Epstein interview: LiCo Energy Metals (LIC.V) director Dwayne Melrose talks cobalt

Dwayne Melrose is a Director & Chair of the Technical Committee for LiCo Energy Metals [TSX-V: LIC / OTCQBWCTXF / Frankfurt: 43W1].  I interviewed Dwayne by phone and email in the week ended May 5th.  While the interview focused a bit more on the Company’s Lithium project in Chile, the Cobalt opportunity in Ontario, Canada is exciting as well, and LiCo is funded to actively advance both projects.  Here’s a great infographic on the Company.

Dwayne, thank you for your time.  Let’s start with your background, can you summarize 30 years into 1 or 2 paragraphs.

Sure, no problem.  I have over 30 years’ experience in the mining industry, where I’ve worked all over the world and in a wide range of capacities.  Boiling it down though, I’m a project developer.  For example, as President & CEO of True Gold Mining Inc., [2011-2015] my team advanced the company from exploration (pre-PEA) into a fully permitted and financed company (raising over $200 M in equity/debt) in just over 3 years.  I spent 20 years with Cameco Corp/Centerra Gold working in Canada, the U.S., Kyrgyzstan & Kazakhstan (uranium capital of the world).   In the Kyrgyz Republic I led the team at the Kumtor Gold Mine responsible for the discovery of the SB Zone, which significantly increased the mine’s reserves and resources.

I know my way around all aspects of exploration and development.  I especially like projects with the potential to be developed in a matter of a few years, not the 5-10 years it takes to develop a gold or uranium mine these days.  That’s why I was drawn to LiCo’s lithium brine project in Chile, there’s real potential to be able to dramatically de-risk that project.  The region has a skilled mining workforce, mining services and equipment.  Our camp is nearby two of the largest lithium producers on the planet, so it has a lot going for it.  NOTE:  {read full bio here}.

Thanks, that was great.  Can you give readers a brief overview of LiCo Energy Metals?

Yes, as the name suggests, LiCo Energy Metals is focused on two energy metals, Lithium (“Li”) and Cobalt (“Co”).  We have control or ownership interests in 4 primary assets; our flagship Purickuta Project, an option on a Li brine exploitation concession in the famed Atacama salar in Chile, 2 interesting Li prospects in Nevada and the Teledyne Co project in Cobalt, Ontario. We have funds earmarked for all projects, but by looking at our press releases, one can see our main interest at this time is Chile and Canada.

How did you find LiCo, or did the Company find you? 

Yes, well I guess the Company found me.  I had been speaking with key shareholders at the end of last year, waiting to hear more about various projects under consideration.  As mentioned, the lithium play in Chile won me over.  Of course, the Company has promising cobalt properties in one of the best jurisdictions (outside of the Democratic Republic of Congo) to find cobalt.  I’ve been impressed at how rapidly we have been able to move the ball forward on our projects.  That’s something that attracted me as well, the corporate culture of getting things done and being properly funded to work quickly and efficiently.  My skill set allows me to cover a lot of bases on the technical side, which is what I’m best at.

In Chile you have an option on an exploitation concession, surrounded on all sides by Chile’s SQM and nearby the operations of another Li giant, Albemarle.  There are few publicly-listed Li juniors in Chile, but over 20 in Argentina.  Why aren’t other juniors pursuing Chile as actively as they are Argentina?

That’s a great question, one on the top of my list when I signed on with LiCo.  There certainly is uncertainty with regard to a junior (ourselves included) being able to advance a project in Chile.  We understand that and accept that risk because the potential reward is quite large.  Doing business in Chile is challenging, but no more challenging than in many other countries I’ve worked in.  There’s a perception that there’s no room for juniors in Chile because SQM and ALB are such major players in the space.  But, we believe there’s always room for more than 2 players.  If we’re right, then we have a seat at the table in the single best lithium producing jurisdictions in the world.  And, we’re not just sitting around waiting for the overall Chile/Li/junior story to pan out, we’re actively involved with boots on the ground and planned exploration activities that are pre-funded.

You bring up a good point about Argentina.  Of course Argentina will be a major player in Li supply going forward.  Chile is already a major force and will remain so.  Argentina is getting saturated with Li juniors (still plenty of Li to be found and harvested, still a great story, but crowded with juniors).  We feel strongly that there will be Li winners from among the ranks of juniors in Argentina, winners in Chile, in Nevada and parts of Canada and Australia…. But only the strong will survive in coming years.  Funding is key, and we are in good shape on that front.

Please tell us more about the Purickuta Project.

Yes, this is currently our flagship project, and we’re looking to lock down additional property in Chile, both Li and Co targets.  I love this project and I’m happy with how it’s progressing.  I just returned from a 10-day trip, and I’m impressed with the mining / minerals culture in the Atacama salar region.  In the nearby community that we will be working with, something like 75% of the jobs are at either SQM or Albemarle, so again, skilled labor will not be a problem.  Equipment & Infrastructure?  Not a problem.

