can. But the reality is that takes a lot of CO2 to process. So at the end of the day, I think there is economics to being clean, and you'll get paid more for being clean.

10:57 So obviously, you have to blend all this together, design it well. But I think that's what we're seeing, is that people with a little bit of design forethought can actually benefit from it. It doesn't have to be a drag on the bottom line. Sasha? Yeah, I think for Ceylon Graphite, I mean, quite frankly, this company wouldn't exist had it not been for our track record on ESG with the previous company. I had co-founded with 2 others, both of whom are also key partners in Ceylon Graphite. We previously founded what became the largest hydro company in the country. That was back in 2004. And I think we built 13 hydro sites in the country, and then 3 in Uganda with the same team, the Sri Lankan team.

11:40 And we were committed from day 1 to having extraordinary community support, obviously as building run-of-river hydro developments. It was certainly checking the box in the E. But in terms of the S, we were very active in each community building bridges, building roads, healthcare facilities, et cetera. And we do that very deliberately, not just writing checks. We look at KPIs and determine if the investment is actually achieving what's supposed to in the communities that we operate in. So basically, the company, I think we were able to get the concessions we did in the country, the Graphite concessions in 2011, because of our history of doing what we said we'd do and being good corporate actors in all those communities across the country.

12:28 Then of course the product. I mean, Graphite is the largest component of an electric vehicle battery. And I don't think we've had 1 conversation with an OEM that hasn't stated that their number 1 priority is the lifecycle environmental footprint of the material. And Of course, we have a huge advantage in that compared to any other graphite producer because we're all underground mining, no open pit, 100% renewables from the very same hydro projects that we built.

13:01 And because we're coming out at 95% plus carbon, you know, the highest grade in the world compared to sub-10 anywhere else in the world, we have no primary processing. So that's a huge, huge environmental advantage, both in terms of the chemicals that are sometimes used in the processing, but also obviously just the electricity usage that's used for that. So it's a tremendous advantage, and we think that is going to be reflected in the ultimate off-peak terms of pricing. And from any discussion we've had, is really a key priority for any auto AM or battery manufacturer. So then why, Sash, we'll start with you here, Why is there some resistance to it then in the mining community, right? I mean, there is a lot of support for it, but also there are some vocal detractors as well. I mean, why do you think there is that resistance? And I guess then follow up to that would be, what would you say to them to change their minds?

14:00 I think one of the things is that there isn't really any standardized assessment yet. So there are carbon standards, but they're very different all around the world. There's really no S standardization yet whatsoever. And G, I mean, G is easy. The government side is very easy to analyze, right, diversity on the board

14:20 and representation of communities and so forth. But there is just no consistency in the resource world yet. I mean, if you look at the – there's very few consultancies that are doing life cycle assessment right now, and again, there's no real standardization of those results. It is happening directly on the carbon usage and the scope 2 and 3 carbon emissions. You know, though scope 1 is relatively easy, those are the direct ones that the mines are utilizing. 2 is a surprise, and 3 is further downstream. A little bit more difficult to analyze and different industries are approaching it differently and for mining that standardization just isn't there yet. So I think in some part people are worried about a label that is relatively loosely applied without inconsistency and being categorized in an area that might not be favorable. At the same time, fighting, as you mentioned, you know, early in the conversation, the amount of capital going to ESG funds, the screening now of any fund on ESG parameters is enormous. We've seen what's happened in the oil and gas sector for that. So I think there is the clear willingness of the mining community to want to avoid that and to start participating positively as those standards are more formalized.

15:44 Yeah, and I find, you know, I haven't talked to really any of my colleagues that have said, oh, we've got to stop this stuff, you know. They, I think, understand the need and the world has changed. And it actually, in many ways, it makes the world be more like Canada. Canada has always been super diligent on its environmental practices as it relates to mining. And we had to export our approach globally, whereas many of our competitors didn't. So that sort of put us somewhat at a disadvantage in some international markets, I know. But I think that that's now sort of narrowing. So I don't think that there is such a hue and cry in mining, more so in oil and gas. And that's honestly a different conversation, a different discussion. I don't think that would be relevant for us to get into today. But I don't think there's any going back on this. I think that clearly this is the way things need to operate for people to feel like they're engaged and they're part of the conversation.

