CSE Issuer Stories, Magazine

Trulieve is setting the pace in a U.S. cannabis market on the verge of major change

Since launching in Florida’s medical cannabis market in 2015, Trulieve Cannabis (CSE:TRUL) has grown its operations to encompass a total of nine states across the U.S., expanding its team from 10 members to more than 6,000 and surpassing US$1 billion in revenue.

The company now operates the world’s largest retail network of cannabis dispensaries, not to mention more than 4 million square feet of domestic cultivation facilities, with 3 million square feet of that in Florida. Well-established hubs in the Northeast, Southeast and Southwest are anchored by leading market positions in Arizona, Florida and Pennsylvania.

Canadian Securities Exchange Magazine caught up with Trulieve Chief Executive Officer Kim Rivers in mid-May to discuss recent milestones achieved by the multi-state operator and upcoming catalysts in existing and new markets as regulatory initiatives at both the state and federal levels gain momentum.

Trulieve recently reported its first quarter financial results. Can you run through some of the highlights?

We had 4% revenue growth, both sequentially and year-over-year, to $298 million. We had a margin uptick from 54% in Q4 of 2023 to 58% and a significant increase in adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) from 31% to 36%, with over $100 million in adjusted EBITDA.

We’re seeing the consumer strength and behaviour that we experienced at the end of Q4 continue into Q1. We’re the only one of our peers that has reported strong sequential growth. The initiatives that we’ve invested in for the last 12 to 18 months are beginning to show up in a real way in our financials.

You are Florida-based with the majority of your operations in that state. How would approval of the Smart & Safe Florida initiative on the November 2024 ballot benefit the company?

We were very excited to have the Supreme Court rule in favour of allowing Amendment 3 on the ballot, which would allow for adult, personal use of cannabis in the state of Florida. We have been a big supporter of the expansion of access to cannabis wherever we operate. With Florida being our backyard, it’s very close to home for us and we’re very passionate about it. This is the first time the issue will be before Florida voters. 

Florida already is one of the best cannabis markets in the country with its medical market at close to 900,000 patients. If adult-use does pass, we anticipate that the market will grow to approximately $6 billion. 

It’s important to build that adult-use program on top of existing infrastructure. We currently operate 135 medical locations in the state and have extensive cultivation and manufacturing capability in Florida as well. Florida is a vertical market so everything in our stores in the state comes from a plant that we grew. It’s true, strict seed-to-sale.

So, it’s a tremendous opportunity for us in the state of Florida and a tremendous opportunity for Floridians. I’m really looking forward to having the opportunity to vote on the initiative in November.

Your other cornerstone markets are Pennsylvania and Arizona. What opportunities do you see in those markets?

In Pennsylvania, we are very encouraged by the momentum that is happening right now in the legislature. Governor Josh Shapiro is very supportive of moving to adult-use and we’re seeing increased discourse and bipartisan support of passing a bill in the legislature to move that market to adult-use. We believe that Pennsylvania could be an approximately $4 billion market. Pennsylvania also has a very robust, healthy medical market. We have seen tremendous growth in our brands, particularly among Roll One and Modern Flower.

Trulieve is in Arizona through our acquisition of Harvest Health & Recreation. We are at the point now where we have opened some brand new locations under the Trulieve banner and are looking forward to transitioning 100% of our store locations this year from the Harvest name into the Trulieve platform.

We also just launched our revamped loyalty program. Arizona was our first large market for the launch and that has done tremendously well. We had an approximately 30% adoption rate in just two months and we’ve seen a 50% increase in return frequency from those customers who are opting into that loyalty program, an incredible start out of the gate. We are looking to roll that program out to all of our other markets this year.

We’re also really excited about Ohio moving to adult-use and us being positioned to take advantage of that opportunity. We are waiting for some additional clarity but it looks like it could be as soon as the summer for adult-use to turn on in that market. 

There is a lot of positive momentum around policy reform in the U.S. with cannabis set to be rescheduled from a Schedule I to Schedule III drug and the SAFER Banking Act. How do you see this playing out?

Rescheduling will have huge implications, as it is the first significant policy change for cannabis to happen at the federal level. I believe that it’s the first important domino that could set off a series of additional policy changes. 

It takes a long time in the U.S. to have policy shifts. I think folks forget that the average length of time for a policy to make it from an idea to final passage is approximately 11 years. With SAFER Banking, we’re at the 10- to 11-year time horizon right now. That certainly gives me additional optimism that we could pass SAFER Banking on the heels of an official rescheduling of cannabis to Schedule III. 

The second thing is that it will open the door for additional research. I’m super excited about the possibility of having more clinical trials produce data we can lean into for our products and to make sure the public is as educated as they can be as it relates to the benefits and health concerns that this wonderful plant can help address.

One of the major benefits of rescheduling would be that cannabis operators will no longer be subject to tax code 280E. How would this impact your financial position? 

For folks who don’t know, 280E is a penalty tax for businesses working with a Schedule I drug, under which cannabis is currently classified alongside methamphetamine and heroin. It does not allow you to make any normalized business deductions, so we have a massively increased tax burden. After rescheduling, we would become a normal payer, which would drastically reduce that liability. The great news here is that we won’t have to wait for another process to unfold. It’s automatic. 

To put the impact in context, our 280E tax liability from 2021 to 2023 was $350 million. For the first quarter, our 280E exposure would have been approximately $46 million. It has a sizable, very material impact on our financials. 

Those potential savings are significant. Are there any particular initiatives you would reallocate these funds to? 

