This was the week trading shifted from Canada to Australia. PMET released results on Sunday ahead of trading opening on the ASX for Monday, announcing that 4 holes drilled east of hole 93 had intersected broad intervals of spodumene bearing pegmatite, adding 400 m to the CV5 pegmatite. It is another 1,600 m to the CV4 outcrop on the north shore. Angular boulders found 1 km south of the lake suggest the lake covers a continuation of the pegmatite. We may get a weekly report of stepouts.
Trading on the TSXV on Monday morning reflected PMET's move on the ASX and triggered a broad rally in James Bay juniors that helped Brunswick Exploration clear $1 on the upside. Even Dios Exploration broke through $0.10 on the upside. By Wednesday morning, however, the James Bay area had cooled and PMET traded as low as $15.25 before a late day rally took it back through $16 before closing at $15.93. The rally also swept up Brunswick which closed at its previous $1.05 high.
It is now clear that Australian investors are driving James Bay sentiment, in particular with regard to PMET. ASX trading begins at 10 AM Sydney time, which is 3 pm Vancouver time, two hours after Canadian trading has closed. It now seems to me that when Australians wake up early in the morning they are checking the Canadian markets and buying PMET in the last hour if is cheap and sentiment remains strong in Australia. This last hour rebound in PMET may be inspiring Canadian and American investors to buy the other area play juniors.
This action reminds me of the diamond play in 1992-93 when Canadians were still trying to get their heads around the concept of diamonds in Canada. Investors in Europe and South Africa understood what Dia Met's Ekati discovery was all about. In a similar vein Australian investors who have lived through Lithium Mania 1.0 understand what is now unfolding in Canada's James Bay area whereas North American investors are still skeptical that this just another battery metals flash in the pan. In London which is 8 hours ahead the Canadian market would be open between 2:30 pm to 9 pm, so if there was good news released in Canada, there would be a flurry of buying early in the trading session after which the Europeans would sign off when they went home for dinner. For the center of gravity to swing back to Canada we need to see evidence that a major company is taking interest in PMET or completion of a big $100 million plus equity financing from institutions such as Blackrock, not just the Canadian ones, which validates the current implied project value of $2 billion.
That CAD $2 billion implied value (on a 100% basis, as calculated from Dia Met's fully diluted, 29% net interest and stock price) was what Dia Met achieved in April 1993, a mere 15 months after news of the Ekati discovery broke in late November 1991. A $3 billion value was achieved in 1997 but when BHP bought out Dia Met for its 29% stake in Ekati in 2001 the valuation was about $2.4 billion. The dream in 1993 was that Ekati would yield a truly world class pipe comparable top Jwaneng in Botswana, but that never came to be. In terms of the rational speculation model the Corvette project's valuation is in S-Curve territory, which is only possible because investors see multiple occurrences of CV5 scale lithium pegmatites within the Corvette trend that could be developed simultaneously to feed a giant processing facility with a capacity much bigger than the scale limit for open-pit mining these linear bodies.
Pilbara Minerals which today has a market cap of AUD $14.2 billion is an example of what PMET could become. PMET's price chart looks more impressive than that of Pilbara, but PMET has only 130 million fully diluted compared to 3 billion for Pilbara. One has to do the value math. The biggest obstacle to an aggressive move by the likes of Rio Tinto or institutional funding is concern that Canada, Quebec and its local First Nations groups lack what it takes to help make happen the 2030 EV goals seen as necessary for net zero emission by 2050. In the past the theme at PDAC has been what can the mining companies do to make the world a better place. I suspect this year the theme will be what can the government and First Nations do to help the mining companies make the world a better place. |
