Maurice Jackson: Welcome to Proven & Probable. I'm your host,
Maurice Jackson. Joining us today is Michael Rowley, president and CEO of Group Ten
Metals Inc. (PGE:TSX.V; PGEZF:OTCQB), which is known for platinum,
palladium, nickel, copper and cobalt in the Stillwater district in Montana.
This interview is the second of a three-part series introducing the value
proposition for the Metallic Group of Companies comprising Metallic Minerals,
Group Ten Metals and Granite Creek Copper. These are three separate leading
exploration companies, each with a different metal of focus, but with a
common approach to business under the proven management of the Metallic
Group.
Earlier we interviewed Greg Johnson to talk about Metallic Minerals
and its exciting high-grade silver projects in the Yukon. Today we turn our
focus to a second company in the Metallic Group, Group Ten Metals, a leading
explorer for platinum, palladium, nickel, copper and cobalt in the
world-famous Stillwater district in Montana.
Mr. Rowley, for someone new to the story who is Group Ten Metals, what is
your flagship project, and what is the thesis you are attempting to prove?
Michael Rowley: Group Ten is a leading explorer for platinum group
metals-these include platinum, palladium and rhodium, along with nickel,
copper and cobalt.
Our flagship project is the Stillwater West project where we have consolidated a very
large land position alongside Sibanye-Stillwater's three producing mines in
the heart of the Stillwater Igneous Complex in Montana. It's one of the
world's premier platinum and palladium producers and is one of the only
platinum group metal producing mines outside of South Africa or Russia.
Geologically, Stillwater is a large, layered, mineral-rich magmatic
system, very similar to the Bushveld complex in South Africa, which hosts
over 75% of the world's platinum, as well as enormous quantities of copper,
nickel, gold and other metals.
We see the potential for large-scale disseminated and high-sulphide
PGE-nickel-copper type deposits similar to the multi-100-million-ounce
deposits in the Platreef district of the northern limb of the Bushveld
Complex, and we are the first to apply the new geological models from the
Platreef district to the Stillwater district, despite these well-known
similarities.
In addition to bringing the land position together with a wealth of data,
we have also assembled a truly world-class team, to which we recently added
one of the most celebrated Platreef geologists, Dr. David Broughton of Ivanhoe.
Maurice Jackson: Please share where in Montana the Stillwater West
Project is located, and provide us some historical context.
Michael Rowley: The project is located in south-central Montana
where we adjoin the three producing Stillwater mines, which were bought by
Sibanye, a South African gold producer, in 2017 for $2.2 billion. The
district is famous for the size and grade of its palladium-platinum mines,
which are the highest grade in the world, and the largest outside of Africa
and Russia with over 14 million ounces of past production, and over 80
million ounces of resources still in the ground. The PGMs occur along with
nickel and copper sulphide, so these are also nickel and copper mines.
Historically, the district, including our block of claims, was also mined
for high-grade nickel, copper, chrome and other metals such as cobalt.
The history at Stillwater parallels the developments at the Bushveld
Complex in South Africa, so they share more than geology in that regard. Both
districts were recognized over 100 years ago for their mineral riches, and
both supported a number of mines for varying commodities. And, in both
districts, the discovery of high-grade "reef-type" platinum group
metal deposits in the 1970s produced large-scale operations that were the
sole focus of exploration efforts until the 1990s when regulatory changes
forced a release of mineral rights to other operators. In Montana, these
changes were in the form of amended U.S. claim fees, while in South Africa it
was the end of apartheid. In South Africa, the resulting exploration efforts
lead to the development of Anglo American's Mogalakwena Mines, a giant at
over 265 Moz PGMs and a very profitable operation that is the largest
open-pit platinum mine in the world. Adjacent to that, Ivanhoe is now
building the Platreef mine on the same system with over 112 Moz platinum plus
substantial nickel and copper values.
We are the first operators to consolidate the lower Stillwater Complex
under one owner, to recognize the similarities of the two systems, and to
bring a focused exploration program for Platreef-type deposits to the
Stillwater complex in Montana.
