Monday October 2, 2023 is Truth and Reconciliation Day, a paid holiday for government workers to reflect on why 5% of Canada's population should have dominion over 95% of Canada's land mass. Unless the Canadian people wake up to what is happening, it may eventually become known as Resource Junior Remambrance Day. FPX Nickel Corp was halted on Thursday September 21, 2023, the day that Japan's Industry Minister Yasutoshi Nishimura showed up in Ottawa to sign a memorandum of cooperation about together establishing sustainable and reliable global battery supply chains. What this means is that Japan has promised to build downstream battery manufacturing capacity in Canada, provided Canada allows the necessary critical minerals to be mined and supplied to these Japanese manufacturing facilities which will provide quality jobs in Canada.

This is a very big deal because the Canadian government under the leadership of Prime Minister Justin Trudeau is very much obsessed with Truth and Reconciliation, the euphemism for establishing the 5% of Canada's population that has indigenous DNA as an aristocracy that has dominion over all of Canada, several times over when you add up all the overlapping traditional territory claims of indigenous groups. Canada's indigenous communities are scattered all over rural Canada while the 95% non-indigenous population tends to concentrate in and near major urban centers. Canada's indigenous people have suffered a fair amount of abuse as a result of government policy that tried to inflict cultural genocide by forcing children into religious indoctrination centers, though that ended decades ago and indigenous communities appear to be thriving except when their people get addicted to fentanyl.

Since Trudeau decided in 2016 to sign up to UNDRIP, the United Nations Declaration of Rights of Indigenous People, the mining and exploration sector has come under pressure to consult indigenous groups which claim as traditional territory areas where mineral claims are located. Since consultation is required ahead of provincial ministries granting drill permits, this has resulted in serious delays which are harming Canada's resource junior eco-system. The delays come about because there are no formal protocols for consultation, either in making them happen or determining whether the mines ministry has a green light to grant drill permits. Some indigenous groups could hardly be bothered to deal with consultation requests. Some have outright decided they do not want mine development in their traditional territory. Some have figured out how to extract confidential memoranda of understanding which include payments to defray First Nation expenses for "monitoring" exploration activity. The monetary request is presented as a reconciliation gesture because extortion and bribes are illegal. These agreements can be ripped up by the indigenous party without consequences for the indigenous group, but with plenty of consequences for the shareholders of resource juniors, the businesses and workers who provide exploration services, and ultimately foreign companies who are eager to build downstream manufacturing capacity in Canada on the assumption they will be able to buy critical minerals responsibly mined in Canada.

On Tuesday September 26 the BC Supreme Court ruled that British Columbia's mining permit system is not in compliance to with the duty to consult indigenous groups. The case revolved around the Yellow Giant Gold Mine, a small scale gold mining operation on Banks Island run by Banks Island Gold Ltd which declared bankruptcy in 2016. The former CEO Benjamin Mossman was found guilty on 13 environmental discharge violations (CEO of defunct Banks Island Gold guilty of environmental violations at British Columbia mine - July 14, 2023 - Mining.com. The recent court ruling involved a case brought by the Gitxaala Nation. The legal firm Fasken published an Indigenous Law Bulletin - Consultation and Mineral Claim Staking: The Gitxaala Case which sums up the implications of the ruling. The ruling does not affect existing mineral claim title under the Mineral Tenure Act, nor does it affect how the current map staking system works. However, Justice Alan Ross has ruled that before mineral title is granted, all relevant First Nations groups must be "consulted", and he has given the BC government 18 months to change its claim staking system. Unless this decision is appealed and reversed, this is a bombshell that will destroy the mining and exploration industry in British Columbia, and possibly for all of Canada if the other provinces are also forced to adopt a new claim staking system.

The importance of this decision is evident in a CBC article, Court rules B.C.'s mining claims system does not comply with duty to consult Indigenous groups, which quotes the Association of Mineral Exploration (AME), supposedly a lobby group for the mining and exploration sector, as welcoming the opportunity to modernize the Mineral Tenure Act. But the First Nation representatives quoted clearly understand that under the ruling the new system will require consultation before mineral title is granted, which means the new mineral system will have to become like the concession application systems that exist in third world countries.

Existing mineral title is unaffected, and the existing system will continue to operate as normal for the next 18 months, which means that unless the ruling is appealed and reversed by a higher court, there may be a map staking rush in BC over the next 18 months, after which claim staking will die. Under a third world concession application system nothing happens unless something secret and forbidden happens behind the scenes which enriches the party with the ability to influence the title granting decision. The third world concession system is unstable because when there is a regime change all existing concessions are investigated and either canceled because of the discovery of corruption or a new under the table deal is sought by the new powers that be.

