Securing the Future of Steel Alloys: Our High-Grade Molybdenum Project

0:08 Hello everyone and welcome to Moon River Capital's live inaugural event hosted by 6. I'm pleased to introduce the speaker for today, Chairman Ian MacDonald. Ian will go through their corporate presentation and afterwards we'll be answering questions. So you can submit your questions at any point during the conversation in the bottom right corner there in the chat box and we will address them at the end. As always this summit is being recorded and will be available on six.com to watch afterwards. So without further ado, I hand things over to Ian to kick things off.

0:40 Thanks very much, Kyle, and good day to everyone who's tuning in. It's my pleasure. To give you an introduction into Moon River Capital and its Davidson project. We are a new company. I'm not going to spend any time on the disclaimer, but here's the first slide. And what that does, it shows where some of the molybdenum deposits and by-product mines that produce molybdenum are in North America. That is not an exhaustive list. There are actually more than 60 drilled-off showings of molybdenum in British Columbia, for example. And I'll just touch on a couple of those sites, because the Davidson deposit, which is just outside of Smithers, D.C., it is a very large, high-grade, in fact, it's the largest molybdenum deposit in Canada. It's the highest-grade deposit anywhere, even though we're only allowed to say the highest grade outside of China.

1:46 But while I'm on that slide, I want you to look down and see the Climax Mine. That's owned by Freeport MacMoran, and not on this map is also the Henderson Deposit. Both of those are in production. They are the only 2 primary molybdenum producers outside of China. The Indako mine, which is at the top of the screen, is about 200 kilometers from the Davison project. And it has been idle. It's on care and maintenance since 2015, although it's a brand new mill and it's a big deposit. A couple of other points, the Climax Mine went into production in 1917 and for 50 years it supplied 75% of the world's molybdenum demand. And just as an aside, molybdenum is a fairly

2:46 recent discovery really on the periodic table. They was around 1790 it was isolated and given the, it's number 42 on the periodic table and then around 1890 they figured out that it was made a good additive for steel. During World War I, the Allies realized that the Germans had a gun called Big Bertha, and it could shoot an artillery shell 20 miles. We didn't have one of those, So they figured out that they needed molybdenum in their steel for military uses. And when the Climax mine went into production in 1917, it was designated by the U.S. Government as the most important mine in America.

3:32 And incidentally, during the 1930s, the Climax Mining Company was the top performing stock in all of North America, maybe the world, I'm not sure, during the whole depression. Okay, next. We have a, we're not the youngest board or management team out there, that's for sure. But we are experienced. And we know what a mind looks like. I think The Paul Perisotto and I have known each other for 40 years. He's been CEO of 5 companies that have been bought by somebody else the last 5 years. Lorna and I have worked together for 3 companies, Glencare, Blue Pearl, and now Moon River.

4:19 Tom and Jamie are both excellent additions to management. There's only 2 that are under 50. And Gordon Reed is on our board. He was the chief operating officer

4:32 for 11 years at Sinterra Gold, who purchased Blue Pearl. And he was the head of their, he ran the gold mine, gold copper mines, but he also was in charge of the molybdenum division. Mark Wilson was there at the time. He was the number 2 man at our company, Blue Pearl and later Thompson Creek, when we operated the third and fifth largest molybdenum mines in the world. I'll get back to those guys. Next. This chart's very important because it shows the historical demand for molybdenum, see, and we have the chart only from 1950, But like I said, the climax mine produced 75% of the world's needed molybdenum for almost 50 years.

5:24 The growth rate for molybdenum, since 29 million pounds worldwide in 1950, in 2022 it was 630 million pounds. And that just shows the power of compounding because if we look at the 2 and a half percent growth, which is what the World Bank, they're forecasting, because that's what they always forecast. We're still gonna need about 1.3 million pounds by 2050. And if we have the 4.4% growth, we're gonna need over 2 million pounds a year. Our question is, where's it gonna come from? Where is that gonna come from? A mine the size of the Davidson, which will be somewhere between 10-15 million pounds, probably average about 12 million pounds a year.

