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Kaiser Watch March 10, 2023: "Lithium, Lithium, Copper" - PDAC Buzz

Posted: Mar 10, 2023JK: Kaiser Watch March 10, 2023 with Jim Goddard and John Kaiser
Published: Mar 10, 2023KRO: Kaiser Watch March 10, 2023: "Lithium, Litium, Copper" - PDAC Buzz
Kaiser Watch is a weekly 15-30 minute 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 in the form of a USD $450 Annual Individual Membership that at some point will increase substantially to reflect KRO's shift to a research platform. However, when the change happens active members will be grandfathered to renew indefinitely at the current rate provided they maintain a continuous paid membership. 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 March 10, 2023: "Lithium, Lithium, Copper" - PDAC Buzz
Jim (0:00:00): You just came back from a week in Toronto attending the Metals Investor Forum and the PDAC conference. What was the Metals Investor Forum like?

The Metals Investor Forum held in Toronto on March 3-4, 2023 was the best yet for the Toronto location, but it was a far cry from the standing room crowds at Vancouver MIF in late January. The lower turnout may be due to the blizzard predicted for Friday and Saturday that discouraged investors from traveling downtown. The blizzard also disrupted travel plans for delegates headed to Toronto for PDAC who saw numerous flights delayed or canceled. My MIF session was the last one at 4:30 and my group presented to a room about 75% full. The presentation and backstage interview links are now available in my KMW MIF Blog. Here is a link to the pdf for my MIF March 2023 Presentation: The Eye of the Hurricane.

Of the 40 or so MIF companies my group was still the only one with exposure to critical minerals (not counting copper of which there were several good juniors present) and specifically lithium. The rest of the companies were precious and base metals juniors. Last year during the June 2022 Toronto MIF I introduced the idea of Lithium Mania 2.0 featuring Brunswick Exploration Inc, at the time trading at $0.15. Brunswick has since soared above $1 and filled its treasury with $16 million to support its multi-pronged strategy of testing the 600 plus pegmatites management has identified and staked or optioned in Canada. A large number of its properties are located in the James Bay region of Quebec which is evolving into a Great Canadian Area Play, the first one since the 1990s and possibly the mother of all such plays thanks to the prospect of lithium becoming a $100-$200 billion market by 2030. While the corporate presentations provide the basic outline of each junior's story, for more nuanced insights about the underlying potential check out the Backstage Interviews.

One junior I would like to highlight from my group is VR Resources Ltd because of a very surprising development announced a couple weeks ago and which CEO Mike Dunning spent a fair bit of time describing. Last fall VR conducted a drill program on the Hecla-Kilmer rare earth prospect in the James Bay Lowlands of Ontario as well as a single hole on a large magnetic low to the north on a property called Northway. VR is focused on the northeastern third of the Kapuskasing Structural Zone which runs from James Bay 500 km to Wawa where the 20 million ounce Hemlo deposit was found in 1982. Rifting caused the KSZ to become thermally active between 2-1 billion years ago which spawned intrusive complexes such as Hecla-Kilmer and NioBay's James Bay carbonatite. A 400 million year old limestone platform covers the Archean aged basement in the northern third which means targets like Hecla Kilmer and Northway are geochemically blind. VR's strategy is to test geophysical anomalies to see if they might be an IOCG system or an alkaline intrusive complex that includes critical mineral enriched carbonatites. The region saw a wave of drilling during the 1960s and 1970s typically testing magnetic highs as potential carbonatites or kimberlites. No kimberlites were discovered, though this was not a big deal because Archean aged diamonds in the diamond stability field would have been turned to graphite during the mantle upwelling 2-1 billion years ago.

VR finished its drill program in mid November and spent the next few months consulting various diamond exploration experts about the unusual "diatreme breccia" intersected in the bottom 40 m of a 282 m hole. All of them have declared the rock to be kimberlite, though thin section petrology still needs to be done to deliver formal confirmation. The hole was a puzzle while being drilled because the basement rocks were supposed to have a limestone cover only 50 m thick in this area based on nearby past drilling. Instead the hole passed through limestone into a thick interval of mudstone with igneous rocks intersected at about 240 m depth; the geophysical data has now been remodeled to show what appears to be a 1,200 m wide kimberlite whose eruption, likely in a marine environment, excavated a giant crater that later filled with sediments that became the mudstone. If this is indeed a kimberlite, or a dense cluster of of kimberlite eruptions as is the case with the world-class Grib and Jwaneng kimberlites, this will be a very large tonnage kimberlite.