Optionality is critical in this business. There are a lot of things that happen externally that we look to influence but that are out of our control. We want to have optionality as it relates to our balance sheet position as well as flexibility for when opportunities do present themselves so we can act quickly on them ahead of growth cycles and catalysts. 

What can investors expect from Trulieve for the remainder of 2024?

We have built this company to be profitable and durable and you’re seeing that in our numbers. The only way we are able to deliver those results is through the strength of our products and our relationships with our customers, so we continue to invest in our customer experience and our employees. Also, our fully automated 750,000 square foot indoor cultivation facility in Florida has turned on and is contributing to significantly lower costs, which show up in our margins and give us greater optionality and flexibility in terms of the customer experience we’re able to deliver.

This story was featured in Canadian Securities Exchange Magazine.

Learn more about Trulieve Cannabis at https://www.trulieve.com/.

Magazine

Canadian Securities Exchange Magazine: The Cannabis Issue – Now Live!

Welcome to the latest issue of Canadian Securities Exchange Magazine, your source for in-depth stories of entrepreneurs from a wealth of different industries.

The journey for publicly traded cannabis companies and their investors has often been characterized by change. Since our last cannabis-themed issue in late 2022, the narrative has shifted from rapid expansion to a focus on ruthless efficiency, more jurisdictions have legalized cannabis, and in the U.S., there is continued, albeit slow, momentum toward greater acceptance of cannabis. 

In this issue of Canadian Securities Exchange Magazine, we feature five CSE listed cannabis companies gearing up to make the most of the coming opportunities with important regulatory change on the horizon.

The CSE listed companies featured in this issue include:

Check out the Cannabis Issue of Canadian Securities Exchange Magazine here:

CSE Issuer Stories, Magazine

A Top-Tier Lithium Project in Saskatchewan Is Just the Start of This Young Company’s Ambitions

The need to enhance the reliability of supply chains for everything from parts for manufacturing to critical minerals is finally garnering the attention it deserves, and there is no better way to ensure this reliability than having all the stops along the way situated right in your own backyard.

While resource extraction has long been a forte of Canadian industry, an increasing number of companies are also now working to set up advanced domestic processing capacity, rather than simply shipping raw material overseas where other nations end up controlling the resource and keeping much of the value for themselves.

EMP Metals (CSE:EMPS) plans to be part of the solution for battery materials in North America, having recently released a Preliminary Economic Assessment (PEA) evidencing a robust lithium project in mining-friendly Saskatchewan. And while there is plenty of its acreage still to be explored, the company is moving quickly to determine the best path to processing the lithium in its brines all the way up to the grade needed to make the batteries for electric vehicles.

EMP Chief Executive Officer Rob Gamley sat down recently with Canadian Securities Exchange Magazine to discuss accomplishments to date and the near-term outlook for getting his company’s contribution to the supply chain up and running.

EMP Metals has not only identified an attractive lithium brine deposit but you are also intending to work with partners on processing the brine once you take it out of the ground. Walk us through the business plan at a high level.

Our main focus is being the first group to have a commercial Direct Lithium Extraction (DLE) facility up and running in Saskatchewan. We’ve taken a pragmatic approach by building an Inferred resource on our landholdings, which are also in the province, and followed that up recently with the release of a Preliminary Economic Assessment.

The next step is a four-month field pilot with Koch Technology Solutions to test 1,000 litres of feed brine from our project area. Downstream partner Saltworks Technologies will be a part of this test as well.

At the same time, we are doing a front-end engineering study, also with Saltworks, over a six-month period. All of these activities are designed to help us assess the technical aspects of our projects on an industrial scale.

Talk to us about your landholdings and what you’ve found so far. We hear the existence of wellbores from historic oil drilling helps to keep capital costs under control.

There were some government datapoints that enabled us to vector in on the specific locations we chose and, obviously, there were certain things we were excited to see from a geological perspective. This is a large regional aquifer and the geology is relatively simple.

Our initial plan was to enter existing wellbores to test them and thereby reduce our capital spending requirements, and we were successful with that. We also drilled new wells where there were not enough suitable existing ones to re-enter and test.

As for the basics of the projects, we have holdings in southeastern Saskatchewan totaling approximately 200,000 acres. These are predominantly crown mineral dispositions and separated into three key project areas, with the highlight so far being the Viewfield portion.

We’ve tested what to our knowledge are the highest lithium brine concentrations proven so far in Canada, with concentrations up to 259 milligrams per litre. Our Inferred resource on the Viewfield project is 747,526  tonnes of lithium carbonate equivalent (LCE), and at Mansur the Inferred resource is 503,462 LCE.

What about processing the brines once they are out of the ground?

The plan is for brines to be processed and the lithium extracted through DLE technology from one of our partners. It would then be concentrated, refined and converted by the downstream service provider I mentioned earlier, Saltworks.

Like our company, Saltworks is based in Western Canada, so you have a world-class Canadian resource and a top-tier Canadian technology company teaming up on this. Saltworks is a global leader in wastewater treatment and lithium refining solutions and is able to take extracted lithium and refine it to the standard of battery-grade lithium carbonate. In our case, we were able to produce carbonate at 99.95% purity.  That’s the triple nines that you’re looking for in order to have true battery-grade lithium.

I think with the trends we currently see of deglobalization, onshoring, bolstering supply chains, and with the Canadian and Saskatchewan governments supportive of these developments, what we are working on is timely and important. You can’t necessarily rely on other sources in today’s world. With what we are advancing, it should be easier to assess the risk.

On that note, Saskatchewan is known as a particularly good jurisdiction for resource companies. Tell us about your experience.

Our experience in Saskatchewan has been nothing short of fantastic. The provincial government is highly supportive as it looks to further diversify its mining and energy sectors. We’ve received a lot of public support for our project as well.

