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Kaiser Media Watch Blog - February 1, 2024 to February 29, 2024

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The KRO Blog is where unrestricted content is posted such as Kaiser Watch, material produced by third parties such as the as Investing News Network, and Metal Investor Forum conference links.

Posted: Feb 29, 2024JK: Kaiser Watch February 23, 2024 with Jim Goddard and John Kaiser
Published: Feb 23, 2024KRO: Kaiser Watch February 23, 2024: Is the AI dream good for resource juniors?
Kaiser Watch is a weekly audio show produced by KaiserResearch.com with Jim Goddard and John Kaiser discussing the junior resource sector. The show has three parts: the first is a general topic, the second discusses developments involving the KRO Favorites which as of January 1, 2022 are no longer exclusive to KRO members, and the third is a peek inside the members only KRO Bottom-Fish Workshop. KRO is transitioning into a Do-It-Yourself research platform that covers all Canadian and Australian resource listings and which also features a Bottom-Fish Workshop where John Kaiser highlights juniors with solvable "missing pieces". Companies that graduate from the Workshop may become part of the Annual Favorites collection whose profiles and related commentary are unrestricted for non-members. Visit the KRO Favorites Dashboard for quick access to all the unrestricted Favorites related content. KRO is not sponsored or compensated directly or indirectly by public companies. The business model is based solely on membership fees which have changed for 2024 as a transition to a $200 per month auto renewal program in 2025. During 2024 individuals can register for a KRO membership at a non-refundable price of $450 for a term that expires December 31, 2024. All active KRO members will be grandfathered to renew annually at $450 on Dec 31, 2024. Sign up here for this limited $450 offer. Kaiser Watch is available at Kaiser Research YouTube and as a Podcast downloadable from KaiserResearch.com. Each episode will be made available through the publication of a Kaiser Media Watch blog report which will provide links to specific questions and include supplementary graphics. All episodes will be archived at Kaiser Watch.

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Kaiser Watch February 23, 2024: Is the AI dream good for resource juniors?
Jim (0:00:00): What do you have in store for the upcoming Metals Investor Forum in Toronto?

The Metals Investor Forum runs March 1 and 2 in Toronto at the Delta across from the PDAC South Convention Center. My session is on Saturday at 3 pm in the afternoon. Attendance is free provided you Register in advance. If you go to the KaiserResearch home page you can find a link to register for this conference which is free. The two companies in my session are PJX Resources Inc and Silver North Resources Ltd. Hopefully attendance this year will not be compromised by a major snow-storm as happened last year.

Anybody visiting my web site will notice a couple differences, one annoying, the other gratifying. The annoying change is that when you arrive you will encounter a Cloudflare captcha designed to identify a human visitor. Most of the time you just have to wait for 10-20 seconds while some algorithm hoovers up your browser history and tries to figure out if you are sluggish enough to qualify as a human. But sometimes you need to click a box which presumably the hyper-efficient bots cannot figure out how to do. Once past this annoyance you get to experience the gratifying difference, namely that pages requested load quickly.

The KRO web site, even though hosted in the cloud, had become horribly sluggish because of bot traffic during the past year or so, but even more so this year. This is not because John Kaiser is flying high as a resource junior guru and the site is being pounded by eager investors, for in fact after a decade plus bear market for the resource juniors he is flying at the lowest elevation in his entire career as an independent commentator. In fact, things are so bad that all annual individual KRO memberships now expire on December 31, 2024 so that he can decide to discontinue KRO as an open fee based subscription service at the end of this year if there is no turnaround. Existing members get to renew at the annual fee of USD $450 prorated for the days left in the year, while everybody else, new and lapsed members, have to pay $450 for the remainder of the year. That is still a deal because if I decide to continue for at least another year, all members expiring at the end of 2024 will be entitled to renew at the $450 annual rate while everybody else will have to pay $200 per month on an auto-renewal basis.

The bot activity that has bogged down KRO and made it difficult for me to market it as a time saving research tool appears to be partly of a Russian nature, possibly trying to inflict a denial of service as punishment for my thumbs down commentary about the Global East and the way PutinXi Poodles are supporting the autocratic leaders Putin and Xi in their plan to flush democracy down the toilet. My main evidence for a Russian origin is the nature of the garbage that populates fake registrations which manage to get past obstacles human users cannot. These registrations fail because there is another step required for completion, such as paying with a credit card. Since the Cloudflare captcha test has been activated there have been zero bot registrations.

A less pernicious type of bot activity that is still capable of overloading a web site comes in the form of AI bots trying to hoover up data to feed their large language models. In the good old days two decades ago the more useful free content a site would provide, the more the site would show up in search engines, and the more "eyeballs" one's site would attract. So I provided a lot of useful free information, not because the site was serving advertisements to visitors for which KRO got paid, but because I hoped a fraction of the visitors would become paying members. The "knowledge" fee based model, however, died during the past decade; today "independent research" increasingly subsidizes itself with corporate sponsorships.