Based on the age of the mudstone Mike Gunning and Justin Daley believe the kimberlite was emplaced between 410-450 million years ago before the limestone covered the area. The magnetic low appears to have been caused by the earth's poles having been reversed during this period relative to when the basement rocks formed. VR has now staked a couple dozen similar but smaller magnetic lows on the premise that these might also be similar aged kimberlites which tend to erupt within a similar time period. It is a testament to market skepticism that nobody has bothered to map stake claims around these "postage stamps". The tantalizing idea is that VR may have discovered an entirely new field of kimberlites under fairly shallow limestone cover. This field would be completely blind and invisible to till sampling for indicator minerals because they were never exposed to glaciation. The Northway target itself was never drilled, likely because it was "too big" to be a kimberlite and nobody was sure what else it might be that was potentially of economic interest.

While it is a fascinating story Northway at this stage is still a long shot. The kimberlite will not have entrained any diamonds formed more than 1 billion years ago because the KSZ thermal event would have wiped them out. However, diamonds can form fairly quickly if the pressure-temperature regime that allows diamond formation returns. For example, the diamonds at Victor 300 km to the northwest have been age-dated at about 700 million years. The Victor pipe does not have the harzburgite or eclogite normally associated with diamondiferous pipes, but instead a form of lherzolite (G9s) is the main diamond bearing xenocryst present at Victor. Eclogite typically occurs deeper than harzburgite because it is formed from basaltic ocean slab that has been subducted at a continental margin and underplated the craton keel.

VR has decided the sample is too small to submit to caustic fusion for the recovery of micro diamonds. The hole was drilled on the margin of the anomaly in the hope that this is where critical mineral enrichment took place. The plan now is to drill a long angle hole from the existing drill pad across the anomaly to confirm its width and determine the extent of multiple vertically zoned pulses. Another hole will be drilled in the center once a drill permit has been received for the new location (Ontario, in what appears to be a make work program for bureaucrats who would otherwise be on welfare, requires specific permit applications for each drill location). The earliest one could thus hope for micro diamonds would be late in Q3 or early Q4 given slow turnaround.

The next milestone after confirming micro diamonds are present would be to conduct a mini bulk sample to confirm macro grade extrapolated from the micro diamond distribution curve if present. The earliest thus one could hope for macro diamond confirmation is a year from now, given the timelines for diamond exploration results turnaround. Meanwhile VR will have the option of testing the other magnetic low anomalies to see if they are also kimberlites, or possibly a different type of intrusive with critical mineral potential.The junior will continue delineating the higher grade rare earth zones within Hecla-Kilmer.

The James Bay Lowland area does have a bad First Nations reputation because of opposition to NioBay's James Bay niobium project. Most of the rivers in the James Bay Lowlands are muddy silt laden water bodies, but the North French River system has clear water and its watershed is effectively off limits for mine exploration and development. The James Bay carbonatite is near the NFR watershed but outside it, though that does not register when the emotional buttons of Moose Cree First Nation members are pushed by outsiders who make a living from opposing mining. The area being explored by VR is well to the west of the NFR watershed, and close to rail and power infrastructure. JK: better than past attendance, but hampered by a snowstorm that included thunder and lightning. Spoke to 3/4 full hall compared to 1/3 full last June when I introduced Brunswick Expl at $0.15 as one of my companies. I was still the only speaker at MIF with lithium as a topic and companies involved in lithium. The Eye of the Hurricane. The YouTube links to my talk and the corporate presentations and backstage interviews are now available.