16:51 Ultimately, we all live in this world and we want it to be a world that's fun for our children and our grandchildren and that people can go to the beach and climb the mountains

17:03 and chop down a Christmas tree and do things that are normal. And we need to make sure that we have sustainable praxis. So I think this is all sort of, you know, any new approach has some rough edges and it's off putting initially and you're grumble because change is just difficult. It doesn't matter what the change is. But eventually, as you start to rethink it, then you start to think, hey, it's actually maybe there's a benefit here. Maybe there's a way to actually, not only, now maybe I don't have to reclaim the mine as a dead end, maybe I turn the mine into

17:45 a actual adventure destination. You know what I mean? So there's a whole new, almost a paradigm shift that needs to take place and is taking place. And I think there are some interesting solutions here that will evolve that and I'm sure it will continue to evolve. I think it's interesting because the overarching goal of sustainability and stewardship, I mean it is as old as time, right? I mean I know in the 1960s there was SRI, socially responsible investing. I mean, heck, Charles Dickens writing about the plight of orphans in like Industrial Revolution London, I mean he would have been an ESG writer if the term had been coined back then, right? So I think it is something that maybe the individual priorities shift, but it's been around forever, right? For as long as humans have been interacting and extracting from the environment. So I guess maybe I'll ask a question here.

18:32 Obviously both of your companies are fairly naturally aligned with these ideas, but maybe I'll ask you, both of you came on board as CEO, well, within the last few years, Sasha, you're saying more recently, but maybe what are some challenges that you've had to confront or improve, right? So we talked about opportunities and strengths of your individual companies, but maybe what are some parts of ESG where it was a challenge for you to implement or to work to improve at? And Sash, I'll let you go first there. Well, I mean, we've had these natural advantages, which is great. We came from a significant position of strength and I think really probably one of the biggest challenges is just conveying that advantage and that opportunity, whether it's to end customers or to investors or others and why

19:22 us having gone down this path and having a fantastic product from a life cycle assessment standpoint and having focused on each of those components of ESG, why it's important, why it's relevant. I think sometimes you get a reaction like, don't spend any money on that, and the only focus should be profit. In our case, fortunately, because of those benefits, we're able to get a higher margin and a larger profit. So, I don't think there's been any specific challenges except really just conveying that story consistently and having both investors, stakeholders and potential offtakers understand all of those advantages and what it can mean for them.

20:12 Yeah, for us, I mean, honestly, junior mining and nano cap junior miners, which is sort of what we are. You know, you have to be super careful with your capital race because the mining markets have been tough. And it's, you know, and it's been, you know, you can't, not that you can ever waste money, but it's not an environment to waste money right now. And you need to show progress on your core objectives, which is obviously to do with the ore bodies, et cetera. But at the same point, you still have to move along. So one of our challenges was to, ESG is quite a complicated, modern approach now that they are looking for in the objectives. I think they're talking about 2024 for most companies, 2025 for junior minors. So we decided, hey, we're gonna have to do it. Let's get in front of this train.

21:02 So we looked at some different consultants, found a really great consultant that's become basically a part-time employee now to be our ESG person.

21:14 And we've now just posted our 1st ESG report up on our site in the last week or 10 days. And it took a fair bit of work to put that together, but it was a good process for us to go through and to put a point in the sands. But I mean, it does take some work and you do have to sort of spend some time on it, but I mean, it's either you do it now willingly or you'll be dragged into it later. So I think it's better to engage, but that's something that we definitely, we definitely had some challenges doing it, but we were able to execute it. Now we're, you know, we're ahead of the pack, so we feel good about that. So, you know, I expect those are the types of challenges that most companies will experience. Yeah, either now voluntarily or yeah, 10 years from now or 5 years from now, not so voluntarily.

22:03 So obviously I think a big selling point for both of you, and I wanna talk maybe upstream, downstream, and maybe the challenges as you say, Terry, of these micro cap or nano caps, really informing ESG best practice. But I think both of you, one of the big advantages for both of your companies is the resource itself, right?

22:22 I mean, graphite and nickel obviously are 2 huge aspects to any sort of green economy or electrification. Maybe I'll just give you 2 a chance to maybe just try, you know, triumph or trumpets, you know, why is it, and you know, Nickel for Terry and Graphite for Sasha? How huge your individual resources are for this Green Revolution or for ESG in general, right? Terry, you want to start us there? Yeah, sure. Well, I mean, Nickel, The primary markets for Nickel, the first market is stainless steel. The urbanisation drives stainless steel. As our modern society continues to grow and people in the third world move from agrarian living to moving into villages, moving into towns, moving into cities, they're buying more pots and pans, more fridges and stoves. And of course, that comes with stainless steel.

