(Image via American CuMo Mining Corporation.)
EDITOR'S NOTE: This article has been edited since it was originally publushed on May 13th, 2021.
Investors have been glued to the recent run in base and precious metals, especially the prices of silver and copper, which have appreciated far more than gold over the past year. A related story is the potential for critical minerals in renewable energy storage systems and in pollution abatement. An outstanding way to capitalize on these trends is through a small-cap, silver play with huge deposits of molybdenum, copper, zinc and certain USA critical minerals.
Enter:
American CuMo Mining Corporation (TSX-V: MLY, OTC Pink: MLYCF, Forum) an exploration and development company with mineral rights interests in the United States and Europe, specifically in Idaho and Austria . MLY, which has a market cap of only $10.5M, is focused on developing toward production its CuMo Project, which is a substantial deposit of copper, molybdenum and silver, and its historic Bleiberg Project, which has potential for substantial quantities of zinc, germanium, cadmium and fluorite.
American CuMo Mining is offering investors a silver stream financing opportunity, an attractive investment vehicle typically available only to institutional investors. The investment is structured as a Senior Secured bond with an embedded option on silver at $5 (USD) per ounce (versus a current market price of $27.63/oz.). The Senior Secured Debentures pay 7.5% interest per annum and are convertible into 1,000 ounces of silver at $5/oz. The bond has been accepted for trading on the Vienna stock exchange.
The Company, through its wholly owned subsidiary, International CuMo Mining Corporation (ICMC), has recently entered into an arms-length agreement to purchase the
Bleiberg project, a Zinc-Germanium-Lead-Cadmium-Fluorite mine located in southern Austria. This property will diversify the Company’s mineral portfolio and add several metals that are vital to the technology industry.
Stockhouse Editorial caught up with American CuMo Mining’s President and Chief Executive Officer, Shaun Dykes to find out more …
SH: Thank you for joining us today. Let’s start by looking at the silver stream financing. Investors at all levels should be interested in taking advantage of this, so can you give us a rundown on how it works?
SD: Thank you for the opportunity. Historically, silver streaming was only available to large scale investors and companies. I believe our Company is now the first to extend this financing vehicle to smaller investors, allowing them to participate in what historically have been very attractive returns. Our silver streaming product allows an investor to purchase physical silver from future production at a price of $5 per ounce. It is a long-term investment that pays interest while the project is being developed. Here is how it works: an investor purchases a bond with an embedded right to purchase 1,000 oz of physical silver at a price of US$5 per ounce. The bond pays 7.5% interest annually and has a seven-year term. Upon the Company’s decision to place its CuMo project into commercial production, the investor can choose to enter into a contract to purchase 1,000 ounces of silver from the mine at US$5 per ounce or be paid back the principal and any accrued interest. Silver is delivered based on the volume of silver produced at the mine each year. The bonds are secured by the assets of the Company and can be traded publicly on the Vienna stock exchange. Vienna is a major bourse with an excellent reputation that has been active since 1771.
SH: It sounds like this financing could create some interesting options for the company. Can you explain how the proceeds from the offering will be used?
SD: The proceeds will allow the Company to continue to develop its projects, bringing them closer to production and thus increasing shareholder value.
Just as importantly, it allows us to reduce the long-term share dilution that would normally occur with a large scale and potentially profitable project.
SH: There is an independent 43-101 resource at the CuMo Project that is not only rich in molybdenum, but also contains very significant credits of copper and silver. So far, this resource is essentially untouched. What do we know about what lies beneath the surface?
SD: The Company recently completed an independent Preliminary Economic Analysis (PEA) that outlines the resource and its accessibility to open pit mining. The analysis shows that CuMo is not only the largest molybdenum deposit in the US, but the largest in the world. It also ranks as the largest silver deposit in the US and one of the top ten copper deposits in the US. Moreover, it is the largest rhenium deposit in the US and has potential to recover tungsten. This is important since both rhenium and tungsten are classified as critical minerals by the US.
All these by-products help reduce the Company’s overall cost to produce molybdenum. To date, approximately 66% of the known deposit has been drilled, and the Company is working toward a pre-feasibility study that will allow it to submit a mining plan for commercial production. Further expansion of the deposit is possible, as the Company follows the feeder system to depth below the open pit accessible mineralization.
