RE:RE:Bought some
The junior mining market has been nothing to write home about for the last four years at least. Companies involved in this sector have been struggling to access financing in order to push early-stage projects forward and maintain some relevance during these challenging times. Its no different for miners involved in PGMs, or Platinum Group Metals. They are also facing the same hurdles and as such, have to rethink the way they are doing things; develop new operational methodologies and create novel approaches to revenue generation that will enhance shareholder value. One of these companies attempting to make that change is Canadian Platinum (TSX: V.CPC, Forum). I sat with company President, CEO and Director, Gary Billingsley for a detailed picture of what Canadian Platinum is up to and what opportunities it presents for investors. Gary, how do you think the year fared out for the PGM market and what do you think the outlook is coming up? I think when youre looking at the PGM market; some people are puzzled when they see, year after year, there is a supply deficit compared to demand and the price doesnt respond with an according increase. Well, a lot of that has to do with the surface stockpiles, so even though for 2015 that predicted shortfall was still there, it was offset by the available above-ground stocks. This year, predictions look like they might be a wash so the above-ground stocks will roughly remain the same. The feeling I get from talking to some of the analysts is that eventually there will be a squeeze and the price of platinum, palladium and the other PGMs should rise accordingly. As far as were concerned, here at Canadian Platinum, these projects are fairly long-term, so if we can get started on them now, the timing might work out for when the prices do start to rise. Speaking of which, Canadian Platinum has three projects on the go: Peter Lake, Craig Lake and Copper Hill. Where does the company stand in regards to progress when it comes to these projects? Sure. While the news flow doesnt look like were doing much, behind the scenes we are working on a number of initiatives. As far as the current projects go, we did go back to reassess the geophysics that had been done at Peter Lake as there had been a considerable amount of both airborne and ground work done at the property. The one target that had been drilled was a geophysical target, so we prioritised some of the geophysical lookalikes for future drilling. And based on that reassessment, we restructured the land package. We let a fair bit of ground go, but also in the last month or so, weve re-staked and staked about 10,000 additional hectares to make sure we have those targets covered for when we get around to drilling them. We still have to raise the funds to do the drilling, but now we have all the targets laid out so can commence drilling immediately once we secure that financing. Craig Lake was a project that we had actually written off last year, but the claims were in good standing for a number of years. So while we went back to take a look at the Peter Lake geophysics, we also had another look at Craig Lake, and when we did that, we found a couple of anomalies that looked attractive enough to follow up on down the road. Basically its a project thats within about 1700 metres from the former producing Westar Mine that Hudson Bay Mining and Smelting operated back in the day for about ten years with average grades about 3.8% copper, 1.5% zinc and about 1.4 grams of gold in it. The drilling that had been done on Canadian Platinums ground to test for some geophysical anomalies explained the anomalies away from graphite conductors but when they went and did some down-hole geophysics using DPM similar to what HudBay uses at Snow Lake, they came up with a 500 to 600 metre deep, fairly large 300x300 metre anomaly that certainly had the potential to be a massive sulphide of some sort. Given its proximity to Westar, we certainly thought it would be worth following up on with at least a couple of drill holes. Well probably put out some news on that in the next little while. So Craig Lake is on the agenda for 2016. As far as Copper Hill goes, we really havent done much with it. We trimmed some of the ground; the southern part of the property that really had no geophysics or surface sampling to indicate we should hold on to it, but we hung onto about 80% of the property. Were not doing a whole bunch with it ourselves; were looking for a JV partner on the project and weve had a number of folks inquire about it as weve been handing out the 43-101 to folks who are interested in working in Nevada. So, as I mentioned earlier, Canadian Platinum is broadening its horizons to enhance value potential. Can you tell us about projects/initiatives the company is currently looking into and doing due diligence on? Certainly, besides doing reassessments on our existing projects, we have a lot more on the go. You have to remember that we had new management step in about a year and a half ago and we wanted to widen our scope a little bit. Were very interested in metals that are involved in green technologies, platinum is certainly one of those, and we were introduced to some exciting things we wanted to do due diligence on. One of them was a recycling project and another one involved a new technology at the mining end of things for processing platinum that does away with the need for smelting. So were carrying out due diligence on those right now. Were doing this for two reasons. First, cap ex and mining expenditures seem to have gotten out of hand for the mining industry, especially with commodity prices falling theres a need to do something different to lower cap ex and operating costs. Therefore any sort of technology that you can come up with that aids in the reduction of your operating expenditures, provides an opportunity to be economic even at these lowered prices. As a result of this, we were pretty keen to follow up on that technology and you may see some news about that in the next while. As far as the recycling is concerned, about 25% of platinum supply actually does come from recycling things like catalytic convertors. So were looking at two projects right now and doing due diligence on. One of them could be commercial within a month or two and if we get involved with something like that, it has the potential for near-term cash flow, which certainly would help out in these markets. Were putting a lot of time into that effort in order to broaden our scope a bit. The other thing I am working on, on behalf of Canadian Platinum, is were working with some groups on research in recovering precious metals and rare earths from waste water supplies, from tailings, from things like geothermal brines or oilfield brines. I dont this has a near-term application, but certainly in the longer term, it might become as important as recycling. Now, currently the market is pretty big for recycling platinum. It is estimated to generate ~9.0 billion globally by 2018, mostly from the recycling of catalytic convertors. However, with commodity pricing the way it is, there has been a lot of stockpiling and the generally weak economy has car owners holding onto their vehicles