Maurice Jackson: Group Ten is exploring for platinum, palladium,
nickel, copper and cobalt in a world-class district; compare and contrast how
your deposits compare to similar districts like South Africa's Bushveld, and
also your neighbors in Montana at Sibanye-Stillwater.
Michael Rowley: The Bushveld and Stillwater complexes are both
layered magmatic systems, which means that they were both created when
enormous amounts of metal-rich magma cooled, forming these massive districts
nearly 3 billion years ago. As a result, both districts have high-grade
PGM-Ni-Cu deposits in the upper layers and they also have lower zones where
magmas where allowed to mix, creating thick intervals of sulphide
mineralization enriched in PGMs.
At Bushveld, two basic types of mines have been developed for these two
deposit types: narrow high-grade PGM mines on two reef-type deposits, and
more recently bulk mining operations in the Platreef district such as Anglo's
Mogalakwena mines and Ivanhoe's underground mechanized operation.
At Stillwater the operating mines have focused on narrow, high-grade
reef-style deposits. These are the highest grade in the industry, but no
systematic effort has been undertaken to explore for and develop
Platreef-style mineralization. Group Ten Metals is now exploring in the lower
part of the complex for potential large-scale Platreef deposits in the
Stillwater district, following the parallels of the same type of settings in
South Africa that have produced the Platreef deposits.
Maurice Jackson: Mr. Rowley, we've covered some good background on
the Stillwater West Project, walk us through the project.
Michael Rowley: Let's begin with some of our claim holdings in the
Stillwater district and some of the existing resources and operations there.
As you can see on the Regional Claims Map, Group Ten's Stillwater West land
position, shown in yellow and orange, is a large 25-km-long claim block located
directly adjacent to Sibanye's three operating Stillwater mines (shown in
grey). Proximity to the existing mines provides access to infrastructure such
as roads from the west and from the northeast.
Maurice Jackson: What can you share with us regarding the geology
and the potential that we have at the Stillwater West project?
Michael Rowley: This is a layered magmatic system, and layering is
visible in the geologic map of the Stillwater Complex, as it shows the J-M reef
deposit-this is the world's highest-grade major PGE deposit at 16 g/t, and,
at 80 Moz, the largest outside of South Africa and Russia.
Looking at the cross-section of the Stillwater Complex shown on the
District Geology figure, this layering is clearly visible. Layers of
metal-rich magma were laid down at formation, and then the whole system was
later tipped up 60 degrees, which is more amenable to both mining and
exploration as mineralization starts right at surface.
Like the Bushveld complex in South Africa, narrow reef deposits occur in
the middle and upper layered portions of the igneous system, while the lower
portion of the complex, shown here in orange, purple and light blue, are the
basal layers where magma mixed with pre-existing rock, created large,
disseminated and massive sulphide deposits such as those in the Platreef
district in South Africa. Though it was previously recognized these areas had
significant nickel and copper mineralization, this is the first time the
potential for large PGM deposits with nickel and copper have been recognized,
and the similarities to the large deposits in South Africa make this a very
exciting exploration target for Group Ten.
Maurice Jackson: What can you share with us regarding geophysics?
Michael Rowley: A geophysical survey measuring the electrical
conductivity of the rocks was conducted over the entire property. High metal
contents in the rocks would make them highly conductive so this survey gives
a very good indication of metal sulphide content of the mineralization that
hosts the PGMs, copper and nickel. This type of geophysics is one of the main
targeting tools used by companies exploring for metal sulphide deposits and
maps the PGE-Ni-Cu targets, as shown in the top half of slide 8. The survey
results indicate seven very large highly conductive targets across the lower
part of the complex (highlighted by large blue ellipses as Platreef-type
deposits), and five high-grade reef type targets (highlighted by red
ellipses), above the lower part of the complex, where they would be expected.
Surface and drill results confirm that these conductors are mineralized
with PGMs, nickel and copper, and that a good relationship exists between
conductivity and metal content. However, Group Ten will be the first company
to systematically drill test these targets in the basal zone for these types
of deposits. The strongest conductive targets have yet to be tested, so these
are very exciting priority targets for us.