6:16 Under the optimistic scenario, if everything else remained the same, in other words, the existing mines just continue to produce at their level and no new mines were introduced, we would need about 130 new Davidson mines to be built by 2050. Under the less optimistic scenario, we'd still need 58. So the question is, where's it going to come from? We just think that's going to be a big problem for the world. Next. Now, molybdenum, like I said, was only really 100 years ago that it became a necessary component. And you can't build a ship or a bridge or an oil pipeline or a car, tank, or a diesel plant. You can't build any of these steel infrastructures without molybdenum, but they don't use very much of it. Like a pipeline is between 0.3 and 0.5%.

7:15 A tank is between 0.5 and 0.7%. So it's pretty inelastic, the demand in terms of pricing, but also the people that produce molybdenum, which 75% comes from byproduct, copper mines mainly, they're gonna produce it no matter what the price is either. So you do have an inelastic supply and demand, but you also have a situation where it can't be replaced because molybdenum has certain characteristics, like its malleability, like it's a great alloy, and it's the fourth highest melting temperature in nature. Anyway, next.

7:55 Now the car industry uses about 8% of the world's demand for molybdenum. If they switch over to electric cars over the next few decades, it won't really change the dynamics. There will still be growth in the molybdenum industry, albeit at a slightly reduced rate compared to the internal combustion engine. One of the reasons that

8:18 is the case is because those cars are heavier and may require more molybdenum in the frame. The average car has about a pound of molybdenum in it. But the other applications, such as geothermal, wind turbines, and nuclear, They require a lot of molybdenum.

8:37 The Bruce Power Plant's gonna require, if they build that new 1, 25 million pounds. And as an example, Yucca Mountain, which is a proposed site for nuclear waste in the US. It's been put on hold, but

8:53 it's in Nevada, and it's gonna require 35 million pounds that it ever gets built. So there is gonna be a healthy demand going forward for molybdenum. Next. Now, the production of molybdenum has changed over the last few years. The greatest demand is in China. They require about 240 million pounds, And they produce about that much too. So they're about even. So even though their mines have ramped up, 4 of the 7 world's primary mines are located in China, and the price hasn't gone down because they're now consuming it, either in their own steels for their own infrastructure or in steel that they make for exports, such as ships and engineered steel.

9:45 The one country that has no molybdenum is India. And even though Europe uses about 60 million pounds, the US about 60, India's about the same, and Japan's about the same, they will have to import molybdenum. They don't have any. Next.

10:05 This is an interesting slide because it shows the by-product copper mines that are on the drawing board. There are a lot of these are coming on stream. Some of them are getting built right now, but say over the next 10 years. But even if all of them come on in the next 10 years, that's only about 160 million pounds a year. So that's not gonna be enough to supply just the regular growth that's predicted by the United Nations. And interestingly enough, Pebble's on there, and that was gonna be the biggest mine in North America, and that got canceled last year. I don't know if it'll be canceled forever, but the First Dynasty, the company that owns it, still has a $200 million market cap because they're gonna institute a lawsuit against the EPA.

10:56 So we'll see how successful that is. The other thing I wanna bring up is the Oyutogul, the magnificent copper mine in

11:06 Mongolia, that they finished the open pit. There are 2 very large underground copper deposits, each one good for about 50 years of production. So there's another century of production there. One of them has molybdenum, one of them doesn't. Reading

11:23 their annual report last year, they've decided to start with the copper deposit that has no molybdenum in it. So I don't know the reason for that, but my guess is they think molybdenum will be a higher price in 50 years. I don't know if I'm right. Next.

11:44 Now, As I said, we are the highest grade molybdenum deposit. Depending on where the cutoff is, we have a very large deposit as well. But we're almost an anomaly because we're so much higher grade than everybody else. If you look at Climax and Henderson,

12:04 their grade is, you know, Climax has been in production 100 years, so they've taken out the highest grade part, the tender line, if you like. As a matter of fact, it started as the largest underground mine in the world. In 1927, they invented block caving, and it was the largest mine, 50,000 tons a day. It was the largest mine for about 40 years.