For example, NWT lithium explorer Li-FT Power Ltd announced on January 8, 2024 that it had engaged New Era Publishing Inc to provide social media marketing services for USD $625,000 up front to identify "an appropriate space for the campaign", with another USD $625,000 to be paid when the campaign begins. That is an investor relations expense of almost CAD $2 million. The press release mentioned that New Era principals had bought stock and promised not to sell any stock "during the active period of the campaign". Oddly, Li-FT does not disclose anything about the duration of the "active campaign". There was also no mention of the relationship between New Era Publishing Inc and Marin Katusa who publishes Katusa Resource Opportunities available at an official annual fee of $3,495 (do not click on the "subscribe" link on his web site unless you have a pending colonoscopy whose food consumption prep rules you suddenly ignored and which act you wish to abruptly reverse). This subscription service which Marin calls "KRO" published a 27 page lithium focused report on January 3, 2024 in which Marin boasts that he purchased CAD $1 million (USD $625,000?) worth of Li-FT stock which company he endorses throughout the report. The report finishes with a disclosure that Katusa, New Era etc own shares in the "following" stocks mentioned in the report "above" which list strangely does not include LIFT. From what I have seen of Katusa's reasoning much of it makes sense and is often innovative, but when you connect the dots getting compensated exclusively for that analytical output is not what his "KRO" appears to be about.

Since the real KRO is a research platform where speed is critical, and AI bots scavenging everything they can encounter to feed their large language models so they can eventually replicate whatever potential knowledge resides within KRO without paying any compensation to the source of the information are bogging down the web site, I have started shifting much of its content behind a paywall. Eventually most of KRO will be invisible to the public except for a peephole such as Kaiser Watch provided to the public for free. If this Cloudflare Captcha continues to keep the bots at bay and make the site fast for humans, KRO has a serious chance of staying alive for 2025 because it will be able to function efficiently as a research platform for sophisticated investors.

I will spend Sunday through Tuesday at the PDAC looking for bottom-fish to add to my 2024 Collection as well as to catch up with all the lithium juniors which are still struggling to get market respect despite some getting James Bay drill programs underway. Hopefully I will have a Kaiser Watch lithium focused update ready for March 8. The lithium carbonate price decline has stopped but it is too early to call a bottom despite talk that even Chinese lepidolite producers are questioning the wisdom of operating at a loss. There is lots of negativity about the energy transition these days, especially with the prospect that Trump might be the president in 2025 and will do what he can to reverse or stall the energy transition.

But there is a new wrinkle which could give legs to energy transition goals and the required metals, which is the Artificial Intelligence (AI) juggernaut. Most of the attention is on hardware producers like Nvidia and the tech giants developing AI tools with the hope of collecting huge revenues through the rental of these tools. (KRO's information platform is a tool rental service which has potential to feed an AI large language model.) Wiping out white-collar jobs by instantly delivering existing answers to questions will be a lamentable outcome that raises the question, what will all those displaced humans do in order to earn the income that is to be paid for the fruit of AI?

When machines first arrived during the industrial revolution there was great concern about displaced manual workers, but they ended up becoming engaged not just in running the machines but also in clerical and marketing work, much of it still manual. When the personal computer and internet innovations arrived these workers found a lot more new jobs as knowledge workers. But AI threatens to replace these knowledge workers, and the question emerges, what is the activity beyond knowledge generation or activation once it is more efficiently done in the digital realm that humans can do which adds value to the economy? Human interaction is one obvious path, which can take place in the cognitive realm such as interpersonal engagement between a payee and a payer or in the physical realm such as changing the diapers of aging boomers. But that doesn't really scale because it is just an end times scenario.

For humanity to thrive on the back of the AI revolution there need to be massive efficiency gains in the material world, not just the cognitive world. AI's potential to create new knowledge is the key to the AI dream. When AI uses vast computational power to work through countless inorganic molecule or crystal configurations to end up with a new group with unprecedented physical properties, who knows what technology innovations will emerge? The same goes for organic molecules and the implications for health, food production, and even rebalancing out of kilter eco-systems. AI will generate huge numbers of probability qualified hypotheses which will have to be tested with prototpyes in the physical world. Yes, AI will do much of the work with computer simulation, but at the end of the day physical testing is unavoidable. There will emerge huge demand for technicians to manage all these physical tests because this will be cheaper than machines creating endlessly recursive sensor systems. The biggest prize lies in the field of energy, with fusion the primary dream for reducing the physical cost of energy production. But there is also room for energy efficiency gains through the deployment of new materials, both in what they do and how they are manufactured. Collapse the cost of energy and all sorts of human activity becomes worth compensating for. But marching AI toward this fusion equivalent energy breakthrough will require an awful lot of energy, and this is the key to reviving the resource sector, in particular the resource juniors.

I recently read Neal Stephenson's novel Fall: or Dodge in Hell where the unexpected death of a tech billionaire results in some version of his brain being uploaded into the digital realm. This novel, which seems like a series of barely related stories, is fascinating because it posits the idea that when a person dies his or her consciousness can be migrated into the "cloud" where it can thrive within a simulated digital reality, provided the deceased has enough accumulated wealth to pay the admission cost for this after-life (a boomer wealth transfer mechanism?). Although most of the novel plays out in this simulated after-life where the deceased become free agents in so much as this is possible in any social setting, a subtext is what unfolds in the still physical world of living humans who are responsible for procuring the future souls (clients) for this simulated after-life as well as building the infrastructure to support it. Spying on the denizens of the simulated after-life itself becomes a form of entertainment that serves as an economic foundation for the living humans. Computation, however, requires energy, and the energy demand of this simulated reality goes through the roof because of the continuous flow of newly deceased members and the growing complexity of their interactions within the simulation. The result is a massive expansion of earth's energy infrastructure, which includes establishing giant solar panel fields in space. Unlike Stephenson's "hard-science" novel "The Seven Eves", he does not get into the mechanics of this because it is a side story for the Fall. But if you take the AI bubble of which Nvidia has become the monetary symbol seriously, it is not hard to realize that for AI to flourish we will need to build a lot more energy infrastructure, and because the AI boom is happening now, and not in 15 years like the fusion dream, this capacity expansion has to be done with existing technology.