The economics as outlined in the PEA are excellent and show an after-tax cash flow of $370 million per year for 30 years using metal prices of $15 molybdenum, $3 copper, $17.50 silver. According to the PEA, the cash cost of molybdenum production, net of by-products, was $4.67 per pound. The Company is working on several optimizations to further reduce costs and improve performance.
SH: Let’s look at your Bleiberg project, can you give us a bit of history on it?
SD: Bleiberg is our recent acquisition, and it gives the Company the opportunity to diversify both geographically and with respect to our mineral portfolio. Most importantly, however, we believe Bleiberg can become profitable much more quickly than the CuMo Project, due largely to its underground nature and extensive workings. I will go into that further, but first let me outline the big picture.
The Bleiberg mine is located in southern Austria, in an area that has seen mining activity since the 12th century. The Bleiberg mine itself has been actively worked for approximately 700 years. In 1946 the mine was nationalized by the Austrian government and thereafter operated continuously until 1993, at which time the Austrian national mining company declared bankruptcy. Since then, the deposit has sat idle. Now, with the rally in metals prices and the demand for certain critical minerals at Bleiberg, we think it makes economic sense to bring the mine back into production. Restarting an existing underground mine is of course much faster and simpler than bringing a new mine online.
Bleiberg is a zinc-germanium-lead-cadmium-fluorite deposit that has a strike length of approximately 20 kilometers and a depth extent of approximately one kilometer. A total of approximately 1,125 kilometers of underground workings already exist with numerous shafts. Historically, mining operations were confined to the initial 12 km of strike, leaving approximately 8 kilometers yet to be explored. Of special note is the fact that Bleiberg was previously one of the top 5 germanium producers in the world, and germanium is now a critical input for computers and solar panels. We believe that based upon the existing mine infrastructure, the projected mineralized bodies, and our expertise in ore sorting, Bleiberg can potentially become a highly profitable operation in a reasonable time frame.
SH: What kind of timetable/expectations does the team hold for Bleiberg?
SD: We have high expectations and an aggressive timeline. We are currently awaiting a lifting of Covid-19 restrictions so we can compile the vast amount of data that already exists. Much of this data is archived in several Austrian government agencies, and includes mine plans, development schedules, drilling results and production volumes. The Company’s goal is to outline a minimum of five million tonnes of resources with grades similar to historic production and use that to place the deposit back into production. Several professional papers mention a potential of 13 to 50 million tonnes indicated in the known parts of the mining complex. The company intends to investigate placing all production, tailings, and waste dumps underground, thereby speeding up the permitting process and reducing the overall environmental footprint.
Note: the 13 to 50 million tonnes mentioned is not considered by the company to be a resource or reserve of any kind.
SH: Switching gears back to the CuMo Project, we have heard that molybdenum may have an interesting future in battery technology. Can you help us understand how that might work?
SD: Currently,rechargeable lithium-ion batteries (LIBs) have become the ubiquitous power source in portable electronic devices and are regarded as the most promising power source for large-scale applications, such as hybrid electric vehicles, electric vehicles, and stationary energy storage wells. Over the last 5 years or so, studies at major universities in the US and around the world have concluded that molybdenum, combined with graphene, can improve the storage capacity of LIBs by 4-5 times. As this research moves toward commercialization, it could have a huge impact on molybdenum demand and therefore prices. We have dozens of papers on this topic, some of which can be found on our website.
SH: What other uses of Molybdenum do you see that show promise.
SD: Two exciting uses for molybdenum are important in the short-term. The first is infrastructure. The developed world needs to replace aging buildings, bridges, railways, pipelines, and much more. The World Bank estimates that over $94 trillion dollars (yes TRILLION!) will be spent over the next 20 years on infrastructure upgrades, and much of this will require molybdenum steel. A recent example is the new World Trade Center in New York, which was built with 2% molybdenum steel. For your readers who don’t know this, the molybdenum content of steel is important because it makes steels stronger and more resistant to corrosion.
A second exciting use of molybdenum is related to drinking water. Obviously, the world needs drinking water, but even though the earth is 70% water, only about 1.2% of it is drinkable. We have the technology to produce clean drinking water from oceans and waste recycling plants, but the technology requires high grade molybdenum steels that can withstand highly corrosive environments. In addition, molybdenum-graphene membranes are used to in the desalination process to make it cheaper and more efficient. The demand for this technology is amazingly strong – Saudi Arabia and the Gulf States have plans to construct 54 desalination plants that will be built using 6% molybdenum steel.