The new BC mineral title system would be different in that approval will lie in the hands of the various indigenous groups with overlapping and competing traditional territory claims. This will be a disaster because there will always be a holdout that can block title from being granted. Under the current system mineral title holders already have to consult First Nations groups as part of the drill permitting system which is already a painful and frustrating process. Under the current online map staking system mineral title is granted on the basis of filing an online application and making the fee payment clear with a credit card.

There are two paths to map staking. One emerges when an existing claim lapses because assessment work has not been done and file. Usually this happens when an individual has staked claims with the goal of flipping them to a resource junior. Prospect-generator type juniors do a lot of archival research that helps them generate fresh ideas about the potential for discovering an orebody. Some have become quite adept at setting up computer driven application methods so that the instant the claims come open for staking they snap them up.

The other path involves staking open crown land based on a new geological concept, typically with the help of archival research and putting boots on the ground to prospect the rocks. Both resource juniors and individual prospectors engage in this early stage target generation activity. The key is secrecy in developing the idea and applying for mineral title. Justice Alan Ross may be ignorant about this key entrepreneurial aspect of mineral exploration, but it is also possible he knows perfectly well how it works and that his ruling will kill future exploration activity in British Columbia.

Under the new system an application will have to be made online, but title will not be granted until the BC Gold Commissioner is satisfied that by some deadline the applicant has consulted all relevant the First Nations. Currently the successful applicant is given a list of "stakeholders" that will have to be consulted if any meaningful exploration work such as drilling is to be permitted. One resource junior executive told me that in one case there were 22 different indigenous groups on the list.

The difficulty in creating a workable replacement is the uncertainty about what it means to have cleared the "consultation" hurdle. What sort of response is needed from the First Nation group with a traditional territory claim over the area for which somebody has applied for mineral title? What if one group like the Tl'azt'en Nation says "no, this is sacred territory", but another one like the Binche Wuht'an says, "yes, give it shot, we still have a say down the road after you find something worth mining". What if a third group is too busy with traditional activities like hunting moose or geese to even bother responding to the consultation request? This is the strategy former Chief Patricia Faries applied on behalf of the Moose Cree First Nation when she ignored consultation requests from NioBay Metals Inc as a provincial government mandated requirement prior to approving drill permits for the James Bay niobium deposit. The existing mineral title system is already very effective in enabling First Nations to block any exploration activity they wish. So the resource juniors with mineral title seek out the indigenous groups and work out confidential memoranda of understanding which aren't about making promises to respect existing environmental laws, but about making "reconciliation" payments to secure the First Nation group's cooperation.

But under the system Justice Ross wants, nobody has an economic basis to make agreements that are binding on the mineral title holder. Once the claim application is public, the intellectual property behind the application becomes visible to the public, including the First Nations groups themselves. They merely need to stonewall the "consultation" process or even explicitly say no, and when the consultation deadline passes and the application lapses, make their own application, consult themselves, and when title is granted flip the claims to the highest bidder. The only reason this will not create a de facto First Nations mineral claim title monopoly in British Columbia is because even the First Nations applicant will have to consult the other First Nation groups with overlapping traditional territory claim who are unlikely to be excited about agreeing to their competitor's self-enrichment. The new system could effectively sterilize all of British Columbia once the claims under the existing act have lapsed, which is the goal of the anti-mining lobby which does not want mines in Canada because they are "dirty and ugly". The new system may end up being adopted by other provinces, killing the long term future of the resource junior eco-system. The BC Supreme Court ruling, if not reversed, is a very serious threat to the mining future of Canada, which comes at a very bad time when Canada is poised to become a supplier of critical minerals needed for the energy transition and which potentially will no longer available to the Global West from the geopolitically hostile Global East led by China and Russia.

Canada's anti-mining lobby within the 95% who do not have indigenous DNA but nevertheless celebrate this latest decision on behalf of First Nations are hypocrites or buffoons of the worst kind imaginable. They either do not understand or care that the iPhone in their hands has blood in it. Every iPhone has tantalum capacitors, and while much of it comes from large scale mines in compliance with enforced environmental rules, some of it comes from the Kivu region of Congo where warlords force villagers, including their children, to mine coltan from riverbeds and nearby seams under very unsafe conditions and at gunpoint. This coltan is bought by Chinese traders from the warlords who use the money to buy more weapons to terrorize the countryside. The traders ship the coltan to Chinese refineries where it gets melted into the same pot as responsibly mined tantalum. These dirty refineries safe money by dumping their emissions onto powerless downstream victims, polluting their air and water. The refineries tell Apple that only clean tantalum gets delivered to the iPhone factories in China, but you have to be a real bag of hammers to believe that. So when I hear some young person protesting about mining in Canada, where tough rules for responsible mining exist and are enforced, and fail to do anything about the blood they are cradling in their hand, it sickens me.

Given this legal push to shut down exploration activity in Canada via the supposed obligations that come with Trudeau's foolish decision to adopt UNDRIP, the Japan-Canada deal is a very big deal because it puts Canada on notice that it cannot let its First Nations and anti-mining lobby block the discovery, development and mining of critical minerals needed for the energy transition. Japan isn't the only country interested in building battery manufacturing capacity in Canada. A Swedish battery startup called Northvolt will build its fourth battery plant in Canada at a location near Montreal at a cost of $5 billion. Northvolt clearly expects that it will get all the lithium supply it needs from the James Bay region of Quebec which is shaping up as a world class lithium pegmatite district and where much of the prospective ground has already been staked. A good part of James Bay has already been flooded to create hydro-electricity which will help the Northvolt plant achieve a very low carbon footprint. This will help it ship batteries to the United States whose carmakers wish to claim a clean supply chain compared to the dirty inputs of EVs subsidized by cost-dumping with which China wants to flood Europe and North America. Trudeau is on notice that Canada's mining future is far more important to Canada's GDP than preserving the land as a giant park for its First Nations.

At the same time the high level Japan-Canada cooperation deal was being signed, FPX Nickel Corp signed a non-binding memorandum of understanding with Jogmec and Prime Planet Energy & Solutions. What is important is that PPES is a recently formed JV between Toyota the carmaker and Panasonic the battery maker. In KW Episode September 8, 2023 I discussed the PFS FPX Nickel had released for its Decar project in central British Columbia which could become a world class very low carbon footprint nickel producer. The PFS economic numbers clear development hurdles for building a mine that will supply a ferro-nickel concentrate that can be fed directly into stainless steel mills. This year the Finnish stainless steel producer, Outokumpo, which specializes in supplying clean stainless steel for markets that care about such things, invested $16 million to acquire a 9.9% equity stake in FPX Nickel. In exchange Outokumpu got an offtake right to purchase 7,500 tonnes of nickel annually based on the LME price. That is only 16% of the 47,000 tpa nickel output of the initial operating scale. In what I do not believe is a coincidence, the PFS included numbers for a refinery that would not be located at the mine site and which would convert ferro-nickel concentrate into battery grade nickel sulphate. The refinery's capacity is 40,000 tpa contained nickel. A nickel producer like Vale would never build the refinery because the return on the extra investment is too low to be economically justifiable. It would be better to sell all the production to the stainless steel market.

In late 2022 FPX Nickel raised $12 million from a mystery investor who was neither a producer nor a financial investor; I suspected it was either a car maker, a battery precursor chemical company, or a battery maker. FPX Nickel's strategic alliance with JOGMEC to find other awaruite deposits in the world made me focus on Japanese entities. Eventually I settled on two suspects, Toyota the car maker and Panasonic the battery maker. It didn't make sense that Panasonic would insist on secrecy, but it certainly did with regard to Toyota which has been a laggard in EV deployment. Toyota became my prime suspect in June when it announced it had figured out how to make a safe solid state lithium ion battery cheaply. I doubled down on this bet when I learned that the cathode of this solid state battery needs a lot of nickel. The recent MOU makes my speculation about the mystery investor irrelevant.

Although the MOU is non-binding and has no time line, it creates a framework for figuring out how to fund the Decar mine and build a nickel sulphate refinery. Panasonic would ultimately make the battery for Toyota, and Toyota would ship the batteries to the United States where it has its Toyota plants. Panasonic would be involved in making sure the refinery is built to its specifications. Since both Toyota and Panasonic benefit from downstream product markups, their JV would likely fund the refinery. JOGMEC comes into play as a gateway to one of the Japanese giants such as Sumitomo or Mitsubishi who know how to build and operate world class mines, and have the capacity to fund construction. This MOU reveals the exit path for FPX Nickel which will be bought out somewhere along the way. It also puts the Canadian government squarely on the side of FPX Nickel against the sacred territory claims of the Tl'atz'en Nation, which, after pocketing a decade of reconciliation payments from FPX Nickel, suddenly got religion after it was split into two separate First Nations of which the Binche Whut'en Nation seems to have the stronger traditional territory claim over the area where Decar is located (see KW Episode August 11, 2023. Furthermore, the Binche people, who also have a deal with FPX Nickel, appear to see the energy transition supplied by clean nickel in their backyard as a win-win for everybody. Canada is a vast country which is in no danger of becoming pock-marked with mines. Only the best deposits will be developed and there is no reason why Canada's 5% indigenous people should have an absolute veto on decisions that affect the 95% of Canadians and chase away foreign investors like Northvolt and the Toyota/Panasonic JV.

The stock price of Verde Agritech Inc has been sliding in recent weeks and late Thursday afternoon September 28, 2023 it became clear why when the CEO Cris Veloso disclosed that he had initiated an automatic selling plan that would see him sell 4,903,967 shares over the next 36 months. Even worse, on Friday he filed insider reports on SEDI revealing that on September 26-27 he had already sold about 180,000 shares to net $390,000. The liquidation plan represents about half of his equity stake in the company, and one has to wonder if a spouse is behind this decision. Veloso has been at the helm of Verde Agritech for nearly two decades and has done a tremendous job turning the glauconite deposits in Brazil's Mias Gerais state into an alternative potash supply that has the potential to supply 50% of Brazil's potash consumption needs if the 50 million tpa production scenario ever gets developed. Right now, however, the market wants to see NPK sell enough K Forte to exhaust the 3 million tpa capacity whose 2.4 million tpa addition last year was finished too late to sell into the crazy fertilizer market of 2022.

In KW Episode August 22, 2023 I discussed my concern that based on poor sales in Q2 the company might not even achieve its 2023 sales volume guidance if things do not pick up in Q3. Brazil's farm sector has been suffering a financial crisis after being forced to pay high in 2021 and 2022 for fertilizer inputs, and then watching crop prices fall this year as the high interest rate policies of central banks begin to crimp global demand. NPK's stunning year in 2022 has also caught the attention of the KCl potash importers who have unsheathed their knives. NPK's particular vulnerability is that it cannot provide farmers with credit on their K Forte orders which the foreign potash suppliers and importers can do, so sales are sluggish this year. The Federal Reserve's sabre-rattling about keeping current high interest rates well into 2026 is not helping out. The farm sector financial crisis is easing thanks to lower fertilizer prices (KCl is in the $300-$350/t range compared to $1,000+ in 2022) and crop prices have stabilized. But shareholders will not know until mid November what sales were like in Q3, and how close Verde Agritech is itself to a financial crisis. The sudden decision by the CEO to sell stock, even though he knows very well that this will provide very poor optics, raises alarm about what is going on inside the company. Cris Veloso now has a credibility problem, especially after he revealed two months late earlier this year that he had dumped 140,000 shares between $5.11-$5.29 in late December. And then one his directors, Renato Gomes, was forced to sell 320,000 shares in April, more than half his position, because he had received a margin call. The market does not have patience for this sort of thing.

Verde Agritech has become an unstable stock because despite growing revenues Veloso has failed to strengthen management at the top with senior executives who know how to deal with the knives that come out when a disruptor starts to cut into established business. He has also failed to attract one or more institutions as cornerstone investors who have incentive to help the company through the inevitable rough patches that come along. Instead he blathered about becoming a dividend paying company well before the growth potential was physically possible. Thankfully that nonsense has stopped.

In mid September he put out a press release that the National Land Transport Agency and Ministry of Infrastructure have granted permission to build a railway branch line that would facilitate delivering 50 million tpa of K Forte to the more distant states. That is not a small company undertaking, especially one which is not yet selling out existing 3 million tpa capacity, and which has stated that existing road infrastructure is sufficient to sell 10 million tonnes of K Forte annually. The expansion potential is what makes Verde Agritech such a fascinating growth story, but for that to happen there is either going to be a predatory buyout of the company, which seems much likelier today after Veloso revealed his willingness to reduce his 20% stake by 50%, or Veloso needs to seek a substantial strategic investor who can help him fend off predators and those who simply want NPK to fail. Signaling that the government supports the future railway branch is not for the benefit of investors, but perhaps for a large company in the wings entertaining a buyout of Verde Agritech.

When he floated the idea of selling carbon credits during the summer based on the fact that when K Forte dissolves carbon dioxide gets pulled out of the soil to form bicarbonate ions which eventually precipitate as inert minerals that sequester the CO2 forever, I saw this as a way to achieve discount pricing for K Forte that could accelerate the adoption curve, because as far as the farm sector is concerned, only money talks. But NPK has not provided any clarity on how this sequestration will be verifiable and thus attract a solid carbon credit price. Perhaps actually selling some to a credible group whose reputation depends on selling real carbon credits could help, but where is such a deal? The current confidence crisis, however, may be the necessity that is the mother of invention. The core growth story remains intact, but the execution can no longer rely on a one man show running an operating company whose shareholder base is dominated by retail investors. This has to change quickly or Verde Agritech will be in danger of disappearing well before it can achieve its potential.