There are so many advantages. Not just the extensive infrastructure owing to years of oil and gas activity that means access to power and other project requirements, but also Saskatchewan being ranked third in the world, and first in Canada, for mining investment attractiveness by the Fraser Institute. There is no better place to be for this business in our opinion.

You came out with your PEA just after the start of the year. Walk us through the numbers.

We are very pleased with the Preliminary Economic Assessment. It shows that we have a large project which compares well vis-à-vis our peers.

I think it’s important to highlight that the numbers in the PEA represent only 14% of our overall landholdings. The project life is 23.2 years, producing 282,090 tonnes of battery-grade lithium carbonate.  Using an average selling price of US$20,000 per tonne of LCE, our after-tax Net Present Value (NPV) at an 8% discount rate is US$1.066 billion. The after-tax internal rate of return (IRR) is 45% and our payback period is 2.4 years at the after-tax number.

Reflected in that last point is that our operating expenditure (OPEX) estimate is one of the lowest in North America thanks to the concentration and quality of the brine.

In the third quarter of 2023, EMP announced an investment of just over C$9.7 million from a private equity group in the U.K., which is quite an accomplishment in this challenging market. We know you are in frequent touch with shareholders. Is there any feedback from the investment community you can share with us on the project or sector in general?

Obviously, the lithium price has not held up as well as the industry had hoped.  But there is certainly a belief that the long-term outlook is robust, with EV sales globally up 30% last year. So, we see the electrification of the economy and green trends continuing.

Regarding the investment community, the mining-focused U.K. investor you mentioned conducted a lot of due diligence on our project and it held up fine, resulting in them taking an equity stake in EMP of almost 20% – it’s a huge endorsement of our company. Further, we clearly have caught the attention of major oil and gas players and strategics. They see our company as a good place to deploy capital owing to our asset quality and the regulatory environment in Canada.

Again, we’ve got a great reservoir with the highest concentrations we know of in Canada to date, low OPEX and an attractive IRR. And I can’t overstate how important it is to be working in a jurisdiction such as Saskatchewan where things are significantly de-risked from a permitting perspective and support from the government and public.

Is there anything we have missed?

I would say that EMP really differentiates itself with a pragmatic, economics-driven approach. We have done a significant amount of work to de-risk the project over the last 12 months, and our top-tier technical team enables us to advance things quite quickly. I would reiterate that our brine is of particularly high quality with no oil or hydrogen sulphides, and that translates into cost savings because little to no pre-treatment is required.

From a geological standpoint, we are in the Duperow formation, which is significantly shallower than the Leduc formation in Alberta, and this is another factor helping to keep costs under control. Add in our commitment to working with the best DLE companies and downstream refiners in the business and I believe things are lining up for us to make big strides in the months and years ahead.

This story was featured in Canadian Securities Exchange Magazine.

Learn more about EMP Metals at https://empmetals.com/.

Event Review

Looking Back on a Successful PDAC 2024

This year’s PDAC promised to be an eventful one – and we’re happy to report it most certainly was. From posh parties to connecting with mining and capital markets leaders from all over the world, the CSE team had an amazing time taking in the full PDAC experience. 

While every PDAC convention offers the unique opportunity to take the pulse of what is going on at the ground level and in the boardrooms throughout this industry, this year, the CSE team noted a lot of conversations about ‘electrification’ on and off the show floor.

This year, however, there was an extra special buzz in the air at PDAC. Not only is 2024 a milestone year because we are celebrating our 20th year as a recognized stock exchange, but we can earnestly say that this was one of the best PDAC experiences yet. 

By the numbers, we had more CSE listed companies exhibiting at the Investors Exchange than ever before; attendance and engagement at our events was at an all-time high, and the continued popularity of our conference-related content reflects our ongoing commitment to showcasing the entrepreneurial spirit that permeates throughout the Exchange. 

Yes, there are certainly headwinds facing segments of the mining industry, particularly as it relates to raising capital. But, judging from the conversations and energy at this year’s show, resilience and perseverance are in abundant supply. 

Thanks to the PDAC convention organizers and to everyone who joined us at this year’s show. We look forward to returning again next year!

Read on to find out more about all of our PDAC highlights, including the new and exciting additions to our event slate, as well as to check out photos from all of our adventures on and off the show floor. 

CSE Welcomes Australian Delegates

During this year’s PDAC convention, we were thrilled to host our first-ever Australian-focused Market Open at the CSE office in Toronto. 

Our friends and colleagues from ‘down-under’ were treated to the highest market opening celebration in Canada and took in the spectacular view of the city from the CSE’s downtown Toronto offices atop First Canadian Place. 

Richard Carleton, CSE CEO, shared important updates on the Exchange’s progress toward membership with the World Federation of Exchanges and reiterated the importance of the mining and exploration sector to both the Canadian and Australian capital markets. 

In addition, representatives from Canaccord Genuity, Citadel Securities, and Iress provided great perspectives on advancements that will specifically strengthen the global positioning of CSE listed mining issuers as they seek capital and liquidity in Australia and beyond.

Thanks again to all who joined for making our event a success!

Follow the link below to see the replay of our PDAC 2024 Australian Market Open.

Watch Now: PDAC 2024 Australian Market Open at CSE | March 6th, 2024

PDAC Convention

We had a fantastic time engaging in all things mining and exploration at this year’s PDAC convention. As with previous years, the convention was a whirlwind of activity however one of the big highlights for our team was meeting with CSE listed issuers on and off the show floor. 

