Power Metallic's Lion MRE Is Out. Next Stop: PEA in H1 2027

Michael (0:15)

Power Metallic published a Maiden Resource Estimate for its Lion project, averaging at 3.9% copper equivalent. In a news release, CEO Terry Lynch said, high-grade mineralization begins at surface, and the deposit remains open at depth. Next is demonstrating scale. Terry, welcome to Mining Stock Daily.

Terry Lynch (0:35)

Great to be here, Michael. Good to see you again.

Michael (0:38)

Now, Terry, highlight the MRE for us. What do you want to underline?

Terry Lynch (0:42)

Yeah, I think the most important thing is the compelling economics it builds for the floor of the project, right? This was done with drilling up to April 19th, so probably by the time of November and November's up and we start the PEA, we'll have another 35,000 meters in. So this is just the floor, and the floor shows, I think, a pretty robust set of numbers. Analysts suggest that you can probably build this thing for under 200 million because 59% of it is open-pedable with the crazy high grade, so then the thing will pay out in a year.

So those are the numbers that really stand out to us. Internally, that such high degree of certainty with 85% of it indicated, big portion of it in the open pit, making it very economic to get the thing rolling.

And the sky is still on the exploration. We had drilled for this to a depth of 610 meters, and we indicated in the press release that we've got the exploration results to 900 meters now, that will come out by the end of September, indicating that we're still in the mass of the sulfide zone. So already lots of resources to be added to it. So the good news keeps on coming, I believe. So it was good to get the stake in the ground. And you know, always, you'd always like to get more tonnage, but you know, what we got is more than enough to have a robust mine right now, and lots more to come.

Michael (2:12)

I now hear you just regarding the floor. The stock did slide on the release of the MRE. Just mostly a case of investors were expecting a larger resource. I noticed in your socials that you're responding to some questions about that.

Terry Lynch (2:24)

Yeah, yeah. You know, I think a couple of things.

Almost everyone is a sell the news company. It seems it doesn't really matter how good your news is. We've had some ridiculous news releases over the years and they still sell them. I don't know why. But, and that's another case here, because, you know, obviously seven million shares traded yesterday.

So some people sold, but, you know, why did they buy? You know, why did the seven million shares get bought? Well, they got bought because smart investors did the math and realized it's probably worth two and a half, three times what the price is at right now, and it's pretty much proven up. So, and there's obviously compelling upside. So these things happen in the life of a project where, you know, you trade out of one set of investors and into another. And that's probably what we did yesterday. And understandable, but we think the traders made a mistake and they'll rue the day.

Michael (3:14)

Talk about the mine sequencing. You mentioned it. You know, there was both open pit and underground that was mentioned in the news release for the MRE.

What is the sequencing and how do you get to the high grade?

Terry Lynch (3:27)

Yeah, so the high grade is just God's gift to us. Thank you, big guy. I really appreciate it.

And the open pit portion is 3.45 percent.

59 percent of the tons are open pittable. So that's really good. So obviously, open pit, I think it's 250 ton to operate versus 70 bucks underground. So big economic difference, right?

So that cash flow that you get from the open pit funds everything, right? So that's what drives the capex being so low and the operating profits being so high. So that's the real sort of prize.

Now, the good news is, this project type, the orthomagnetic nickel-copper PGEs, they're very rare, been about 20 in the history of the world. The world's biggest, most profitable mines, including Neurilsk, the archetype of this type of project, but others like Mertzky's Reef in South Africa, Xinchuan in China, you know, Sikati, the last of its known discovery of this type about 18 years ago by Anglo-American and Finland, they're all very big. I mean, the average metal-contained tons is probably over 3 million, smallest maybe a million and a quarter, we're about, I don't know, around 400,000 or so. And so obviously, you know, a long ways to go to get to be the smallest. And we don't think we'll end up there, you know, we think there's these things take, you know, time to find and develop. But the good news is we've made an enormous first start and have proven it. And we can, I think, advance in two paths, one of continued exploration to, you know, grow the resource, but at the same time, advance towards becoming a mine. And people say, well, why would you do that? Well, two reasons. One, if you can build a mine for a couple hundred million and pay it out in a year, I think that's good, that's good economic principles, and you can fund from cash flow as opposed to deluding your shareholders. So that's number one. Number two, there's a lot of government money around, but they want it for mines, you know, not for arm-waving. So you got to get to, through the reports and prove them that you're going to be a mine. And then you get a lot of really attractive, even free money from the governments. And that just benefits our shareholders. So that's why we made the decision. But at the same time, you know, because we're a high-grade mine and we can advance our expiration very quickly, while we're going through the process of the reports, we can continue to upgrade the resource. So we can still have a growth story on the resource. And that's what we're doing here. The MRE was in April. The PEA, which will start basically now, will get out sometime in H1, hopefully early in H1, hopefully in Q1.