VR Resources Ltd (VRR-V)

Bottom-Fish Spec Value
Northway Canada - Ontario 3-Discovery Delineation D

James Bay Lowland Map and Location of North French River Watershed

Will the Northway kimberlite prove part of a new diamondiferous kimberlite cluster?
Jim (0:04:51): What was the Prospectors and Developers Association conference like?

PDAC 2023 was the first full-fledged in-person conference since 2020 and recorded 23,819 delegates. Although this was lower than the 28,000-30,000 delegates PDAC used to attract, the aisles in the Investors Exchange and Trade Show were packed with people, forcing one to bob and weave past people marching with smartphones in their faces. What was not packed was the Sunday Newsletter Presentation Session which Peter Botjos organized for several decades before retiring last year. This all day session featuring newsletter writers with 25 minute speaking slots was hugely popular during the 2000's, but began to wane during the decade long resource junior bear market that was underway by 2013. In 2020 I was no longer welcome because I was also participating in the Metals Investor Forum which overlapped with the Sunday though this is no longer the case. Last year I participated in an hour long panel of newsletter writers at 11 AM (2022 PDAC was only Monday-Wednesday) which I thought went very well though I nearly missed it because Exhibit Only Day Pass holders were not allowed into the convention center until 1 PM on that Monday because of a bottleneck (I had to be smuggled in with somebody else's All Access Pass). Needless to say, any retail investors who bought a Day Pass for CAD $25 last year missed out on this shortened version of the newsletter session, which might explain why the room which seats several hundred people was only quarter full last year.

Peter Botjos used to get the newsletter writers an All Access pass for free, which allowed us to sit in on technical presentations and visit the Trade Show where government agencies have their booths and lots of useful information about the mineral potential of their countries. But PDAC decided that was too good a deal and offered the writers 50% off an All Access Pass which would have set anybody under age of 65 back $300 or more. PDAC does have a very good deal for delegates 65 and older who need pay only CAD $75 for access to absolutely everything all four days. The Investors Exchange (public companies) and the Trade Show (government agencies and mining service-equipment providers) are now available for a simple CAD $25 day pass charge, and since I might be interested in only a handful of technical talks, I didn't feel any need to fork over a 50% discounted $300 when CAD $100 gave me access to the IE and TS for 4 days.

For the 2021 Virtual PDAC I contributed a technical presentation to the Capital Markets session which was pre-recorded but screened along with the other ones on the designated virtual day. Afterwards we contributors were all supposed to log on as a panel to field questions from the online audience, but PDAC insisted that it could not let me into the room unless I purchased a full access pass at a 50% discount. Needless to say, my virtual chair was empty. I'm not sure how many delegates saw my presentation during the "live" event, and PDAC certainly does not make anything it records available on YouTube, though supposedly Full Access Pass holders can see them later through some forum. Many of the technical presentations at PDAC represent new ideas, and PDAC deserves to be commended for selecting and organizing these talks. Making sure the exploration and mining sector is kept abreast of the latest ideas would seem to be the mandate of an industry lobby group like PDAC. But how is this mandate served when the recordings are never made public? A delegate can take in only so many talks, and some may run concurrently. There is value in being physically present at a talk in a highly stimulating setting like the 4 day conference. But why constrain and hoard the knowledge transfer created by these technical talks? What is the rationale behind not making the talks available online for free some time after the conference is over so that the entire industry can benefit? I don't buy the argument that this might shrink the purchase of All Access passes; the delegates with an All Access pass generally have it paid for by their employers.

I am happy to report that my 2021 virtual presentation, Expanding the Funding Pool for Juniors, which complained that the "accredited investor" requirement for participation in a private placement (you need to be a millionaire not including your real estate net equity) pointlessly limited the pool of risk capital available to resource juniors, is irrelevant since November 2022 when the Canadian regulators adopted the LIFE exemption which allows ordinary investors to buy private placement stock that is immediately free trading. LIFE as an efficient non-brokered private placement mechanism is still a work in progress, but it is a watershed event which allows younger generations whose boomer parents refuse to die (and thus through inheritance qualify their children as "accredited") to participate directly in the resource junior eco-system.

