With its successful fundraise, Canadian firm Global Energy Metals (TSXV:GEMC | OTC:GBLEF | FSE:5GE1) is in an excellent position to benefit from both project development and encouraging global trends.
The US, as Global Energy Metals (“GEMC”) has pointed out before, is committed to securing material supply and building out electrification infrastructure, which should benefit the company’s North American battery metals projects especially.
One major driver is the Biden administration’s American Jobs Plan, which dedicates $621 billion to transportation infrastructure including $174 billion to “win” the electric vehicle (“EV”) market. The plan centres around enabling automakers to spur globally competitive domestic supply chains while supporting American workers in making EVs and batteries.
GEMC’s chief executive Mitchell Smith said the push to secure a battery supply chain in the US is “very real”, with “trillions of dollars being spent to boost that made in America economy”. Smith further pointed out that this is “only made possible by securing the raw materials that go into that battery supply chain”.
Smith also highlighted the firm’s growing US footprint, including its Lovelock cobalt-nickel-copper project in Nevada.
GEMC’s recently upsized fundraise will also help to advance its goals in the US. After a $550,000 investment from two institutional investment management firms based in New York, the company amended the terms of its financing, increasing the size to allow gross proceeds of up to $1.0 million.
The first tranche of this deal recently closed, raising $870,000 in gross proceeds, with the second tranche set to close in the next few days.
The strategic investment, alongside investor participation, will help GEMC with various initiatives such as the acceleration of its exploration program at Lovelock. Indeed, the firm plans to drill up to eight holes totaling 1,400 metres as part of its inaugural Lovelock drilling program.
Asked about the use of the additional investment, Smith explained that the funds were to be “earmarked for exploration at Lovelock” as the company seeks “to really fast track exploration on that project, given its strategic location and prime mining jurisdiction.”.
The chief executive highlighted the “historical numbers” previously mined at Lovelock as the driving force behind accelerating the project to “confirm some of those numbers and values”.
Proceeds of the upsized offering will also help with capital and business development initiatives. The money will additionally be used in the acquisition of a 50% interest in copper-silver and copper, nickel, cobalt, platinum group elements (“PGE”) properties located in Idaho, US, and Quebec, Canada.
“Our footprint in the US is growing we’ve added on a project in Idaho, we’ve got the Nevada assets that we’re going to advance and we think that there’s a huge opportunity to continue to build up on that,” said Smith.
Moreover, the company’s projects in Canada will benefit from the supply chain agreement between Canada and the US.
“Canada and the US have a joint collaboration agreement that they’re working on to secure that battery supply chain and battery metals from Canada, given the wealth of raw materials that we have,” Smith said.
He pointed in particular to Canada’s growing automotive sector, as well as the “skill and the labour force” needed for such a supply chain. Ultimately, Smith predicts “a stronger collaboration between the two governments”.
A foothold in Europe
In Europe, too, electrification is gathering steam.
GEMC recently inked a definitive agreement to invest in Norway’s Råna nickel-copper-cobalt project, as announced in April. This was the company’s first foray into Europe.
Smith described the firm’s strategy as one of “acquisition, development, and partnership”, and said it would consider future steps in Europe.
He explained that the company was “always evaluating opportunities” worldwide, looking for projects that fit its criteria of being both safe and mining-friendly – with Norway and other Scandinavian countries meeting the mark here.
In particular, Smith previously took note of the “European battery manufacturing hub” emerging in that region. The chief executive commented on the number of players in the space, thanks to Norway’s abundance of green energy from hydroelectric power which allows for green manufacturing.
Smith said he expects further expansion there in the future, thanks to both established players and new manufacturers looking to build “a larger footprint for battery manufacturing in the area”.
Adding to this, Norway is poised to ban the sale of fossil fuel-powered cars in just four years.
This put it at the vanguard of a global trend that will also see the UK will implement its own ban in 2030, and then Japan in the mid-2030s. The EU, too, is considering a crackdown in order to hit its 2050 zero emissions target. Outside of the EU, the US state of California intends a halt the sale of passenger cars and trucks that use gasoline in 2035 while China is expected to implement its own restrictions.
A sustainable future
The battery metals space is on the rise, with the growing electric vehicle market driving much of the demand. With bans on the horizon, this demand can only accelerate.
Electrification is vital to tackling climate change. This is because, while there are clear paths to creating zero-carbon electricity using methods like solar, wind, nuclear and hydropower, this is not yet true for combustion fuels.
For example, while it’s simple enough to charge an electric car using clean energy, it is not so easy to swap out petrol for a zero-carbon alternative, especially on a global scale.
“Right now, there’s a global movement towards a cleaner greener economy and a sustainable future. And I think there’s a recognition across the world that the only way to be able to do that is to be able to electrify and use clean sources of energy to be able to move that agenda forward,” said Smith.
He pointed out that “critical” to this electrification revolution are the raw materials, the battery metals like cobalt and lithium, and nickel, that make electrification possible. That includes metals from the Lovelock mine, as well as from the firm’s its interests in Idaho and Nevada.
GEMC also has three cobalt-copper-gold projects in Queensland, Australia: Millennium, Cobalt Ridge, and Mount Dorothy. The company groups the latter two as the Mount Isa projects.
The company has a partnership with Electric Royalties (CVE: ELEC ) on all three Queensland projects, having sold a 0.5% gross metal royalty in exchange for 1.15 million shares in Electric Royalties as well as $150,000 in cash.
Electric Royalties has a call option allowing it to buy another 0.5% royalty on net smelter returns (“NSR”) from Millennium for an additional $500,000 – 25% of which can be paid in shares. There is also a second option to increase Electric Royalty’s NSR on Millennium by another 1%.
This partnership gives GEMC exposure to elements like manganese, tin, and graphite that aren’t already in its portfolio but are still necessary for electrification.
With so many great projects and exposure to an array of essential elements for the green revolution, the company benefits on multiple fronts.
The firm is boosted not just from demand for the elements themselves, or a favourable political landscape, but also by the potential for future success from its projects. As exploration generates results and excitement around the company itself, investors might expect to see all of these factors at play in GEMC’s share price.
Author: Anna Farley
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