MarketOpen(ed) Issue #15

12th August 2023

A CRISIS OF COPPER

INTERNATIONAL UPHEAVAL PUTS CLIMATE GOALS IN PERIL

ROARING FROM THE FIRE

MTM BUILD ON SUCCCESS AT POMME OUT OF ASHES

MANSOOR’S RADAR: GL1 GOES IPO TO HALF A BILLION

GLOBAL LITHIUM RESOURCES ROUND-THE-BEND AND HEAD STARIGHT FOR THEIR FIRST BILLION

THE LIZARD KING GIVES HIS BACKFLIP SCORECARD AND CHECKS IN ON DIGGERS & DEALERS DEBAUCHERY

THE LIZARD KING

The WA Government’s embarrassing backflip on heritage laws gave my blue-blooded comrades something else to say other than it’s just other mining companies and people trying to sell us stuff here’ this year at Diggers & Dealers this week. And the acrobatics were something to behold from our esteemed Mines Minister Billy Johnston. I always knew there was the soul of a 13-year-old Russian gymnast in that hairy but very cuddly body! This Lizard would have given him a 10/10 on the overhead scorecard for such a fantastic feat, perhaps after a bit of a tap on the shoulder from Labor’s federal counterpart. Well. Rio at least won’t be doing any (public) cheering after giving the laws their full-fledged support, but they already blew up Juukan Gorge, so maybe the rest of us can have a turn at some landmark pyrotechnics - perhaps the bell tower is due for a few blocks of TNT? The battery metal bosses were taking their turn in the spotlight at diggers. However, a few of them might be annoyed at Patriot boss Ken

Brinsden, who expects lithium spodumene concentrate could disappear from the market in a decade. A weird look for a company made on lithium spodumene, but at least you can take him

at face value.

The judges saved their punishment for Delta Lithium, whose “big and very good” presentation was met with a quick share price decline, showing that maybe all that work on PowerPoint has a purpose.

On fire earlier in the year, our gold miners were put in a minority for the first time at the onceunbridled boozefest. It would be best if you felt more for the female execs who remain a tiny contingent, though it would undoubtedly make me feel better as a shareholder having a boss who could manage to not be a total prick after sinking a few Crownies.

Diggers has now wrapped up after three fun days in the desert, and now we wait for the lawsuits, though hopefully, the valiant efforts of the Matildas taught a little bit of respect for the fairer

sex, hard as it is to look proper in a soccer kit. Much like whatever ploy is in vogue to get a share price moving, we will all go back to not caring about soccer soon enough, but it is always lovely to gather round a common cause occasionally.

FROM THE EDITOR

Good news for miners in Western Australia: the government has reversed its decision on Heri tage Laws. Starting an exploration project was becoming increasingly difficult due to excessive bureaucracy. These laws had the potential to hinder crucial exploration that would benefit the state’s economy and the necessary transition towards sustainable energy. For example, greenfield exploration companies would have faced high upfront costs, making many projects doomed from the outset. They would have had to pay to secure traditional owners’ tenements over 1100 square metres, potentially impeding the search for valuable minerals and commodities. This cost would have equated to 7 per cent of their exploration expenses to start, putting around 9 out of 10 applications in jeopardy due to delayed approvals or risk of breaching the Act. While objections to the Act come from a good place, most would agree that the intent and principles behind the Aboriginal Cultural Heritage Act 2021 are essential. However, there is little doubt that the government’s well-intentioned plan to avoid a repeat of Juukan was recklessly formulated and executed without due process or consultation with even the most vulnerable stakeholders.

A CRISIS OF COPPER

By Tom Duggan

The world’s growing need for copper is becoming increasingly evident. However, several factors, such as declining growth, lower grades, political instability, and conflicts between miners and governments, are hindering its production. Therefore, it is essential to explore new solutions and identify potential sources to ensure a steady supply of copper in the future.

Commodity analysts have been banging the drum for a global copper shortfall which will short-circuit ambitions of an energy transition already in flux.