Note that the main part of the property is over 20 km long, and that these
individual targets are 3 to 6 kilometers in length each, large enough
individually to contain a deposit the size of Ivanhoe's or Anglo American's
Platreef deposits!
Maurice Jackson: What do we know about the soil geochemistry?
Michael Rowley: In addition to the geophysics, we have identified
very high levels of metals in soils covering an 18-kilometer-long area with
high levels of platinum, palladium, nickel and copper. These elevated metals
in soils correlate well with the geophysical targets and the shape of the
underlying geology. Group Ten's work in 2018 was the first property-wide
effort to target large-scale Platreef-type systems in the lower Stillwater
Complex and to see this combination of large scale geochemical and
geophysical targets is very rare.
Maurice Jackson: Tell us a bit more about these geologic targets
that you have identified.
Michael Rowley: Below is a picture of some of the core from our
property showing strong sulphide mineralization with PGE-Ni-Cu-Co values in
the lower part of the Stillwater Complex.
We have identified two primary target types: the high-grade
"reef-type" type deposits that are being currently mined by
Sibanye-Stillwater and the Platreef-type that Group Ten is targeting based on
evidence in the data, and geologic parallels with the Bushveld in South
Africa.
Maurice Jackson: What do we know about the styles of mineralization
in this kind of geologic environment?
Michael Rowley: In terms of mineralization and mineralization type,
slide 11 presents and compares reef type and Platreef-type targets. The Reef
type deposits are presented in the brown color box and photos, and we've
taken the Merensky and the J-M Reef as examples, one from Bushveld and one
from Stillwater. Very high grade, very narrow thickness. On the right hand
side of the slide are some good pictures showing what it's like to operate in
these mines. Merensky happens to be flat lying, and the mines are deep and
expensive to operate. It is expected that many of these marginal Merensky
mines will close due to their high costs, which should drive platinum prices
in the coming years, with continued reduction of supply even as demand for
platinum and palladium continue to grow.
The lower picture on the right shows mining of the J-M Reef deposits at
Stillwater, at a 60 degree angle that's more amenable to mining.
The key take-away from this slide is the scale of the Platreef-style
deposits shown in the grey box in the lower left of the slide with the
picture of Mogalakwena mine. The thicknesses that we see in the
mineralization, and the contained metal in these deposits-these are very
large and economically attractive bulk mining operations. It's worth noting
that Anglo American's Platreef Mogalakwena Mines are the largest and most
profitable platinum mines in the world. Ivanhoe's adjoining Platreef Mine is
going to be a very high-tech underground bulk mining operation that looks
similarly very economically attractive, and that's potential that we see at
Stillwater West.
Maurice Jackson: The Stillwater West is considered a large
brownfields exploration property; how is this important in terms of the
potential for exploration discovery and development?
Michael Rowley: Brownfields is a term for a property that is in an
area that has had past discoveries and/or production. So this in contrast to
a greenfields property, which is outside of proven mining areas.
Many people don't realize that the majority of exploration dollars spent
in the mining industry go to exploration around existing mines because it is
one of the best places to make new discoveries and to rapidly be developed
and produced using existing infrastructure. The adage is "the best place
to find a mine is right next to an existing one."
In this case, at Stillwater, we have consolidated the district alongside
three operating mines owned by Stillwater-Sibanye and are exploring in this
same highly productive geologic environment, significantly increasing the
probability of making new discoveries and potentially allowing for rapid development
of low capital deposits because they are near surface and have the benefit of
existing roads, power and other infrastructure already in the district.
Maurice Jackson: Group Ten has other assets in its portfolio. Where
are these located, and please provide us with some historical background.
Michael Rowley: Following the Metallic Group model of acquiring
quality assets in districts during the low parts of the metals price cycle,
Group Ten has another PGE nickel copper project in the Kluane belt of the
Yukon. This adjoins Nickel Creek Platinum's Wellgreen project. World-class
geology, and excellent potential for scale and grade there. We are seeing
good interest in this asset as well but it's at an earlier stage than the
Stillwater asset.
