Interview with Jerko Zuvela, MD of Argosy Minerals Ltd. (ASX:AGY)

Argosy Minerals (ASX: AGY) is an Australian lithium developer with a current 77.5% (and ultimate 90%) interest in the Rincon Lithium Project in Salta Province, Argentina, and a 100% interest in the Tonopah Lithium Project in Nevada, USA. Argentina is the core focus. The long-term goal for Argosy Minerals has always been to become a sustainable lithium production company that is highly leveraged to the potential growth of lithium demand in the lithium-ion battery sector.

How has COVID-19 affected Argentina? Zuvela says its been similar to the rest of the world, but things are now starting to get moving again. Argentina is still effectively in lockdown, but mining and production is regarded as an essential activity, so there are workarounds.

The big news? The lithium pilot plant has been approved for construction. There's only one major issue: Argosy Minerals has been unable to finance it, despite being in discussions for much of the last year. Zuvela claims Argosy was talking to end-users in Asia and European groups. Argosy Minerals is looking at a debt funding package and that the company would have been "there or thereabouts" if COVID-19 hadn't come along. However, while COVID-19 has been disruptive, plenty of companies are still having funding conversations. He states that Argosy Minerals already has its industrial-scale pilot plant in production, and this puts the company well ahead of the pack.

He then claims the fact the lithium market is in a slump is putting off potential investors. What are the investors really nervous about? Zuvela is adamant that nobody in lithium has been financed to build a new project in quite some time. How come big strategic partner, Mitsubishi, hasn't stepped in? Zuvela thinks its an inconvenient blend of the two: COVID-19 affecting corporate strategy and lithium not being the most attractive market right now.

How does the balance sheet at Argosy Minerals look? Zuvela states that as of the last quarter, the company had just over A$5.1M, which should see them through 6-7 quarters of current financing. He states he is very confident that by this time, the company will have secured the CAPEX financing for the pilot plant. Will investors be as confident? What needs to happen in the lithium space for lithium to become attractive again. Zuvela states the obvious: the price needs to go back up. Investors need to recognise that the China spot price of lithium is not the true price. To get an established customer to buy the product, Argosy Minerals needs to be an established producer. It's a bit of a chicken and the egg situation, with Argosy chasing funding to become a producer which is only readily available to those already in production. Can Zuvela pull this off? There's only so much he can do.

There are some offers on the table that Zuvela has deemed are unsuitable because they aren't at the right price. If there is a prolonged slump in the lithium price, would he be forced to go back to those offers with his tail between his legs? Zuvela is unsure, and if there's one thing putting off investors right now, it's uncertainty. Behind the scenes, Argosy Minerals is making sure that its secondary options are as palatable.

What about the lithium market dynamics? What sort of opportunity is there for a small player like Argosy Minerals? Lots of production has been removed from the lithium space recently, with big players ramping down operations. Zuvela states that everything is back running as normal, except for the Australian spodumene operators. The brine operators have remained economic in a low price environment. Will this give lithium brine developer, Argosy Minerals, a gap in the market to exploit?

Zuvela is claims Argosy Minerals is always having conversations about being taken over, but all parties appreciate the market isn't there yet. The focus is on processing technology and the expertise around it.  

Company Page: https://www.argosyminerals.com.au/

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Interview with Philippe Cloutier, President & CEO of Cartier Resources Inc. (TSX-V: ECR)

Many juniors have less than Cartier Resources (TSX-V: ECR), but they are worth 3x as times as much...

Cartier Resources, listed on the TSX-V in 2007, is an exploration & development company focused on discovery in the 'prolific' Abitibi Gold Belt in Québec. Cartier Resources has 7 projects spread across Quebec that it acquired from 2012 to 2015. The flagship project, Chimo Mine, is the current focus, while the other projects have been parked for now. Cartier Resources thinks it is 6-months away from making a decision to possibly sell the mine, which could result in a big return for shareholders.

In 2012, Cartier Resources decided to go on an aggressive shopping spree to pick up high-quality, discounted assets from the many struggling mineral exploration companies in the region. In the Abitibi, from 2002-2012, there were lots of exciting, but expensive, exploration discoveries in remote areas: frontier exploration. No less than 10 deposits that were drilled, delineated, permitted and brought into production. The common denominator? None of the projects were new discoveries: all were old projects that had been shelved because of bad economic situations or corporate decisions. These things were sitting ducks, and this is what Cloutier calls renaissance exploration. The acquisition profile was to seek out struggling junior mining companies and pick up their assets. Agnico Eagle clocked onto this "signature acquisition programme" by 2016, and purchased 22,500,000 common shares for C$4.5M. Cartier decided to focus solely on projects that have previously been discovered and developed, rather than looking at more exotic exploration. Chimo is the focus because it has good existing mining infrastructure.

Cartier Resources has been drilling at Chimo since 2017. The mine has 4,000 historic drill holes: a "huge 60,000 data set of assay results." Cartier Resources likes to be held accountable to the data. He claims while retail investors aren't the biggest fans of this, institutional investors like it a lot. The company has brought all of the drill data up to date, completed 116 diamond drill holes and 54,000m of drilling within a 500m radius of the known infrastructures, at depth and laterally. Cartier Resources then published a maiden resource estimate and will produce a second resource estimate on the shallow northern and southern shears in the next few weeks.