This year, a record number of CSE listed issuers were on the exhibition show floor at the Investors Exchange. It was great to catch up with members from their respective teams and to help them have the best convention experience possible. Here’s the list of CSE listed companies who exhibited this year:

Additionally, our role as an official media partner enabled us to distribute the Mining Issue of Canadian Securities Exchange Magazine to our many booth visitors and to all convention attendees. If you missed out on snagging a copy at the event, you can read the latest Mining Issue online here.

See you all at next year’s PDAC!

Read Now: Canadian Securities Exchange Magazine – The Mining Issue – March 2024

CSE Investor Luncheon

The highly-sought after CSE Investor Luncheon brought together various members of the investment and capital markets communities and an exciting cross-section of mineral exploration companies listed on the CSE for company presentations, a special panel, and networking. 

Rob Cook, the CSE’s Senior Vice President of Market Development, was back to emcee the pitch presentations. CSE listed issuers continue to step up their game every year, with some of the most proficient pitches yet. Thank you to the companies that participated, including:

The second portion of the afternoon was a panel discussion, where attendees enjoyed a very engaging and lively discussion about short selling. 

We’d like to thank Terry Lynch, Founder of Save Canadian Mining, who joined Richard Carleton as a special guest on the panel, “Fact-and-Fiction – Short Selling in the Capital Markets.” 

Thank you to everyone who joined us, with special thanks to our incredible sponsors Computershare, DealMaker, MNP, Grove Corporate Services, Issuer Direct ACCESSWIRE, Marrelli Trust Company Limited, Marrelli Support Services, DSA Corporate Services, Newsfile, Outlier Marketing, QuoteMedia, Independent Trading Group (ITG), and W.D. Latimer Co. Limited for making the event such a huge success! 

We hope you’ll join us again at next year’s Investor Luncheon! 

View the album: CSE’s Annual PDAC Investor Luncheon 2024

Mangia Bevi Festa

Once again, we were pleased to co-host Mangia Bevi Festa, our exclusive PDAC networking event, presented in partnership with MNP and Aird & Berlis! 

The capacity crowd filled the Pilsner Hall at Steam Whistle Brewing which served as an incredible setting for connecting with friends old and new. 

As always, this event was buzzing with conversations about mining and capital markets, and everyone enjoyed connecting and reconnecting over delicious food and drinks on offer. 

Thank you to everyone who attended and for making this year’s event another success!

CSE Issuer Stories, Magazine

Synergy Abounds When You Put Salt Mining, Hydrogen Storage and Ammonia Cracking Under One Roof

Salt was one of the most valuable commodities in ancient times. In fact, the phrase “worth its salt” is thought to have originated with the ancient Romans, who valued their sodium chloride highly.

Roman soldiers at the time received wages so they could purchase salt to preserve food such as meat and fish, in what was known as a monthly “salarium,” which has evolved into the English word “salary.”

Today, salt has a wide range of commercial and consumer applications, from water treatment, drilling fluids and winter road maintenance to food processing, condiments and preservatives.

Globally, the size of the salt market is projected to grow from US$34.1 billion in 2023 to $48.6 billion by 2030, according to Fortune Business Insights.

Canadian company Vortex Energy (CSE:VRTX) hopes to capture some of those sales through the advancement of its Robinsons River Salt Project located in Newfoundland and Labrador.

In doing so, it would help to reduce the 7-10 million tonne per year road salt shortfall that leads Canada and the U.S. to turn to the import market to top up their supplies, according to Mining.com.

“Where we are located is near one of the largest salt discoveries in eastern North America,” Vortex Energy Chief Executive Officer Paul Sparkes tells Canadian Securities Exchange Magazine.

“We are also next to a large, proposed hydrogen project called World Energy, which will require storage not only for hydrogen but also for green energy.”

Sparkes, an accomplished business leader and entrepreneur, is a former director of operations under Canadian Prime Minister Jean Chrétien and has also served as a senior aide to two premiers of Newfoundland and Labrador.

Vortex Energy boasts an experienced and distinguished management and advisory team as well, which includes famed Yukon gold prospector Shawn Ryan, and George Furey, who served as speaker of the Senate of Canada from 2015 to 2023.

Robinsons River, which is comprised of 942 claims covering 23,500 hectares, contains two large-scale salt structures that were identified through geophysical and seismic exploration. The maximum thickness of the salt strata is estimated to be 1,700-1,800 metres in both structures.

As salt is extracted from the ground it leaves behind caverns or domes, which are ideal locations for storing hydrogen, an increasingly popular clean fuel option.

Salt caverns feature some significant advantages when it comes to storing hydrogen. First, the caverns allow for safe storage of large quantities of hydrogen under pressure with minimal environmental disturbance at the surface. As well, they enable flexibility regarding injection and withdrawal cycles.

Vortex began drilling the Robinsons River project in November of last year, with the first occurrence of salt rock occurring at a depth of 581.5 metres at the Western Salt Structure, which has the potential to house an estimated amount of 250,000 tonnes of hydrogen in more than 25 caverns.

The company notes that based on available geological information, the East and West Salt Structures have a conservatively estimated potential combined hydrogen storage capacity of up to 800,000 tonnes within more than 60 caverns.

Vortex Energy says its Robinsons River salt dome project could be as much as 127% larger in terms of hydrogen storage potential than the Fischell Salt Dome owned by privately held Triple Point Resources.

In addition, Robinsons River’s location in Newfoundland and Labrador positions the project as a potentially viable alternative for supplying the U.S. East Coast with hydrogen, due to ready port access and distance to U.S. customers.

European markets are a distinct possibility as well, particularly in light of the agreement Canadian Prime Minister Justin Trudeau signed with German Chancellor Olaf Scholz in August 2022 envisioning a hydrogen alliance between their two countries.

