A Q&A with Power Metal Resources
“…Over the past few years Power’s portfolio of projects has increased steadily to the point where we are currently progressing 14 projects, in 7 countries on 3 continents. We are a truly global business offering a unique, diverse, and exciting portfolio of projects targeting a suite of commodities in demand globally…”
TMS welcomes back guest blogger and financial commentator Elias Jones to the platform where he shares great insight from his latest interview with Paul Johnson, Chief Executive Officer of Power Metal Resources.
#POW is an AIM listed metals exploration and development company seeking a large-scale metal discovery across its global project portfolio. Power Metal’s project interests range from early stage greenfield exploration to prospects currently under active exploration activity with the drill bit and has a portfolio of project interests including precious and base metal exploration in North America, Africa and Australia.
Power Metal Resources has built quite an intriguing portfolio of interest from Uranium to Gold and a wrath of other base metal prospects in-between. The company is led by the enthusiastic and energetic Paul Johnson, who has been a keen investor himself over the years in the junior mining space. When you look at the RNS feed for Power Metal Resources you realise the number of active projects and development that is actually underway and also the corporate work in the background, with the recent announcement to acquire 100% ownership of First Development Resources and its transaction with First Class Metals Limited recent examples.
With so much clearly going on with the company, including this weeks news announcing an update from their joint venture subsidiary, New Ballarat Gold Corporation PLC, which is undertaking gold exploration at its granted exploration licences in the Victoria Goldfields in Australia, Elias was pleased to get the opportunity to put the following questions to the Power Metal Resources Chief Executive Officer Mr Paul Johnson:
Q1. In the UK we have the most pro nuclear Government that we have seen in the past 50 years, there is work ahead that will see a fleet of SMR’s and at least another one large nuclear project, this drive for new nuclear is also replicated in other countries. With the zero carbon drive globally there is sure to be intensive demand going forward for Uranium and this can be seen in the commodity price strength. Could you please describe the Power Metal Resources interest in Uranium, an overview of the work programme and the company aspiration for this part of the portfolio going forward?
Nuclear fuel will, in my opinion, increasingly become an energy source governments globally will look to, to maintain a diverse mix of energy to satisfy ever increasing consumer demand as fossil fuels are phased out. Power Metal is positioning itself to contribute to the global exploration effort in the search for viable projects to satisfy this demand. There is no doubt the market is also starting to recognise the potential value in uranium focussed companies. The uranium spot price has increased significantly over recent months driven, in part, by significant players entering the market looking to capitalise on the opportunity. Power Metal recently announced it had significantly increased its uranium portfolio in the Athabasca Basin in northern Saskatchewan, Canada. Our total land holdings around the Athabasca basin have increased now to 41,196 hectares. The Athabasca basin is in our view one of the best places in the world to explore for uranium and is home to some the world’s most productive operators. Since we first established our core position, we swiftly completed an initial sampling programme. Initial observations in the field suggested we may be onto something very interesting however we will have to wait for the assays to be returned before we can state with any certainty exactly what we are dealing with however, I look forward to updating the market with developments soon.
Q2. A huge challenge facing the world is transitioning away from the dependency on fossil fuels, and one big undertaking is moving over to electric vehicles over the next decade, as investors we know this will cause a surge in demand for metals like lithium, cobalt, nickel and manganese which are essential for making EV batteries, but they’re not found everywhere. Could you again take us through your projects in this rare commodity area with an overview of the work programme and the company aspiration for this part of the portfolio going forward?
Like uranium, demand for battery metals and REEs is considered by many to be only going in one direction. There has been, without question, a global shift in attitudes towards sustainability and how our everyday actions can impact global health. The recent COP26 conference has put the spotlight on all things sustainable as it has forced governments to pledge decisive action to do what can be done to address global warming. Naturally we must wait and see whether their words will translate into action but the general direction of travel seems to be also in one direction. Notably, it is clear the switch from the combustion engine to electric vehicles has been gathering momentum over recent years to a point where electric vehicles are now becoming increasingly desirable and, for many, a public statement of their commitment to driving environmental change. We have strategically positioned our business to maximise the opportunity of discovering new sources of metals which are in desperately needed in the battery supply chain and have been regularly updating the market on developments. As reported last month, we have increased exploration scope of Ditau Botswana with our strategic JV partner Kavango resources to include base metals as well as Rare Earth Elements (REEs) and in doing so, we have accelerated the drilling plan on the I10 target and once drilling is complete we will conduct a downhole electromagnetic survey to help us refine our targeting as we progress into subsequent rounds of drilling in 2022. REEs and battery metals will remain an integral part of our portfolio.