The AI dream's potential to provide rapid efficiency gains for the material world, a variation of Ray Kurzweil's dream of the approaching singularity, stands in stark contrast to the energy transition goals which require near term sacrifice borne mostly by boomers who will largely not live to experience the benefits of stopping global warming by shifting to an energy basis that does not generate carbon dioxide. The IEA has made predictions of the raw materials required to make net zero emission goals reality, which includes metals like nickel, copper, rare earths and lithium which require respectively supply gains by 2030 of 100%, 50%, 200% and 600%. But while interest in lithium had a boom during the past couple years, the market has not taken seriously the reality that the current development pipeline will not deliver this supply. Despite all the corporate presentations loaded with talk about "battery" metals and their future needs, investment capital is not going into exploration and development anywhere near the scale and diversity needed to make those supply goals reality. And the reason is very simple.

People do not believe it is necessary, do not believe that it will make a difference, or may even not care what the outcome of energy transition strategies might be. Since the decision making power and capital resides in the hands of the boomer generation, which will have to make the greatest sacrifice for an outcome most will not experience, the inclination is to oppose or stall the costs of the energy transition. Never mind that they may have children or even grand-children; this generation was once called the Me generation and that probably hasn't changed. The political inclination is to take one's chances and pray or hope for the best. This, of course, does not sit well with the younger generations who along with their children will experience the outcome in full. The energy transition is a hard sell for spending huge amounts on transforming energy infrastructure into a clean foundation that slows global warming which science minded people who have not slid to the bottom of the Belief Horeseshoe recognize is laying the foundation for a dysfunctional and apocalyptic future society.

While the energy transition dream has negative connotations (sacrificing now to prevent something future bad from happening that may or may not happen), the AI dream is the complete opposite. It does threaten potentially bad future scenarios such as the extermination of humanity that may or may not happen, and which certainly is not an overnight threat, but it also offers potential near term technology breakthroughs that could make a positive difference to everybody's welfare very quickly. The only hitch is that as AI gets rolling its computational requirements will suck up huge amounts of energy the existing infrastructure capacity cannot supply.

So why not go on an infrastructure spending binge if this is the only way to make possible massive gains in human welfare? And, while we are at it, why don't we focus on building clean energy infrastructure that suits energy transition goals just in case the warnings about future calamity are correct? What is the point of all this AI innovation if we feed it with fossil fuels and the livability of the planet collapses? Unlike in the late nineties when the dot-com boom sucked all the air out of the room for the resource juniors, this time around the new AI boom could pump oxygen into the resource sector. Throw in the geopolitical reality that the Global East is in a showdown with the Global West to dominate the future, how is it possible for the resource sector not to boom, and, by extension, the resource juniors which are key to finding and advancing new discoveries in jurisdictions that are secure for the Global West?

Five Year Chart of Nvidia - $2 trillion market cap
Jim (0:09:26): Did you not just have PJX Resources at the recent January Metals Investor Forum in Vancouver?

PJX Resources Inc was part of my session at the Vancouver MIF so Kaiser Watch fans will already be familiar with that story, which is that the century long hunt for Sullivan Two could finally deliver success in 2024 when drilling starts at the Dewdney Trail project in southeastern British Columbia. Not much will change in terms of fundamentals until drilling gets underway in June, though we may see new interpretations of existing geophysical data between now and then. Confirmation may take a couple months of drilling because the outcropping horizon they found late last year is interpreted as peripheral to the likely vent center for the Sedex system. The reason for his assessment is that zinc-lead-silver mineralization in the outcrop is non-magnetic compared to the boulders found in the talus at the base of the slope to the south. The magnetism is caused by pyrrhotite, an iron sulphide which tends to be part of the massive sulphide pile that builds up over the vent. So the drilling strategy will be one of starting with the outcropping horizon to develop an understanding of the stratigraphic controls and vector towards the area above the talus field. Meanwhile field crew will continue to prospect upslope from the talus field to try to find the erosional windows within the syenite dyke sheet from which the magnetic massive sulphide rocks spilled. If they are successful the drill will likely be moved to test the stratigraphy where the greatest potential for a major discovery resides. That is why discovery hole confirmation that sends the stock through the roof is not likely until August.

It is interesting that Adam Travis' Coast Copper Corp has staked 5,134 hectares on the eastern flank of the 13,500 ha Dewdney Trail property. I asked PJX CEO John Keating why PJX had not expanded its property to include this area. His response was that the rocks in this direction are Cambrian aged which is significantly younger than the rocks that host Sullivan as well as the outcrop stratigraphy which is slightly younger than the Sullivan Time Horizon. He does concede that Coast Copper's Sully property is prospective for the younger 150 million year old or so intrusions that PJX was chasing at the start of the 2023 field season.