Good access to power and roads underpins favourable logistics for moving product from site to port.

Vortex also holds the licence and right to use ammonia cracking reactor technology and membrane separator technology for producing hydrogen from ammonia.  According to Vortex, the technology causes the ammonia molecule to be “broken apart” in a process that creates inert nitrogen, which can be safely released into the atmosphere, and pure hydrogen, which is suitable for use as fuel.

Sparkes notes, though, that the technology is still in the “early stages,” reasserting that the company’s main focus is the salt resource and cavern storage opportunity.

But with a variety of end uses that include automobiles and maritime vessels, it is an important aspect of the company’s overall strategy and worth keeping an eye on as things progress.  Once all R&D work is complete, plans call for building a commercial prototype facility to produce high-purity hydrogen at a customer site to validate the system’s operating performance in a commercial setting.

Looking ahead, Vortex Energy recently raised C$1 million in flow-through funds and $1.5 million of hard dollars in an equity private placement, which the company will use to advance its Robinsons River project.

“Our first drill hole was completed before the Christmas holidays in late 2023, in which salt was hit in the first hole,” Sparkes says.

He added that the company has begun drilling its second hole, upon completion of which core from the two drill holes will be sent to the laboratory for analysis.

The drilling of the second hole is designed to confirm the depth of the salt rock structures at the project as well as to assess the geological properties of the salt and non-salt rocks.

Listed only since late December of 2022, Vortex Energy has assembled an impressively diverse team and proven its ability to raise capital and move expeditiously forward with project modeling and exploratory drilling. With completion of its second hole on the horizon, 2024 is shaping up to be an important year for the company as it enters a new phase of its multi-faceted growth strategy.

This story was featured in Canadian Securities Exchange Magazine.

Learn more about Vortex Energy at https://vortexenergycorp.com/.

CSE Issuer Stories, Magazine

Quiet Market an Opportunity Rather Than a Hurdle for This Québec-Focused Explorer

Amid a challenging environment for junior miners, Abitibi Metals (CSE:AMQ) took an aggressive approach to acquisitions and financing in the fourth quarter of 2023 to put itself in a strong position for when resource stocks bounce back.

Notably, the company capitalized on the Canadian financing calendar, successfully securing over $14 million through a combination of charity flow-through and common shares in December. 

Canadian Securities Exchange Magazine caught up with Jon Deluce, Abitibi Metals’ Founder and Chief Executive Officer, to talk about the company’s recent acquisition of the B26 polymetallic copper deposit and plans to put some of its newly raised capital to work on 30,000 metres of drilling.

Abitibi Metals is focused on the Abitibi Greenstone Belt in Québec. What opportunities does the company see in this region?

We see Québec as the best mining jurisdiction in Canada. The government support, positive relationships with First Nations groups, and the pro-mining sentiment create a strong foundation for mining activities in the province.

We’re excited about the opportunity to be in Québec because we’re on the verge of a commodity cycle that’s starting to turn and accelerate. Having a copper-focused project like B26 in a strong jurisdiction like Québec significantly enhances the value and prospects for developing such an asset. 

It was November of last year when you acquired the option to earn 80% of the B26 project. What does this mean for the company?

We had made the tough decision to reduce operations, and in turn cash burn, because we weren’t getting rewarded for our gold asset in what has been a very challenging market for the last one to two years in the junior mining sector. Our team decided not to wait for market conditions to come to us but to be aggressive and realize the opportunities that were at hand.

We looked at quite a few potential acquisitions to restart the pursuit of our exploration goals and provide a lower cost of capital. In the end, we landed on the B26 deposit, an asset developed by SOQUEM, a private company funded by Investissement Québec. We view this as both a discovery and an acquisition given the fact that the majority of the market didn’t realize this was available because it was sitting in a private company.

We’re starting with a significant resource (Indicated resource of 7.0 million tonnes at 2.94% copper equivalent and Inferred resource of 4.4 million tonnes at 2.97% copper equivalent). This is a polymetallic deposit with a copper-gold stringer zone and parallel zinc-silver massive sulphide zone. These types of assets are rare, especially a polymetallic deposit with gold in the system. We believe this presents a strong starting resource with room for expansion.

Our plan for the year includes an ambitious drilling program of 30,000 metres to further develop and highlight the growth and upside potential of this asset, which is situated within 7 kilometres of our prior flagship asset, the Beschefer Gold Project.

We also benefit from mining infrastructure still being in place, such as a power line that runs 3 kilometres north of the project. These are all factors that support this being a serious potential development opportunity.

What are some of the key targets you’ll be drilling as part of this year’s program?

We’re starting exploration right away and asking ourselves, ‘Where’s the low-hanging fruit?’ and ‘Where can we develop value for shareholders cost-effectively?’

The 2018 resource was almost solely an underground resource. We see the potential and we want to test the open pit bulk tonnage potential of the asset so that’s going to be a priority in the first quarter of 2024.

To break down the drilling plan: number one is testing the open pit with shallow drilling testing the north bedrock interface of the deposit; number two is testing the extension and expansion potential within the first 300 metres vertical, which hosts the majority of the copper-gold resource; and number three is testing the system at depth. There’s a large infill area that needs to be drilled to define the full resource potential between 300 metres and 850 metres vertical.

There’s also about 5,000 metres of historical drilling that we believe needs to be assayed, that wasn’t previously, and it could help us assess the potential disseminated and bulk tonnage material around this high-grade core.

What else can investors expect from Abitibi Metals in 2024?

