Power Metal Resources plc (‘Power Metal’ or ‘POW’) released its annual report on 3 March 2022, for the year ended 30 September 2021. You can review this document on the POW website here:
POW is holding its Annual General Meeting (‘AGM’) at 10 AM on 30 March 2022 and at 11 AM a separate General Meeting to get shareholder approval for a ‘Capital Reduction’ to allow shareholder distributions. You can review the meeting notices here:
We spoke to Paul Johnson, Power Metal CEO after the release of the Annual Report to get his take on the current market, company progress and plans.
ST: Is there light at the end of the tunnel appearing for mining & exploration shares as volume and share prices seem to be improving a little?
PJ: Yes, I think so, it feels that way. I have been investing in mainly junior resource companies for 15 years and you get a gut feeling when things are starting to turn the right way again. Gut instinct is powerful, and it helps when that gut feeling aligns with exceptionally strong metal commodity markets that have powered ahead and left the junior stocks in a position where they need to play some serious catchup.
ST: Yes, this past week saw nickel prices soar on the back of a short squeeze from Asia, leading to a suspension of trading on the LME in London. Why have the exploration shares not risen on the back of this?
PJ: Because there is always a delay before junior mining equities show recognition of the macro climate and bullish metal market moves. We are emerging from a long net bear phase in the junior resource markets, so it is natural that there is reluctance and fear all around.
ST: What will it take to get over that reluctance and fear and get the junior resource companies firing again?
PJ: What it always takes, a little time and a few standout market success stories, where we see a share price rise on the back of positive news, and the immediate collapse the market is expecting doesn’t happen. The question is always when and which stocks will lead the charge.
ST: Is it really that simple – time and a few market successes?
PJ: No, it’s not that simple, but it’s close to that. Importantly, the dynamic is clear; either metal commodity prices collapse, or junior resource company prices rise considerably, to make relative pricing rationale again. The ability to make share profits in any financial market is to identify, and be brave enough to position, in irrational markets. If markets were rational all the time profit opportunities would be limited.
ST: Turning to your Annual Report, is this a document that investors should read?
PJ: Yes, it provides an excellent summary of the activity in the year up to 30 September 2021. More importantly, it includes all material events that have happened since 30 September and therefore a good run through of business activities in recent months.
ST: What are your highlights from the Annual Report?
PJ: As CEO, I am proud of what we have been able to accomplish in a market that has been challenging. The amount of exploration work done has been notable, particularly drilling of three projects in the year and getting some strong results from our exploration work. I like the way we have embedded our commercial model in the year, where we are looking to build our balance sheet strength and crystallise value for shareholders. However, the job is not yet done, we now have an astonishing portfolio and need to demonstrate its value more clearly.
ST: What do you mean by “demonstrate its value”?
PJ: Well, we can better articulate the value across the entire portfolio but if I pick on a couple of examples. We hit significant nickel in the second hole at Molopo and demonstrated the feeder zone geological model. This was an amazing outcome and I don’t think we delivered that message optimally.
Toward the end of year we built a strategic uranium portfolio in the Athabasca, Canada. We now hold a 7 project business in one of the most exciting uranium regions of the world, just as the world is getting excited about nuclear power and uranium prices are starting to rise considerably. Because our portfolio is so diverse, it can be difficult to fully articulate the value of each part, and our uranium interests in Canada have not received the recognition they justify.
ST: Turning to your announced meeting your AGM is a standard business meeting, anything you want to note?
PJ: The AGM is required to be held within 6 months of the end of each financial year. Of note it does include resolutions to authorise options to the two POW Non-executive Directors (5million each at 3.25p), but importantly the POW share price has to trade at 5p for ten days before they can be exercised. So our share price has to rise by nearly 4 times before the options become active, that’s a decent target.
ST: What about the General Meeting what can you tell us about that?
PJ: We are undertaking a legal and accounting exercise to eliminate the effect of historic losses incurred by POW over the last 10 years. It’s called a Capital Reduction, requires shareholder and High Court approval and means when done we can distribute cash and other assets (like shares held in other companies) to shareholders. It doesn’t affect the number of ordinary shares in issue, or the share price, but it does mean that sooner rather than later, we have the ability to make shareholder distributions. It’s a statement of intent by undertaking the exercise now.
ST: What are your personal objectives for the Power Metal business?
PJ: To be different, through our thought process, treatment of shareholders and business outcomes. Firstly, we work hard on creative thinking to find innovative ways of doing business and running the Company. Through constant honest communication with our shareholders and stakeholders (market announcements, media work and direct engagement) to keep all those with an interest fully informed and to listen to what they have to say. Finally, to build the Company on the back of multiple exploration successes, commercial value crystallisation and proper returns to shareholders.
ST: Your business portfolio is widely dispersed – and it’s easy to say it’s too big to cover but we want to get your thoughts across the business?
PJ: Yes, too large to address in detail in one interview but fire away.
ST: First in North America you talk about Pilot Mountain being a strategic asset, why?