The soil geochemistry at Dewdney Trail and the deep geophysics suggests that there is a lot going on in this area in terms of younger intrusive activity that never made it to surface except in local instances like the syenite dyke sheet which PJX explored last year. These would have created copper-gold systems rather than the much older zinc-lead-silver Sullivan type Sedex systems from 1.5 billion years ago. There is no guarantee that the Sedex target will turn out to be Sullivan scale, or even half that, but there will be enough visuals during exploration to fuel anticipatory speculation that could enable PJX to raise a lot more money at higher prices. Some of that money could be used to drill these deeper blind targets, and if these deliver evidence of the intrusion related gold systems Keating thinks the structural framework in this area made possible, not only would that turn Dewdney Trail into two distinct exploration plays, but it would also spark interest in Coast Copper's Sully property to the east. But that is getting ahead of ourselves. Normally I do not allow a junior to be part of my session in successive MIF conferences unless something dramatic has changed, but this story is so interesting that I felt the Toronto audience should have a chance to see it. The Dewdney Trail Sullivan Two hunt could turn out to be a huge discovery play whose serendipitous origins would be an inspiration for all serious discovery oriented exploration juniors.

PJX Resources Inc (PJX-V)

Bottom-Fish Spec Value
Dewdney Trail Canada - British Columbia 2-Target Drilling Zn Pb Ag

Regional Map & PJX Property Map

Geology Map showing Sullivan in relation to potential Sullivan Two

Deedney Trail Map with Coast Copper claims

Magnetic Geophysical Map for Dewdney Trail

Sample Results for Dewdney Trail

Photo View of Sullivan Two Target

Conceptual Section showing location of dyke relative to stratigraphy
Jim (0:17:03): Why have you invited Silver North Resources to the Toronto Metals Investor Forum?

Silver North Resources Ltd, headed by CEO Jason Weber and chairman Mark Brown, holds 100% of the strategically located Haldane project in the Yukon west of the Keno Hill silver-zinc-lead mine operated by Alexco until Hecla Mining bought it out in late 2022 for $100 million in stock. Hecla, which also paid more than double that to buy out Wheaton's silver stream, is now working to bring mining supply to the existing mill's capacity. Alexco, which took on the Keno Hill project with a promise to undertake reclamation of the district's legacy waste from a time when environmental mitigation rules were weak or non-existent, a legacy for which the exploration and mining sector continues to get a bad wrap today despite a completely different permitting regime, sold the silver stream early on because its geologists believed that at depth the Keno Hill veins would undergo an increase in zinc-lead grades at the expense of the silver grade. That proved not to be the case and Alexco ended up struggling to make its Keno Hill operation profitable. Hecla's purchase of the silver stream eliminates that profit obstacle and allows it to pursue development of the deeper veins so as to bring the mill to full capacity. But it also positions Hecla in the middle of a Yukon region where Victoria Gold operated the Eagle gold mine, Banyan is advancing its Aurmac gold deposit, and Sitka Gold is drilling its own intrusion-related gold system.

Hecla's revival of the Keno Hill zinc-lead-silver district has made Haldane topical and is a key reason Silver North has shifted from the prospect-generator-farmout model to focusing on turning its flagship into a 100% owned discovery. The Keno Hill district is characterized by northeast striking veins within a quartzite host that have undergone secondary faulting which created jogs within which very high grade silver shoots have formed. The trick is to find where exactly these shoots repeat. The Haldane property covers a mountain whose oxidized portion of vein sets similar to Keno Hill has been preserved, which made the deeper sulphide extensions a more elusive target for past explorers. The prevailing view is that Haldane Mountain is an upwards horsted block which, if true, implies that substantial down dip potential exists beneath the mountain and will be accessible from the surrounding valley floor. Alexco's silver stream mistake is thus a reason to revisit Haldane in a big way.

High grade silver was mined at the southern end but the project has seen only 28 drill holes, half of them conducted by Silver North. This drilling has confirmed multiple mineralized veins similar to those at Keno Hill; the spacing of the holes was such that only 600 m of cumulative 12 km strike has been tested. The hypothesis is that denser drilling will reveal the location of high grade shoots which can grade above 3,000 g/t silver, for which Silver North would like to mount a $2 million program in 2024 that is only partly funded so far. The goal is to delineate 30 million ounces silver, which is not enough on a standalone basis, but which would be of great interest to Hecla as ore trucked to its Keno Hill mill.

Silver North has also farmed out its Tim project in southern Yukon to Coeur Mining which can earn 80% by delivering a positive feasibility study by 2028. The original deal was done nearly 5 years ago and Coeur was in danger of defaulting thanks to lengthy delays getting a drill permit. The project sits within overlapping territories of the Liard and Ross River First Nations of which Ross River has not been enthusiastic about mineral exploration. The permit was granted in 2023 but too late for Coeur to mount a drill program. Given the desire to focus on the 100% owned Haldane project Silver North agreed to extend the original deal to 2028. With permits finally in hand Coeur will be drilling Tim in 2024 with the benefit of knowledge it has gained developing the Silvertip carbonate replacement type silver-zinc-lead project on the BC side. Haldane's location in the middle of an area where intrusion related gold systems owned by Victoria Gold, Banyan and Sitka Gold are now believed to be the drivers of the slightly younger peripheral Keno Hill Ag-Zn-Pb veins makes Silver North a potential buyout target for more than just Hecla Mining. Hecla and Coeur are arch rivals vying for the attention of silver bugs. If Coeur has another Silvertip scale success at the Tim project it will want to acquire Silver North sooner than later, which would put Haldane into its hands. That in turn would stymie any ambitions Hecla might have to develop the Haldane vein shoots Silver North delineates and truck them to its Keno Hill mill. Although Silver North still needs to do a major financing to fund a serious summer drill program, the changes in the strategic implications of Haldane for this part of the Yukon is the key reason I invited Silver North to the 2024 Toronto Metals Investor Forum.

