Terreno Secures Bolivian Tantalum Exploration Licence

0:03 Good morning, good afternoon, or good evening, depending on where in the world you're signing in from today. I've got with me today Rick Williams, CEO of Terrano Resources. Rick, how are you? I'm well, thanks. How are you? Good, good. Thank you. Now we're chatting off the back of some recent news of yours. I'm really excited to talk about it. I just want to bore everybody with a bit of housekeeping first. So please bear with me just for a couple seconds. Here's how today's going to work. We do have some slides up. They're mostly in service to some questions that I've got for Rick about recent news,

0:31 really talking about the stock and what's coming up next for the company. But that being said, today is an interactive event, so there's that chat button at the bottom right of your screen. Please do feel free to ask questions at any point during today's event. We'll make sure that I get to as many as we can today, presumably all of them, but just in case I don't get to your question, either it's wildly off topic or out of the scope of today's event or we ran out of time, I'll make sure that Rick gets that question afterwards in the transcript and he'll be able to get back to you as soon as possible. Only other piece of housekeeping before we get into the good stuff. This is being recorded, will be available for replay probably mid afternoon Eastern time, think

1:06 about 04:00, it'll come right into your inbox, but it'll also be on Six's YouTube page so you can access it there, or this exact same link that you're on now. So please feel free to share it along once it comes through. But enough out of me, that's the boring stuff. Rick, I'm gonna go to you. First, I'll say congratulations, obviously on securing the exploration license in Bolivia. I'd love if you could just walk us through, the folks in the room, what this milestone means for the company and why you think the timing is significant right now. All right, well, thank you. Securing the expiration license is just part of it. We also got confirmation of title,

1:41 which that represents a major milestone for us. These developments fundamentally shift the project from concept to actionable activities. With the license in hand, we're now able to outline our planned work, estimate the project timelines and forecast costs. So the timing of this achievement is especially favorable due to the recent geopolitical actions that are taking place, the shifts that are taking place. And in addition, there's obviously

2:12 increased awareness of critical metals and surging demand for tantalum. Sure. And I know you mentioned here and in the press release, timing couldn't be better. If I could add, I know there's U.S. 2.8 billion in recent Critical Minerals Fund announcements, And obviously there's been a shift towards supply chain diversification

2:35 just generally, so that they're not all coming from the same sources. How do you see Terreno positioned within this sort of broader industry transformation? Well, In the last month, there's been 2 new funds created, 1 for $1 billion and 1 for $1.8 billion in the critical mineral field. In addition to that, you've had the US government say that they would like to procure $100 million of tantalum, which is about 20% of the annual production. And then in addition to

3:12 the market demand, there's also AI, which accounts for about an added 10% to the demand side. And while the demand keeps increasing, on the other side, you have issues in the Congo and in Rwanda taking place. And they present a large percentage. And I'll get into that a little bit further. So you've got supply decreases, material decreases in supply and at the same time

3:44 very significant increases in demand. So that's been a big catalyst for us. And in addition to that, we've had some very positive developments in Bolivia itself. And I guess there's a question coming up on that. So I'll defer on that point. But all of that, when you compound it with the awareness that China has been the dominant player and the West would like to move away from that and have some more comfort in the level of supplies, and given that this metal is critical in various industries, the timing seems to be ideal. We're very fortunate here. I think that's interesting. I do want to zoom in on the actual ground itself. So she secured, as I understand it, 138 claims, cover 3,450 hectares in that part of northeastern Bolivia.

4:38 So a couple of questions what makes this particular region perspective for tantalum and Kind of most importantly what are the immediate next steps for your exploration program over this, we'll call it five-year permit period? Well, this is a highly prospective

4:52 area for tantalum. It's on a Precambrian shield bordering the Brazilian, broidering Brazil, rather. And

5:03 there are a number of pegmatite fields that stretch over 120 kilometers, and there are a number of little operations at the village level. So there are artisanal operations where people are washing the the gravels and recovering the tantalum. And there's an opportunity to become a major player, a consolidator on the belt. And that, as I mentioned before, Bolivia's gone through a major transformation here in the last month,

5:36 so the timing is again ideal. So not only is there tantalum, but these pegmatites are host to niobium, And I think those might be in economic quantities. That's something we're going to have to evaluate as we go forward. But there's also platinum group metals and rare rare earth elements. So there's a suite of metals that has to be investigated. We're still at an early stage and our focus has been primarily,

6:04 excuse me, on the tantalum front. Okay. I know you already referenced U.S. Spending, but I know the Department of War, formerly Department of Defense, recently committed $100 million to tantalum purchases, which is I think 20% of annual global production. What is this kind of government commitment change the equation for junior like Toronto? And are we way too early? Are you already in conversations with potential offtake partners?

6:33 As I was preparing for this podcast, I was trying to get a comparison. And in my mind, what came to mind was the 1967 film called The Graduate, starring Dustin Hoffman. And in there, he's pulled aside by a Mr. McGuire, and it's a famous line, he said, Ben, one word, are you listening? The word was plastics.

