A conversation with Brandon Munro, CEO of uranium developer, Bannerman Resources (ASX:BMN)

Thursday saw the long awaited announcement by the US Govt's Dept of Energy Nuclear Fuel Working Group. They made a recommendation about how America can restore itself to former glory by investing in the entire Nuclear Fuel chain. The report was initially received negatively by retail investors as they were expecting it to detail how much money was being allocated and to whom. It didn't. It read more like a Framework Policy Document, which in itself is an impressive feat.

The Nuclear Fuel Industry is far reaching and complex. But as days have passed and many commentators have given their verdict the mood seem positive and refocusing on the economic drivers. Whilst not yet a seller market, it is becoming less of a buyers market.

Brandon Munro breaks down the announcement with the effortless ability of the sharp mind and intimate knowledge that only he has of the uranium and nuclear ecosystem. We run through the key policy measures and he explains what each means in quick succession. We also discuss the global implications.

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

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Interview with Merlin Marr-Johnson, Director of Salazar Resources (TSX-V:SRL)

Interview with Merlin Marr-Johnson, Director of Salazar Resources (TSX-V:SRL) Salazar Resources is an Ecuadorian exploration company. In our last interview, we discussed how this gold explorer had farmed out its first copper-zinc-gold asset, the El Domo Curipamba VMS discovery. The PEA shows an economically viable resource. The company is fully carried for 25% and receives US$250,000 in advance royalty payments (to a limit of US$1.5M), additional recurring management fees standing at over US$350,000pa, and was also given the ability to lease out their 3 drills. At the time, they had c.$5M in the bank to continue exploration and consideration of M&A options. Salazar Resources has 3 additional copper-gold assets at varying degrees of licencing. Adventus has a 75% option on project, obtained by funding CAPEX of US$25M over five years. Fully carried for 25%, and receiving annual cash payments. Interesting. A Feasibility Study will be completed in 2022 for El Domo Curipamba, and lots of metallurgical work has been carried out. The aim is for production in 2024, possibly late 2023.

We really like project diversification and commodity diversification. It helps mitigate risk by removing a company's reliance on a single asset performance. So, in addition to running the copper-gold side of things smartly, Salazar Resources has a zinc-exploration JV that falls within the Adventus-Salazar Exploration Alliance that contains two projects, Pijili and Santiago. Salazar Resources has no activity-funding burden at Pijili or Santiago because Adventus must provide 100% of development and construction expenditures up to a construction decision. Exploration activities of the Alliance are carried out by Salazar on a cost +10% basis.

It's a good solid model: Salazar Resources can seek out exciting copper-gold and zinc projects, then get other companies to foot the bill. CEO, Fredy Salazar is an ex-Newmont team leader in country and Salazar Resources.

Lots of green lights here, but what about concerns and possible red flags? Ecuador a mining jurisdiction making changes to mining code. The permitting process, both water and environmental, is slow. In light of this, Salazar Resources has been quite slow to deliver on exploration ambitions in the last 18-months due to Ecuador-wide permitting issues. Like in many countries, the mining industry has some social issues in Ecuador, with the usual vocal protests and populist sentiment. However, the administration itself is very pro-mining. Another issue is that the board is a little burdensome.

Perhaps the primary reason behind Salazar Resources' share price stagnation is the issue of a lack of liquidity in the stock. Marr-Johnson and the rest of the Salazar team are clearly aware of this. Marr-Johnson was steadfast in his response: all the team can do is get out there and tell the story to prospective investors, and continue delivering results. We feel Salazar, and in particular, Marr-Johnson, have communicated the value proposition effectively. It's up to investors to listen and decide if they think Salazar Resources is an Ecuadorian winner.

Moving forward, what will Salazar Resources do with its US$3.5M cash? Exploration is planned. Potential catalysts in 2020 will be drilling on the 3x 100%-owned exploration licences: Rumiñahui, with copper-gold porphyry targets, Macara Mina, with VMS targets, and Los Osos, with copper-gold-silver targets. The big decision the Salazar face is to select which of their 3 assets they are going to select to develop; the other 2 likely then farmed on on a similar basis as El Domo. There is a lot to like about mining in Ecuador and lot to like about this business model. 