In any case, I declined to participate in the PDAC 2023 newsletter session and I truly made the right choice. I dropped by around 3 pm Sunday during Peter Krauth's presentation and was horrified when all dozen people present spun around to see who else was bothering to join their tiny audience. Stunned, I promptly backed out without even entering the room (my apologies Peter). I heard from other newsletter writers that the attendance was similarly dismal. Brent Cook and Joe Mazumdar whose "exploration insights" are always worth listening to even when one disagrees provided a Q&A panel that had only a couple dozen people in attendance, none of whom felt the urge to ask questions. The PDAC 2023 newsletter session represents rock bottom for PDAC as far as a retail audience is concerned.

The Metals Investor Forum in contrast was a resounding success, and the presentations of the MIF newsletter writers and the companies are now available online at the MIF YouTube Channel. As of this writing my own talk has already logged 700 views and the 11 minute Brunswick presentation by Killian Charles has 500 views. Patriot Battery Metals did not have a booth at PDAC (80 juniors with negative working capital had prior dibs) but did a 10 minute presentation in a critical minerals session. It was well attended, but how many views beyond the hundred present has the PMET presentation since received?

All those newsletter writers put time and effort into their PDAC presentations for 1-2 dozen people, and for that they got the privilege of buying an All Access Pass at a 50% discount which they didn't need. Why would any of them return in 2024 unless they are pay to play stock pumpers who will grab any exposure that seems legitimate? The typical retail investor has a real life job which makes Sunday the only realistic day to visit PDAC. Why would PDAC not waive the $25 day pass fee for Sunday to pull in retail investors? The service providers who waste the time of exhibitors Monday through Wednesday flogging their services have no problem shelling out CAD $25 for the day pass so they can do their solicitation job. The answer is simple: PDAC has lost its way.

PDAC has become a bureaucracy obsessed with ESG. It used to provide delegates with a brochure that listed all the exhibitors as well as the times, locations, speakers and titles of all the technical talks and the newsletter writers, plus all the special country rooms. After picking it up on Sunday I would sit down somewhere with my yellow highlighter and figure out everything I needed to attend over the next 4 days. The program was my PDAC bible. This year you had to know to ask to get the brochure, but it is a stripped down version that is little more than an exhibitor directory. When I asked how I am supposed to figure out where is what, I was told to scan a QR code. Use my tiny smartphone screen to navigate the endless pages of programs on the PDAC web site. How am I supposed to keep track of anything?

PDAC is proud not to "waste" paper printing detailed programs that end up in the recycling bin a week later. It is proud to inflict a dysfunctional interface on delegates who want to make productive use of their PDAC stay. It is proud that savvy delegates who know there won't be a program but want to plan ahead print reams of wasteful pages from a web site that does not offer a printer friendly pdf version of what a proper program would look like. But maybe PDAC knows only a handful will try to print its html pages because who wants to waste paper and toner on inefficiently presented output? Who needs a one inch thick bundle of paper cranked out by some sluggish inkjet printer? But those who do value the content PDAC provides will do it. And that is where PDAC the ESG Pumper is in reality a fake like just about every anti-mining group out there.

PDAC is a cost dumper like everybody else who is more than happy to consume products made from raw materials produced in some environmental shithole run by autocrats who make sure the downstream victims cause no trouble. My printer is a shithole compared to a commercial printer. The output of both goes into the recycle bin at the end of the conference, but my home printed output has a bigger environmental footprint than a properly printed PDAC program and it has wasted my time to prepare ahead of PDAC. Plus it has cost me more than it would have cost PDAC to produce the same hardcopy. PDAC is dumping costs on its delegates while pumping ESG principles. It should be focused on tradeoffs that make sense, not aspire to some ideal of purity that ultimately translates into hypocrisy.