12:27 Incidentally, the Endaco mine, When it was built in 1965, it was the second largest mine. So that means the 2 largest metal mines in the world were both Malevdo in the 1960s. Henderson's been in production 60 years. It's got a couple more decades left. The Climax Mines, caught them on its last legs because it was an underground mine and a few years ago they've gone to surface. It's now an open pit mine. But these are the mines in the grade that's being mined around the world. And that is the Chinese mine, Shapingu. It is a deposit, very similar. It will be the biggest molybdenum mine in the world. It'll be a finished construction around 2027, 2028.

13:14 But It's a deposit that's very similar to ours. They're just gonna mine at a higher throughput and therefore gonna mine a lower grade. Okay, next.

13:28 Yeah, the Davidson Project has a very interesting history. It was drilled, started to be drilled off in 1957. They went underground and drilled a couple of miles of underground workings. And that was in 1966. They made a production decision around 1970 and it was ready for production and then they stopped and they built Kitsil, which is the mine, that was a project

13:56 on the earlier slide. That didn't work out too well. It only produced about 30 million pounds between the early 70s and the early 80s. However, it's still there. And at some time in the future, I expect it probably will be built. But the Davidson is the, I'd say It's the premier best in class deposit that's not built right now. Next.

14:22 This is just a snapshot of the feasibility done in 2008. We did that Blue Pearl when I was the chairman of Blue Pearl And we did that based on a small mine, 2000 tons a day, and we were going to ship

14:39 or by truck, we're gonna truck 2000 tons a day down to the Indaco mine, which we were negotiating, which we did own. We negotiated to buy it in 06. And then the owner of Thompson Creek said, oh, if you wanna buy Endaca, why don't you buy the whole company? And that's what we did with Blue Pearl. But it shows you how large this deposit is. It's about, the deposit's about 2 1 1 1 kilometers wide and about 2 1 1 1, about 2 kilometers high. That's big. If you come from Toronto, That would be from say Jarvis over to Bathurst and Dundas up the Bloor and we're gonna mine, we're probably gonna mine about 7,000 tons a day.

15:29 That means we would take out a piece of rock the size of first Canadian place every 5 months.

15:38 More on the mine, we will be announcing the results of that engineering study in the next week or 2. It will not include any of the rare earths, tungsten, gallium, or copper that we have recently announced.

15:55 And the rare earths were a surprise, but we always knew tungsten was there. So what we will be doing is a refresh on the study we're gonna announce in a week or 2. By the end of the summer, we will have a refresh on that to include these new materials. Next. Yeah, so you can see the size of the deposit. What we're gonna do is of that 394 million ton envelope of ore, and by the way, it keeps going, 3 kilometres from the deposit, it still grades 0.001% molybdenum. So it really is a mineralised mountain. In fact, at the same elevation where we are, which is about 3,500 feet above sea level, and the mountain is about 12 kilometers wide at that point, At the very eastern end of the mountain, there was a lead zinc silver mine and it operated on and off for 50 years.

16:55 It was owned by a silver spanner. So it's very well mineralized. What we're gonna do is we're gonna take out about 1 sixth, so about 50 million tons of the high grade ore. And we'll have that out in the next week or 2. Okay, next. This is our corporate structure. All the insiders are shareholders and everybody put money up, no 1 got free stock. And they all own between 1% and 9%. So Generation owns about 27% of the company, insiders are on about 25%. So we really, we're engaged and we're excited about where it's gonna go. So the next, this year what we have coming up is we need to take another sample of ore because even though we have 71 kilometers of drill core, we need fresh ore for metallurgical testing. So we're going to drill 4 or 5 holes. We need a ton of ore to get the edge scale testing on what recoveries we can get from the rare earths, the tungsten, and the copper and the gallium. And we're gonna do that here this summer. We should have the results out end of summer. And then we'll have a refresh on the economic, the preliminary economic analysis, say third quarter.

18:25 But we will be starting, assuming the PDA is positive, and it is, we'll be starting a bankable feasibility study this summer, and that'll take about a year, but that'll be the last engineering we do because we'll start permitting at the same time.

18:43 So those are the 3 things that are going to happen for sure the next year. Well, I'll stop there. And I will say this just before I stop.