Silver North Resources Ltd (SNAG-V)

Bottom-Fish Spec Value
Haldane Canada - Yukon Territory 2-Target Drilling Ag Zn Pb

Keno Hill District and Vicinity Map

History of past Haldane exploration activity

Geoogy of Keno Hill Silver-Zinc-Lead District

Mineralizad Faults at Haldane

Previous Haldane Results
Disclosure: JK does not own any of the stocks mentioned; PJX Resources and Silver North Resources are Bottom-Fish Spec Value rated

Posted: Feb 28, 2024JK: Kaiser Watch February 9, 2024 with Jim Goddard and John Kaiser
Published: Feb 9, 2024KRO: Kaiser Watch February 9, 2024: The PutinXi Poodle Lifestyle
Kaiser Watch is a weekly audio show produced by KaiserResearch.com with Jim Goddard and John Kaiser discussing the junior resource sector. The show has three parts: the first is a general topic, the second discusses developments involving the KRO Favorites which as of January 1, 2022 are no longer exclusive to KRO members, and the third is a peek inside the members only KRO Bottom-Fish Workshop. KRO is transitioning into a Do-It-Yourself research platform that covers all Canadian and Australian resource listings and which also features a Bottom-Fish Workshop where John Kaiser highlights juniors with solvable "missing pieces". Companies that graduate from the Workshop may become part of the Annual Favorites collection whose profiles and related commentary are unrestricted for non-members. Visit the KRO Favorites Dashboard for quick access to all the unrestricted Favorites related content. KRO is not sponsored or compensated directly or indirectly by public companies. The business model is based solely on membership fees which have changed for 2024 as a transition to a $200 per month auto renewal program in 2025. During 2024 individuals can register for a KRO membership at a non-refundable price of $450 for a term that expires December 31, 2024. All active KRO members will be grandfathered to renew annually at $450 on Dec 31, 2024. Sign up here for this limited $450 offer. Kaiser Watch is available at Kaiser Research YouTube and as a Podcast downloadable from KaiserResearch.com. Each episode will be made available through the publication of a Kaiser Media Watch blog report which will provide links to specific questions and include supplementary graphics. All episodes will be archived at Kaiser Watch.

Podcast Download

Kaiser Watch February 9, 2024: The PutinXi Poodle Lifestyle
Jim (0:00:00): Why did FPX Nickel jump last week despite weak nickel prices and a deepening bear market for resource juniors?

The big story for FPX Nickel in mid January was a $14.4 million financing by Sumitomo at $0.48 which I discussed in Kaiser Watch January 17, 2024. Although almost everybody grumbled about the dilution created by this financing, I argued that it was significant because Sumitomo is a mining company, possibly the one which buys out the minority shareholders of FPX down the road, and, unlike the other strategic investors, will care that Decar has a decent after tax IRR and NPV, whereas the others simply want a secure clean supply of nickel for their downstream products like green stainless steel and EV batteries. Prior to Sumitomo's arrival the risk was that Decar gets developed on a breakeven basis that benefits the offtake parties who make their markup through the value-add within their product lines. In the case of Outokumpu that would be because it can charge a premium for "green" stainless steel whose nickel input is bought at LME refined nickel prices. In the case of the mystery strategic investor who is likely a downstream battery or car maker the value is added by being able to sell in jurisdictions that insist on clean inputs. A buyout could happen when nickel prices are depressed, as they are today, which would result in a low net present value, a percentage of which is the most minority shareholders can hope to get through a buyout offer. A mining company like Sumitomo will not want to build Decar unless it meets a producer's economic return thresholds, and, given the substantial CapEx Decar's development would involve, implies a future buyout price north of $2 per share.

Although FPX Nickel initially perked up with the Sumitomo news, whose $0.48 price was at a substantial premium to the $0.25-$0.30 range where FPX was languishing, the stock subsequently sagged as investors turned their attention back to concern that the Tl'azt'en Nation which desecrated Mt Sydney with clearcut logging would prevail with its new found claim that Mr Sydney is sacred territory. On February 1 2024 FPX announced that all 3 strategic investors had coughed up another $4.3 million at $0.48 to maintain their existing percentages which involved issuing another 8,981,971 shares at $0.48. This would have been an interesting iterative calculation because all three strategic investors have rights to maintain their holdings. While Sumitomo bought into FPX Nickel with eyes wide open after Chief Leslie Aslin unilaterally dumped a decade long benefits agreement to declare Mt Sydney off limits for future mining last August, Outokumpu and the mystery investor were already on board when the chief launched his surprise extortion ploy.

The fact that both strategic investors stepped up to maintain their equity stakes after Sumitomo came on board is a strong vote of confidence that Canada is not going to let some band of 1,561 indigenous people prevent the development of a major supply of clean nickel while similar indigenous groups with stronger territorial claims support the development of a mine that is good for the energy transition and for solid multi-decade local jobs. This extra financing brings working capital to $45 million and covers feasibility study costs through 2025. I think this is the last of the financings during the "value trough" of feasibility demonstration. Minority shareholders are now hoping that if any of the strategic investors want to increase their positions to 15% they will do so with open market purchases that drive the stock to a valuation more reflective of the underlying value. The mystery investor, of course, would have to reveal its identity as soon as it passes 10%, which could be how we eventually find out why the secrecy was so important.

