Power Metallic (TSXV:PNPN) - Defines High-Grade 4.7 Million Tonne Lion Maiden Resource in Quebec

Terry Lynch (0:00)

My name is Terry Lynch, I'm the CEO of Power Metallic. We're probably most well known for our Nisk project in Quebec.

Yesterday, we dropped our initial MRE on the Lion's Lounge. That was great news from our perspective. Shows an amazing project that's ready to go. So, looking forward to talking to you today, Matt.

Matt (0:15)

Sorry, yeah, we picked up the release yesterday. What do you think the response has been?

Terry Lynch (0:21)

You know, I expect probably the response we sort of thought we'd get. You know, the market was expecting a higher resource number in terms of tonnage.

And, you know, so the traders, well, they didn't see that sold off. And that was picked up by the investors who actually had done the better math and realized, holy crap, they've established an amazing floor, which is two or three times more than where they're at right now. And they've got unlimited upside. So, they saw the asymmetric investment opportunity stepped in. So, that's really what happened yesterday.

Matt (0:51)

Okay, but let's talk about that. You know, 4.75 million tons, that is probably less than people were expecting, but you kind of got 3.9% Copper equivalent grade. So, really, what are the numbers that you think people should be focused on, not necessarily the size?

Terry Lynch (1:09)

That number and the fact that more than half of it was in the open pit. And so, what that translates to in terms of development is that, you know, analysts are already saying, look, this can cost less than 200 million US to build, and it will pay out in a year or less. I mean, when's the last time you heard about that in a mining project? It's outbeaten ever since I've never heard it.

You know, so it's super high grade.

And because of the open pit nature of it, it's low capex initially, you know, and then you can fund it in the underground from the profits of the open pit. So, we like that aspect of the deal, and investors should like it. You know, once they understand it, they will like it, and that's our mission really in the fall, is to communicate that, and also communicate that, listen, that was an April 19 cutoff. This is the beginning, not the end. You know, we've let people know yesterday that we'll be updating before the end of September on several deeper targets that have hit beneath the line zone that extended the zone from 600 meters to more than 900 meters. So, that has not been incorporated in the MRE, but will be in the PEA and the drilling all the way up to the end of November, will. So, the expiration story still is growing, you know. So, I think that's the other part of the message.

Matt (2:22)

So, my takeaway from this is this is a standalone mine. As indicated, you're saying that's a standalone mine today, but it's only the beginning of a process, so that there's more growth to come. That's what I need to understand.

Terry Lynch (2:35)

That's the way to take it, yeah, absolutely.

Matt (2:37)

Okay, okay. And so, let's talk about this, what's going to open pit resourc, in terms of the amount of tarns that fall within in that open pit resource, and as I guess, proximity to surface or not, what do we need to know?

Terry Lynch (2:53)

Yeah, I think about 59% of the resource falls within the open pit, so we'll be probably able to open pit it for the first four years, so it creates significant cash flow, and then that cash flow can then fund the additional investment that we need to go underground.

In the underground, what's interesting, these projects, these orthomagmatic projects, generally they're all vastly bigger than us. The 20 that have been found in the history of the world, I think the smallest is 1.25 million tons contained, so we're way less than half that right now. So we've always, and the average would be 3 million tons. So we fully expect to get to the average at some point in time in this project. So that's a monster increase in resource.

So I think the fact that the open pit is so large and so high grade, it's really going to provide a tremendous cash flow for us to not only continue to move forward into the underground, but also to explore the area that we've got. We've got probably scratched maybe 2% or 3% of the overall area we have there in Quebec. And these projects historically have been district place, with the deposits spread out over a number of kilometers. And if you look at Norelsk, which is the archetype of the project type, the orthomagmatics, it's got several mines spread over tens of kilometers. We would expect something similar here at Nisk.