23:12 So stainless steel has been growing at 6% compound annual growth rate over the last number of years, which is an amazing growth rate really. And so that's the underbelly of Nickel market, about 70%. The other major trend of course is electrification. So right now, electrification, the battery usage would be about 10% of the nickel market. And that's coming from, there's really 3 types of nickel, class 1 nickel, which is used in batteries, class 2 nickel, which is used in stainless, and recycled, which is generally used in stainless as well.

23:43 It's not impossible for class 2 nickel, recycled to get into batteries, but it's much more costly and more energy cost as well. So to the main point, the technology has not moved far enough at this point, where you really need class 1 nickel in order to provide for the electrification side of things. So from a growth perspective, electrification demand wise in the Nickel sector is expected to grow from 10%,

24:09 you know, they say by 2030 to up to 50%. I personally don't think that can happen. I just don't think You can find enough Nickel mines in that period of time or put them in place. So but aside from that, obviously, it's going to grow, obviously, maybe to at least 30%. So it's going to require a number of projects to be greenlit and that will take financing. And interestingly enough, I would say the governments have done a great job in the last 12 months of really setting the stage, right? I mean, I guess it probably started with the Inflation Reduction Act in the U.S. Where they provided the incentives and there's a pathway to getting 50% of your mine, sort of financed in one way, shape or form from by the US government, if it's, if it fits their critical mineral process.

25:02 And then, you know, in about 3 or 4 weeks ago, obviously the Quebec government and the Canadian government did their most recent budgets. And while they're not yet law, they were the most popular parts of the budget. So it's highly expected they'll be passed. So the Canadian government will provide a 30% tax credit to build and equip a mine and the Quebec government up to 25%. So the governments are really focusing on trying to give the tools to the mining sector to go ahead and develop and build mines. And it's also there on the exploration side. In Quebec, we basically get 2 for 1 exploration. So nowhere else like it in the world. It's amazing. So that's

25:41 all good. The challenge has been the markets have been so savage. Markets are so fundamentally broken right now with, in my mind, the shorts and how things are regulated and allowing the spoofing and all this stuff that we really, it's hard. Good results just don't get rewarded. Like in the old days, like you used to, if you had a great mining result, stock might double, triple, and you would finance up there. And that's what brought investors in the sector because investors follow rewards. If they don't see the sector making money, they won't invest.

26:15 And that's probably our biggest threat to this whole critical mineral sector, is the markets are not functioning. And until they sort that out, all the government grants the world won't get you. But just getting back to the nickel, on the class 1 side of things. Generally speaking, it's forecast being quite a supply deficit in about 2 years. This year, it's probably going to be, you know, it's going to be fairly balanced. North America, a slight imbalance. In Europe, probably a slight imbalance. China, an excess because of the slow start after the COVID. And then next year, probably, you know, should be sort of flat to up. We notice now, like if you look at the LSE, you know, inventory levels, they're at record lows.

27:02 So it's interesting. I'm not sure what's happening with that. But I mean, generally speaking, the Nickel demand is going to be, you know, probably keep pricing in the sort of the $9 to $15 range and probably closer to middle of that range. And That would be very economic

27:20 for Nickel manufacturers to have incentive to produce. I think they'll be able to get new mines in play at that, but they'll have to get the capital markets working to really get rolling.

27:36 And graphite, Sasha? Yeah, I mean, the growth, as most people watching are probably very well aware, for the battery metals is enormous and Benchmark Mineral Intelligence, which is one of the leading analytical firms in the space, has projected graphite as the highest growth of all the materials for batteries, which is, I guess, easy to understand given that it's almost 50% of a battery. But another interesting report was put out by the World Bank about 24 months ago, which is really worth reading, that talks about the entire energy transition and all of the different metals required. And again, they show that graphite, not just in batteries, but across the full spectrum, is still the largest growth of any material requirement.

28:29 We can say that we're arguably very close to a natural graphite deficit. So most batteries currently have a blend of natural and synthetic graphite, synthetic graphite being a petroleum by-product and definitely not environmentally friendly. The constraint right now is, of course, that over 90% of processed graphite is coming from China. So trying to find alternatives, both on the mining side but also the processing side, is an enormous challenge. And really, to get the environmental footprint down or the lifecycle environmental footprint of the battery down really have to get the natural graphite composition up. And that's the real challenge given the constraints that are out there, the time it takes to bring new mines into production.