longer, lessening available sources. That said, there are analysts who say this is a near-term issue and will rectify itself shortly, would you agree? Absolutely. I think its a huge market with huge potential. Now, there are a lot of people involved in that market, so the trick is really acquiring the catalytic convertors, or whatever other scraps youre looking at from the junkyards or the recyclers, at a competitive price, so when you process them, you can actually make some money. I think thats the challenge. Certainly the sort of projects were looking at right now, that is by far the biggest cost. But despite the number of guys involved in recycling and recovering platinum, there still seems to be a fair number of convertors available. Considering the size of the projects were looking at, we certainly wouldnt be giving headaches to the big guys, but for a company our size at Canadian Platinum, it would be a real boon to what were doing. So well be focusing on that pretty hard coming up. The platinum recycling market from what I understand is still fairly fragmented with many single operators running from junkyard to junkyard, buying scrap. So it seems there is a lot of opportunity for a company to come in and become a small Starbucks of the sector, do you see Canadian Platinum doing that? Exactly that. Through contacts, we know of some groups that actually prep the catalytic convertors so they would be ready to run through this particular process were looking at, which could provide an opportunity to cut out the middle man. This kind of consolidation could offer up a ton of opportunity for us. That said, since 2012, the PGM market, like other commodities, has had a decent hammering. So I am sure investors are curious how youre doing financially. How do your books look? Well right now, we still dont have very much cash, but zero debt as well except to the insiders that have kept it afloat. We didnt really get too aggressive in starting to look for funding until the fall and it was pretty clear people werent interested in grass roots mining projects. However they definitely were interested in things like recycling and new technologies, so Im pretty optimistic that well be able to put something together in 2016 that will attract investors. Youre right about the grass roots projects; guys are just able to scratch together just enough to keep the lights on, which does nothing to help advance them, so were hoping that the spin with our push to expand into recycling and recovery, and the new technology on the mining side will bring in significant interest. Speaking of the new technology, the project were currently may have some advanced platinum projects attached to it, so this would really add to a complete package to offer to the investment community. So what kind of major milestones can investors expect in 2016? I think the major milestones will be first to enter into some kind of agreements either on the recycling side or on the new technology side or both. Once those are in place, the next milestone will be to come up with some sort of funding so we can advance those initiatives. Right now, no real plans to drill Peter Lake until some of the aforementioned initiatives are moving, but that certainly could happen later in the year. With Craig Lake; could be some drilling done as early as the spring depending on how the JV initiative goes. We do have some groups that are interested in helping with that. For me personally, the real milestones would be entering into the recycling and the new technology side, and going down that road. Just out of curiosity, do you expect a share consolidation to happen within the year? Were trying to avoid it. We do have shareholder approval to go ahead and do that. If we can avoid it, we dont really want to consolidate. Insiders own about 50% of the stock, so theres probably only 50 or 60 million shares sitting out in the float. So while its not as tight as it could be, but its not as bad as having 200 or 300 million shares out there. Well play it by ear and we would only do it if it was connected to some pretty major financing. Now, David Ludwar was appointed to the Board back in September. What skills does he bring to the table that will help Canadian Platinum reach its objectives? David has worked in the financial sector for a number of years and he actually works with Doug Billingsley, who is also on the board. The both of them are involved in fund raising, not on the mining side, but the manufacturing/technology side. They definitely have some contacts that could be useful down the road. You know; my background over the last ten years or so had branched out into that manufacturing side as well, which at the time was a whole new world, but has also generated some important contacts, especially in Japan that we can tap for the recycling stuff as well. You mentioned earlier that there was a new management in the last year and a half. Who would that include? Mainly me. We havent loaded up the company with management. We have a CFO that we brought on board and thats Karen Frisky. Other than that, we use consultants that Ive been associated with for the last 20 or 30 years. Is there anything else you think investors should be aware of in regards to Canadian Platinums story? The main message is that while there hasnt been a whole lot of news flow and we havent been out drilling, weve certainly been working at a strategy to move the company forward that involves both the near-term and the potential of near-term cash flow, which is the recycling side, and the longer-term that involves these technologies that could be used in a mining scenario that would lower cap ex and op ex. So were not sitting on our butts here and despite the doom and gloom on the radio and TV every day, were actually feeling pretty good about 2016. Are you on board with some of the analysts who say weve reached the trough of this particular commodity pit? I think we have to be close to the trough any way. I dont know about oil and gas, but on the metal side of things possibly. I suppose gold could be lower, but if you look at and youll see it trying to spike up every once and a while here. Platinum, I think, is quite a different thing. Its a pretty important metal, especially for green technologies involving catalysts and I think eventually there is going to be a squeeze. As a result, those prices will head up. Yeah, I think we have to be pretty close to the bottom on the metal side of things. You know, in general, it doesnt really matter whats happening; everybody needs these metals. Do you think that investors buying into gold will help drive up the price for platinum? Yeah, I think so. Most people I talk to, doesnt matter if theyre your average Joe on the street or sophisticated mining analyst, theyre more optimistic about platinum and PGs heading up in price than gold. But certainly when gold heads up, it generally helps everything. Well, there you have it. Canadian Platinums story is a very compelling one and I will be interested is seeing how it unfolds over the next 12 months. Read more at https://www.stockhouse.com/opinion/interviews/2016/02/03/canadian-platinum-v-cpc-ceo-discusses-expanded-direction#zceLDUDYRXHSVQO1.99