We have an exploitation concession, which is different then an exploration concession.  So, we believe that we will be able to advance the project relatively quickly.  With that in mind, we already contracted a firm to do a detailed Transient Electromagnetic (TEM) geophysical survey that should provide detailed information on the depth and possible thickness of brine bearing aquifers to enable optimal drill target selection. Subject to receipt of permits, drilling to depths of up to 350 m will commence shortly thereafter, followed by an engineering & hydrological study that will include flow testing, porosity measurements and an assessment of aquifer potential.

We believe, subject to permitting, this work could lead us to a maiden resource in a year or less.  Technically speaking, drilling a prospect Li brine deposit is straightforward, a lot easier than chasing narrow vein gold deposits!  We will continue to deliver updates on our Phase 1 exploration program at Purickuta, so readers should stay tuned.

Can you update readers on the Teledyne Cobalt project? 

Yes, look– an estimated $25 million (inflation-adjusted) was invested onsite prior to our arrival, there are underground workings, 600 hectares, the project is in one of the best jurisdictions outside of Africa and China.  A detailed NI 43-101 Technical Report was delivered in September 2016.  The property is on-strike with a prolific past producing mine.  The property adjoins claims that hosted the Agaunico Mine. From 1905 through to 1961, Agaunico reportedly produced 4,350,000 pounds of cobalt and 980,000 oz. of silver worth hundreds of millions in today’s dollars and spot prices.

LiCo Energy Metals reported that it has commenced a Phase One exploration program on the Teledyne Property.  A geophysical survey has been completed.  It covered areas that have had little to no exploration work to further identify prospective mineralized targets to depths of up to about 300 m or greater.  This work, along with the historical data that is currently being compiled, will be evaluated in advance of a diamond drill program planned to commence in late 2nd qtr/early 3rd qtr.  We have a lot of good information on our website about the Teledyne project.

Experts like Simon Moores, Joe Lowry & Chris Berry do a great job informing investors about green energy-tech metals.  Do you have a view on the market fundamentals for these metals?  

When it comes to the global paradigm shift towards green energy high tech Li-ion batteries, I leave it to the experts you mentioned and others.  We follow their work, and they seem to agree that demand for both Li and Co will be very strong.  This chart tells me all I need to know about the underlying strength in Cobalt, half of world-wide production and reserves are from (in) the Democratic Republic of Congo.  Even if supply from the DRC can be sustained, global corporations like Tesla Inc. will presumably go to great lengths to source Co from any other place on earth!

Are there misconceptions about LiCo Energy Metals that you would like to address or final thoughts to leave us with? 

I really think that it might be a misconception that Chile is not open for business to juniors.  If Chile is a primary factor in keeping readers away from a company like LiCo Energy Metals, that might be a mistake.  Every jurisdiction has its own set of opportunities and challenges.  If we successfully move forward, we will be doing so in the single best salar on the planet.  So, readers should certainly diversify; own Li / Co juniors in other jurisdictions, but it probably makes sense for risk tolerant investors to have exposure to Chile as well.  To add to that, getting exposure to both Li and Co, in a single company, is rare and something to consider.

Thank you so much for your time and thoughtful answers to my questions.

— Peter Epstein, Epstein Research

FULL DISCLOSURE: LiCo Energy Metals is an Equity.Guru marketing client

Disclosures: The content of this interview is for information purposes only. Readers fully understand and agree that nothing contained herein, written by Peter Epstein, about LiCo Energy Metalsincluding but not limited to, commentary, opinions, views, assumptions, reported facts, calculations, etc. is to be considered, in any way whatsoever, implicit or explicit investment advice. Further, nothing contained herein is a recommendation or solicitation to buy, hold or sell any security. The content contained herein is not directed at any individual or group. Peter Epstein and Epstein Research [ER] are not responsible, under any circumstances whatsoever, for investment actions taken by the reader. Peter Epstein and  [ER] have never been, and are not currently, a registered or licensed financial advisor or broker/dealer, investment advisor, stockbroker, trader, money manager, compliance or legal officer, and they do not perform market making activities. Peter Epstein and [ER] are not directly employed by any company, group, organization, party or person. The shares of LiCo Energy are highly speculative, not suitable for all investors. Readers understand and agree that investments in small cap stocks can result in a 100% loss of invested funds. It is assumed and agreed upon by readers that they will consult with their own licensed or registered financial advisors before making any investment decisions.

At the time this article was posted, Peter Epstein owned shares of LiCo Energy (purchased in open market) and the Company was a sponsor of Epstein ResearchReaders understand and agree that they must conduct their own due diligence above and beyond reading this article. While the author believes he’s diligent in screening out companies that, for any reasons whatsoever, are unattractive investment opportunities, he cannot guarantee that his efforts will (or have been) successful. Mr. Epstein & [ER] are not responsible for any perceived, or actual, errors including, but not limited to, commentary, opinions, views, assumptions, reported facts & financial calculations, or for the completeness of this article or future content. Mr. Epstein & [ER] are not expected or required to subsequently follow or cover events & news, or write about any particular company or topic. Mr. Epstein and [ER] are not experts in any company, industry sector or investment topic. 

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