18:55 The ore is gonna be worth just the molybdenum about $100 a ton, say US. The other minerals, the elements that we announced on 2 weeks ago today, that is just under $50. So we don't know what recovery we're gonna get. Somewhere between 0 and 100%. But we're gonna get something, but let's say we get 40%. That would still be an extra $20 US a ton. So it's gonna be very meaningful. And what that means is we're gonna have what every primary molybdenum mine wishes they had, and that is a cold product that is unrelated to the price of molybdenum, but its income in addition to the price of molybdenum to withstand the cycles, which I think the cycles are gonna become less because what was a 100,200 million pound a year market 50 years ago is now gonna be a billion ton market here in the next 20 years. So it won't get overwhelmed by 1 or 2 new copper mines coming on stream.

20:04 Anyway that's our story and I'll leave it there and I'll open it up to questions. Thanks very much. Great, thank you so much Ian. Excellent presentation. For any individuals that came in late, just a reminder that we are answering questions so please feel free to submit them in the chat here.

20:24 We have one from Richard here, any plans for a US stock exchange listing?

20:31 We did file about 4 weeks ago the paperwork, so it was not much cost, about $50,000, so we can trade in the U.S. On the pink sheets. But we, at this time, we want to entertain a listing on a major exchange. Thank you. And while we wait for questions to trickle in, I did write some down some points. So you mentioned China has the largest producer of molybdenum. Could you educate us a little further on that? How much mine life is a 1 mine? What are we looking at for molybdenum production in China?

21:17 They have 4 primary mines and several co-product mines, mainly copper. China Mali has one of the 4 and it also produces tungsten. It's actually the largest producer of tungsten because China, they influence a lot of metal prices, but they control a couple. They influence molybdenum, they don't control it, but they do control tungsten, and they do control the rare earths, even though they only produce a little over half, they control how it gets processed and that's an important factor. But they had a lot of small mines and they shut a lot of those down in the 2000s.

22:06 That was one of the reasons the price of molybdenum had an elevated price from, let's say, 2004 to 2010. But they have the 4 primary mines, a couple on their last legs, but they're still going. And then they will have the big mine, Shapingu, which is, like I say, a mine very similar, if you go on their website. It looks just like the Davidson Deposit. It's inside a mountain, and it's a primary molybdenum mine. But China, they are the biggest producer and the biggest consumer of molybdenum. And then in South America, I saw on that one chart as well. Is it Peru, Chile? Is it a malignant primary mine or is it more of a by-product in South America?

22:58 Yeah, the only 2 primary mines in operation are the Henderson and Climax. All the mines in South America and even the big copper mines in the US, like Serrita, Marensi, These are copper mines that produce copper as a byproduct. And in Peru and Chile, they are byproduct mines, but they have some pretty big ones. Chupancavada, which was a big producer, They've mined out the high grade molybdenum. It still produces a modest amount, but it's a copper mine. And Escondida, which is, I believe, the biggest mine anywhere, they produce molybdenum as a by-product, and quite a bit, like, I think it's about 20, 22 million pounds as a by-product.

23:55 But they move a lot of ore. Between the 2 2 pits with ore waste, I think they move 1.3 million tons a day. But they are, when the prices were elevated, as I say, from 2004 to 2010, they went huckle-de-buck to mine the parts of the pit that had the high molybdenum. They already did that. They're on the decline in terms of molybdenum production, although they're still going to be there. Thank you for that. H. Watson in the chat here says, Mollie is on Canada's critical minerals list and now with having rare earth metals, what does this mean for the permitting process?

24:46 Well, I think we're in a good location in B.C. I mean, you've looked at or seen some other mines, you can get expropriated. Like the Cobra mine in Panama, that was a beloved coal product producer. Now it's been shut down. So I'm happy we're in Canada. I'm also happy that it's gonna be an underground mine. We are gonna be a mine for the 21st century. It's gonna be a, There'll be no buildings outside. There'll be no tailings dam outside the mountain. It's gonna be an electric, all electric mountain. Hydropower will go right up to the portal going in, and we'll have a cement plant, and we will take all 90% plus of the tailings, mix it with cement, and paste backfill the cavity, which we've just excavated.