Q3. Could I now turn to the recent news on the acquisition of First Development Resources and their key asset, which is the exploration interests in the prolific Paterson region of Western Australia? Could you briefly tell us a bit about the corporate transaction and outline why Power Metal Resources was interested in this asset and what potential do you believe this may hold for the company, a metallic bull’s-eye has been mentioned, what does this mean and what is the forward plan for this asset?
Despite historically being largely underexplored, the Paterson Province is considered highly prospective for copper-gold and base metal mineral systems and is currently of particular focus for resource companies with a significant level of exploration activity underway across the region. Notably the northern region of the Paterson has been overlooked partly due to the thickness of sedimentary cover which blankets the more interesting rocks at depth. Recent discoveries such as Greatland Gold’s Havieron (4.2Moz Au Eq) and Rio Tinto’s Winu (503Mt at 0.546% Cu Eq) projects have demonstrated the exploration potential of the Paterson and have validated the existence of additional economic areas beyond existing operations such as Telfer and Nifty. The Wallal Project, which is our primary focus, is of particular interest due to the geophysical anomalies identified following the completion of desk top studies and the reprocessing of historical airborne geophysics. We recently announced that three untested magnetic “Bullseye” anomalies have been identified within our 100% owned Wallal licence area. These magnetic anomalies have a similar amplitude to geophysical signature seen at Havieron which, of course, we hope translates into mineralogical similarities. The strength of the exploration potential of the bullseye anomalies is increased further due their geological location on the edge of the Wallal Embayment, which again, based on our geophysical analysis is reminiscent of Rio Tinto’s Winu project.
These direct comparisons between Wallal, Havieron and Winu bode well for prospectivity and we look forward to testing the targets, specifically the Eastern and Border anomalies, identified from the exploration conducted to date. We are targeting drilling to commence during H1 2022. Preparation for these works is well underway and we look forward to updating the market on our plans soon. We believe the Wallal Project has the potential to host significant, previously undiscovered copper-gold and base metal mineralisation of the Winu and Havieron style in one of the most underexplored, yet prospective regions of Western Australia.
Q4. Could you please briefly summaries the interest Power Metal Resources has in Australia and why the strong focus on Australia for the company?
Australia is fantastic place to do business in our sector, with a wealth of natural resources and a long history of exploration, it really is the land of opportunity. Advancements in sensing technology and geophysical surveying is allowing explorers to reassess previously overlooked regions and push frontiers into previously unexplored regions. As a result, interesting and exciting acquisition opportunities are readily available for companies prepared to take a different approach to traditional exploration and reassess old or underexplored ground. Power Metal recently announced the acquisition of 100% of First Development Resources (FDR). FDR holds exploration interests, including Wallal, Ripon Hills and Braeside West, targeting gold-copper discoveries in the prolific Paterson region of Western Australia. Western Australia has ranked in the Top 10 of international mining jurisdictions in each of the last 5 years aided by first class infrastructure and a government which actively promotes our industry. Western Australia is geared towards enabling companies such as Power Metal, to progress with exploration efficiently. This was clearly demonstrated with our recent grant of up to A$165,000 through Western Australia’s Government Exploration Incentive Scheme (EIS). The EIS is a funding programme which offers co-funding for innovative exploration drilling projects undertaken within Western Australia. The proceeds from the EIS grant will contribute to the cost of commencing our phase 1 drilling programme at Wallal, targeting the two of the three magnetic anomalies identified in the reprocessed geophysics.