Is PDAC an organization of cynics that will laugh at my complaints, or is it so lost in myopia that it doesn't even know it has lost its soul? I stayed at the Delta Hotel where MIF was held which is very convenient to access the south entrance of the PDAC convention center. There is a winding path that leads from the intersection of Lower Simcoe and Bremner Blvd through "Olympic Park" which everybody uses. On Sunday nobody used it because it was still full of slushy snow after the weekend blizzard. I shrugged and walked the longer way along the taxi entrance. By Monday morning the slush had melted and the path was clear. But the end of the path was still blocked by snow that the plough for the taxi road had pushed aside. Everybody was using the path but gingerly stepping over the small snowbank. I looked around for a shovel because I figured it would take 5 minutes to remove this obstacle. There was none so I assumed somebody from PDAC would notice and sound the alarm to clear this blockage. A friend witnessed somebody in a wheelchair struggling to get past the snowbank. On Wednesday the snowbank was still there, albeit smaller. I took a photograph on Monday hoping it would soon be a delete event. It wasn't. The Monday and Wednesday photos symbolize what today's PDAC is really all about. This tiny snowbank was a treacherous inconvenience for many delegates, but nobody connected with PDAC saw any need to fix this simple problem.

PDAC so full of ESG it couldn't be bothered to shovel the sidewalk to make it safe
Jim (0:11:00): What was the buzz at PDAC?

Of the 400 plus mining and exploration companies exhibiting at PDAC about three dozen had lithium as a target metal for their flagship project. I suspect that by the end of March that percentage will be a lot higher than 10% of exhibitors. When I asked exhibitors what delegates were interested in the answer was usually a grumpy "lithium, lithium, lithium", though some mentioned copper was also a topic. What unites lithium and copper is that both are key inputs for the energy transition. The net zero emission goals for 2030 as described by the International Energy Agency will be met mainly by the expansion of wind and solar power and the adoption of electric vehicles. The IEA projects that if these goals are to be met, the world will need a supply expansion of 50% for copper, 600% for lithium, 100% for nickel and 100% for rare earths. Boosting copper output 50% from a $200 billion annual market to $300 billion is a big deal, but what has really caught everybody's imagination is the realization that a 600% expansion of lithium won't happen if lithium carbonate is not at least $10/lb, and if it is this market that was worth $200 million in 2005 will be worth $100-$200 billion in 2030 and onward. It is interesting that Albemarle and SQM both had booths in the Investors Exchange, a sign they understand their expansion future at least in part resides in hardrock lithium enriched pegmatite mining. After updating my database with the 2022 metal supply data published in late January by the USGS, I created lithium supply evolution charts for Australia, Chile and China which illustrate how rapidly Australia has mobilized new pegmatite based lithium supply compared to Chile which recovers lithium from salar brines. The buzz at PDAC was about Canada being a key source for the second half of the 600% supply expansion needed to make 2030 EV deployment goals a reality.

The supply volume and value expansion of a metal on this scale over a decade long time period has never before happened. Skeptics abound who declare that it will not happen because it cannot. Even the IEA in its January 2023 report warns that mine permitting timelines which run 10-15 years from discovery to production are the biggest obstacle to 2030 NZE goals. But where there is a will there is a way, and government policy goals constitute a will for which out of necessity they must create a way. The buzz at PDAC revolved around the energy transition and Canada's potential role in supplying the required raw materials. But even more important is that while PDAC obsesses about how mining companies can do a better ESG job, government agencies are thinking hard about how they can do a better job to make their net zero emission climate goals reality. In backroom meetings representatives from government agencies such as those of Ontario were consulting with juniors on how permitting timelines can be streamlined and First Nations can be better integrated into the exploration and development cycle so that they are productively engaged rather than an obstacle to energy transition goals.

The elephant in the room is the potential for metal supply disruption caused by the geopolitical fracturing of the global economy into opposing alliances of autocracies (Russia-China) and democracies (United States, Canada, Australia, Europe). Nobody quite yet wants to talk about what happens to metal supply that normally comes from China and Russia if the great power conflict becomes hot and globalized supply channels collapse. When I show my slide that depicts how much of each metal/energy commodity Russia and China supply cameras shoot up to take a picture of the screen. Most people have no idea how vulnerable the free world's economy is to raw material supply disruption due to geopolitics. I've since created a slide which shows the metal supply for Australia, Canada, the United States and India with the Russia-China chart as an insert to reveal the contrast.