29:25 So that's, you know, the demand is huge and graphite is really leading the pack in terms of that growth over the next 30 years. Now, Sach, I want to just circle back here. You made a comment previously about how part of the issue with ESG in terms of kind of hesitancy towards it is a lack of kind of international standardization. Is there something that you have in mind? I mean, is that coming? Is that something you're aware of that there are efforts towards that? Just curious. And Terry, you're obviously welcome to speak to this too, Terry, if you're aware of it, but I just thought I'd follow that up as a follow-up question for you, Sasha. So I look at both sides, the financial side and then the pure resource side. And the financial side is obviously important because it's going to dictate or constrain or make available more depending on where you land for the mining company in your ranking.

30:20 On the financial side, there are definitely moves towards standardization. So there's been different groups that are providing the analysis and the data, and There's different aggregators of that data with ranking systems. So you've got people like S&P and others. But there's been an effort to get standardization, and not just standardization of the qualifications, but also standardization and fungibility on carbon credits through different jurisdictions. That's happening quite actively. And, you know, there might not be just 1 standard, but there will be consistency amongst, you know, different jurisdictions. So that's really happening on the financial side. On the resource side, less so.

31:09 As I mentioned before, there's really just a handful of firms that are doing the environmental analysis. And speaking quite frankly, when I look at people that have sustainable finance in their title, often I can't exactly find what they've been doing in sustainable finance for the last few years, but nevertheless it seems to be a popular title, whether you're in a bank or any other company, that's a challenge. And I would say, I mean, if you look at even the carbon assessment firms, there is no standardization to be a certifier. It's amazing that to this day, You don't have to have any specific qualification to be employed by those firms or to undergo that analysis for carbon assessments. Ultimately, it's convincing the registration entity, whichever 1 it might be, why this credit has value or doesn't have value.

32:04 And now you're seeing a lot of them being reset. I think, quite honestly, it's a huge risk for investors on the carbon side that are buying credits that are probably going to get re-rated, that aren't going to meet the expectations of urban abatement that they were suggested they would. And we saw this before, by the way, in the early stages of renewable energy on the wind side. We had assessment firms out there that were providing projections of huge capacity factors. That's the availability that wind turbines could produce energy, so 25%, 30%, 35%. All of them, If you remember the early days of flow-through financing for wind in Canada, all of those funds that were put together, every single one of them failed.

32:53 They all failed because they were project finance based on production assessment of 35% and they ended up doing 28 and they all folded. I think we're seeing some of that now. We're definitely seeing it in the carbon side, but in the overall theme of ESG and sustainable finance, you know, there's a lot of people popping up with, you know, Again, I just question some of the backgrounds and their qualifications. So that's going to be a challenge. It's being addressed on the financial side, those standards that are applying to the funds and how those screens work. But It's certainly, as I mentioned before, for scope 2 or scope 3 assessments, that's very hard. Scope 1, relatively straightforward, but when you start looking at your downstream and your upstream suppliers, It's a big challenge.

33:48 Yeah, you know, with PowerNegro, we didn't, you know, when we were looking around at the carbon side of things, you know, doing offsetting, that's one of the things we discovered was that there's a lot of flim flam out there. That's the best way to describe it. And so Vera Certified sort of seems to be one of the credible carbon brands. And I'm sure there might be 1 or 2 others. But so we're trying to, just as a company, just to deal with the branded stuff so that you have some sort of place to place your trust because we're not equipped to really analyze it ourselves.

34:35 So it's important to pick the right partner to work with on that side of things. I think we did with Carbos, they've been great. And I think the drill green program is a phenomenal program for mining people and it's quite cost-effective. So that's been good. I think when I was in New York at that SME conference, there was a S&P ESG spokesperson that gave us a speech on it and what S&P is doing. And so clearly the big guys are moving into this because this is a, you know, there's gonna be money there, right? I mean, there's lots of money for these rating guys and they'll go where the cash is. So they'll, you know, they'll come up with some terms and that's just part of the process of this, you know, relatively new industry that needs to, it's gonna be the wild west for a little bit and there'll be some spectacular failures and some spectacular successes.

35:25 And that's just part of any new invention, it's gonna go through that process. So for the smaller companies like ourselves, who are just really trying to be good corporate citizens and do the right thing, we'll just try and stick to the most proven commodities we can find out there in terms of this and not take a lot of risk in terms of Greenfield, trying to do it ourselves. No, it's like, let's go work with the pros and maybe we'll pay a little bit more, but we can sleep at night and know that we've, we've definitely checked the box, if that's the box we wanna check. So I think that's sort of how we're going to approach it. Nope, thank you. Maybe I'll ask you 2 gentlemen for this one, take a step back, you know, you're not no longer just representatives where, you know, the hatch of Power Nickel or the hatch of Ceylon, but maybe just as, you know, participants in this industry, maybe what, you know, what is the biggest challenge or sticking point or failure, if I call it that, of the industry at this point? Where does the industry need to pull up its socks most in terms of achieving ESG best practice? Terry, I'll let you lead off with that one.