According to McKinsey, the demand for copper is expected to increase to 36.6 million tonnes annually by 2031 due to global electrification. However, there is a projected shortage of 6.5 million tonnes. S&P Global Market Intelligence predicts an even higher demand of nearly 50 million tonnes by 2035 There is an increasing belief that producers should take more action to tackle this issue. The great hope was Chile. The South American producer accounts for around a quarter of global production. However, its low outputs since January are causing concern, which hasa rippling effect on supply chains across the

planet.

The nation’s state miner Codelco has cut its copper output forecast for the year following months of declines, and other major South American producers face similar setbacks. Still holding the world’s number two spot, Peru aims to get its output back on track after its worst outbreak of political violence in years and a nearly twenty per cent drop in year-on-year sales but still stares down an institutional crisis First, Quantum was forced to stop processing at its titanic Cobre mine in Panama after a bitter tax dispute. Teck Resources has revised down production targets for the year after its Chilean operations failed to meet output figures.

Mining billionaire Robert Friedland has previously focused on Africa, saying it was silly to consider Chile a safe place to mine. At the same time, the

Democratic Republic of the Congo has a heavy discount rate.

“There’s this fiction that somehow Africa is dangerous, and it’s safe for the industry to go to Chile or Peru. I challenge that. I would rather be in Africa – in the DRC,” Mr Friedland said. Although Mr Friedland has chosen a continent, things there often don’t go as planned due to supply chain issues and political turmoil, which hinder production.

Zambian production will fall to its lowest in 22 years, and the Democratic Republic of the Congo, once predicted to take the number two spot from Peru, continually faces internal strife and humanitarian crises and is now pushing for an audit of mining contracts it considered to be heavily in favour of Beijing.

Economic litigation between governments and miners increases as the global resources industry expands into new jurisdictions.

Toronto-based Charles River Associates found that between 2013 and 2022, the number of treaty arbitrations has nearly doubled, with roughly 80 per cent of cases originating in Africa and South America – up 167 and 57 per cent, respectively, since 2016.

The world’s biggest miners appear almost universally bullish on copper demand, and there remains optimism that Latin American and

African production can get back on track.

Peru has doubled down on efforts to ramp up production; Rio Tinto and Codelco have partnered up to find more Chilean copper, while there is hope for renewed production in the safer African jurisdictions.

But governments change, and if prices begin to reflect better the gulf between supply and demand, tax disputes and the spectre of nationalised resources are unlikely to ease. And worldwide, even in safer jurisdictions, a low copper price and lack of investment have led to a shortage of discoveries.

In the previous year, Glencore’s CEO, Gary Nagle, expressed the need for a successor to the ongoing production projects.

“Whatever was planned to be built has been built. There is nothing coming behind,” Mr Nagle said.

According to analyst Sam Crittenden from RBC Dominion Securities, the shift towards clean energy will create a demand for copper equivalent to opening one large mine yearly. However, the locations of these potential projects with high-quality copper deposits still need to be determined.

“When we look at the list of available copper projects, it’s notable that there is much copper out there, but a lot of it may never come out of the ground,” Mr Crittenden said. Existing projects are not faring much better. A 2016 study found that the average ore grade had fallen by around a quarter in just ten years prior and Glencore, Teck, Codelco, and AngloAmerican are just a few multinational miners forced to lower production guidance. Despite the global

commitment to climate targets in the Paris Agreement several years ago, achieving net-zero goals seems a distant reality. Furthermore, the current scenario indicates a potential shift from a copper surplus to a considerable deficit.

Charles River Associates - Disputes Involving Mineral Assets Statistics and Trends

GL1 FROM $23M IPO TO A$500M MC AND TRENDING TO TOWARDS $1Bn

The success of Global Lithium Resources, now trending to $1 billion, is not just about a small-cap company listing during the battery metals boom of 2020. It’s also about the impact of Ron Mitchell, who brought his vast experience to the company. Initially, he made a difference at Marble Bar and then at Manna. He worked hard to nurture the company, and as a result, GL1 now has a market cap of half a billion. Through his efforts, shareholders and stakeholders have benefited, and GL1 has become one of the few Lithium explorers with a JORC resource above 50mt. Mitchell’s contributions have put GL1 on the map and made it a success story.