India will reach a super cycle tipping point by 2030 similar to what China hit in 2003 when its economy achieved 3.5%-4.0% of global GDP. India is becoming the new destination for low cost manufacturing as multinationals like Apple shift away from China which is turning into a pressure cooker as Xi Jinping tightens his autocratic stranglehold, the real estate debt pyramid begins to implode, its demographic decline accelerates, and the risk of Taiwan's annexation rises. India is expected to become the most populous country in 2023 and it has a very young demographic that can be harnessed to support an accelerating growth trajectory. But India's self-sufficiency in metal and energy supply is dismal, in part because the country has forever been mired in bureaucracy and corruption. The United States, which still has world's biggest GDP, is also a dismal metal supplier and has an entrenched NIMBY system that keeps metal in the ground. This NIMBY system has been parasitic on metal supply from environmental shitholes elsewhere made possible by autocratic governments.

India, which will have a hard time geopolitically aligning itself with rival China, and the United States, have looming raw material supply program for which Australia and Canada, with giant land passes and tiny populations, represent major potential solutions. The India pavilion at PDAC was swarming with Indians who seemed to be in a panic. The person I tried to engage in a conversation with was hustled away to help with somebody more important. I heard from resource junior executives that India has been pitching them to come explore in India. Some juniors have tried that in the past but grounded out in the face of India's hopeless bureaucracy. Brazil also had a large pavilion and there I received a lot of attention from one of the representatives eager to show that Brazil has extraordinary untapped mineral potential. When I asked about Bolsonaro's push for autocracy I merely got a big eye roll. India and the United States need to look to Australia, Canada and Brazil to shore up their future raw material supply needs. The resource juniors are key to finding and developing new deposits, in particular those metals relevant to the energy transition, but also those whose dominant supply from autocracies face potential disruption. The PDAC buzz was not yet about the Back to Canada and Australia exploration theme, but the need for this is a key reason I believe the resource juniors are heading into a decade long bull market.

IEA Net Zero Emission Technology Goals for 2030 and 2050

IEA Projections for required new metal supply for 2030 and 2050 NZE goals

IEA projections of additional supply needed to meet 2030 EV goals

Lithium Supply Evolution by top 3 producers

The portion of each commodity's supply that comes from China and Russia

The portion of raw material suppy that comes from Australia, Canada, USA and India
Jim (0:17:56): Resource juniors started dropping while PDAC was still underway. Do you still think the PDAC Curse will be violated this year?

The PDAC Curse is the tendency for the New Year Effect after the December tax-loss drubbing to climax in early March at PDAC, following which the prices of resource juniors tank as investors pre-empt the adage "sell in May and go away". The 2020-2022 PDAC sessions do not count because they were disrupted by the covid pandemic, but 2023 is a full opportunity to manifest the PDAC Curse once again. But every 3-6 years the PDAC Curse gets violated where the resource junior uptrend continues right through Q2 into summer. Past major violations were 2003 when gold finally emerged from its slump and earlybirds like Robert Friedland began to talk about the emerging China super-cycle, 2006 when the majors finally accepted the super-cycle theory and stopped forward selling metal into a very backwarded futures curve that kept rising, and in 2009 when the responses to the 2008 financial crisis in the form of $600 billion infrastructure spending by China and massive quantitative easing by the United States respectively goosed prices for useful metals and gold. Since then there were only a couple short-lived attempt to violate the PDAC Curse in 2016 and 2017. What is needed to overcome the PDAC Curse is a big picture development that has positive implications for resource juniors.

The topic of my MIF presentation, "The Eye of the Hurricane", reflects my analysis that the resource juniors are transitioning from a decade long bear market to what will be a decade long bull cycle. Investors sense we are leaving a bear market behind but don't yet feel the coming bull market. I call this being in the eye of the hurricane, but for the moment investors are much more worried about a potential economic hurricane caused by the Federal Reserve's goal to bring inflation back to 2% by hiking interest rates. Resource juniors started wobbling during PDAC after Jerome Powell reiterated his monetary policy strategy and hinted that a 1981 style Paul Volcker shock therapy is not off the table. What we have seen so far, which triggered a big equity market sell-off in 2022, is nothing in comparison to what the economy underwent in 1981-82 when Volcker pushed rates to a high of 21% to subdue inflation which had hit 14%. I see a greater parallel with the 1920-1935 period for the 2010-2025 period than with 1980-1995.