36:33 Yeah, you know what? That's a tough one. I mean, I think all in all, they've been generally mining has been quite progressive, you know? I guess, you know, I think, you know, probably diversity is probably one of the areas that we could probably do a better job of. And it's not that we're doing a bad job. I think there's lots of women in our leadership positions. There's lots of people of color in our leadership positions, but we can probably do better and do more. I think we can do a better job of engaging with our indigenous partners and not just having them as obviously, you know, employees in our mining situations, but actually leaders in our businesses, you know, that they can become because intelligence doesn't know any, you know, sex or color or creed. It's either you have a good work ethic and you have been trained and you can execute or you can't. You know, and I think we always need to reward competence and that's always the tough line, But we can also have special training and special programming to try and channel more diversity into our sector. And that can be a good thing.

37:58 That can get us into more engagement and to more social license to do business. So again, it doesn't necessarily have to be a cost. It can be a benefit. You know, so but I think we, you know, and I generally see lots of trends that way in the space. And I think generally that the mining community is pretty progressive. So I'm quite encouraged to see what we're seeing out there when I'm talking with my colleagues and at conferences and stuff like that. And Sasha, over to you. Yeah, I was, I mean, as Terry mentioned earlier, I think Canadian mining companies in general are a little bit ahead of the curve. I had mentioned earlier that I'm chair of Nature United, which is the Canadian arm of Nature Conservancy. And if anybody's interested in this, please take a look at nature.org is the TNC site and natureunited.ca is the Canadian 1. And they'll see some very interesting projects that we've done in Canada.

38:52 And they're always in partnership with either forestry companies or mining companies. So these are nature-based climate solutions mostly, and looking at, you know, either tenements, forestry concessions that have been end of life and there's reclamation, or in conjunction with operating assets. And so we've seen some very progressive companies in the resource space that have sort of looked forward, not just to the next few years of operations, but to end of life and beyond, and as I said, even concurrent during operations. And some of those partnerships are quite interesting, a combination of the province, First Nations communities, and the mining company. And as I say, usually in the mining scenario, utilizing lands that aren't in the direct area of production but extended lands that the company might control or part of the crown partnership that they have.

39:49 So those are great, great win-wins and there have been some phenomenal companies that have partnered in that. And amazingly, it doesn't cost the companies anything. There's no shortage of capital that is ready to invest in these projects. We just got $100 million from Jeff Bezos, for example, on the Emerald Edge project, which you'll see Ocean Wall, some of the forestry companies, there's some other ones, British Columbia with mining companies, but there's an opportunity to do something that is a win-win for the community, a win-win for the environment, actually a win-win for the federal government even, which has them very excited about these type of projects. So Again, very encouraging to see through that work that I do with that organization, some of these companies being very, very proactive on that.

40:42 Excellent. I'm going to circle around here to discuss maybe the constraints or limitations of talking the talk, walking the walk, which nevertheless being a microcap and working with a microcap or junior resource sector, right? And I've actually, I'm just trying to find it here. One of our listeners had a good question here, Paul, And this kind of touches on something that you had mentioned, Terry, in terms of the actual capital markets kind of working or not working well. And so Paul's asking here, what needs to be done in capital markets policy to drive investment back into these small cap companies? His concern is that there's too much large cap bias among institutional investors, which starves the big winners of the future. And so Terry, maybe I'll let you, cause that was kind of where you were going with one of your answers.

41:27 I'll let you take that. Yeah, I think, you know, the biggest thing is there's a, there is a lack of transparency. When people are the normal investors and myself included, trade and we've been trading on the TSXV or stock power nickel or CSE or whatever. We see this trading volume and think, okay, that's it. Well, in most cases, that's less than half the trading volume. OK, so I mean, so the sophisticated institutional investors and the hedge funds that are offshore that are shorting these stocks and doing whatever they see at all, you know. So why is the individual investor disenfranchised? So that's the first thing we got to fix. That's just nonsense that it can't be fixed. It can be fixed, simply lacks the will to fix it. And it must be fixed to protect individual investors. So that's number 1. Second thing is, you know, we have rules. We have rules about naked shorting, but we don't enforce them, okay?