Beyond drilling activities, our plans include conducting a comprehensive gravity survey at B26, aimed at enhancing our understanding of the deposit’s overall structure. We will also delve into downhole geophysics, adding another layer to our understanding of the structure. 

In addition, an internal resource and updated 3D model will provide us with a strong exploration and growth framework. We aim to present our plans coherently to the market, ensuring that stakeholders can readily comprehend our results and grasp the growth potential.

In essence, our focus spans across drilling, modelling and geophysics, all converging to shape a compelling and comprehensible value proposition for the exciting year ahead.

Abitibi Metals recently raised just under $15 million. Tell us about those fundraising rounds.

The company was certainly a standout in the fourth quarter in what was still a very challenging market. We were able to complete a $4.4 million financing in December, immediately followed by a $10 million charity flow-through. And these financings were completed without issuing any warrants, which is a rare thing in this market and speaks to investor optimism about what we’ve put together.

So, our exploration budget for 2024 is $10 million, which will cover the objectives I have just outlined. In terms of our B26 option agreement, we are funded to clear phase one of the option, which we have four years to complete, in one year.

We brought in some strategic shareholders headlined by Frank Giustra and Greg Chamandy, both very well-known names in the space and the start of what I think is a great shareholder registry.

We’re also assembling the right team. Recently announced were the first two team members of our advisory committee, namely Eric Kallio, a former senior vice president of exploration at both Agnico Eagle and Kirkland Lake Gold, and Shane Williams, formerly a vice president at Eldorado Gold and he oversaw a landmark Québec project from pre-development agreement through to commercial production.

My thesis going into the acquisition of B26 was that we needed to find a potentially world-class asset to assemble a world-class team, and we’re at the start of that.

What is your outlook on the junior mining sector more broadly in 2024?

I see the sector performing incredibly well in 2024. Timing is a hard thing to dictate – I wish I had a crystal ball – but all the factors are there: easing inflationary pressures, the Fed pivoting on interest rate policy, and supply-demand imbalances for critical minerals like copper. Look what happened in other sectors when the supply-demand balance tipped, like it did with nickel a few years ago and what’s going on with uranium at the moment. It’s going to be very exciting.

We’re in a waiting period. But we didn’t want to wait for the market to come to us, so we were very aggressive in the fourth quarter with financing and acquisitions to be well-positioned for the market we believe is coming.

This story was featured in Canadian Securities Exchange Magazine.

Learn more about Abitibi Metals at https://abitibimetals.com/.

CSE Issuer Stories, Magazine

Excitement Follows When You Unveil One of the Largest Lithium Projects of Its Kind

Some 200 kilometres from Las Vegas sits Sarcobatus Flat. It is a massive dry lakebed, similar to its nearby neighbour Area 51, the birthplace of generations of advanced U.S. aircraft and, according to some, home to who knows what else.

Sarcobatus Flat is part of the Nevada desert and you can see it for miles due to an eye-catching surface that looks like a dusting of snow. Underneath that white blanket of salts lies what Mining Intelligence ranks as the third-largest lithium clay and hard rock project in the world, Bonnie Claire.

This is the project proudly held by Nevada Lithium Resources (CSE:NVLH). The company has 18,300 acres of land at Bonnie Claire and has completed a Preliminary Economic Assessment (PEA). By the numbers, the project contains 18.37 million tonnes of Inferred lithium carbonate equivalent.

That’s all the more notable when one considers that the global lithium market is projected to hit sales of US$15.45 billion by 2028, according to data from Research and Markets.

Canadian Securities Exchange Magazine sat down with Chief Executive Officer Stephen Rentschler to discuss what’s coming next at Bonnie Claire and the future of lithium as a commodity.

Let’s begin with an overview of Bonnie Claire. When you engage with new investors during presentations, how do you articulate what Bonnie Claire entails?

Bonnie Claire is an advanced lithium exploration project located in Nevada, two and a half hours northwest of Las Vegas. Our project gate is 50 metres from Interstate 95 and high voltage power wires traverse the entire length of our property, which is the size of Manhattan Island.

We’ve finished a PEA and have a robust project of substantial scale, projecting an annual output exceeding 30,000 tonnes over a mine life of 40 years. Even at conservative lithium prices, the PEA suggests a project with a net present value exceeding US$1.5 billion.

And while we have more than enough resource already, the prospect of discovering additional resources remains a distinct possibility.

I also tell investors that although Bonnie Claire is often referred to as a clay deposit, a nuanced understanding is required because sedimentary deposits are relatively new to the scene. The world has simply never needed the lithium they contain. South American salars (salt flats), and then the hard rock deposits, had been forecasted to provide the needed lithium supply. 

But now, with the world significantly increasing the projected number of electric vehicles (EVs) on the roads, a third category has entered the scene: the sedimentary deposits, often referred to as clays, which in the U.S. are predominantly found in Nevada. These sedimentary deposits tend to be of lower grade compared to many hard rocks, and even some brines. However, in Nevada, the size is the key. Lower grade is compensated for by vast tonnages.

Typically, I finish my presentation by telling investors that in just over two years, Nevada Lithium Resources has gone public on the CSE, acquired progressively larger percentages of this world-class project, and last summer consolidated 100% ownership of the property. Now, we are in the initial stages of introducing ourselves to the investing public, leveraging our new full ownership status.

Is the next step in this process a Preliminary Feasibility Study?

Yes, and ideally our Preliminary Feasibility Study (PFS) should be completed around the close of 2024, plus or minus a few months. Following the PFS, we envision launching immediately into a Feasibility Study that we think will take two years to complete.