6:58 There's a great future in plastics, enough said. So today I would suggest you can replace plastics with tantalum. It's become a very significant metal in 3 major areas. 1, and the main one, is in capacitors. And this is used in every cell phone, computer, electronics in cars, boats, planes, rocket ships. It's a mini battery that allows the electricity to go through the system and keeps all these pieces working. So as I mentioned earlier, you've got a 10% increase in demand simply from the AI components, which haven't been built yet, but the demand is going to be increasing exponentially

7:51 in that area. Then you have the medical side, and tantalum is one of the few metals that isn't rejected by the human body. So when you have a hip replacement or a tooth implant, the titanium base is coated with a tantalum powder to make it,

8:13 accepted by the human body. And it's got all sorts of other medical applications because of its properties. Last time I was on a podcast, I mentioned that tantalum can be as hard as diamonds, and A friend of ours called me up after. She's an engineer and does a lot of work in... She's

8:42 a metallurgist and does a lot of work in critical metals. She indicated that on a hardness scale of Mohs, tantalum is 6.5 whereas diamonds are 10. So I then had a phone call with

8:59 our consultant in South Africa, Dr. Peter Cox, who was the one who indicated the hardness of equal to comparable to diamonds. And he explained to me that what you have to use is you blend it with carbonate. And so you have a tantalum carbonate that gets up to 9.5 or 10. So the statement is still there. So on the defense side, its application is on the nose of rocket ships and on the nose of missiles and any projectile to make it harder. It's coated on propellers on submarines and other boats and also on propellers on helicopters and airplanes.

9:46 So it's one of those metals I believe that if there was more, they would use more. And from what I'm reading, and I'm getting an education on this, it's really quite fascinating. But it's about 20%

10:01 20 times as rare as gold on the surface. So it's a sought after metal. And it's really quite fascinating to me. Oh, great. And I want to actually ties into a question that's in the chat. And that's, I know the traditional tantalum supply from the DRC in Rwanda faces ongoing

10:24 disruptions, we'll call them. I'd love if you can help the audience and me understand the supply demand picture right now. Where is tantalum coming from and where do you see prices heading as these dynamics continue to play out? Well The genocide in Rwanda happened in 1994 and since then it's been an ongoing off-and-on flame The President Trump recently claimed to have solved that war, but it's not my understanding that it's ongoing.

10:57 The West is reluctant to buy metal from the DRC. It's regarded as conflict metal and some of the metal is going to China but at the moment in 2024 they supplied about 42% of the world's tantalum. So that's a big piece of the pie that's out of bounds. So places like Bolivia, which are changing over from a leftist government to a right-centered government and opening up to foreign investment.

11:34 It's a great opportunity. Our timing seems to be very fortuitous. All right. That's always good when that can happen. And as you mentioned, Tansil has a really interesting applications. It's all stuff I wouldn't think of combining, like smartphone capacitors, hip replacements, jet engines, etc. Which end-use markets, though, are driving the most growth and how does that influence your strategies to develop this project? Well, as I mentioned, AI has probably increased the demand for tantalum by 10%, and that's before it's really gotten into its mainstay, if you will. And that's again for computing, driving, is being driven by tantalum capacitors.

12:22 And the price increase, gold, silver, and copper are doing extremely well. Tantalum, from what I understand, is exceeding that, and it's being sold on a spot basis. So it's hard to monitor that. But the increase is definitely there. We're hearing about it from our in-country manager who is buying and selling Tantalum. But the applications are so widespread from smartphones, computers, cars, implants,

12:55 submarines, rockets, nuclear. Because its melting point is about 3000 degrees, it's being used to coat the walls and just provides safety elements around nuclear plants. So it's just, it's what again, as I said, if there were more of it, it would be used more. And it's so interesting that we're definitely looking at developing a laboratory once we get a little further along to see what other components we can make and get more involved in the upstream market, if you will. Sure.

13:44 Now I'm zooming out a bit, just to talk about the politics for a second. I know Bolivia hasn't always been known or thought of as the most mining friendly jurisdiction. There's a comment in the chat that I think alludes to that as well. But I know you highlighted in the PR President Rodrigo Paz's inauguration and seeming renewed commitment to both capitalism and foreign investment. What kind of just talking personally, what gave you the confidence to pursue this opportunity? And what do you hear on the ground about the future of mining in Bolivia? One of the key elements when we were doing our due diligence was how this property was secured. And our in-country representative is Winston Dominguez and he worked for Alex Stewart International, a major laboratory company for 15 years and was their manager there. So he got to see samples from all over the country.

14:37 So he's the one who selected the property. And since his retirement from the laboratory, he's been buying and selling tantalum along this belt. So he has relationships with both the village and the indigenous people there. That's probably one of our major assets. That was a big factor in our decision to invest in Bolivia. The other factor was I have a childhood friend who has a another listed company in Bolivia. Their focus is on silver and tin, which is the main product being mined in, main metals being mined in Bolivia. And they've invested about 100 million dollars.