25:38 So it really is gonna be a 21st century mine. Now, with the advent of the rare earths, and once we determine how much we can recover, I think we will qualify for some incentives. It's a little too early to say at this point what we can get, but I'm quite sure we're going to get something. And I hope we get the support of the town and the First Nations, because this really is a legacy for the community. And they have carriage of it with us. And it's a fantastic endowment for the for the for Canada and for the local community. That's not to say that it's not going to take a few years. It's going to take a few years because we have to finalize the engineering studies.

26:31 We have to consult with the community and First Nations on, you know, there's still a remote possibility that we could send by train. There's a railway that's only 6 kilometers from the deposit and it goes right to the Adaco mine, which is already built. Conceivably, you could rail 8 or 10,000 tons a day down there. Anyway, we're going to do a final study to determine what the best way is and do that in consultation with all these stakeholders. Thank you for that Ian. We'll wait for a few more questions if we have any. 1 I did write down for Sentara Gold, I noticed their COO at the time, Gordon is now a director for your company, right? Could you educate us on why it went idle in 2015, this mine, and why Gordon wanted to get involved with Moon River?

27:29 Yeah, well, Gordon, I met him in, I guess, 2018 and 19, because when he was at Sentara, I actually got asked to come in and see if a group would be interested in purchasing one of their projects. But Gord has always liked the Davidson deposit and he likes the, well he likes the Indaco situation which we may be able to ship some more to. But he's very familiar with both assets. And he retired in 2019. And we need to enhance our operational experience. Gordon's a board member. He's the same age as me, basically. He's not going to become the chief operating officer.

28:20 He may help us find the chief operating officer for Moon River, but we will need to bulk up that operational experience, like I said, later this year. But he likes the asset. He's, well, what's not to like? It's the highest grade deposit. I just may have already mentioned, but most mining companies, successful great mining companies, they're that way because they had a great ore body. That's all they share. We've got the great ore body. Excellent. Well, I don't see any more questions in the chat here, Ian. A little bit of a shy audience today, But I guess I'll have one more question. Why did you decide to join as chairman and director of Moon River Capital?

29:07 And then we can close it off with any closing remarks. So I would just before you answer that question, just remind the audience, if you came in late, this is being recorded, so it will be available on YouTube afterwards if you did come in late. Feel free to reach out to the team if you have any questions, they'd be more than happy to answer if you came up with some after the event. But yeah, just again, the question, Why did you decide to take part in Moon River as chairman and director, Ian? And what are you most excited for for 2024? Well, I had been inactive. I was a couple of board seats, but I was not on an operational or a get to rule. But when I realized that the Davidson deposit, which was owned by Generation Mining, and they are our largest shareholder, that they weren't gonna be able to focus on it, I just think it's such a great deposit.

30:00 And Like I just said a minute ago, mining companies, great ones, they have a super old body to start with. Well, you don't get one of those very often because if you're a junior company and you find one, either you build a mine, or you get taken up by a big company that wants it. So big companies, they're not gonna give up a deposit like this. But here's a chance to have a best in class deposit. And I'm very familiar with it. I really like it. I like the molybdenum space. And we've just had 15 years of horrible markets. And in the meantime, we've had the power of compounding and the price of molybdenum, just, it varies, the price. But the demand just inexorably goes up 4 percent every year and the that's the way it's going to be so I think it's time for this deposit to get built built and I think it's time, you know, both the molybdenum big mines, the Gibraltar and Highland Valley, which produce copper and a byproduct of molybdenum in DC, they're going to shut down in 1 2040 and 1 2043.

31:19 So we're going to need more molybdenum production because the Canada is very small otherwise. One of the Hemlo lines produces a little bit as a by-product and Pud Bay produces, I think about 1 and a half, 2 million pounds out of Manitoba. But I think that timing is just right. And, you know, in life, timing is everything. Ian, thank you so much for your time. Appreciate the presentation here. Where is the best place people can reach out to the team if they wanted to learn more about the story? I think they can. Look, we're a very new company. I don't even have business cards yet.

31:55 We're just getting going. The story's just starting, but they, I think just go to our website and they can send a question in or they can send it directly to Paul or myself. Excellent. And I did put the website in the chat for individuals looking. Thank you so much for your time, Ian. And thank you