We ask Paul Johnson, CEO of Power Metal some shareholder question and he explains the company road map in depth.
Why should investors research POW and consider taking a position?
I think three reasons, all interlinked:
- POW has a single strategic objective to make one or more large-scale metal discoveries.
- In the case of POW, we have three project interests capable, in our view, of delivering that large-scale discovery.
- POW has working capital to support its work programmes already in place.
One key investor concern is funding? What’s your financial position at present compared to the needs of the business?
In the case of POW, we are in a good financial position with working capital to pursue our business plans for the foreseeable future. We have hard cash and shareholdings in listed and private companies that hold considerable value should we wish to monetise them. We are debt-free.
POW’s listed and private company shareholdings have been experiencing a strong uplift in value and we think that is likely to continue going forward. Should that growth in value occur, our working capital position grows as a result.
We are also aspirational in that we would like to drive the company to financial independence whereby we have our own internal financial resources and are not reliant on the markets for ongoing working capital through financings.
What are POW’s lead projects at the moment?
We have three, in Botswana, the DRC and Tanzania.
Botswana – Kalahari Key Molopo Farms Complex Project
In Botswana we have an 18.26% share position in Kalahari Key Mineral Exploration PTY Ltd, a private Botswana company that holds one project, the Molopo Farms Complex Project (“MFC Project”), targeting nickel and platinum group metal (“PGM”) mineralisation, in south-west Botswana.
We have also elected to earn into a 40% direct project interest by spending US$500,000 on drilling the top priority targets at the MFC Project, with drilling to commence as soon as local approvals are received.
Overall, we have an effective economic interest in the MFC Project of circa 51%.
Lots of work was undertaken in 2019 at the project and the technical team at Kalahari Key are very excited with the findings to date.
Of course, the best way to determine the value of any project is to undertake drilling, and we have the drill targets established and the cash at bank (US$500,000 sat ring-fenced in the account) to get this programme running.
With the MFC project, we are operating in the elephant scale end of discovery potential and whilst the early holes are often used as a technical exercise to better understand the geology, we will be drilling through the heart of some major geophysical anomalies which could relate to sulphide conductor bodies. If we hit massive nickel sulphides, our company and our shareholders can potentially experience a life-transforming event.
The Democratic Republic of the Congo (the “DRC”) – Kisinka Project
In the DRC POW has a 70% interest in the Kisinka Copper-Cobalt Project wherein 2019 our exploration programme identified a 6.8km copper anomaly through the heart of the licence area.
Those familiar with the DRC will understand the rather dramatic prospectivity of the country, as demonstrated by the numerous operating mines, many of which are owned and operated by international companies.
Our working relationships locally are very robust, with a strong technical team and a legal and compliance partner who operates in a diligent professional manner to ensure our licences and corporate structures remain in good standing.
We have just announced the next stage pitting programme where we are seeking to further validate the large scale copper anomaly and conduct further cobalt focused testing.
If our work yields positive outcomes we take another big step forward in demonstrating the potential for a large scale metal discovery, this time copper in the DRC, and potential cobalt alongside.
Tanzania – Haneti Polymetallic Project
In Tanzania, we have a current 25% interest in the Haneti Project, with a right to increase that interest to 35% by paying our partner, Katoro Gold PLC (LON: KAT ) £25,000 cash by mid-May 2020.
We also hold 10m shares in Katoro Gold and 10m 1.25p warrants which increases our overall effective economic interest in the Haneti Project.
Haneti is a polymetallic prospect with the most advanced targets in nickel-PGMs just as with our Botswana interest. Otherwise, there is prospectivity for gold, lithium and rare earths.
This project is something I have followed for years and one where I have been keen to secure an interest pre-drilling which is where POW is now positioned.
The most advanced targets are drill-ready and targeting nickel sulphides, with the lead target showing some high-grade nickel and PGMs at surface.
We are working with Katoro on developing and executing the drill programme.
Most exploration projects ultimately fail, so why do you feel you are onto the something?
You hear the phrase “exploration is high risk” all the time, with just cause, because juniors operate in the risk business with the chance of ultimate success relatively remote.
When it works, however, the returns are disproportionate to the investment, and you make big capital upside. I have seen this multiple times in my career in public companies, the most notable examples being as a previous Executive Director of Metal Tiger plc when we signed the JV with MOD Resources leading to the T3 Copper Project discovery in Botswana and also as an early investor into the restructuring/refinancing of Greatland Gold PLC.
Katoro Gold itself is experiencing something of a renaissance of late with its recent move into gold tailings production in a unique deal, out of left field, which has jolted the market into action.
In our case at POW across all three lead projects, there is a bustling technical excitement around the project opportunities.
With Botswana, in particular, I have not seen this level of enthusiasm before from so many people with a strong technical understanding, including the Kalahari Key team which includes a number of highly experienced team members, who have personally developed the project from the outset.
Secondly, the projects in Botswana and Tanzania are attracting considerable interest from larger third parties, as has been indicated in market announcements. We are living in a world where mid-tier and tier 1 companies are on the hunt for large scale nickel projects in Africa and POW has significant exposure to two such opportunities.
What newsflow can shareholders expect in the coming months?
Quite a lot of newsflow is anticipated, by virtue of our active operations across multiple interests. As a policy, I always believe shareholders should have a good understanding of the strategic approach of the business and regular updates on operational activities.
Since the restructuring and refinancing one year ago we have been highly active, having found a very large copper anomaly in the DRC and acquired significant strategic interests in two nickel-PGM, elephant scale discovery potential, projects. We have a long and intriguing pipeline of new opportunities, one of which, the Alamo Gold Project in Arizona, is under exclusivity due diligence right now.
We have also protected and preserved working capital and now sit with enough financial resource to pursue our business interests for the foreseeable future.
If we are at or near the bottom in the junior mining and exploration space, we are fortuitously positioned.
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