15:23 He's established a very good relationships has an extremely strong board with all sorts of high profile Bolivian people on staff, including some geologists who have their qualified person designation for Canadian purposes, and I can then piggyback a little bit on his experience. So that also gave me a lot of comfort before we went there. But I've worked in Mexico, I've lived in Panama, I've lived in Costa Rica. I'm comfortable in that part of the country, in that part. So it made sense with this opportunity came along to pursue it. I appreciate that.

16:09 Now, a simple but complicated question. How's Treasury looking right now for Teredo? How are you contemplating a financing? What does it look like in the bank? Yeah, our treasury is essentially depleted. We're currently operating on the generosity and goodwill of some of our key shareholders who are advancing some funds to us by way of loans. Now that we've secured title and the expiration permits, we can clearly outline a purpose of proceeds and that should facilitate a financing. Discussions are being initiated. I've had a couple of calls from overseas that are very interested in providing funding for us. It's something that we're going to be pursuing over the next weeks. But we will need to do a financing.

16:56 We'll be doing that in the not too distant future. Sure. I appreciate that. And beyond that, looking ahead, what does success look like for you at Terreno over the next, call it 12, 24 months? What milestones should the investors in the room be watching for as you're kind of going from exploration towards potential development here? Well, when we took on the project, the game plan was to get to cash flow and production as soon as possible. And that's still the mandate. Now that we have the expiration permit, we can go into small scale production. We've also started the application to go into exploitation. And the advantage that we have there is not only do we have Winston who's on the ground with relationships, we're being offered properties. We've had meetings with the indigenous chiefs who control 2.8 million hectares, and they've brought in a number of samples from other properties that they would like us to explore. We're happy to do that once we achieve cash flow and production.

18:01 Again, one of the attractive points of this project was the fact that equipment is already near the site. It's in storage, ready to be installed. When it was brought to us, that the request was that we provide the funding to assemble the equipment, and that could be done in about 45 days. But before we do so, we'd like to complete some systematic exploration to meet the regulatory requirements so that we can not only talk about production, but also talk about having a mine and talk about having ore. Those are things that are defined and need the sign-off of a qualified person.

18:46 That's what we're going to do. In addition to that, as I mentioned earlier, there's some opportunities to get into higher end products. And for example, tantalum pentoxide commands about a 70% premium. And we could develop a lab and process something that gives us a better return. And we're working with our South African associates, our colleagues over there, they control a smelter and they've got some new technology that they would like us to try that enhances the recoveries. So with these enhanced production recoveries and processing recoveries, we're getting a lot of interest from the local small scale artisanal operations that would like us to process their material where we'd get a better recovery rate and therefore more money for the same amount of work.

19:46 Awesome. So exciting things ahead. I appreciate that always. A couple of questions in the chat, a lot of which I think we've already covered in content. I'm going to throw them back to you anyway, just so we can reiterate some of the points there. So Barry asked, is there any chance of them in the United States? I think what it goes down to say is that Trump could direct on-shoring to, or is it just diversification that the US government is currently looking for, not necessarily on-shoring? To the best of my knowledge, and I've done some research on it, there's no tantalum production in the US. There, there is past production in Canada. And that's quite interesting. That was my first introduction to tantalum going back I worked, one of my mentors is Peter Howe, who was the president of ACA Howe International.

20:34 And he's credited with the discovery of the Burnick Lake deposit in Manitoba, which then became Tanko. And Tanko is currently owned by a Chinese company and they're processing some of the other related metals. They're doing some lithium and some cesium, I believe, but there is no tantalum production being put through at this time. There's nothing in North America. There are a few things in the works, but no, we're not a producer in North America. Okay, thanks. And Wesley asked from the chat really about what the permitting scene is like in Bolivia. He actually asked, Is Bolivian permitting sane? So if you could speak to the process in Bolivia, I'd appreciate it. Well, when we started the process, Winston, who said he's got contacts in the government and good relationships, expressed the process would take 4 months.

21:33 When I talked to our colleague who has the larger mine down there, he's got some exploration properties. And he said, look at the more likely scenario is 8 to 10 months. And he's got some properties that are, have been applied for and are now about a year and a half in the process. All of that is, I don't know the details, but all of that is supposed to change. 30% of Bolivian GDP comes from mining. And most of that, as I mentioned earlier, is from silver and tin. So mining is a big component over there. And they've got some of the world's best Lithium deposits in the brines, the salt lakes that they have.

22:24 And that's going to go out for auction now that they've changed their focus politically. I understand there's a contingent of about 40 US companies going down there to look at investment opportunities. So streamlining the mining processes is definitely going to be on the agenda. Great. I appreciate that very much. So I know there are a bunch of you in the room. Thanks so much for joining us today. If you have any additional questions, you think of the perfect question to ask right after the event, as I sometimes do. Please do reach out directly. Make sure you get in touch with Rick. Rick, thanks for running through your news and letting me grill you a little bit. I appreciate it. Appreciate it. Thank you, Mel Romey.