Increasing equity stakes through open market purchase may not happen overnight because nickel is expected to be in surplus during 2024 following a major production ramp-up in Indonesia. The USGS just published its metal supply summaries for 2023 in late January which I have now absorbed into my database which goes back to 1930 when the USGS first started publishing annual supply stats. Since 2021 Indonesia's nickel supply has increased 73% to an estimated output of 1.8 million tonnes to represent 50% of 2023 nickel supply. Canada, Australia and New Caledonia increased supply modestly while Russia's supply, which comes mainly from Noril'sk, the world's dirtiest nickel mine, declined. Indonesia's 2023 production is more than double its peak in 2013 after President Joko Widodo declared a moratorium on the export of raw nickel laterite ore.

The China super-cycle depleted nickel warehouse stocks during the 2000s, causing nickel to soar over $24/lb in 2007. At the time nickel was produced from sulphide ores as concentrates that had to be smelted into refined nickel or from laterite ores via high pressure oxidation leaching (HPAL) which was an expensive process. Chinese steelmaker Tsingshan, however, became a national hero when it figured out how to make nickel pig iron by smelting lower grade laterite ore from Indonesia and the Philippines using its legacy (spelled very dirty) blast furnaces. Nickel pig iron did not yield high quality stainless steel, but it was good enough for Chinese needs. Production from Indonesia and the Philippines soared after 2010 as laterite ore was strip mined and shipped in bulk to China, clobbering the nickel price and inhibiting the development of supply from traditional sulphide and laterite deposits.

Indonesian supply dropped 85% after 2013 while that of the Philippines stabilized. Widodo's moratorium, however, worked as the Chinese reluctantly began to fund the development of smelting capacity in Indonesia. Indonesian supply began to grow in 2017 and is now more than four times that of the next biggest producer, the Philippines whose laterite ore still gets direct shipped to China. The problem for the world and its energy transition goals is that the Indonesian smelters are powered by coal-fired electricity, and while some of the nickel is converted to nickel sulphate for the batteries of China's growing EV fleet, a good part of the Chinese electricity grid is fed by coal power. To make matters worse for nickel producers elsewhere in the world, such as Australia and New Caledonia, the Indonesian nickel supply is not required to turn a profit for the owners which are part of China's extended state owned enterprise family. Indonesia does not care because from a government perspective it collects its royalties and the taxes paid by the providers of the "cost" which ends up matching revenues.

Widodo was unable to run for the Indonesian presidency due to term limits which he did not change like some aspiring autocrats have done. But he did a strange deal whereby he supported a rival called Prabowo Subianto, who was a special forces commander under the dictator Suharto, on the condition that he take Widodo's 36 year old son Gibrano Rakabuming Raka as his vice-president running mate. It appears that Prabowo has won the presidency in the recent election, but it is doubtful that Widodo's dynastic goals will come to fruition. The risk exists that one of the most corrupt nations in the world slides back into autocracy which would suit China fine because it in effect bankrolled the smelting capacity which will allow this Global East-Global South alliance to dominate global nickel supply. Major producers such as Glencore, Eramet, BHP and Anglo American are all squawking now because their operations are losing money and will need to be shut down. The Indonesian nickel operations may not be making money, but they bestow a strategic benefit to the Global East, which includes Russia whose dirty nickel sulphide mine will profit down the road when western nickel mines have disappeared.

Putin and his oligarchs could not care less that everything surrounding Noril'sk is an environmental wasteland, bestowing a lower cost structure than that of nickel sulphide mines elsewhere in the world which must comply with Global West environmental standards. New Caledonia's nickel laterite production using HPAL is currently losing money with Glencore trying to unload the Koniambo operation it bought in 2013, while others, according to a February 13, 2024 Financial Times article, are also "bleeding cash". So when Chief Aslin stands up to declare No-Can-Do to FPX Nickel with regard to a nickel mine that because it is neither sulphide nor laterite has a chance of achieving a zero carbon footprint, he is de facto working as a PutinXi Poodle against humanity's energy transition goals while also supporting a growing Global West nickel supply dependence on the autocratic Global East. Decar will not be in production before 2030 so what the price of nickel does during the interim is irrelevant, but the big picture story is how the Global West is being dragged into a reverse takeover by the Global East. Perhaps FPX Nickel's stock price perked up after the extra financing news because the market is beginning to understand that the juniors's strategic investors are members of the Global West making sure that their business plans do not fall victim to China's weaponization of nickel supply.

FPX Nickel Corp (FPX-V)

Bottom-Fish Spec Value
Decar Canada - British Columbia 7-Permitting & Feasibility Ni

Global Nickel Supply - Indonesia and Phillipines

Nickel Supply Charts for New Caledonia, Russia, Canada & Australia

Nickel Price and Warehouse Stocks Chart

Nickel Usage Chart
Jim (0:08:57): Why did Wolfden Resources move up a couple pennies after announcing that the Maine Land Use Planning Commission staff changed its position on the Pickett project rezoning application and appears set to reject the rezoning?

Wolfden Resources Corp has been trying to get approval from Maine's Land Use Planning Commission to rezone the minesite area at the Pickett zinc-lead-copper-silver VMS project for industrial use so that it can initiate a feasibility study and submit the project to Maine's Department of Environmental Protection for mine permitting. Under current law the DEP cannot process a mine permit application involving unincorporated land, all of which in Maine currently privately owned except state parks, unless the area in question has been rezoned for industrial use. The private property owners at the same time are free to harvest the timber growing on what represents just under half of Maine's land mass.