42:24 And the compliance is dreadful. And, you know, the spoofing And the naked shorting that goes on in the junior capital markets, not just a mining, but across the board is ridiculous. You can see it every day. I mean, we had 7 days in a row on really good news. Stock trades down 15, 59, 59 by the same firm every day. How is that even possible that one firm gets the last trade every day at 1559.59? And not just in our stock, but in many of my peers stocks. So it's just ridiculous. So, you know, At the end of the day, these things basically suppress true market discovery. And all we're asking for, all any capitalist should ask for, is true price discovery. Let's supply and demand, based on full disclosure of information that's relevant, dictate pricing.

43:20 Don't let people with big muscle that are offshore be able to pound stocks into oblivion just because they can, they just keep selling. They don't mark the trade short. Just to give you an example, Goldman Sachs got fined just recently, about a month ago, because I was in talking with them, the Minister of Finance here in Ontario on this point, and the Minister of State, I guess. And they get 60 million mismarked transactions, a $3 million fine. Think about that for a second. A, how do you miss mark something 60 million times? Terry would be in jail if he did that. Okay, Sasha too. So, I mean, that's just big business, you know, taking the fact that they got a paltry $3 million fine, they probably made $300 million or $3 billion.

44:06 So who cares? That's just the cost of doing business. And right now that's what's happening to our system. Big guys can muscle things around and they can suppress stocks and they do. And they do it through a variety of tactics. And I've talked to litigators, all I've talked to the best litigators in North America on this and guys that have won 10 cases of between 10 and 100 million dollars in against the JP Morgans and Merrill Lynch's and Woodbush's and all these people, like the big, big investment banks out there, that these are like multimillion dollar efforts over multiple years, nothing a junior miner could do. Okay, so at the end of the day, that to me, we need to make this market fairer for investors. Markets existed for 2 reasons.

44:55 They existed for allowing investors to find more opportunities to invest in, and they invested for companies to have better access to capital. That's the primary reasons why markets were invented, okay? Not invented for hedge funds to trade and make profit and somehow you scan the system or exchanges to make profit. You know, it's really, generally speaking, the fundamental purposes for exchanges are to get investors access to investment opportunities that are fully disclosed in a transparent way, and then to allow companies to access capital. So we really need to fix that. And that's the, and you know, I think I have a simple solution, really simple. Now, I've been stumbling along this for, in the Save Canadian Mile world for 3 years now.

45:40 I've now determined the solution is simply this. We need to charge a 10 times profit engorgement fine, okay, on naked shorting, okay, and we let the regulators keep the cash, okay, so they're gonna have incentive to go catch these guys. Okay, so if Goldman Sachs made $300 million in that thing, they pay $3 billion fine, they only do that once, and that'll be over. And probably what we need to do is say, guys, here's this 10 times profit engorgement thing and we're going to start it in 6 months because if we crush them all today, bankrupt, everyone wouldn't make any sense. We need the time. The system's going to need time to to clean up. But if we could get these guys off the suppressing tactics that you see every day in every stock, that would be enormous because eventually stocks will find their own natural trading point through transparency.

46:32 But that's my view on it. And but it's a view that's held by a lot of my colleagues in the junior mining space. I guess I just add to that. Having been the CEO of a full service investment bank for many, many years, I guess I've got a few opinions on it. The first is I think that the industry has just completely changed. When I started investment banking for the first few years of my career, we probably had close to 100 full-service independent dealers and bank-owned dealers. Now there's less than 10 real inactive, full-service independent dealers. The business has changed completely. Used to be able to rely on trading revenue to cover fixed costs, and your profit was in your investment banking, underwriting business, but that's no longer the case because obviously there's no trading margin anymore and that disincentivizes equity research coverage because in the old days you'd basically pay for research through trading and that doesn't exist anymore.

47:33 So there are a handful of analysts out there that cover junior mining that are left and the business case is quite difficult. So the business has to be made through, the revenue has to be made through underwriting. And that's where I think you get into some of those, you know, some of those anomalies that Terry's talking about, or maybe not anomalies, maybe those are the common practice, and that's definitely become an issue. So you know, then the question becomes how do you incentivize more independent investment dealers and the ones that used to do, you know, the heavy lifting and write the research and market the stories. I mean, my entire career really as an investment banker was that. Early junior companies building the story, marketing them, you know, I personally market a lot of the companies in Europe to funds and to other places where that we're looking for, you know, those type of deals and it's just there's very few that'll do that heavy lifting now because the market has changed so much, the price is smaller, they've got to de-risk it more, regulation is never-ending, it's basically impossible for an independent dealer, a full-service independent dealer, to keep up with compliance, it's really impossible, really none of the banks can do that. So it's a very challenging environment and you really have to look at what regulations are required to make it easier for those small dealers to operate and encourage more to enter the