Company page: https://www.salazarresources.com/

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An Interview with Farhad Abasov, CEO of Millennial Lithium (TSX-V:ML)

The EV revolution is something many investors will know lots about. Battery metals are at the heart of the EV thematic, with exponential demand projected by many qualified experts and commentators. A battery metal that will undoubtedly be important in the future production of EV batteries is lithium.

Lithium batteries are primary batteries that have metallic lithium as an anode. These types of batteries are also referred to as lithium-metal batteries, and Li-ion batteries. While there is plenty of demand for lithium in portable consumer electronics, the real promise of growth comes from the idea of Teslas and Volkswagens whirring up and down roads around the world.

The lithium market has depressed for much of the last few years, but this is because of oversupply from Chinese-grade lithium. This low-grade lithium differs from Millenial Lithium's model; the company intends to fill the high-grade battery demand gap.

So, Millenial Lithium. The company is listed on the TSX-V and is a lithium developer. Its flagship project is a lithium brine project, Pastos Grandes, located in Salta in the 'Lithium Triangle' of Argentina. An FS was recently released for Pastos Grandes:

There are proven Lithium Carbonate Equivalent (LCE) reserves of 179,000t and Probable LCE Reserves of 764,000t. The economics are robust for a 24,000t/y battery-grade LCE operation. The CAPEX is reasonable, standing at US$442M. The OPEX is US$3,388/t of LCE, with an NPV of US$1,030M and an IRR of 24.2%. Pilot plant (evaporation plant) and 'pilot pond' trials have been taking place for a while. Millenial Lithium will commission the plant in the next few weeks.

What about permits and licenses? Millennial Lithium obtained its fiscal stability program late last year. This fixes royalties and taxes as of that time and was a strategy to combat economic instability in Argentina. In terms of the mining permit, the EIA was completed and filed last year, but things have been delayed because of Argentinian political elections. However, the new administration is in support and ready to sign. COVID-19 has put a halt to things for now, but Abasov is confident it'll be done in the next few weeks. Salta looks like a good mining province, and while there are some issues in wider Argentina, this should be looked at on a provincial level. Millennial Lithium is unlikely to have any problems here.

Interestingly, there is a potash by-product as part of the Pastos Grandes lithium project. The potash to lithium ratio is 4:1, which makes the amount of potash substantial (c. 100,000t per annum). The already strong FS did not take potash into consideration. The plan originally was to stockpile potash for the first few years, then begin selling is regionally and nationally. Potash currently fetches US$200/t-US$300/t. This means around US$25M additional income for Millennial Lithium. Very smart indeed.

Abasov and his management team have an excellent track record over the last 12 years. the management team has largely stayed together. The business model is simple: find a project that can become world-class, then throw everything into it. They focus on one project at a time, and they take it from exploration through to production, or they position it for an M&A transaction. Some examples? The most recent is Allana Potash Corp., a Canadian-listed African potash project. The team took it from a US$3M initial investment to production, then sold it for US$170M. The team has replicated this success several times. These are remarkable returns. Investors need to pay attention. Abasov then touches on COVID-19's impact on global lithium demand. 

Company page: http://www.millenniallithium.com

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Interview with Wayne Heili, CEO of Peninsula Energy (ASX: PEN).

Following todays announcement of the DoE's plan for Nuclear Energy in the US, we speak with Wayne Heili to hear his thoughts.

Company page: http://www.pel.net.au/

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Interview with James Campbell, Managing Director of Botswana Diamonds (AIM:BOD)

Diamonds are a girl's best friend?

Botswana Diamonds is an early-stage diamond exploration and project development company with exploration licences in Botswana, South Africa and Zimbabwe. Botswana Diamonds is listed on AIM and the Botswana Stock Exchange. Over one-third of the world's diamonds are mined in this region and Campbell regards it as highly prospective.

What does the diamond market look like? The fundamental demand comes from engagement and wedding rings. A global tradition, individuals will spend, on average, between 3 to 4-months of their gross salary on a diamond ring. Campbell says once you have bought your first diamond, you are statistically likely to buy your second diamond, and this increases upon every additional purchase.