When combined with the Central Corridor resource estimate from last November, the Chimo Mine property now hosts a total of 4Mt indicated, grading 4.53g/t gold containing 585,190oz and combined inferred resources of 4.9Mt at 3.82g/t gold for a total of 597,800 gold oz. It's clear that Cartier Resources has been undervalued by the market, but is this because of the focus on institutional investors? Short term, it seems clear that Cartier might suffer. The company is focussing on robustness, rather than "sex and sizzle." In the long-term, there could be a payoff for smart investors who spot the value discrepancy.

The end goal is to prove Cartier Resources' exploration model. The team has not "threatened" to build the mine, and will decide the most appropriate way to reward shareholders. Cloutier is pragmatic and recognises it is a giant leap to go from development/de-risking to construction and eventual production.

What is the plan for the other 3 assets? Benoist is the next priority. The team has already launched an assessment of the resources in place. If Chimo is a success, expect a rinse and repeat approach. The cash position? $6M in the bank: $5M hard cash and $1M flow-through money. The burn rate when not drilling is C$50,000 per month. Even a severe bear market/crisis wouldn't stop Cartier Resources' strategy. Cloutier himself has 191M share with 0 warrants and 13M options.

What did you make of Philippe Cloutier?

Company page: https://ressourcescartier.com/

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Interview with Bryce Crocker, CEO of Jervois Mining (ASX:JRV)

Jervois Mining is an ASX-listed mining company with a focus on cobalt, but with significant exposure to nickel and copper. Jervois Mining has assets in Uganda, Australia, and the United States (the main focus). The company is hoping to benefit from the much-discussed and much-distressed EV revolution by producing raw battery materials. COVID-19 appears to have put a real spanner in the works of the EV thematic, though Crocker suggests the US government is viewing cobalt as a strategic commodity, and Jervois Mining could benefit. Let's unpack this.

Crocker paints a "profoundly negative" picture of the impact of COVID-19 on EV global supply chains. COVID-19 hasn't just compressed cobalt demand, "it has DECIMATED it". Crocker has never seen anything like it before. China was down c. 80% in Q1/20 and all the Western players are down 40%-50% in Q2/20. Some companies are losing as much as "US$100M per day." There is no positive scenario near-term. Crocker expects a massive "dislocation" of the supply chain across 2020, and claims people aren't expecting it.

How does Jervois Mining plan on taking advantage? Do its hopes lie in the hands of the US government? Government subsidies for EV manufacturers are starting to flow back in, but they have been crushed because their export markets are off; this is particularly true of China. It's also very difficult to be bullish when it comes to aerospace right now. Who knows when the airline industry could recover? There is an awful lot of uncertainty right now. Crocker claims cobalt is a unique commodity, with 75% of cobalt coming out of the very unstable Democratic Republic of Congo. The supply chain looks incredibly fragile as it is, and COVID-19 has only worsened problems. The major mines in the DRC are still operating. Some borders are still open, but the border with South Africa is closed, and the border with Zambia is an "unmitigated disaster," with queues stretching as far as the eye can see. The cobalt mines are stockpiling aggressively, and a lot of the highly-technical major projects are being canceled because of key minds being repatriated. The outlook for cobalt is very binary as to what is going to happen in the DRC. Crocker expects to see COVID-19 peak in the region in the first few weeks of June. Cobalt investors will need to keep their eyes peeled. The impact could be "profound." COVID-19 is going nowhere in the short term, and the DRC already has numerous logistical issues: the cost of trucking copper and cobalt out of the country is US$300/t.

Crocker is actually very happy with Jervois Mining's own position in a stable jurisdiction with a "half-built" cobalt project. He has always claimed the US is the most strategic market in the world for cobalt, and claims the country is fast catching up China. The US has no domestic cobalt mine, and Crocker thinks it is timely for Jervois to be at the forefront of this. Cobalt has always been of geopolitical importance to the US, and now it is even more so. Crocker expects green mining to prevail as the US government tries to create jobs in 2020. Crocker remains coy on the government's plans for possible nationalisation, but claims cobalt is "up there" because of its importance to aerospace and critical industries.

Crocker expects to complete the BFS by the end of the year. It's nearly finished, there are just a few things to sort on the offtake side (metallurgical test work). Travel restrictions have also caused delays.

Jervois Mining has c. US$7M cash to see the company to midway through 2021. Away from Jervois Mining's core Idaho assets, Jervois has been clear it wants a partner to form a JV for the Nico Young nickel-cobalt project in Australia. The rest of the projects will have their day in the sun, but right now there is an emphasis on keeping a tight balance sheet. This seems sensible. A Tanzanian acquisition is also on the cards.  

Company page: https://jervoismining.com.au/

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Interview with Kevin M. Keough, President & CEO of Evergold Corp. (TSX-V:EVER)

Evergold Corp. is a gold-silver-copper explorer and project developer with assets in British Colombia. The company has four projects: flagship projects, Snoball, and Golden Lion, and other projects, Spanish Lake and Holy Cross. The team is looking to replicate its previous success at GT Gold. Evergold was set up before GT Gold, but took a back seat while the team focussed on GT.