49:03 marketplace. Put you on the spot here, Terry had this suggestion of more heavily penalizing shorting. If you were God Emperor for a day, what would be 1 law that you would pass? Shorting is actively being pursued now, as you probably know, the US regulators, actually the Department of Justice is directly pursuing those as we speak. They gave an update I think last week that they're intending to move forward in a couple of weeks, as a story I think it was the Wall Street Journal had said. So, that's a pretty active thing and that was obviously very, very commonplace and very difficult for junior companies in any sector when people are shorting into a deal, you know, and covering through the deal. So I think, you know, if people are still doing that on a deal, they're going to be under the microscope if they aren't already.

49:55 So I think that's going to, you know, be something that's addressed. I think it's just gone too far and been too prevalent that the regulators, starting with the US side, it appears, are going to definitely go after that. But I think the other part, as I was saying before, is more proactive regulation or less – different banks and independent dealers can't be treated the same. Banks have armies and armies of compliance people and different systems of accountability than independents do, And we just have to – we have to look at an environment. There was a task force that was in place that put a report together led by my friend Waleed Solomon, who's chair of Norton Rose. He chaired the task force on securities overhaul for Canada, and he has some fantastic recommendations in there that really cover the whole industry and address exactly what we're talking about now.

50:50 How do you make a more vibrant capital market system? How do you support those companies that are going to be those future winners and those future major resource companies and other companies, tech and others that have made Canada what it is, you've got to have that junior market. So I encourage the person that asked the question to look up the report. There are some great recommendations in it. It was a report given to the Minister of Finance in Ontario. It was submitted about 18 months ago. I'll have to dig in that one as well for me. No, thank you. So another kind of a question around, you know, around this idea of junior companies and, you know, your powers and limitations perhaps to affect change. But I guess, so threats of opportunities for ESG through the supply chain specifically, right? I mean, how do you make upstream downstream priorities align? How do you ensure jurisdictional compliance, et cetera? I mean, this is a huge topic and 1 that I could probably ask 10 different questions from. But maybe, I mean, specifically back to you 2 guys, I mean, how does a $15 million market cap company, how does a $40 million market cap company, how does a microcap junior fit into that conversation?

52:03 This massive and complex conversation, I guess. And yeah, Sash, you can lead it off. Sure. I guess apropos to what we were just talking about, I think over regulation on that aspect for juniors doesn't make any sense. So I was talking before about scope 2 and 3, I mean I think we have to have a market cap threshold or a revenue threshold probably more appropriately that is brought into consideration as to when a company has to even look at scope 2 and 3 and that's again those upstream inputs carbon footprints. Obviously this is more specific to the E, but it does apply to the S and the G as well. It just doesn't make any sense. The cost burden for a small junior to go all the way into those scope 2 and 3 just doesn't make sense. I think we need a clear framework that says, at this certain market capital revenue, then it's incumbent on the company to report scope 2, and then at a bigger one scope 3, I think it's just too difficult.

53:01 The massive major multinational companies are really struggling to do it now. Very few, you'll see from most reports, are publishing them, even though it's a requirement for I think NYSE. And it's virtually impossible to do and consultants are making tens and tens of millions of dollars making up the analysis as they go. So it just doesn't make sense imposing that type of regime on juniors at this stage. Awesome, Terry. Yeah, no, I agree with what Sasha said. You know, we have to walk before we run on these things, certainly for the small cap guys. And it's like even the cap limits or revenue limits I think would be a great way to look at, for example, shorting and why are you even able to short stocks under 250 million or under 1 billion.

54:05 You know, I get the concept behind, and I'm not necessarily against short selling. If they're taking the actual honest bet and they're saying, hey, you know, I think Terry's doing a terrible job at Power Nickel. I think that thing's going down. And they borrow the stock and they sell it. That's one thing. It's the other thing is when they sell a stock, they don't own the stock and they just keep, you know, moving the trades around. So they never cover, you know, and, you know, we've, we've actually figured out a way. Finally, we're, we're, we're actually, you know, just, we just sent a bunch of seasoned assist letters yesterday to brokerages where we've actually proven with Broadbridge and CES data that they have massive share imbalances. Okay. So you can now, We're starting to figure ways to deal with these guys, but that would be one example of a market cap threshold that would be productive, because once you get to 250 million in market cap, you're probably pretty substantial company.