What about industrial diamonds? From a value perspective, this sector is relatively small. The majority of industrial diamonds are produced on industrial presses, rather than out of the primary natural diamond sources: kimberlites. Other uses are beginning to creep in, such as formerly silicon computer chips. Diamonds are an excellent conductor, so could become the computer chip of choice.

What about the financial side of things? Before the global financial crash in 2009, big institutional investors used to always take 10% of every high-potential diamond explorer in the world. After the crash, this funding from big firms dried up. From a long-term perspective, there are fewer and fewer diamond mines being discovered, and the belief in the natural diamond macro story remains robust. Campbell claims diamond prices must increase over the long term, but doesn't know when. There appears to be a consensus that a supply-demand gap is growing larger and diamond producers need to fill this void.

Are diamonds a luxury that future generations will be unable to afford? What statistics are diamond demand projections based upon? Realistically, to survive and get funded, Botswana Diamonds needs to find large or coloured stones via a kimberlite project.

What are the numbers? In its 7-year lifespan, Botswana Diamonds has had a burn-rate ranging from £350,000-£1,000,000 per annum. Because of a halt to fieldwork, generated by COVID-19, Botswana Diamonds' burn-rate should go below £350,000. The company is currently focussing on compliance work to keep licenses in good order and other desktop work. The average yearly cash burn is £500,000. The company has raised c. £3.5M in the last 7-years and is "reasonably-well cashed up at the moment." Campbell is conscious going to market would be incredibly difficult in the short term, so it appears the hatches have been firmly battened down. The general trend of the share price is down, so Campbell has a task ahead to change that trend.

Campbell has a good reason for investors to believe. the track record of the management team is top-notch. In their previous form, Africa Diamonds, the company was responsible for the development of the AK6 deposit (now the Karowe Mine) and delivered 10x returns to investors who got in and out at the right time.

Why should investors look at Botswana Diamonds now rather than after its evaluation phase? Drilling on high-grade geophysical targets with kimberlite minerals over the top of it is on the cards after the lockdown. Also in Botswana, a JV with BCL (in liquidation) has turned up some high-grade kimberlite targets. The liquidator is making progress. The South Africa project has released a 100t bulk sample that will be reviewed in the near future. in Zimbabwe, a JV with Vast Resources also demonstrates potential.  

Company page: http://botswanadiamonds.co.uk/

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Interview with Jeff Klenda, CEO of Ur-Energy (NYSE: URG, TSX: URE)

Jeff gives us his response to the US Department of Energy's document Resolving America's Competitive Nuclear Energy Advantage.

Company page: http://www.ur-energy.com

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Interview with Mike Rosenstreich, Managing Director of Hexagon Energy Materials (ASX:HXG)

Hexagon Energy Materials is an ASX-listed rare earth elements (REEs) developer. It is aiming to commercialise a 'revolutionary' rare earth processing technology called RapidSX™, which it claims has the potential to disrupt China's virtual monopoly over the processing of rare earth elements into rare earth oxides (REOs).

In March 2017, when Rosenstreich first joined Hexagon, he had a clear mandate: commercialize a Western Australian graphite deposit that the company held. Hexagon Energy Materials was primarily focussed on graphite for the anode of Li-ion batteries for the EV revolution. This worried Rosenstreich at the time, because China dominates the EV graphite space, and he saw little logic in David going into battle with Goliath. The McIntosh Project is a large-scale, high-quality flake graphite deposit, and Rosenstreich and his team worked hard to explore different routes the company could push its graphite down. The team began to appreciate the value in the downstream of the graphite business, rather than the upstream.

Last year, a JV with a major Australian mining company allowed Hexagon Energy Materials to finance the McIntosh graphite project through to production. However, moving through 2019, Hexagon Energy Materials began focussing much more on the downstream. Unfortunately, through 2019, declining graphite prices cause the company to come out publicly and label the project unviable in that price environment. The company ended up pulling back from its primary upstream graphite project to focus on the downstream: specialty graphite materials for special markets with a 'made in the USA focus,' because that's when the company's technical expertise is. During this transition period, Hexagon Energy Materials linked up with many great rare earth element minds, and found graphite fits neatly into the rare earth thematic. The company started to look into the rare earth supply stream, and studied Toronto-based Innovation Metals Corp; it has a downstream technological process for separating rare earths, and this was a "pinch point" in the supply chain. In October of last year, a transaction between the two parties allowed Hexagon Energy Marerials to obtain 49% interest in the project. In short, this is not a major pivot from graphite to rare earth elements; this is a major pivot from upstream to downstream.