One thing is clear straight away: Evergold Corp. is not trying to be a producer. The company wants to locate promising gold projects, acquire them for a great price, then sell them for a significant profit. However, if the company has to, it will develop them. The company's mission is to deliver discoveries by packaging them in a de-risked, effectively marketed fashion. The team at Evergold Corp. has a track record in the gold discovery.

Why does Evergold stick to exploration rather than moving through the stages towards production? Keough states he really likes the excitement of discovery, but he states there is some science behind it; specifically, working at the "spiky" end of the business. He states most of the value gets added during the discovery phase of a project. During the more advanced phase, which involves permitting and construction, speculators get bored, and the project loses its excitement.

What will Evergold do at Snoball and Golden Lion? The company went public in October 2019, the intention was to use the c. US$3M to drill for the first time on geochemical anomaly targets identified on the two properties. Keough is confident because of previous geochemistry conducted at the site. The IPO was actually the largest in the mining space in Canada last year. The company was able to achieve this raise because of its reputation for achieving excellent results, combined with the potential of its assets.

What do the numbers look like? Evergold has c. US$2M cash having paid for the planning of a phase 1 drill program on the 2 flagship properties. This will result in around 2,400m on both projects. Keough is matter of fact. As an exploration company, the company has no cash flow, so will need to raise more capital to continue advancing the properties. The company is shooting for 10Moz.

What is the strategy? Keough is remunerated with an annual cash salary of US$150,000 with options, having previously invested US$250,000. He claims he would "do this work for nothing (equity)."

In terms of the timescale, Keough and his workforce will be on the ground setting up camp for phase one in just over a month. The initial air survey will be conducted on May 20th, while some serious elements of the drilling program will be launched on June 15th.  

Company page: https://www.evergoldcorp.ca/

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Interview with David Feliba, Financial Reporter for S&P Global Market Intelligence

We interview plenty of South American mining companies at Crux Investor. It's important for investors to understand the latest developments in the region in order to carry out informed investment decisions. That's why we spoke David Feliba: an expert in South American markets.

We started by asking about Feliba's background. He is a financial market and banking reporter who works within a newsroom for S&P Global, which is a global inside information provider of investors. The newsroom is deployed around the globe, with around 500 journalists hard at work specialising in different sectors and jurisdictions.

We start with Chile: the country with the strongest credit rating in Latin America. Feliba is aware that all countries are under enormous financial pressure because of the difficulties created by COVID-19. Chile has already had some financial pressure, which was created in late 2019. The Chilean government created a social/constitutional crisis by hiking the metric ticket of Santiago (the capital of Chile). This led to a huge amount of social unrest. Chileans now have to vote if they want a new constitution from scratch to include more social issues. Last year was a wild one for Chile: the economy fell by 2.1%. Now, COVID-19 has served as the second blow. In 2019, the profits of banks receded by c. 16%, and now this second blow has created even more disruption. However, Feliba claims Chile is in a strong economic position to cope with these difficulties. Copper makes up 40% of total Chilean exports. However, demand for copper, particularly from China, is not that high nowadays.

Chile has deployed its central bank at 10% of GDP to try to cope with COVID-19. In relative terms, this is similar to the U.S and other developed countries. It is keeping the engine running and providing liquidity in an effort to try to sustain lending as best as possible. Chile looks like it'll be fine, provided the COVID-19 crisis doesn't extend too much.

What is the sentiment like in Chile, with anti-government protests happening just last month? Should investors be worried? Feliba claims the Chilean lockdown isn't as stringent as in other Latin American countries, and he also claims Chile has deeper "financial market penetration" than other countries in the region. How do the South American countries stack up against one another? While Feliba doesn't comment on specific policies, he explains that Chile has a reputation fiscal prudents and good management of its debt, with enough buffers in place to take on this new crisis. He claims analysts state Chile has adequate ammunition to cope. The countries that have avoided the strictest lockdowns appear more likely to flourish economically. Similarly, if you take a look at Peru, a country on a wave of 25-years of economic growth, they look well-positioned. What about Brazil? Brazil has weak growth and a weaker credit rating, with limits on its capacity and debt levels, having just emerged from its worst fiscal crisis in years. Argentina was struggling even before COVID-19, with significant fiscal deficits and inflation.

What's gone wrong in Brazil? President, Jair Bolsonaro, is certainly a polarising figure. He was sworn in in January 2019, and the rest of 2019 saw strong share price performance for the majority of Brazilian companies, with compression in debt spreads/borrowing costs. This helped alleviate some investor's concerns. However, this year, Brazil will not be seeing growth: projected at a fall of 5.3%. The BOVESPA index has seen a whopping 50% decline in dollar terms since February, wiping clean 4 years of returns. Worrying.

Feliba then moves into his particular area of expertise: fintechs. As many as half the people in Latin America are underbanked, and fintechs are looking to plug the gap.  

Company page: https://www.spglobal.com/marketintelligence/en/

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