We also have the Black Lake/Drayton gold project, which adjoins First
Mining's Goldlund project and Treasury Metals Goliath project in the Rainy
River belt of Ontario. We have several groups looking at this project as it
is a 30-kilometer-long belt of productive geology that sits between two
multi-million-ounce gold deposits. We've consolidated an impressive land
position and database during the bear market and this is a very active
exploration district.
Maurice Jackson: What work have you done this year, and how do you
prioritize them alongside your flagship Stillwater West project?
Michael Rowley: Work programs at Kluane were focused on target
refinement with an eye to adding value and assisting some of the parties from
whom we have had expressions of interest. Similarly, in Ontario our work has
consisted of refining targets and presenting the potential of the project to
the groups we have under CA looking at a possible acquisition or partnership.
Maurice Jackson: You are just wrapping up exploration for this
season at Stillwater West so when should we expect to see the next results
from this year's work?
Michael Rowley: This was only our first year on the ground at
Stillwater and yet, because of the amount of information we have including
surface sampling, mapping, drilling and geophysics we have already identified
12 major targets on the property.
In addition, we have re-logged over 11,000 meters of core that is in our
possession, some of which was assayed incompletely, or never assayed at all,
and certainly never looked at with the bulk tonnage model we are using. Those
results, and the new 3D models they will drive, are expected to give us a lot
of news flow over the next several months as we detail the information in
each of our target zones with the objective to develop and refine the targets
for drilling and to focus on those areas that we may be able to rapidly
advance towards new resources.
Maurice Jackson: What is management's philosophy, are you looking
to build mines or are you focused on exploration?
Michael Rowley: We are very much focused on the opportunity to make
discoveries and to rapidly advance those to resource definition, as shown on
slide 13. This stage can be one of the greatest periods for value creation in
mining for investors. It's not uncommon that the value that's created in that
initial discovery and resource development phase may not be exceeded again
until these projects actually go into production, often times many years
later.
Maurice Jackson: Switching gears, I've learned from some of the
most respected names in the natural resource space-Rick Rule, Doug Casey,
Jayant Bhandari, Mickey Fulp, Bob Moriarty-that the people running the
business are equally, if not more important, than the latent material in the
ground. Mr. Rowley, please introduce us to your board of directors and
management team, and what unique skill sets do they bring to Group Ten
Metals?
Michael Rowley: The quality of the Stillwater asset in particular
has enabled us to attract a remarkable team. Dr. Craig Bow, who was part of
the original discovery at Stillwater, is back leading the team now. Dr. Dave
Broughton, of course of Ivanhoe, awarded for the discovery of the Platreef
deposit and other world-class mines for Ivanhoe, just recently joined as
senior technical advisor. They both are very excited about the potential
here, and are experts in this type of deposit. In addition, we have a number
of experienced team members who have worked in this region for decades. It's
a great group of people to work with. And of course the Metallic Group
management team, Greg Johnson, Gregor Hamilton, Bill Harris, myself, all of
us veterans are of the industry. The team brings great depth of experience
with specialized expertise in PGM and nickel systems.
Maurice Jackson: Tell us about your share structure, options and
warrants.
Michael Rowley: It's early days, we have a market cap of about $8
million, and about 44 million shares outstanding. Key point is we have $3
million of both in the money warrants that are callable and that's after
bringing in about $800,000 worth of those to date.
Maurice Jackson: What is your burn rate?
Michael Rowley: Presently it is about $50,000 per month. That
includes our technical team and we do a good job of keeping costs down by
sharing office and other back office expenses with the Metallic Group
companies.
Maurice Jackson: Do you have institutional investors at this point?
Michael Rowley: We have a couple of mining-focused institutional
funds with one out of Europe and one out of Toronto and a great set of high
net worth investors.
Maurice Jackson: What is the float?
Michael Rowley: It's pretty tightly held so probably about 20
million shares, and we turn over about one or two million shares per month.
Maurice Jackson: Mr. Rowley, multilayered question, what is the
unanswered question for Group Ten Metals, when should we expect results, and
what will determine success?
