It is a well-known fact that mining executives are aging fast, with most, as of a study conducted in 2011, running on the north side of 50. New faces are actively being sought but at this point are still relatively rare.
Max Porterfield plays a role in this generational rejuvenation with his recent appointment as President and CEO of Callinex Mines (TSX:V.CNX, Stock Forum).
I met with Max over brunch to discuss his take on the company and how he planned to take it to the next level. But first some history on Callinex Mines…
The company itself stems from a long and storied pedigree that began with one of Canada’s oldest publicly traded companies, Callinan Mines, founded in 1927 by Jack Callinan when he commenced production at the Callinan Mine, located in Manitoba’s Flin Flon Mining District.
Callinex, the result of a Callinan Mines exploration property spin out in 2011, began its life with Canadian mining icon, Mike Muzylowski, at the helm as President and CEO.
Mr. Muzylowski was a strong choice for leadership of the newly minted exploration firm not only because he had spent the last fifteen years running Callinan and had hand-picked the portfolio that was spun into Callinex but also because in his half-century career, the Oakburn Manitoba native was known for the discovery and development of 16 ore bodies that went on to become producing mines.
Max Porterfield was brought on board in May 2014 to replace the recent Canadian Mining Hall of Fame inductee, transitioning Muzylowski back as Chairman.
Max also had a long historical association with natural resources. Born in oil-rich West Texas in the small city of Odessa, he graduated from Texas Tech University with a Bachelors degree in Business Administration before going on to become the Vice-President of Institutional Services at U.S. Global Investors, a well-respected boutique investment management firm with a long track record in precious metals and natural resources.
By the time Max went on to manage investor relations for noted resource companies, Brazil Resources (TSX:V.BRI, Stock Forum) and Uranium Energy (NYSE-MKT:UEC, Stock Forum), he had developed a unique relationship with the investment community and an in-depth understanding of the natural resource sector.
The appointment at Callinex was a no-brainer for the company as it combined Max’s well-developed management skills and gift for gab with the technical expertise of Muzylowski. I asked Max what were the deciding factors for him taking the appointment.
“Aside from the track record Mike has, and the project portfolio, the Company's capital structure is very much intact. Callinex has less than 32 million shares out and roughly 60% of the float is tightly held, by a shareholder base in North America and Europe that are long term supporters of the Company.”
Speaking of longer term, Callinex’s Neuron graphite property, located in Manitoba, has received a lot of attention lately due impressive assay results reported at the end of April noting that the company had intersected 5.91% carbon graphite over 56.00 metres including a whopping 60.38% graphite mineralization over 4.10 metres.
Primary analysis of the project’s mineralogy by SGS labs showed fine to coarse flakes from 100 µm (140 mesh) up to large 2mm flakes (10 mesh). Flakes larger than 80 mesh are considered prime candidates in the production of lithium ion batteries.
Graphite was all the rage at the beginning of the year when China, one of the world's largest graphite producers, announced it was pulling back on production. Then came the Tesla Motors (NASDAQ: TSLA, Stock Forum) announcement that it intended to construct a giga-factory in the US to produce lithium-ion batteries for its much-anticipated electric drive fleet.
All of the above combined with the speculated potential of Graphene caused investors to salivate and mining juniors to jump on the bandwagon. However the market changed shortly afterwards and graphite lost some of its allure.
So what happened? Well graphene remains a relatively theoretical product without a market and wasn’t as limitless as people were so optimistically predicting. Also China showed intent to ramp up production as well as graphite mining operations were expected to come online in Mozambique and Sri Lanka.
After a brief lull, excitement built once again with Tesla's announcement that it had settled on Nevada as a location for its gigafactory, but its demand, although massive, wouldn't drive the need of graphite into the stratosphere, so only a few major vendors would benefit from the motor company's material requirements.
In the end, graphite remains a necessary commodity and in time, will rocket in worldwide demand, but at the moment it remains a relative development gamble for junior miners.
So where does this leave Callinex? Max went on to explain...
“We have a really solid portfolio of 14 projects. All with the exception of one are located in Manitoba, which is where Mike has had a huge amount of success over his career. So that’s really the storyline for the company moving forward, while Neuron is a unique opportunity, there are also other projects in the portfolio that may have not had the same attention put on them, that should have garnered that attention.”
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This doesn’t mean, Neuron is being put out to pasture or placed on the chopping block, Max intends to push the project as a Joint Venture. By bringing in a partner into an already de-risked environment like Neuron and allowing them to develop the property into production, he will avoid further diluting his shareholder base for financing while retaining an accretive involvement with the project. This will give Callinex the necessary financial freedom to continue exploring the other properties on its roster.
Two prospective projects mentioned during our discussion were Flin Flon, not to be confused with the Flin Flon Mining Camp, and Pine Bay. Both of which are located in the same area and, opposed to graphite, contain VMS deposits, which Max feels, from an exploration perspective, deserve more attention and have a bigger upside given their high-grade polymetallic nature.
This all sounds great, but holding a portfolio, even if it’s prospective, isn’t the same as producing and so far, Callinex is caught at the starting block with no operating income, but fortunately, has access to capital which is hard to come by these days.
The company’s relative anonymity, under-developed portfolio and the difficult atmosphere for junior miners, remain a daunting challenge, but Max has moved ahead and controlled the junior miner’s cash burn rate, re-aligned its exploration strategies and done his practiced best to amplify the company’s presence in the mining investment community.
Max summed up his role as the head of Callinex best, “He’s (Mike) had a helluva track record in discovering economic deposits and I've come in to re-focus and further his success.”
Sure, right now there isn’t a tremendous amount of fire in Callinex’s furnace, but in our discussion, and discussions that followed, it was pretty clear Max had the expertise and determination to realize the company’s portfolio potential and significantly grow shareholder value; a worthy representative of mining’s new generation.
Callinex has a new website, just launched last night that encapsulates the company's vision. I highly recommend a visit, this company deserves your intention.