PJ: Power Metal was fortunate to acquire Pilot Mountain, a highly valuable strategic project, on reasonable terms. Timing is everything and recent world events have demonstrated that we were fortunate on timing as well. Pilot Mountain is a strategic tungsten deposit in Nevada, USA, and tungsten has just been reconfirmed by the US geological survey as a critical mineral on the 2022 list that was just published. The President has recently made it absolutely clear they want homeland metal security, and we hold a major strategic metal asset that can contribute to that security.
ST: We hear less about your Golconda gold property, why’s that?
PJ: The Golconda interest is targeting Carlin-type gold mineralisation in a region (Nevada USA again) with multiple 5million ounce gold deposits in the area. You are right we need to talk more about this project, the geological thesis and our plans. However, it’s already clear that if we are targeting a major gold discovery we are in the right area.
ST: We haven’t heard much about the Silver Peak project recently, what’s happening?
PJ: Lots, in line with announcements and the last quarterly update. Obviously, I have to respect the market rules but this is an important business interest for Power Metal and in simple terms is a strategic stake in a former working silver mine (Silver Peak) with bonanza grade silver littering our recent drill campaign there. More information will be provided to the market as soon as we can.
ST: You mention uranium in Canada above, what are your intentions for the Canadian uranium portfolio?
PJ: That’s a great question because there is considerable interest in uranium projects and our projects are no exception. I would say expect innovation in our approach as always, but also that we value the portfolio highly, it is disproportionately valuable to what we paid to stake the ground. Interestingly, we have looked and so far we don’t see other valuable ground in the Athabasca that has not already been staked. It seems like we got in again in a timely fashion.
ST: When can we expect results from the Haneti drill programme?
PJ: As soon as we have them and have completed our interpretation. We are as eager as our shareholders to see the outcome of this first drill programme on, what is, a district scale project with major discovery potential.
ST: Do you expect the Kavango option to be exercised at Molopo Farms in Botswana.
PJ: In Botswana, the first drill programme at Molopo Farms Complex saw significant nickel confirmed in the second hole. Do I expect Kavango to exercise? Well, that is not in my gift, however I can say this is a highly valuable project, with clear mineralisation already identified. Most of our peers would be pleased with the results we have achieved thus far if they held this project. So as the party with the largest exposure to Molopo Farms currently we are preparing the way to move that project forward at pace, and it would be great to have Kavango on board as we have a strong working relationship with them in Botswana already.
ST: What about your other interests in Botswana, where are you with them?
PJ: We have interests in the district scale Kalahari Copper Belt Project targeting major copper-silver discoveries, and the Ditau Camp Project, targeting Rare Earth Elements (‘REEs”). We are currently building up to drill high-priority exploration targets across both projects and are now in the late stage of drill target vectoring. We also completed a reverse circulation drill programme at the Tati Project in late 2021, where we are exploring for gold and nickel and look forward to releasing results and next stage plans there.
ST: In Australia, what’s happening with exploration at New Ballarat Gold Corporation (‘NBGC’)?
PJ: NBGC is exploring for gold with a very large land package in the Victoria Goldfields, Australia. This is one of the largest land packages held in that region and we have been undertaking diamond drilling there, with results awaited. The scale of opportunity in Victoria is immense and we have the team on the ground pushing ahead at pace with exploration work.
ST: Your First Development Resources business seems very active, what’s happening at the moment?
PJ: Yes, it is highly active. We recently published a detailed update from the gold/copper focused interests in the Paterson region of Western Australia. Here we have the Wallal project which holds drill targets with similar geophysical properties to the Havieron project where a major discovery occurred in 2018. Work in respect of that upcoming drill programme is continuing alongside with desktop studies of the Braeside West and Ripon Hills projects, also held in the portfolio. Separately, and very importantly, we received grants of all three Selta project licences in the Northern Territory. We are currently undertaking a review at Selta of all geological, geophysical and geochemical data, to identify mineralisation targets for uranium and REEs. There will be further updates in the near term.
ST: What messages do you want investors to take home with regard to Power Metal?
PJ: To investors: you have a choice where to invest. If you become a shareholder with Power Metal, whatever the size of your holding, we never forget our duty to do our best for you, collectively and individually.
For too long exploration companies have relied on market funding alone and have not innovated to create their own financial returns to sustain their operations – therefore minimising dilution to shareholders. We want to change that.
Too often junior exploration vehicles are centred around models with limited project potential but much promoting. We have a diverse range of quality projects, increasing the chance of major discovery through diversification and innovative portfolio management.
As often quoted, ‘insanity is doing things over and over and expecting different results’, so it’s time for a new and fresh commercial business model in resource exploration. Disproportionate gains rarely come out of a standardised approach to a challenge, but by thinking differently. That is our objective.
For further information please visit https://www.powermetalresources.com/ or contact:
Power Metal Resources plc
Paul Johnson (Chief Executive Officer)
+44 (0) 7766 465 617
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