CAPITAL RAISINGS

From its listing on May 21 to date, Global Lithium has utilised multiple avenues to keep cash coming into the coffers. Post IPO, Yibin Tianvi came onto the registry with A$13M, followed by Mineral Resources, which allocated AS30M. Finally, ~9 months ago, a massive capital raise of A$121M came to acquire Manna outright and initiated an enormous drilling program for a ORC upgrade. With a current market cap of ~A$450M, the initial round of investors has done exceptionally well. The last round of CR completed at

$2.25 is underwater!

Exploration Spend Vs Drilling Program

Like all mining IPO companies, the initial focus is exploration and covering the meters. Global Lithium is no different, achieving ›110,000 meters over 24 months for AS24M. Its value for money to meters completed is unparalleled in the industry, with a dollar intensity of -A$200/metre.

Gobal Lithium has worked on a two• pronged strategy. MD Ron Mitchell

and the Board focused on business development, raising funds, bringing in a cornerstone investor, portfolio additions and the ground crew working on achieving metres. Initially, the field crew focused on Marble Bar and Manna with heavy-handed exploration.

Marble Bar is back in the equation with a 35,000-metre drilling program planned for 2023.

CURRENT RESOURCE ESTIMATE UPSIDE VS SHARE PRICE

Resource: Considering the last two years’ dollar per meter cost, Global Lithium has enough cash on book to achieve above 50,000 meters of drilling and potentially deliver 27 to 30% higher MRE and achieve ~80Mt of resources across both Marble Bar and Manna.

Share Price: The GL1 share price is not reflecting the amount of work that has gone into the ground, and analysis suggests there is ~70% upside to the share price from the current level. With market sentiment changing and regular announcements to the market, $2.10 is the short-term target, and $2.80 is a medium-term valuation, potentially eventuating pre-resource upgrade.

NEW HOPE OUT OF THE FLAMES

By Rueben Hale

“We committed to a critical metals exploration strategy after acquiring the Pomme project, which is a quality carbonatite exploration target containing significant rare earth elements and niobium mineralisation. MM Managing Director Lachlan Reynolds says.

Reynolds said Canada was a logical sell to investors who recognised both the geological opportunity and a clear pathway and value proposition. Understandably upbeat following the recent positive results, Reynolds speaks about the uniqueness of this advanced project, its early development potential, and plans to circle back on its high-quality assets in Western Australia.

What led you to choose the Pomme project as the latest endeavour for MTM?

Pomme is a more advanced project with significant geological potential. Based on the results of limited historical drilling we knew immediately that it is a mineralised carbonatite. It was a clear drilling target without

the need to do much reconnaissance work. Furthermore, it is easily accessible and located within a very favourable jurisdiction.

How have things been since the Canadian wildfires?

The recent fires caused significant disruptions to our operations and to other mineral exploration and forestry industries in Quebec Obviously, our team is grateful to have been able to return to the field again so quickly when things were declared safe and start delivering these latest encouraging results New drill holes at Pomme have revealed rare earth mineralisation extending over a kilometre north of the historical drill holes, indicating a promisingly extensive system

We’re exploring new, previously untested areas for higher-grade mineralisation and are excited about making further discoveries.

Do you remain confident about the quick development potential of Pomme?

Because we have been able to target our exploration drilling quickly and because the

After the Canadian fires, MT Critical Metals has met with quick success at its Pomme REE-Nb project. New mineralised zones have been uncovered near the big Montviel rare earth and niobium deposit in Quebec, Canada.

rare earth mineralisation is visible in the drill core, we think that this project can race from an exploration target into a resource definition phase and, ultimately, a mine development. We need to discover a suitable mineralised zone but once that is done we can then rapidly scale-up our drilling program to define a resource.

How do you feel about the initial 500 meters of mineralisation and upcoming assays?