In addition to interests in Western Australia, POW also has a 49.9% (Red Rock Resources 50.1%) Shareholding in Red Australasia Pty Ltd (RRAL). RRAL have applied for a total of 16 exploration licences in the Victorian Goldfields north-east of Melbourne, Australia. Victoria’s world-class narrow-vein Goldfields have historically produced over 80 million ounces of gold. During the peak of the Victorian goldrush an estimated 6,000 diggers arrived each week to strike their fortune exploiting the readily available alluvial and shallow reef gold. Since its discovery in 1851 Victoria, Australia’s smallest state, has produced 2,400 tonnes of gold which is 32% of all the gold ever mined on the continent. Despite the impressive production figures, output from the Victorian goldfields dwindled considerably during the second half of the 20th Century as easy to reach lodes were depleted and new gold provinces opened in other parts of the country.
Power Metal’s JV with Red Rock is targeting areas which historically have been significantly productive and reassessing their future prospectivity with the aid of advancements in exploration and processing technology, as the Geological survey of Victoria states “the brownfields can obtain world-class deposits”. A clear example of this strategy yielding results was the discovery of abandoned mine workings at Enfield and Glasgow Reefs, gold baring ground which bares geological similarities to the nearby prolific Ballarat Mine. No previous reports or indications of historical grade have so far been uncovered in the available literature so this will be the first modern day exploration at these previously forgotten workings since the 1860s. FDR and RRAL present a significant opportunity to explore and crystallise value either through applying the latest exploration technology or by simply re-evaluating long-forgotten historically prospective claims. Beyond FDR and RRAL, Power Metal is actively assessing opportunities across Australia in a range of commodities, we remain optimistic that through our disciplined approach to due diligence and engaging with experts in the field our portfolio of projects in Australia will continue to expand.
Q5. Power Metal Resources has a substantial amount of interest in other projects, could you please provide a summary of some of the other projects and wat we should look out for?
Over the past few years Power’s portfolio of projects has increased steadily to the point where we are currently progressing 14 projects, in 7 countries on 3 continents. We are a truly global business offering a unique, diverse, and exciting portfolio of projects targeting a suite of commodities in demand globally. I don’t believe a junior in the mining space at our stage of development has ever assembled a suite of quality projects to the extent we have and developed them simultaneously in the hope of unlocking value efficiently. With so many exploration programmes up and running it is difficult to differentiate between the various projects as I believe all our projects have the potential to generate significant upside for our shareholders. I am genuinely excited about the recent expansion into the Canadian Athabasca basin, uranium as alternative energy source will only become more attractive as energy companies move away from fossil fuels and look to bridge the gap to renewable energy. Over recent months we have spoken openly about our intention to spin out certain projects into standalone vehicles and list them independently. Although a novel approach in the UK markets, I believe this is an innovative and efficient way to generate value for Power Metal. By maintaining a significant shareholding in the spin outs and establishing a true partnership where our objectives are aligned, the ability of a project to raise finance independently to develop will allow Power Metal to deploy targeted capital to its other core projects without putting unnecessary strain on our central cash position.
Q6. As investors we know all too well that many AIM constituents are seen as lifestyle companies, who hardly communicate with investors and just focus on getting through their AGM and annual report to rinse another year. I am sure investing peers would agree that Power Metal Resources is a world apart from those type of companies and is clearly ‘active’, can you please give us a flavour of the, hours, work and effort that goes in behind the scenes and sum up with what motivates you as CEO of Power Metal Resources?
With a global portfolio of projects across several different time zones means someone, somewhere associated with the project is working around the clock, as a result I must be available 24/7. Being the head of what is a relatively lean team means there is always a lot of things to do. Running a publicly listed Company is not without its challenges. My work is varied and diverse, we operate in a very competitive market meaning it is essential I remain tuned into every part of my business and have to be able to digest large amounts of information and communicate it effectively to the wider team, the market and our shareholders. It is of course a life based on compromise and on occasions frustrating for my family who feel sometimes they have to make an appointment to see me! I have mentioned on numerous occasions I have a very supportive wife, Michelle, who shares my belief it will all be worth it in the end! In the meantime, I try to strike as best a balance as I can. Ultimately it is ensuring a positive outcome for my family which is my main motivation. Nobody sacrifices time away from their loved ones, time they will never get back, if they didn’t think it was worth it in the end.