Unlike the output of many of the lithium projects being developed globally, Bonnie Claire’s lithium will not need to go somewhere else for conversion into battery-grade material. Our lithium will be ready for immediate use, ideally in one of the many U.S. or Canadian battery plants that are currently being developed. This will allow end users of Bonnie Claire’s lithium to extract maximum value from the tax credits offered by the U.S. Inflation Reduction Act. 

It’s interesting to see different methods for exploring for lithium within the sector. How would you characterize your process and how does execution and cost differ when pursuing lithium at your project as compared to other approaches?

Because of the expansive nature of the sedimentary deposits, a considerable amount of drilling is needed to adequately define the resource. In the case of Bonnie Claire, which has a massive footprint, the drilling is laterally expansive, already covering multiple kilometres.  And because of the tremendous columns of lithium we’ve encountered, the drilling is very deep. Our latest assay results have shown even higher grades over almost an additional 200 metres below our deepest holes. So, for us, making sure we are not missing the best mineralization will cost additional money. This is not a small pegmatite field that we are drilling out.

Another difference with our process goes back to the distinction between sedimentary and clay-hosted lithium mineralization. In simple terms, our recovery flow sheet is significantly different than most of the other Nevada-based projects because our localized geology is different. Our lithium is not bound in the clays, so we avoid the use of sulphuric or hydrochloric acid to liberate the lithium. This is an important part of our ESG (environmental, social and governance) profile that we think differentiates us from our peers and makes our lithium particularly attractive to lithium end users. 

Looking ahead, how do you position the company to emerge as a key player in the lithium space?

I am convinced that there is a secular supply-demand mismatch due to the global commitment to an EV future. Given the tremendous economic and geopolitical advantages of our Nevada location, we want to build a world-scale lithium mine, producing battery-grade lithium headed for the U.S. auto market. And we want to do that as quickly as possible. 

Part of our strategy is to use our management team’s collective experience to proactively mitigate the effects of obstacles that will always emerge during the development of a natural resource asset. At the same time, we are working to achieve important technical milestones as early as possible. An example of this is having already proved our ability to produce battery-grade lithium carbonate, which we believe differentiates us from many other lithium developers.

In my opinion, Nevada will emerge as the centrepiece of the future U.S. lithium supply chain, and our intent is to leverage Nevada’s location, history and culture. Nevada is perennially ranked as one of the very top mining jurisdictions in the world, with a rich history of gold, silver and copper production. A recent trip to Canada by Joseph Lombardo, Governor of Nevada, showcased his intent to extract maximum value from the lithium industry for his state. Concurrently, Nevada Lithium intends to extract part of that value for its shareholders through the responsible development of Bonnie Claire.

This story was featured in Canadian Securities Exchange Magazine.

Learn more about Nevada Lithium Resources at https://nevadalithium.com/.

Podcasts, The Exchange for Entrepreneurs

Thomas S. Caldwell’s Financial Outlook for 2024 | The CSE Podcast S4-EP3

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This week we welcome back Thomas S. Caldwell, Chairman of Caldwell Securities who shares his annual outlook for the market and economy and explains why there are reasons for investor optimism this year.

#AlwaysInvested

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CSE Issuer Stories, Magazine

Leading the Charge to Develop an Integrated North American Supply Chain for LFP Batteries

Around two-thirds of the batteries used to power new electric vehicles (EVs) in China are now of the lithium iron phosphate (LFP) variety, overtaking lithium-ion batteries as manufacturers aim for reliability and lower price points in the world’s fastest-growing EV market.

The trend in North America is moving that way as well, spurred by the Inflation Reduction Act (IRA), which offers big incentives to manufacturers and consumers.

The IRA’s clean vehicle tax credit, which has already attracted nearly US$100 billion in private-sector investment, according to the U.S. Department of the Treasury, supports consumers with savings on new clean vehicles while creating jobs and fostering a resilient domestic supply chain. 

There are provisos, though. EVs made with minerals and materials from China won’t qualify for the credit.

Starting in 2024, EVs can’t use battery components from a “foreign entity of concern,” expanding to include minerals in 2025 and prompting a race for automakers to adapt or risk losing tax credits. 

As companies reorganize supply chains for battery parts and minerals outside of China, First Phosphate (CSE:PHOS) is a step ahead. The mineral development company aims to transform the Saguenay-Lac-Saint-Jean region of Québec into North America’s LFP Battery Valley and believes it has a unique proposition.

First Phosphate holds and is actively developing over 1,500 square kilometres of district-scale land claims in the region. The properties host rare anorthosite igneous phosphate rock that can yield the high-purity phosphate required to create the materials used in the manufacture of LFP batteries.

A 43-101 technical report and Preliminary Economic Assessment (PEA) on its flagship Lac à l’Orignal property revealed 15.8 million tonnes of phosphate (P2O5) in the Indicated category, and a further 33.2 million tonnes in the Inferred category, with a pre-tax net present value of C$795.3 million and an internal rate of return (IRR) of 21.7% at a discount rate of 5%.

The project would produce an annual average of 425,000 tonnes of beneficiated phosphate concentrate at over 40% P2O5 content, 280,000 tonnes of magnetite and 97,000 tonnes of ilmenite over a mine life of 14.2 years.

Nearby at its Bégin-Lamarche property, First Phosphate is conducting a 25,000 metre drill program that should position the company to calculate a 43-101 resource estimate, with a PEA expected to follow. 

Meanwhile, a geological reconnaissance program at its Larouche property, just 40 kilometres from the Port of Saguenay, also revealed strong assay results, including one sample grading 39.45% P2O5.

The company’s goal is to integrate material from these properties into the supply chains of major North American LFP battery producers that require battery-grade LFP cathode active material (CAM) from a consistent and secure supply source.