It’s always wonderful to see mineralisation in the diamond drill core. The grade will of course be variable, but I am confident there will be zones that could indicate the potential for a resource. Our objective is to systematically explore the project to locate the most promising portion of the system. This opportunity is thrilling as the geology of the target area still holds immense unexplored potential.

Why are the historical indications from Pomme so compelling?

The exploration history is vital to this project. The previous diamond drilling has told us without a doubt that we are dealing with not only a carbonatite but one containing both rare earth elements and highly valued niobium. Beyond that, the Pomme project is only a few kilometres away from another world-class rare earth resource hosted in another carbonatite. If we can discover and define a new resource, we can assess a more considerable combined development with the nearby deposit.

What’s your drilling approach?

We have planned our program strategically, with wide spacing between deep, angled drill holes. We aim to maximise the changes of intersecting a significant resource that

matches the size and grade of the nearby Montviel carbonatite deposit. Our current drilling area could easily contain a valuable resource of this size. Once we identify a highly mineralised zone, we’ll escalate our exploration program and progress to the resource definition phase.

What are you doing to ensure that the resource is recoverable?

The Canadian project is attractive because it is carbonatite-hosted rare earth element mineralisation, which is comparatively well understood. However, the mineralogy of these deposits is complex, making it difficult to process and recover metals from them economically. This is why very few operations have been brought to market. With available drill core we can start on a metallurgical test work program to assist with assessing a possible process flow sheet.

In Western Australia, there is no concrete idea of what would make a viable rare earth resource, thoughthe industry is actively working to overcome this. Still, with carbonatite projects, we clearly understand the capital structure of any future development and can be confident about the resources needed to succeed

Where do you hope MTM to be in the next 12 months and beyond?

Exploration success in Canada and WA will position us well for continued growth. We are drilling for discovery in several prospective locations, and in the next 12 months, we expect to identify potential economic mineral deposits and build our critical metal resource base. Our company aims to ultimately transition from an explorer to a project developer with quality essential metal assets

Cazaly enter the James Bay lithium fray

Cazaly Resources has secured territory of 260 square kilometres in the heart of the James Bay lithium province as major mining companies enter the area. Sundown Lithium Project is located between Patriot’s Corvette discovery, established as the largest lithium pegmatite resource in the continent, and Allkem’s James Bay deposit. The project has over 200 documented pegmatite outcrops not assayed for lithium. Patriot’s maiden resource announcement made Albemarle the company’s largest shareholder. The small-cap explorers in the bay know that the world’s largest miners will keep tabs on the results as they pioneer the North American lithium hub

Discovery in the name for VHM

VHM Limited, holding one of Australia’s most important rare earth projects, has made a remarkable discovery at Goschen. The high-grade strandline discovery at the Nowie prospect area revealed valuable heavy minerals, including rare earth, zircon, titanium, rutile, and leucoxene. The finding shows the site has a Critical Mineral Province over 55 kilometres in northwest Victoria. This is a significant addition to a rare earth project awarded Major Project Status by the Australian Government.

White Cliff scale up the board

White Cliff Minerals has found its Executive Chairman in Roderick Mcllree, a highly experienced mining veteran with a successful track record across multiple companies. Despite being based in London, Mcllree is now focused on delivering value from a promising Western Australian portfolio. With his extensive global network, he is expected to identify and secure critical mineral assets in established jurisdictions to enhance the company’s portfolio further. Mcllree’s impressive background includes founding and holding senior mining positions at various international mining and exploration companies, all with a market cap exceeding $100 million.

Auris return open Morck Well metals

Auris Minerals is excited about the potential for high-grade gold and significant base metals and manganese at the Mock Well site, as mineralisation remains open at both prospects. The Jacques East prospect has shown high-grade gold mineralisation for up to 400 metres in multiple directions. The McLean Well site returned intercepts of 4m @ 12.9% Mn and 35 @ 1.05% Zn from a strike extent over 800 metres that remains open. The Bryah Basin mineral field is highly prospective but largely underexplored and Auris Minerals is well-funded and ready for more drilling to fully gauge the extent of mineralisation at its high-priority prospects.

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