The LUPC had previously rejected an application which placed the mill and tailings facility at the 374 acre mine site but had hinted that it might be better equipped to judge a proposal that included just a hole in the ground with a head frame above it. So for the past couple years Wolfden has canvassed the surrounding township communities about their willingness to have the Pickett ore trucked from the minesite to a milling and tailings facility within their townships. After receiving support, over whose ultimate approval all local stakeholders understood the DEP has final jurisdiction, Wolfden resubmitted the Pickett mine application and worked with the LUPC staff to assess the proposal via a series of hearings in which anti-mining activists played a major role. A major hearing was held on December 13, 2023 where the LUPC staff was to present its recommendation. But because the chair of the commission was absent the hearing was hijacked by several commissioners who have an absolutist opposition to mining in Maine even though the state spent 7 years to reform its mining regulations so that the permitting cycle can be properly executed by the DEP which is made up of trained professionals. The LUPC staff had favored rezoning and prepared a pros and cons presentation to help the commissioners understand the proposal and make an informed decision. KW Episode December 15, 2023 discussed the outcome of this meeting which featured ignored objections such as that Wolfden does not have the capital to build a mine that has not even been submitted to the required permitting authority.

After the Bangor Daily crowed about how poorly the hearing went for Wolfden the LUPC staff changed their position to one of recommending rejection of the rezoning application. This KW episode was recorded before a February 14, 2024 meeting scheduled to discuss and possibly vote on the new recommendation to reject the rezoning, with only 8 commissioners out of 9 eligible, one of which is outgoing Lee Smith who never attended any of the public hearings leading up to the December 13 presentation whom Oxford County wants to replace with somebody more representative of the county's goals, and the vacant position for which Franklin County proposed Tom Dubois who was supposed to be approved in early January, but for some reason the Legislative Committee on Agriculture, Conservation and Forestry voted early January to reject the replacement nominees. Tom Dubois has since been reinstated as the proposed Franklin nominee, but not until after the February 14 hearing.

Wolfden asked on January 19 for a postponement of the decision until the new full 9 person commission is on board because LUPC rezoning requires a yes from 5 commissioners to pass. Currently 4 of the commissioners are overtly hostile to any mining on LUPC land, which is evident in the ignorance displayed during the December 13 meeting when staff was supposed to defend its recommendation that the rezoning be approved. As it turned out Wolfden's request was rejected and on February 14 the 5 of the 7 eligible LUPC commissioners turned down the rezoning application.

The primary agent behind the LUPC rezoning application rejection is the Natural Resources Council of Maine, a non-profit organization whose agenda appears to be to prevent any mining activity in the half of Maine's 21.3 million acres that is unincorporated and thus under the jurisdiction of the LUPC which makes development rezoning decisions through a commission of 9 volunteers which, when negative, prevents a project from being submitted to the Department of Environmental Protection for competent, professional evaluation. NRCM would, of course, oppose any mine permit application submitted to the DEP, but any decision would follow rules of law with professional accountability, not manipulation of potentially biased and gullible volunteers.

NRCM is a lifestyle organization which collects about $3 million annually in tax deductible donations to support a staff of a couple dozen people and various lawyers (see their NRCM 2023 Annual Report" TARGET=_blank>2023 Annual Report, one of which sent me a gloating email after the December 13 meeting. Their web site has an Anti-Mining in Maine page dedicated to Wolfden's Pickett project that is larded with misinformation including quotes from Native Americans who supposedly are worried about an area where they do not live or even visit, a theme echoed in the NRCM's February 14, 2024 Press Release. NRCM likes to point out that the Pickett project is within one of the watersheds of the Penobscot River which is critical habitat for Atlantic salmon while failing to mention that for decades no Atlantic salmon have migrated up the Penobscot River past Bangor to spawn in this habitat due to contamination from Maine's long fading pulp and paper industry.

The LUPC land is all privately held and can be clearcut logged at will. After that it looks like shit for several decades. If you use Google Earth in 3D mode to fly over this area east of Baxter State Park it is not the pretty area portrayed on the NRCM web site. It is boring rolling hills with second growth forest if any at all. I have not been to Maine but I have been to adjacent New Brunswick to visit the Sisson tungsten-moly project of Northcliff Resources Ltd and I have a good idea about how uninspiring the landscape is in this part of the world. I would be shocked if any NRCM employee or donor ever spent summer vacation time east of Baxter State Park where the Pickett deposit is located. Townships in the vicinity like Hersey, which hoped to get a boost to its local economy from the Pickett Mine, are located east of Mt Katahdin, famous as the end of the 2,200 mile Appalachian Trail celebrated by Bill Bryson in his 1998 book A Walk in the Woods. This was made into a movie in 2015 starring Robert Redford as Bryson and Nick Nolte as Katz. About 3 million people attempt this trail annually which starts in northern Georgia and follows the Appalachian Mountain chain until Mt Katahdin in northeastern Maine.

Bryson and Katz only completed a fraction of the southern end as a continuous slog, but Bryson went on later to sample segments of the trail to get a feel for the different parts. He and Katz teamed up to attempt the final slog in Maine at Monson where the 100 Mile Wilderness corridor ends up at Mt Katahdin. The entire Maine portion of the Appalachian Trail is 282 miles. Bryson and Katz gave up a third of the 100 Mile Wilderness way near the Katahdin Iron Works historic site, defeated by countless stream crossings and endless hill climbs. To do the Baxter State Park portion to the peak requires a free long distance hiker permit, but only 3,150 such permits are issued annually for a season that runs June through October. You don't really want to do it during June-July because this is horrible black fly season. The northern limit of the Appalachian Trail thus does not generate much in terms of tourist revenue because hardly anybody does this portion. The Appalachian Trail is not an economic panacea for rural Maine's woes.

