This is a brief update covering two of our shortlisted stocks: Defense Metals and Forum Energy Metals. I may publish an interview with the CEO of another company on the Highballer shortlist later in the week.
Defense has been busy pushing its strategic, wholly-owned Wicheeda REE Project further along the development curve.
To that end, the company dropped the following headline on June 12:
The company closed the first tranche of this non-brokered flow-through PP (3,460,000 flow-through units priced at $0.25) for gross proceeds of $865,000.
“Each FT Unit is comprised of one flow-through share and one common share purchase warrant. Each warrant is exercisable to purchase one common share of the Company at a price of $0.35 per share for a period of twenty-four (24) months from the date of closing the FT Private Placement.”
The Company also closed the first tranche of its non-brokered hard dollar PP (675,000 units priced at $0.20) for gross proceeds of $135,000.
“Each Unit is comprised of one common share and one common share purchase warrant. Each warrant is exercisable to purchase one common share of the Company at a price of $0.30 per share for a period of twenty-four (24) months from the date of closing the Private Placement.”
These funds are earmarked for its REE flotation pilot plant, a phase-2 proposal recommended by SGS Canada Inc.
Pilot plant completion is expected by the end of July 2020. Initial results are expected in August.
The objectives of this phase-2 pilot plant testwork:
- Confirm metallurgy in a pilot plant environment;
- Generate data to support engineering;
- Produce a large amount of concentrate for downstream hydrometallurgy testing.
Some people ask, “what’s this pilot plant all about… is it some kindofa science experiment”?
SGS Canada—the world’s leading inspection, verification, testing and certification company with over 2,600 offices and labs worldwide—is running the pilot plant show. As you can see, there are multiple stages to producing a concentrate. This is the real deal.
Keep in mind that Defense has 30 tonnes of REE rich material stockpiled above ground—material that was bulk sampled in early 2019.
“The pilot plant will treat up to 30 tonnes of material in a continuous manner over 180 hours of operation, at an anticipated feed-rate of approximately 150 kg per hour. The approach will be to first commission the circuit in mid-June. This will be followed by a series of optimization runs through later June / early July. A continuous 48 hour run will serve to confirm metallurgy over extended operation in later July.”
The second tranche of the PP is expected to close later this month. Those funds would get a drill rig mobilized to the Wicheeda project.
I expect newsflow to be steady over the remainder of the year.
Forum Energy Metals’ (FMC.V) flagship project is Janice Lake—38,250 hectares of district-scale copper potential located in north-central Saskatchewan within the Wollaston Domain, “a northeasterly-trending belt of metamorphosed lower Proterozoic supracrustal rocks deposited upon Archean granitoid basement.”
We took a close look at Forum Energy on May 31st—A new addition to the Highballer shortlist – Forum Energy Metals (FMC.V).
It’s always good hear a CEO speak to a project’s fundamentals.
As you may recall, Janice Lake’s district-scale copper potential attracted mining behemoth Rio Tinto in a JV worth $30M.
Rio has already spent over $3M on the project, since last summer. They plan to spend another $7M on a multiple phase drilling campaign set to begin in late July.
We should see upwards of 20,000 meters drilled over the next 8-months, all told. 20k meters is an aggressive campaign.
If Janice Lake didn’t have district-scale potential, Rio wouldn’t be here.
The above interview also covers Love Lake, a 27,896-hectare project with multiple Ni-Cu-PGM occurrences associated with the 2.5 billion-year-old Swan River mafic complex, and the Love Lake felsic pluton in the Peter Lake Domain.
Management plans to put boots on the ground at Love Lake this summer with a crew of prospectors and geologists.
The company also plans to fly a high resolution mag survey over the project to further flesh out some of the more compelling Ni-Cu-PGM targets identified to date (Love Lake was intermittently explored for platinum group metals (PGMs) since the mid-1980s).
These PGM settings often occur with significant nickel and copper values. And Love Lake does have early indications of significant Ni in its subsurface layers (see map below)…
“Grab samples in Trench #4 in the Korvin Lake area returned 0.33% Cu, 1.33% Ni, 2735 ppb platinum, 2685 ppb palladium, 70 ppb gold and 0.43%Cu, 0.23% Ni, 3580 ppb platinum, 4275 ppb palladium, 200 ppb gold. (Saskatchewan Geological Survey – Maxeiner and Rayner, 2005).”
I love nickel. Electric vehicle (EV) battery makers—to overcome travel distance shortcomings in current EVs—are moving away from lithium-ion phosphate batteries and embracing newer designs based on NMC111 (equal parts nickel, cobalt, manganese) and NMC811 (80% nickel, 10% manganese, 10% cobalt).
With two key nickel guys on its advisory board (Dr. Larry Hulbert and Jim Atkinson), Forum is weighing its options for Love Lake.
The company could bring in a JV partner early, after this summer’s exploration campaign is complete.
They could also mobilize a drill rig to the property on their dime, and continue adding value to the project before they option it out. This would depend on exploration results from the summer campaign, and market conditions.
Deviating from the company’s prospect generator biz-model—footing exploration expenditures 100% if future exploration results demand—is also an option.
And if momentum begins to build and market conditions are right, spinning off the project as a dividend to shareholders is another avenue open to management.
I like this team’s open-mindedness and vision. You would think that unlocking a project’s value in a manner that best serves shareholders is standard protocol with most companies in this arena. It’s not.
Rio’s geological team will be mobilized to Janice Lake over the next two weeks and will begin prospecting and mapping the entire length of the project (52 kilometers). Drill crews will follow. Drilling is expected to commence soon after (late July) and will test the district-scale (regional) potential of the project.
Full disclosure: Defense Metals and Forum Energy Metals are Highballer marketing clients. The authors owns shares in Defense and may initiate purchases of Forum in the coming days/weeks.Disclaimer - Legal Notice
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