Michael Rowley: We have a lot to report through coming months as we
continue the work to refine the highest priority drill targets for 2019. We
have over 11,000 meters of core that has been re-logged and in places
re-sampled, we have completed a comprehensive program of surface mapping and
sampling and are integrating the drill information along with the surface
work and geophysics.
We will be reporting a large number of assay results over coming months
from our 2018 programs and are excited to be able to begin 3D modelling of
the geophysics and drilling towards developing a predictive 3D geologic model
of the lower Stillwater Complex targets.
Maurice Jackson: Mr. Rowley, in the introduction we alluded to the
Metallic Group of Companies, please tell more about this.
Michael Rowley: Group Ten Metals is part of a collaboration of
leading exploration companies with some common directors between the
companies and a similar approach to business. The Metallic Group of Companies
includes Metallic Minerals TSX-V: MMG, which is focused on high-grade silver
in the Yukon Territory; Group Ten Metals focused on platinum and palladium
along with nickel and copper, in the Stillwater District, of Montana; and the
newest company to join the group, Granite Creek Copper, as a newly launched
copper focused exploration company with an exciting project right next door
to a high-grade copper producer in the Carmacks District of the Yukon.
These three companies have each focused on acquiring large blocks of
brownfield holdings during the low part of the metal price cycle, adjacent to
operating mines with infrastructure and facilities already in place in the
districts. All three companies have multiple targets that have potential for
major new discoveries, and are focused on large-scale targets that would be
of interest to the major mining companies.
We are applying new technologies to the extensive historical data on these
projects that allow us to fast-track target development and refinement and
drive rapid advancement to the resource delineation stage.
In each of these situations with these operating mines next door, there is
an opportunity to be able to fast track development on these targets by
utilizing the existing infrastructure in their respective districts. There is
also the potential for partnering with those operators or, if we're successful
in discovering very large scale deposits, to see interest by other larger
companies.
The Metallic Group of Companies are reducing costs by having a common
admin group and CFO, as well as allowing us to have a deeper technical team
with some specialists that can be shared across the group.
It's an exciting group of companies with a common philosophy. Our
objective is to build real value for the Metallic Group investors going
forward.
Maurice Jackson: Finally, what did I forget to ask?
Michael Rowley: I think that was a very comprehensive overview of
Group Ten, and thank you for it. Perhaps in closing, I'd like to touch on a
couple of catalysts ahead. On the industry side, we mentioned South Africa
and the costs of mining there and the expected closure of a lot of those
high-cost platinum mines. It has been a well-established pattern of falling
PGM production out of South Africa year-on-year and the CPM Group's work out
of New York indicates that a lot of mine closures are expected soon, in 2019
and 2020. This is going to have a huge effect on platinum prices, because 75%
of the world's PGMs comes out of those reef deposits in South Africa. It's
also worth noting that we have significant nickel, copper and cobalt, which
are such important metals for the rapidly growing battery and technology
metals space.
We are very bullish on these metals after a seven-year bear market. With
most commodity price cycles running four to six years, we believe that the
upside opportunity in these metals moving into the next cycle ahead could be
very significant.
Lastly, the fact that the Stillwater West project is a U.S.-based project
adjoining these world-class, enormous PGM mines in Montana, with all the
existing infrastructure in place can allow us to fast track our progress there.
Maurice Jackson: In our first interview, we shared that there was a
financing opportunity for accredited investors. Please share the details with
us.
Michael Rowley: We recently announced that we are in the process of
completing the initial offering for our newly created copper company, Granite Creek Copper.
Maurice Jackson: For someone listening that wants to get more
information on Group Ten Metals, the website address is www.grouptenmetals.com.
And as a reminder Group Ten Metals trades on the TSX-V:PGE and on the
OTCQB:PGEZF. For direct inquiries please contact Chris Ackerman at
604-357-4790 ext. 1 and he may also be reached at info@grouptenmetals.com
And last but not least please visit our website provenandprobable.com,
where we interview the most respected names in the natural resources space.
You may reach us at contact@provenandprobable.com.
Michael Rowley of Group Ten Metals, thank you for joining us today on
Proven and Probable.
[NLINSERT]
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