Atlas Salt (TSXV:SALT) - C$300M in Lender Interest Secured as Road Salt Prices Nearly Double

Nolan Peterson (0:00)

Hi, I'm Nolan Peterson, CEO of Atlas Salt. We're developing the Great Atlantic Salt Project on the West Coast of Newfoundland.

We're here in Beaver Creek, discussing the de-icing salt market with potential investors and lenders.

Matt (0:16)

Hello, good to see you, Impressen.

Like I said, we're here in Beaver Creek, pretty busy, kind of a little bit excitable audience out there. But more importantly, lots of investors. How are you finding it?

Nolan Peterson (0:27)

Yeah, it's been great. It's a bit of a catch up for the industry. A lot of times, you do PDACs, a lot of people gather there, but you get a lot of retail investors and others. So you have to talk to them a lot, which we want to do. But here, it's definitely more of the banking community, more of the friends who you've worked with in the past that are running companies or involved with companies again.

As well as I do, you're sitting there chatting with somebody and a old colleague of yours walks by. It's like a good catch up opportunity.

Matt (0:56)

It's a good catch up, but you get no work done sometimes.

You're probably the only salt company here. So there's pluses and minuses to that. Pluses are there's no competition. Minus, I suspect, is what's the salt market all about?

Nolan Peterson (1:14)

Well, as you know, a banker told me today, he's like, hey, Atlas Salt, you're the best salt company here. I was like, absolutely. But don't tell anyone we're also the worst one.

Just kidding.

Matt (1:25)

So just on that, what are the main questions being thrown at you? We've had good discussions over the past few months.

What are people still asking?

Nolan Peterson (1:32)

Yeah, always trying to understand.

I think, first of all, most people are quite curious. They like to learn more, especially people in mining, a lot of them engineers or engineering background, trying to understand what drives the salt industry, how it operates, so what the market is like, how it functions, what the demand is like. It's not something you read about in the papers very often. You don't see how global events are affecting the macros of salt, for example. So there is that piece. It's a novelty for some people to learn about it. Usually, they walk away quite a bit informed about it.

Matt (2:06)

So we're a bit clear what type of salt we're talking about.

If you do that in a second, but I would also like you to talk about the demand component, which is a conversation we've had a few times. But I think, interestingly, the changes in the selling, the sales market, pricing, et cetera. So what type of salt we're talking about?

Nolan Peterson (2:26)

So we're talking about sodium chloride, the same salt as everybody's quite familiar with, they put it on their food, has many different uses. But for us, our specific primary focus, and what we studied in our feasibility study, is its use as de-icing road salt. The reason for that is it's the bulkiest market, easiest market to understand, and therefore present in a feasibility study. It doesn't mean that our salt may not end up in other markets. We're just not prepared to talk about that right now, and what the implications of that are. But yeah, the primary buyers of de-icing road salt, especially for us in the West Coast of Newfoundland, would be the Northeast US, the Midwest, Ontario, Quebec, the Atlantic provinces. The buyers are the cities, governments and municipalities in those regions. Thinking about road safety and infrastructure security, they traditionally buy the salt on year-long contracts. So they'll issue a tender in the spring and the summer, and then the suppliers will bid on it, and then that will be the price that they pay over the year. So it's not a single market price, it's actually an amalgamation of thousands of different contracts that kind of give you that idea. But what we're seeing, as you mentioned, is kind of a shift from a buyer's market to a seller's market. And what I mean by that is in the salt industry, historically, and you can look back decades, every year goes up 2% to 3%, sometimes 4%, sometimes it goes down a percent but bounces back, fairly stable, steadily going up. We've seen headlines now recently where jurisdictions that were paying $88 a ton last year on a one-year contract, and the year before, $85, and the year before $83, for example, they put out a tender. Last year, they would have got three bidders. This year, no bidders.

Put out another tender, relaxing the criteria, final bidder, $165 a ton.