54:58 You can probably take care of yourself in the market and deal with these shorters, you know, in the fullness of time. But if you're a nano cap like we are, where you're basically, you know, going from financing to execution to financing, and you're the only way you can create value for your shareholders is if you execute and deliver the goods and what you said you were gonna do, you need to get rewarded and the shareholders need to get rewarded, otherwise the system's gonna break down. And that's what's happening in junior mining, unfortunately. So yeah, that's the challenge. I have a number of more questions here. We're kind of circling around to the end of it, so I apologize for listeners. I won't be able to get to all your questions. Some of them were party-specific or company-specific, which you'll have to maybe contact Sasha or Terry on your own. But maybe the last one I'll end with here is just a generic tip for investors. I mean, I think it was you, Terry, that said, I mean, the ESG and carbon credits, it can be a bit of a Wild West thing, right?

55:52 Where because of the lack of regulation that we've discussed, it can be very much, you know, winner takes all, losers lose their shirt. But I mean, how do you, so maybe, yeah, so tips for investors from this perspective, how, you know, maybe the question I have and feel free to take it in a different direction if you have something else you wanna talk about, but how do you separate buzzwords from sincerity? How do you separate talk from action, you know, and How do you separate that desire for genuine change from those accusations of greenwashing? You know, if you're speaking to investors here. Yeah, I would say generally speaking as an investor, I wouldn't be making any investment decision on a mining company, you know, on an ESG point solely. I don't think it's there yet. I don't think, I mean, there may be some sectors where you're talking about, hey, I've got a hot mine in California. You think yourself, well, maybe not, maybe that's never gonna get produced. So there might be, I mean, you know, common sense situations where you say, well, ESG is definitely a big problem here. Or there's, you know, these areas where we know we're never going to be able to build a mine close to, you know, Sacramento.

57:00 That's just not going to happen. So, but I think that the, yeah, I would just say for most investors, stick to the fundamentals, you know, look at, you know, the resource, you know, and the catalyst And, you know, because the only way if the stock is where it is today, how does it get north? Because you want to invest in something that's going north, right? You want to make money. You're not doing this to not make money. You're doing this to make a lot of money. And I'm telling you right now, junior mining represents enormous investment opportunity at this moment in time, because stocks are trading for pennies that will trade for dollars and maybe tens of dollars. And the evidence is there for us. So look at the resource, look at the catalyst and do this. Does the company have the money to get the catalyst done? Because it's a very tough market out there to raise capital. So if the company's got a good resource, got some catalysts that you believe they can execute on and has the money to execute on them, then those are the companies you want to be investing in.

58:03 Yeah, I think ESG analysis for pre-production companies is very difficult. So it's just really looking at the management of board, what experience they have, are they forward thinking, are they starting to plan and consider these things and talk about them as Terry's done his company with an ESG report and have engaged the right people to advance that. I think pre-production companies, there's not too much more you can do until production and certainly going into production, I look at it as a risk measure. If they aren't considering these things, you know, going into production, then there's a problem. You know, other than that, again, as Serge was saying, that's very jurisdiction-specific. So, you know, a degree location is an important factor to consider.

58:50 If we're looking at just sort of the carbon piece, are they operating in countries that have very difficult what's called NDCs, National Determined Contributions, where they're committed to being extremely proactive because they have to curtail a fossil liability or something, is that going to make it more difficult to operate? And I think looking at that a little bit forward is useful, because Those will be the jurisdictions that will have to be more difficult. So for example, if they are implementing a carbon tax, it's going to be higher in those places, not having those jurisdictions, those countries that have a bigger liability. So that's just some analysis to look at. But as I say, for the pre-production, it's really just about management, governance, and are they preparing for that time when they are producing that they're being proactive?

59:47 Nope, thank you both. So on that note, I think we're at about the 1 hour mark, which is usually when the hook comes out to grab me here. So I appreciate both, I guess, last words, Sasha, any last words for you guys, leave it to you 2. Yeah, Thank you so much for hosting this. It was a great topic. You know, it's been something I've been involved with for most of my career. I'm excited to be leading a company that has a great advantage in this area. And I look forward to answering any questions that we weren't able to get to offline. Yeah, again, thanks for having us. And if you have any questions that we didn't get a chance to address online, terry at powernickel.com, happy to engage over time and answer the stuff.

1:00:35 And yeah, we'll look forward to talking to you again next time, Matt. Awesome. Thank you, Terry. Thank you, Sasha. Again, Matt McLebrough here from Junior Resource Investing. And thank you to 6 for organizing this. Thank you gentlemen, have a good day.