On Friday March 10 the Silicon Valley Bank failed as it succumbed to a run by its depositors who are guaranteed only $250,000 by the federal deposit insurance system. The SVB specialized in west coast startup accounts which now have a big payroll problem. Many beneficiaries of the past decade's tech bubble also parked their capital in SVB. The problem seems to be that when the Federal Reserve flooded the system with money in 2020 only a portion of it went to loans; the vast majority was parked in low yielding debt instruments which have since gone down in value as inflation emerged in 2021, failed to prove transitory, and was attacked in 2022 with sharp interest rate hikes. Although these government bonds will yield full value if held until maturity, the problem for these banks is the value of their bond portfolios is sinking below the value owed to depositors. Powell's threat to raise interest rates to whatever level it takes to engineer a hard economic landing to put the younger generations of workers back in their place as serfs pleading for jobs threatens to make this situation worse. Most individuals do not have more than $250,000 sitting in a bank saving account; they tend to park it in money market funds, but businesses with large balances to make payroll are extremely vulnerable to a bank run away from smaller banks like SVB. If the Federal Reserve cannot contain this situation it could spiral out of control and tank the general equity markets. This threat for the moment almost guarantees that the PDAC Curse will reign in 2023.

Assuming the bank run contagion can be contained, and it should be possible because this time around the banking system is not loaded up with a global mountain of rotting securitized mortgage paper wrapped with false payout guarantees, a PDAC Curse violation remains possible for 2023. But what would be the trigger? Gold racing into new price territory has done the trick in the past, but in the current context the reason for gold to charge beyond $2,000 would be due to widespread wealth destruction and a hard landing recession which would not leave much risk capital available to be bet on resource juniors. A much likelier driver for a PDAC Curse violation would be a broadening appreciation of the energy transition requirements and the role Canadian juniors can play in finding and mobilizing new lithium supply. But that breakout is being hampered by the current breakdown of last year's unrealistic $30-$35/lb lithium carbonate spot price range. Nobody likes the optics of a metal price falling off a cliff, and the sooner lithium carbonate ends up back in the $10-$15/lb the sooner we can see Lithium Mania 2.0 gain traction among Northern American investors, not just Australian investors.

The resource juniors don't need a $30-$35/lb lithium carbonate price to deliver big scores for their shareholders. I have created a matrix that shows the rock value at different lithium oxide grades and lithium carbonate prices. For LCT-type pegmatites such as Patriot Battery Metal's CV5 pegmatite with a 1%-2% grade implication the $30-$35/lb price range is equivalent to having an open-pittable deposit grading 1-2 opt gold. A 50 million tonne open-pittable deposit at 1 opt gold does not exist in the real world but in 2022 it did in the world of lithium pegmatites. Common sense tells you that such pricing is not sustainable. In the $10-$15/lb range the gold equivalence for 1%-2% Li2O is roughly 10-25 g/t gold. That is still obscenely lucrative compared to gold exploration plays, but it is also necessary to mobilize the 600% required expansion of lithium supply to meet 2030 EV deployment goals. The lithium carbonate price retreat will kick off Lithium Mania 2.0 because it will help North American investors understand the underlying rock value math. That sets the stage for James Bay lifting off as a Great Canadian Area Play in Q2 of 2023, and soon replicated by smaller area plays in other Canadian pegmatite fields. But the PDAC Curse will not be violated if we suffer a major general equity market crash.

PDAC Curse history from 2009 onward

Will Jerome Powell repeat the scale of Paul Volcker's 1981 interest rate shock therapy?

Will the 2010-2025 market cycle avoid the fate of the 1920-35 cycle?

Comparison of Lithium Supply and Price Trends

Lithium Rock Value Matrix for Price and Grade
Disclosure: JK wons shares of Brunswick Expl; Brunswick is a Fair Spec Value rated Favortie; VR Resources is Bottom-Fish Spec Value rated

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