Global Energy Metals’ (TSXV: GEMC) chief executive recently spelled out the advantages of the company’s strategy at a time when major players are shifting towards electrification and localisation. GEMC, which stands at the intersection of these two trends, is well-positioned to capitalise on both.
In a mid-week investor talk, Smith discussed the very topical subject of “localisation and regional supply”. When the pandemic closed borders and cut off supply chains, it exposed the dangers of increasing interdependence. Countries have opted to respond to the crisis by securing local supplies of essential products.
This was the motivation behind GEMC’s recent property acquisitions in North America, where localisation is currently a big focus. Early this month, GEMC signed a letter of intent to acquire a 50% interest in three battery metals projects from DG Resource Management.
Two of these, Chance Lake and Amiral, are located in Quebec – the former is a nickel-copper-cobalt project and the latter a nickel-copper-PGEs asset. PGEs – or platinum group elements – include platinum, palladium, and other metals with similar properties like high melting points and corrosion resistance.
The final property, Monument Peak in Idaho, is a copper-silver-gold project covering around 1,380 acres and includes two small past-producing copper mines.
These new purchases fit well with GEMC’s 85% interest in the Lovelock Mine and Treasure Box project in Nevada, where it is targeting nickel, cobalt, and copper. Eight targets for diamond drilling have already been identified.
The existing Werner Lake cobalt project in Ontario, Canada, is a similarly complementary property. Werner Lake has an indicated resource estimate of 57.9 thousand tons at 0.51% cobalt and 0.25% copper at a 0.25% cobalt cut-off, giving 653,000 pounds of Contained Cobalt.
In his presentation, Smith enthused that all of these assets have given GEMC, “a strong foothold at a time when both the US and Canada are really committing to securing supply of material and building out infrastructure for electrification”.
Having based its portfolio around the rechargeable battery and electric vehicle (“EV”) market, and with multiple locations in Canada and the US, GEMC is now in a fantastic position to benefit from both localisation and electrification. Indeed, Smith described this as a “megatrend opportunity”.
As countries turn their focus inward, seeking to secure their own internal supplies, establishing a presence in more than one territory has become increasingly important.
For example, GEMC is also focusing on the Millennium copper-cobalt project located in Queensland, Australia. Millennium contains vast cobalt reserves as well as significant copper. Its estimated resource its 3.1 million tonnes containing cobalt at 0.14%, copper at 0.34%, and gold at 0.12 grams per tonne.
The company’s other Queensland endeavours are the Mount Dorothy and Cobalt Ridge projects. These projects have so far retuned “outstanding, high-grade intercepts”.
GEMC has partnered with Electric Royalties (CVE: ELEC ) on all three Queensland projects, selling a 0.5% gross metal royalty to them for 1.15 million Electric Royalties shares plus $150,000 in cash. Electric Royalties has a call option to buy another 0.5% royalty on net smelter returns from Millennium for a further $500,000 – of which up to 25% can be paid in shares. Following that, it holds a second option to increase its NSR on Millennium by another 1%.
In the investor talk, Smith said the Electric Royalties deal not only gave GEMC “cash and shares in a company that’s growing and building themselves” but also exposure to new commodities through the company’s royalty portfolio.
GEMC is to gain exposure to battery metals that aren’t just in the cobalt, lithium, copper, and nickel space “such as tin and manganese and graphite and others”. Electric Royalties started trading on the TSX Venture Exchange in June 2020 and has been growing ever since through new royalty acquisitions. Most recently, Electric Royalties acquired its first cash-flowing royalty covering zinc and manganese.
Battery metal availability is key to electrification. In such a fast-growing space, it makes sense to seek exposure to more of these increasingly valuable materials.
On top of all this, in February, Global Energy announced a strategic investment in Norway though the past-producing Rana nickel project, seizing a great opportunity in Europe. Under the Rana deal, GEMC will acquire a 10% interest in a portfolio of four exploration licences from Scandinavian Resource Holdings and a 1% net smelter licences in exchange for 3.3 million GEMC shares.
This is a particularly great country for GEMC to move into, as Norway is poised to ban the sale of fossil fuel-powered cars by as soon as 2025. The country is, as Smith put it, “leading the world in terms of electrification of vehicles”.
The UK is to follow suit with a ban in 2030 and Japan in the mid-2030s. In the US, California intends a halt the sale of passenger cars and trucks that use gasoline in 2035. The EU is also proposing a crackdown in order to hit its legally binding 2050 zero emissions target while China, too, is considering its own ban.
Norway in particular is a great space for GEMC to enter as it is “emerging as a real battery manufacturing hub for Europe”. As Smith added, Rana offers “a future supply to that market”.
GEMC is continuing to move ahead with its ambitions and raise funds. In the investor talk, Smith highlighted that, at the time of speaking, GEMC was undertaking a private placement. He added that the firm was looking to raise a minimum of $500,000 from 2 million units at 25 cents each, with a 35 cent full warrant.
With these new funds and a position at the critical intersection of localisation and electrification, GEMC seems well-set to take advantage of the huge opportunities its space presents.
Author: Anna Farley
The Author does not hold any position in the stock(s) and/or financial instrument(s) mentioned in the piece.
MiningMaven Ltd, the owner of MiningMaven.com, does not own a position in the stock(s) and/or financial instrument(s) mentioned in the piece.
MiningMaven Ltd, the owner of MiningMaven.com, has not been paid for the production of this piece by the company or companies mentioned above.
MiningMaven.com and MiningMaven Ltd are not responsible for the article's content or accuracy and do not share the views of the author. News and research are not recommendations to deal, and investments may fall in value so that you could lose some or all of your investment. Past performance is not an indicator of future performanc