The righteous absolutists at NRCM really do not seem to care at all about the people in rural Maine who might benefit from meaningful jobs other than minimum wage toilet scrubbing jobs offered by rural Maine's growing population of retirees who buy cheap lots and blast down to Bangor in a 100 mile or so drive in their SUVs to load up with whatever they might need. They don't need rural Maine to have an economy because they are living off their accumulated wealth. So they will oppose any commercial development. Maine spent 7 years developing a new mine permitting regime which excludes open pit mining. The NRCM claims it played a major role in this process, but now it is using a loophole in the system that allows a 9 person commission of non-expert volunteers vulnerable to manipulation by a professional anti-mining organization to arbitrarily keep half of Maine's territory off limits to mine development by simply withholding a rezoning to industrial use decision. Clearly NRCM has no confidence in the new mining law and Department of Environmental Protection to safeguard Maine's future. It's all about promoting the mining industry's past sordid history to encourage people to click the Donate Now button. And by invoking NIMBY the Natural Resource Council of Maine helps perpetuate America's growing reliance on raw materials primarily imported from the Global East and increasingly Global South nations who are shifting their allegiance to China and Russia. The supporters and members of NRCM are PutinXi Poodles occupying the bottom left side of the Belief Horseshoe, no better than those on the bottom right side.

Further evidence of NRCM's lifestyle non-profit nature is evident in the support it leant NextEra Energy's $20 million effort to block a transmission corridor through western Maine that would bring clean hydroelectric power from Quebec to New England (see MainePublic.org's Documents reveal NextEra's hidden attempts to derail CMP's transmission line corridor). NextEra operates the Seabrook nuclear power plant in New Hampshire whose electricity rates would suffer from the arrival of cheap hydro power from Quebec. Why is NRCM stumping for high electricity rates and blocking the arrival of clean energy for higher demand?

So why did Wolfden's stock go up a bit when it looked like the NRCM had engineered a defeat for the LUPC rezoning application? First of all, the press release included a statement that implies somebody orchestrated an end run around the wishes of the Oxford and Franklin counties rejecting their replacement nominees for the LUPC. Until now Wolfden has been very discreet about the application process, but now we are seeing a shift in attitude where it will no longer be an asymmetric situation where an anti-mining lifestyle organization not dissimilar from the cynical lifestyle companies that pollute the Canadian junior resource sector gets to play dirty while the serious resource junior has to bite its tongue in case the Bangor Daily gets some fresh quotes that can be spun into a song about how a mining company will destroy Maine's pristine wilderness.

Wolfden has spent about $10 million advancing the Pickett project with exploration and about $10 million in acquisition costs since 2017 after the new mining law came into effect. The market liked that finally Wolfden, seeing the potential for a $20 million writeoff despite acting in good faith, is rolling up its sleeves and shaking off its naivete that Maine's decision making is a science based professional process. In its February 15 press release Wolfden's Ron Little was quite blunt about the hyprocrisy underlying the LUPC decision.

Second, there is hope that rural Maine will wake up and stand up to the Bangor elites who bear none of the suffering of rural Maine and in fact through the tax deductible donations to NRCM divert revenue from public services to sustain lawyers acting for NRCM and native groups. Wolfden may have suffered a Valentines Day Massacre, but within two years there could be political change in Maine which makes a simple change in the rules that allow the LUPC to grant a rezoning application conditional on the project passing the DEP permitting system, thus eliminating the pressure placed by the anti-mining lobby on the LUPC staff and commissioners that if anything ever goes wrong it is their fault alone (this sort of bullying is typical of absolutists at the bottom of the Belief Horseshoe).

Third, some investors are already contemplating that if the LUPC votes to deny the rezoning application, Wolfden will move on and secure a new project in a jurisdiction less vulnerable to the machinations of lifestyle entities who in the name of NIMBY are PutinXi Poodles promoting America's growing raw material vulnerability to the Global East. Wolfden did want to do a "ground" geophysical survey over the lake covered portion of its Nickel Island project in Manitoba where it sees potential expansion of the existing deposit which needs to grow bigger to be worth developing. This winter has been warmer than usual and it is now believed the ice will be solid only until early April. The problem for Wolfden is that it needs to start the program within a week or so ago, but needs a green light from the local First Nation stakeholders who are preoccupied with the possibility that the winter ice road from the northern end of Lake Winnipeg may not open this year. A positive geophysical survey would allow planning for a winter drill program in 2025. Manitoba First Nations declared a state of emergency on February 6, 2024, though apparently the network did open though with some load limitations. Wolfden's stock price sagged in late February so whatever optimism fluttered earlier in February has dissipated.

Wolfden Resources Corp (WLF-V)

Bottom-Fish Spec Value
Pickett Mountain United States - Maine 7-Permitting & Feasibility Zn Pb Cu Ag Au

US Raw Material Supply compared to China-Russia Supply

Where do Democracy & Autocracy sit within the Belief Horseshoe?

Maine portion of the Appalachian Trail

Aerial View of Pickett deposit area and adjoining Hersey township
Disclosure: JK owns shares of FPX Nickel and Wolfden Resources Corp; FPX and Wolfden are Bottom-Fish Spec Value rated


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