Q7. Leading on from the previous question, very few of these lifestyle companies leaders have hardly any ‘skin’ worth talking about in the game, we have seen the TR-1’s come where you have dipped considerably into your pocket and now hold 75m shares in Power Metal Resources. How important do you believe having skin in the game is for a company CEO in general and specifically in your case?
That is an easy question to answer. As a vehement supporter of my Company, I absolutely believe the quality of our projects, the diversity of commodities we are targeting, combined with the team we are assembling will yield success on multiple fronts. As CEO, anyone taking an interest in what we are doing will automatically look to me and my own shareholding to gauge my confidence in the business and use it as a measure of my ability to deliver results, this may in turn, influence their decision to invest. How could I possibly expect others to invest in what I hope will be a successful company if I wasn’t prepared to put my money where my mouth is. I have continuously increased my holding periodically (when I have been able to trade). I honestly believe we have reached an inflexion point from a value perspective. We have, along with our peers, suffered as a result of a extremely low sentiment in the markets, however, we are starting to see more and more deals getting done and we are starting to see the flicker of positivity return. I hope all Power Metal shareholders, including myself, will benefit as market conditions begin to improve. In the meantime, I will continue to focus on areas where I do actually have significant control, that being diligently running the business, maintaining a disciplined approach to corporate, exploration & business development expenditure and at all times exploring ways to maximise value for our shareholders.
Q8. Your website holds the caption, ‘Explore. Crystallise. Seeking Large Scale Metal Discoveries’, can you briefly outline the company strategy and at the end of the day the key ways shareholder value will emerge?
Our core business strategy is to do just that,
- Explore and locate potential new strategic mineral discoveries.
- Complete multiple layers of exploration to validate any early indications of possible value locked up in the ground to a point where our projects become viable for potential sale, partnership or independent listing.
Our core business is not to develop projects beyond our capability. There are too many instances in our sector of junior mining companies developing projects beyond their comfort zone, usually driven by the vanity of CEOs who don’t know when to let go. I believe that by maintaining our disciplined approach to project selection combined with informed, methodical exploration we are significantly increasing our chances of making a significant discovery which, if managed appropriately will translate into value for all of our shareholders.
Q9. I am not sure in my time investing that I have come across an AIM junior with such a portfolio of projects, I suspect with the vigour shown by the company to date that there is a certain amount of internal ambition here, could you please explain what is the aim here for the company management in terms of building the shareholder value over the medium to long term.
The diversity of our portfolio provides us with optionality and therefore the ability to pivot our focus as market conditions change and stay relevant in the eyes of the market. Single asset plays will always remain high risk, especially in the exploration space where certainty of a viable outcome is inherently low. I believe we have greatly increased our chances of finding something of significance simply by targeting and prioritising multiple targets simultaneously.
Q10. Finally Paul, many thanks for taking the time out to answer these questions and for sharing your thoughts, to sum up what can the Power Metal Resources shareholders expect over the next 12 to 18 months?
A lot more newsflow! More discernible value creation through project sales, partnerships and independent listings. Rapid advancement of internal projects with multi-layered exploration programmes targeting major metal discoveries. The use of the plural there being quite deliberate.
Ticker code: POW, Shares in issue: 1,358m, Current SP: 1.52p, Market Cap: £18m, 52 Wk Low: 1.3p, 52 Wk High: 3.45p
The interviewer holds shares in Power Metal Resource and was not remunerated to conduct the interview
References
Power Metal Resources November 2021 Corporate Presentation:
https://www.powermetalresources.com/wp-content/uploads/2021/11/POW-Presentation_2021-11-02.pdf
Power Metal Resources Interim Results 26 May 2021 https://www.powermetalresources.com/wp-content/uploads/2021/05/POW-Interims-31-March-2021-2642-POW_Interims_31_March_2021.pdf
Power Metal Acquires 100% of FDR Australia
https://polaris.brighterir.com/public/power_metal_resources/news/rns/story/w04g16x