Between its uses in infrastructure spending, desalinization, and improved battery technology, the demand for molybdenum is expected to increase substantially, creating a shortage of supply and associated increase in price. An analogy can be made to cobalt, which went from $7 to over $45 per pound just on battery-related demand.
In short, the future for molybdenum looks terrific.
SH: Based on what you have been seeing, what do you predict for the future of silver prices?
SD: Given the amount of government spending around the world I can see significant increases in precious and base metals as currencies devalue. $50 per ounce or higher is foreseeable just within the life of the silver financing units. I for one am very bullish not only on silver, but all strategic metals over the next few years.
SH: Can you give us some highlights on the experience of your management team?
SD: Our management team has broad experience developing and exploring mineral projects. We have been leaders or members of teams that have taken projects around the world from grass roots exploration toward production. Seven of the projects our team members have worked on have gone into production. The team has broad experience in geology, engineering, and exploration, plus extensive history with environmental permitting and compliance at the community, state, and federal levels. We also have access to many experts required to advance our projects toward production.
SH: How about you? What brought you to American CuMo?
SD: I first became involved with the Company in 1995, when I worked on numerous gold deposits in Russia. At that time, we were collecting data from Russian sources to produce models and analyze properties for option or purchase. Over the years we also worked on deposits in Canada, the US, and Australia. In 2004, I investigated the CuMo Project and recommended it for option. From 2005 to 2013, I worked on CuMo and other projects and then, in 2013, the Company became embroiled in a proxy battle related to prior management’s misuse of funds. When the dust settled, I became President and CEO of the Company. Thereafter we changed the Company’s name to American CuMo Mining to reflect the flagship project, and I have been working to advance the project ever since. My family members and I are large shareholders who have a strong belief in the Company and continue to fight for its shareholders.
SH: Finally, could you talk a bit about the Company’s ESG strategy. What does it look like and how are you implementing it?
SD:By strictly adhering to sustainable development principles, the Company is investing in the long-term economic health of the Company. This lifecycle approach to business aims to leave a net positive imprint or, at the very least, a neutral impact on the geographic areas and lives touched by each of its projects. The Company is committed to renewed production of minerals and the responsible development of natural resources by using regulatory and cost-benefit analysis tools to achieve balance on economic, environmental, and social bottom lines. The Company’s mandate is to continue developing the CuMo Project in an environmentally-friendly and sustainable manner with the goals of achieving huge economic benefit for Idaho and a cleaner and better environment than what is currently on site today.
The Company has developed a Responsible Mineral Development Policy to communicate sustainable development goals and commitments at every phase of project development. CuMoCo, its employees, contractors and partners will:
- Actively work with local residents, communities and governments to ensure that the CuMo Project respects local priorities, and advances local interests in such areas as employment, business opportunities and infrastructure development;
- Ensure that all regulatory requirements for the development of the CuMo Project are met and/or exceeded;
- Ensure that all technical, environmental and cultural studies undertaken in support of the CuMo Project are thorough and rigorous;
- Apply best practice environmental management standards to all study, development, construction and operational activities undertaken at the CuMo Project;
- Be open, honest and forthright with all project stakeholders;
- Seek input and dialogue with local communities and project stakeholders;
- Ensure that local people and local companies receive priority consideration for employment and business opportunities, based on qualifications and merit;
- Develop and implement the best possible exploration plan for the CuMo Project from an environmental, social, and economic perspective.
Over the past 15 years, the Company has developed a strong relationship with the local community and the local and state government officials and regulatory authorities, and will continue to do so.
Thanks again for joining us today Shaun, anything further to add?
SD: With the recent and ongoing increase in the price of both precious and base metals and the advancement of its projects, the Company is poised to become a major player in the mining and critical mineral industry. In addition, Copper, Silver, Zinc and critical metals such as Germanium, Rhenium, Tungsten, and Fluorite are becoming more in demand and critical to the ongoing development. Molybdenum is poised to play a major role in the world’s future through aging infrastructure replacement, battery technology, and drinking water supply. The Company’s approach to having multi-element diversified deposits is starting to pay dividends and we look forward to the upcoming developments at both of our exciting projects
Finally, I’d like to acknowledge that the tremendous work completed to date is the work of a team of professionals and experts the comprise the Board, management, and the consultants hired for the projects and to acknowledge the shareholders of the Company who have been fully supportive.
For more information on the Company, visit
www.cumoco.com.
FULL DISCLOSURE: This is a paid article produced by Stockhouse Publishing.