“What makes us unique is we are trying to set up a fully North American supply chain, and we’re working and we’re cooperating with those who are aligned with that vision,” says Chief Executive Officer John Passalacqua.

“We’re the start of the supply chain; we’re the critical minerals. So, if it starts clean in North America with us, then we make sure that all of our partners downstream, everything that goes into making the battery, the car or the storage system, will be North American-based as far as possible.”

With First Phosphate’s deposits forming the first pillar, Passalacqua explains that his team has established strategic partnerships and alliances with companies that will complete the supply chain as it sticks to both the spirit and the letter of the law in the IRA.

These include Belgium’s Prayon, whose technology is used to produce over 50% of the world’s phosphoric acid. Prayon is looking at a long-term offtake agreement for First Phosphate’s phosphate rock as well as the potential for a purified phosphoric acid toll processing agreement.

The company has also entered a memorandum of understanding (MOU) with NorFalco, a division of Glencore Canada, to secure the supply of sulphuric acid needed to manufacture phosphoric acid. 

A non-binding MOU with Sun Chemical Corporation to develop intermediates used to produce lithium iron phosphate-based cathode active material (LFP CAM) extends the potential supply chain even further.

“We have a number of companies that have processes to make LFP CAM that are interested in working with us,” says Passalacqua.

“Sun Chemical, one of the world’s leading suppliers of inks and pressroom products, with a massive manufacturing footprint around the world, is available with their manufacturing facilities to partner with us to actually build LFP CAM, which is important because that saves on capital outlays.”

In December, First Phosphate signed an MOU with Las Vegas-based Ultion Technologies for the purchase of a non-exclusive, perpetual license for technology to produce LFP and lithium iron manganese phosphate (LFMP) cathode active materials.

A partnership with American Battery Factory aims to support the production of up to 40,000 tonnes of fully North American-manufactured LFP CAM annually.

Finally, the Port of Saguenay can provide access to overseas.

“In everything we do, we’re looking to promote environmental stewardship, while doing it at home and creating jobs at home,” Passalacqua says. 

“We’re trying to get very integrated into the downstream activities so that it becomes a fluid process; it becomes a real supply chain.”

Passalacqua believes a number of factors will continue to drive the push to LFP batteries, including cost, as they are cheaper to manufacture than lithium-ion batteries that use cathode active material from nickel, manganese and cobalt (NMC), which are tougher to source and more toxic. Cobalt also has issues related to ethical supply.

Additionally, the NMC cathode contains available oxygen, making it more susceptible to thermal runaway, which can result in fires. That’s not the case with LFP batteries, which are much more stable. 

Above all, Passalacqua says price is a big factor in choosing LFP batteries, as the cost to produce LFP CAM is generally much lower than for NMC CAM.

“Because of that, there has been a huge flock to LFP batteries,” he says.

“LFP batteries have been known to offer 25% to 30% less range than an NMC battery but the technology is increasing on both of those batteries such that an LFP battery may now get you a 300 kilometre to 350 kilometre range in some models and generally without any associated memory issues.”

While more expensive vehicles that need range for out-of-city driving still veer towards NMC batteries, vehicles targeted for city driving are shifting to LFP due to the price factor. 

Passalacqua says Tesla managed, at one point, to offer pricing below US$40,000 using LFP batteries.

With changes to the IRA, automakers, including Tesla, won’t be able to source their LFP batteries from China, which will work in favour of local companies like First Phosphate.  

“In order to get the IRA subsidies, you need to have a retail price of under US$55,000 on passenger vehicles and one way to get there is with an LFP battery.

“The practical considerations around the LFP battery are cost, certainly the fire safety, and even though it has shorter range you can generally charge it at any point in its battery cycle due to the lack of memory issues.”

For now, though, fresh from an $8.2 million financing, Passalacqua says the immediate priority is to further uncover the deposit at Bégin-Lamarche.

“We have to decide on a potential mine site, start feasibility studies, and take the purified phosphoric acid Prayon prepares for us and send it to potential clients for possible offtakes and partnerships,” he says. 

“We also need to start planning for a purified phosphoric acid plant at the Port of Saguenay.”

Passalacqua says First Phosphate is sitting on perhaps one of the purest phosphate rock qualities in the world, and in one of the best jurisdictions in the world for mining and electrification.

“We want to have the ability to produce much of the phosphoric acid that is going to be needed in North America for the LFP battery in a clean, ethical, just-in-time fashion. We are 100% dedicated to that,” the CEO says.

“We’re well-managed, we’re well-capitalized and we’re fully North American so that opens all the doors to great working relationships with North American companies and North American governments.”

This story was featured in Canadian Securities Exchange Magazine.

Learn more about First Phosphate at https://firstphosphate.com/.

Magazine

Canadian Securities Exchange Magazine: The Mining Issue – Now Live!

Welcome to the latest issue of Canadian Securities Exchange Magazine, your source for in-depth stories of entrepreneurs from a wealth of different industries.

From our vantage point at the CSE, mining continues to be a significant story. The remarkable influx of new listings, robust liquidity, and material capital raises by mining companies listed on the CSE underscore a clear message: even in the face of adversity, the mining and exploration sector’s pursuit of progress remains undeterred. Certainly, the firms featured in this edition of the magazine highlight resilience and innovation in action.

In this issue of Canadian Securities Exchange Magazine, we feature five CSE listed mining companies racing to unlock economic opportunities across North America as green becomes the new gold.

The CSE listed companies featured in this issue include:

Check out the Mining Issue of Canadian Securities Exchange Magazine here: