Chairman's Message - Fall 2019/Winter 2020
On behalf of the management and directors, I am pleased to update you on the key milestones completed to date and the goals and objectives for New Age Metals (NAM) for the balance of 2019 and 2020.
In 2019 we were able to complete two major objectives for our River Valley Project. An updated NI43-101 Mineral Resource Estimate and our first economic study on the project, a Preliminary Economic Assessment (PEA). In terms of our exploration plan, the new IP programs last completed in 2017/2018 and follow up 2017 drilling that identified the new Pine Zone discovery have verified our exploration model. Going forward we are finalizing a 5,000 m program to continue drilling the Pine Zone and to begin drilling new anomalies in the north west portion of the project which are outlined in the map figure below.
Figure 1 : Northwest portion of the River Valley project with superimposed 2018 merged IP at -100 level. Retrieved from River Valley geophysical review by Geoscience North (Alan King, P. Geo, M.Sc.) Black circles indicate potential drill targets.
Longer term plans are to continue the IP programs throughout the 16 kilometres of the project adding significant potential to find new deposits, drilling near the defined open pit shells to increase mine life and drilling deeper to test the open-ended deposit at depth.
Management was proud to publish the Project’s first Preliminary Economic Assessment (PEA), on August 8, 2019. The study concluded that there is a case for an open pit mining scenario at River Valley with 14 years of mine life with an estimated annual average payable Palladium production of 119,000 ounces. Recommendations were made to proceed with project exploration and development activities with the objective of advancing the project on to a Prefeasibility Study. NAM management and technical teams have taken the work recommendations outlined in the PEA and put together a proposed budget for next stages of work, and focused on the aspects that align with our exploration model explained above – Induced Polarization chargeability surveys with follow up drilling. This methodology was applied from 2015- 2017 and lead to the discovery of the Pine Zone.
Additional PEA recommendations included the following: Advanced metallurgical testing to improve / confirm process recoveries and more accurately estimate concentrate grades, geotechnical logging of drill core, with new geotechnical holes to create a 3D geomechanical block model and estimate pit wall angles, hydrogeological studies that will estimate water inflows to the open pits and generate a site water and management plan, and re-assaying existing drill core for Rhodium in order that Rhodium may be added to the Project’s payable metal suite. Finally, the Pre-Feasibility study will update the Project study to a higher level of precision.
Due to improving metal prices for PGMs, more specifically Palladium and Rhodium along with projected favourable supply and demand statistics in precious and base metals (Gold, Nickel, Copper, Cobalt) sector, management believes that investor’s sentiment is beginning to change. Investors with interest in both the common shares of Junior companies with advanced stage projects like River Valley and others who would purchase the physical metal are beginning to take notice of these changing economic indicators. North America’s only two Primary PGM producers have been acquired by large South African companies in the last 3 years.
On October 7 North American Palladium announced a $1 billion bid by Impala Platinum to acquire the company. This news paired with Sibanye’s acquisition of Stillwater in 2016 are very important for the industry. These deals signal the major South African PGM players interest in diversifying their operations into safer socio-economic jurisdictions, as well as solidifying their long-term belief in PGM’s.
The long-term consensus for the palladium, rhodium, cobalt, copper, nickel and lithium markets continues to forecast a physical metal deficit. PGM demand is increasing with the cause of this attributed to significant supply risks from declining South African production combined with a growing demand picture.
This message will also outline our exploration and development plans for the Alaskan Genesis PGM and Base Metal Project. Additionally, we will review our plans for the exploration and development of our eight Lithium and Rare Element projects in Manitoba for 2019. All NAM’s Lithium and Rare Element Projects are 100% owned and controlled by the company.
River Valley PGM Deposit, Sudbury, Ontario
River Valley is the largest undeveloped primary PGM resource in North America. The majority of PGM production in North America comes from primary base metal projects, with PGM’s as by-products. We are able to call the River Valley Project a primary PGM project because the majority of the payable metal contributing to the revenue stream on the project, about 80%, is Palladium (63.4%) and Platinum (17.5%). As metal prices change, so too does the percentage of payable metals on the project, i.e., at spot Palladium price ($US 1,752/oz), Palladium accounts for about 72% of the revenue stream for River Valley. Below is a list of project milestones completed in the past year as well as exploration and development goals going forward for project:
- Complete the re-stated resource calculation (Q1 2019, completed); ✓
- Complete the Projects first economic study, PEA (Q2 2019); ✓
- Arrange additional funding for continued development of the project (ongoing);
- Finalize planning and conduct a 5000-metre drill program focusing in the northern portion of the Project;
- Ongoing solicitation for a strategic partner to aid in further exploration and development of the Project.
2019 Mineral Resource Update
On January 9, 2019 NAM filed its latest Mineral Resource Estimate on the River Valley Project. A Mineral Resource Estimate was completed in May 2018 that presented a global mineral inventory. The January 2019 Resource presents a pit constrained mineral resource that shows reasonable prospects for eventual economic extraction. Figure 1 below shows a map of the Project with the corresponding resource tonnage and grades by mineralized zone. The results of the updated January 2019 Mineral Resource Estimate are tabulated in Table 1, page 3 (0.35 g/t PdEq open pit and 2.0 g.t PdEq underground cut-off). This NI43-101 Technical Report is available on SEDAR.
Figure 1: Global resource of River Valley. Note: A 0.35 g/t cut-off grade was used as that was approximately the open pit cut-off of Canada’s only PGM producing mine, North American Palladium’s Lac des Iles.
Table 1 : Results from the amended 2019 NI 43-101 Mineral Resource Estimate.
- CIM definition standards were followed for the Mineral Resource Estimate.
- The 2018 Mineral Resource models used Ordinary Kriging grade estimation within a three-dimensional block model with mineralized zones defined by wireframed solids.
- A base cut-off grade of 0.35 g/t PdEq was used for reporting Mineral Resources in a constrained pit and 2.00 g/t PdEq was used for reporting the Mineral Resources under the pit.
- Palladium Equivalent (PdEq) calculated using (US$): $950/oz Pd, $950/oz Pt, $1,275/oz Au, $1500/oz Rh, $2.75/lb Cu, $5.25/lb Ni, $36/lb Co.
- Numbers may not add exactly due to rounding.
- Mineral Resources that are not Mineral Reserves do not have economic viability
- The Inferred Mineral Resource in this estimate has a lower level of confidence than that applied to an Indicated Mineral Resource and must not be converted to a Mineral Reserve. It is reasonably expected that the majority of the Inferred Mineral Resource could be upgraded to an Indicated Mineral Resource with continued exploration.
Qualified Person Statement
The resource above is the result of a new 2019 NI 43-101 calculation, which was completed January 2019 by WSP Canada Inc. (WSP) under the supervision of Todd McCracken, P. Geo.
Platinum Group Metal Markets
We are encouraged about the economics surrounding PGMs as analysts continue to see ongoing deficits being forecasted in both Platinum and Palladium. As of October 16, 2019, the price of Palladium is $US 1,752/oz which represents a 63% increase in the past year. It is important to note, that the River Valley Project’s PEA used a $US1,200/oz Palladium price. The automotive industry will drive increases in demand for palladium and platinum due to the ever-increasing loadings of these precious metals in gasoline and diesel vehicles. The use of auto catalysts is mainstream in developed countries but their need has recently been mandated by more stringent regulations surrounding emissions in China, India and Brazil. Platinum and Palladium, outside of their extensive uses in catalytic converters (which convert harmful gasses from hydrocarbon emissions into less harmful substances in vehicles) are precious metals like gold and silver, and as such are therefore also considered a store of value.
Exploration Plans for Lithium Division 2019
The Company has seven pegmatite hosted Lithium and Rare Element Projects in the Winnipeg River Pegmatite Field, located in SE Manitoba. In 2018 NAM conducted surface exploration programs on our Lithman East, Lithman North, Lithium One and Lithium Two projects. The programs consisted of reviewing, characterising and sampling all of the known surface pegmatites. Samples were taken from the Eagle and FD5 pegmatites on Lithium Two and returned results of up to 3.8% Li2O. On Lithium One, samples were taken from the known Silverleaf and Annie pegmatites and not only returned significant Li20 assays of up to 4.1% but heightened levels of Rubidium Oxide (Rb2O).
In 2020, the Company plans to drill on both Lithium One and Lithium Two. A drill permit has been applied for and received for Lithium Two and the Company is working on a drill application for Lithium One.
Figure 2: Map showing the seven Manitoba, 100% owned Lithium and Rare Element Projects.
Genesis Platinum Group Metal, Base Metal Project, Alaska
The Genesis PGM Project is an under explored, highly prospective multi-prospect drill ready Pd-Pt-Ni-Cu property that warrants follow-up drilling, additional surface mapping, sampling to expand the known footprint of mineralization and to determine the ultimate size and grade of the layered mineralization outlined to date. On October 8, 2019 we announced that the summers exploration efforts had doubled the strike length of prospective mineralization at the Project. The work program contributed to a new total of 23 exploration targets on the project and recommendations work next stages of work include further prospecting, geologic mapping and geochemical sampling followed by prioritization of target areas for future drilling.
NAM management is actively seeking an option/joint-venture partner for this road accessible PGM/Multiple Element Project using the Prospector Generator business model. The stable land status, ease of access and superb infrastructure make this project prospective for year-around exploration, development and production.
Figure 3: Map of the Genesis PGM/ Base Metal Project in Alaska.
I would personally like to acknowledge our Directors, Management Team and Technical Team for their ongoing hard work and dedication to our Company. On behalf of our board of directors, I would like to thank you, our shareholders and interested parties for your continued interest and support.
Chairman & CEO
NEW AGE METALS INC.
Harry Barr, Chairman & CEO
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