China also dominates REE production, accounting for 80% of mine production worldwide. The country generated an estimated 132,000t of REO last year, compared to 26,000t from the US and 21,000t from Australia. Rosenstreich would like to commercialise the project over the next few years, which compares very favourably with a REE mining project. The commercial demonstration plant will cost US$2M but will become self-sustaining financially as a service to customers.

What is the plan? How can Hexagon dismantle China's REE dominance? Rosenstreich claims that being a US-based company positions the company to have conversations with many blossoming American EV producers, who are keen on domestic supply. The thematic, in essence, is that the significantly modified capital profile of a RapidSX™ will allow companies to put their rare earth concentrate into a plant when otherwise it would be uneconomic. Rosenstreich is pragmatic: Hexagon Energy Materials will not become a global REE player, but he believes one commercial RapidSX™ facility in North America that demonstrates American REE materials can be processed into oxides, some of the existing rare earth permanent magnet makers will seriously look at setting up a facility in North America. Hexagon will either sell clients a technical license or will collaborate with the producer of REE concentrates to process them together. The numbers are excellent compared to existing solutions, but nobody is listening.

Company page: https://hexagonresources.com/

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Interview with Claude Dufresne, President &  CEO of Niobay Metals (TSX-V:NBY)

Niobium is a very small market (100,000t, US$3-4Bn) with very few players (2 in Brazil, 1 in Canada). Most investors have never heard of it, let alone considered investing in it. Niobium is mainly used (90%) in the production of stainless steel alloys and also in alloys with a variety of nonferrous metals, such as zirconium. Niobium is used in superalloys for jet engines and heat resistant equipment. The remaining 10% of demand comes from the intelligent technology sector.

So, onto Niobay Metals. The TSX-listed niobium explorer is aiming to be a new entrant into the niobium space. Dufresne himself has 15-years worth of niobium-specific experience. Useful. Dufresne claims to have a project similar to the successful Niobec Niobium mine in Quebec, a mine Dufresne previously worked on in the early 2000s. The appeal is clear: niobium is a high margin, unsaturated market, but does Niobay really have what it takes to add value for shareholders? If the share price is anything to go off, there are doubts.

Niobay was set up with the intention of finding an excellent niobium project. The James Bay Niobium Project was originally acquired for C$50,000 cash and C$300,000 of Niobay stock in 2016. Dufresne believes the project is worth a large multiple of that. Niobay has studied historical data, released a resource estimate, and conducted a scoping study.

Some exciting news was released a few weeks ago, with Niobay finding high-grade niobium from the first three drill holes at the James Bay project. What was the market reaction? Nothing. This appears to be a major issue for Niobay Metals: the market is not responding. Is it the obscure nature of niobium, or is there a problem with Niobay itself? Dufresne claims the first reason is that investors don't understand the value of the asset. The first hole's assays included 0.69% niobium pentoxide Nb205 over 185m in one hole including 1.02% Nb2O5 over 61.8m. Converted to gold, that is a 185m intersection at 4.3g/t Au eq: much more exciting. It is perhaps true that many investors don't understand if these numbers are impressive or not, and many will not want to go anywhere near a commodity they don't understand, especially if it's an exploration company. Aren't these problems inherent in the niobium space itself? If so, what is Dufresne going to do about it? He knew all about the niobium space beforehand, so should Niobay be experiencing these issues?

A lot of niobium-aware investors are aware of the scale of the competition. The world's largest producer of niobium, CBMM, has enough niobium to supply 100% of the world's demand profitably, and will continue to have this amount for at least 20-years. So, where is the space for Niobay? How can there be a gap in the sector when demand is already satisfied? Or can Niobay produce at a substantially lower cost to undercut the established competition? Dufresne claims in reality that niobium consumers target smaller producers before going to CBMM. Strangely, does being a smaller niobium producer help in this space? Will suppliers see Niobay as its first point of contact to avoid giving CBMM more leverage? The market doesn't appear to agree or understand at present.

Long term, Dufresne expects Niobay to be taken out once the project has been derisked. Niobay is currently sat on C$1.7M in the bank after conducting its drill program. This funds the company through to the start of 2021. This year, Dufresne wants to get the PEA out and raise more capital. Licencing and permitting with then present additional obstacles to navigate. Niobay may need to raise money in Q3/20 or Q4/20.

In terms of remuneration, Dufresne claims he and his board members are heavily invested. He claims a salary of C$200,000 per annum.

Company page: http://niobaymetals.com/

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Interview with Jeff Klenda, President & CEO of uranium producer, Ur-Energy (TSX: URE, NYSE: URG)

Klenda tells us what he knows about the US Dept of Energy announcement due this week. And what he thinks these lost pounds mean for his shareholders. Immediate winners and who is at the back of the room.

Company page: http://www.ur-energy.com/

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Interview with Craig Parry, President & CEO of IsoEnergy (TSX-V:ISO)

IsoEnergy is a uranium junior listed on the TSX-V. It is a uranium exploration and development company with a portfolio of projects that sit in the renowned Athabasca Basin in Canada. The board and management team at IsoEnergy has a track record of success in uranium exploration, development and operations. Interestingly, IsoEnergy is a spin-out; it was founded (2016) and is supported by the team at major shareholder, NexGen Energy. IsoEnergy focusses on projects that would not have been given attention at NexGen.

The focus for the last 18-months has been drilling out the company's flagship Hurricane Deposit at the Larocque East project in the Eastern Athabasca Basin.

Anyone who follows the uranium space will know what a tough decade the green energy commodity has had. In the last few weeks, in the wake of the COVID-19 international crisis, major supply disruption at the 2 largest uranium producers, KazAtomProm and Cameco, has been perceived by many investors and uranium commentators as a major catalyst moment. Parry is candid: this is a terrible time for humanity, but a good time for uranium. The 441 nuclear reactors operating around the world are hungry for uranium, and this significant disruption to the uranium supply chain has exposed the fragility of international uranium supply. The utility companies can't hold out forever and there is a sense with every passing day that uranium price discovery is growing closer. The uranium spot price has already risen quite sharply, from US$23.50/lbs to US$32/lbs, but uranium commentators are clear: this is just the beginning of a new bull cycle.

Being in the Athabasca Basin, the high-grade of IsoEnergy's portfolio is obviously key. The Hurricane Deposit is only 40km away from Orano's McClean Lake Mill: this turns a part of the uranium production process that is normally incredibly expensive and complex into something that looks much more economic and simple. The mill is currently on care & maintenance and has been underfed, so Parry is confident IsoEnergy can slot neatly into the supply side of things. IsoEnergy should now find it easier to raise capital, courtesy of the rising uranium spot price. The company has been approached by numerous brokers and bankers in the last few weeks offering significant financings. IsoEnergy is fully financed for its planned summer of drilling with C$3.5M in the bank, and with operations currently halted due to COVID-19, Parry is in no rush to raise capital.

The message from Parry is clear: stick to the plan, advance the project and deliver value for shareholders through eventual production. Ideally, by Summer, IsoEnergy will conduct an enlarged resource delineation drilling program, though there is plenty of exploration work left to do. There are several promising targets, and IsoEnergy's chances of discovery are "very, very good." The company has yet to find the boundaries of the deposit yet, so will this undoubtedly require some attention. IsoEnergy is still "1-2 drill campaigns away from knowing the full extent of the deposit." It is too early to discuss the path to development; IsoEnergy doesn't even have a Resource yet. Investors will be hoping for an impressive resource come the Summer, if this is possible. Then they'll want to see a feasible plan from Parry for how he can get this thing off the ground. Until then, this is a risky opportunity, but with big potential.

What did you make of Craig Parry? Why choose IsoEnergy over any other uranium junior? How will the uranium market develop over the remainder of 2020? 

Company page: http://www.isoenergy.ca/

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