Pursuit Minerals Limited (PUR) Earnings Call Transcript & Summary

Good morning, everybody. I'll just give a few more minutes for people who are attending to join as we started promptly 11:00 a.m. But everybody, welcome to the webinar this morning. I'll just bring up the slides that I'm going to talk from, and we'll get started in a few minutes. All right. Given that this is a recorded webinar, I'll just kick off anyway. So everyone, thanks for joining. This webinar is going to be a little bit different. I'm not going to talk too much to corporate statistics rather really just focus on Pursuit, where we've come from the PFS and what are the value-creating milestones coming up over the next 6 to 12 months across the Rio Grande Sur project and then the Sascha Marcelina Gold project, really just capturing what we're doing, how we intend to create the value and what we're really looking to achieve the company's mission across the two projects. So, all of this information, there is no new disclosures in any of this. You can find all of this information on our recent announcements, both the PFS announcement and then the December '18 announcement of the Sascha Marcelina gold targets. But some of this, I will remove from the slides and also switch to Google Earth which will come across in a minute when talking about Mito. So let's go from there. Just recapping, we did have our PFS come out a couple of weeks ago now. Phenomenal results here in the CapEx, the operating cost, the NPV basis, quite significant in terms of positioning the project as a producing opportunity at the lower end of the CapEx scale, lower cost curve in the quartile where we sit, but also very attractive numbers on that NPV, USD 363.9 million, just over AUD 0.5 billion. These numbers are quite important as within the last lithium cycle, we saw a lot of ASX companies, notably Argosy Galan really trade at sort of 50% to 80% of NPV, notably -- sorry, Argosy Minerals clipped over $1 billion market cap when traded. So having this on a steady-state project basis is quite impressive for us. The real highlight, however, I want to work through some of the other numbers, which is really those project returns and project financing. So, with this project now, as some of you may have heard, I've always talked about having a line in the sand for potential offtake partners in terms of what is the CapEx, what is the OpEx, what is the IRR. Now having those numbers, we were really able to drill down in our PFS, not so much on a 100% equity basis, but modeling out what would it actually look like for a prospective offtaker to come in with an 80-20 debt ratio. This number was selected as that's more of an industry standard. However, having seen that in La Puna, we are seeing lithium financing of 100% debt with Glencore, who wrote a $400 million prepay offtake check for Eramet. So for us, this was really important to run through these numbers and especially the bank covenants, which sit down the bottom of that slide. They were very attractive, 3.81x your debt gearing. So it's a healthy project that can withstand a fall in the lithium price and becomes very attractive in an uptick in the lithium price, which notably brings me to the next slide. Lithium price forecast, where do they -- where are they going? For us, this is the Canaccord model where we're starting to see lithium prices forecasted to edge above $30,000 per tonne in 2027. You're seeing that drop back off towards the $20,000 per tonne mark, $22,000 per tonne, the $28,000, $29,000, $30,000. However, a lot of this demand around BESS energy storage is really coming out to play here. Lithium prices above $20,000 for the first time since November 2023. So with this project, very strong economics, very attractive in terms of the CapEx entry. If I just think back to the previous slide, the use of funds with a finance, which includes an interest coupon during construction was USD 156.6 million, which comparative to a lot of the lithium projects that are above the $1 billion CapEx bill for these large scenarios. This is a lower cost entry, which we're finding very attractive amongst those strategic offtake discussions. So, moving forward, the plant layout, it looks like what's in front of you. So a very simple operation of evaporation ponds on Sal Rio 02. And then from there, you have the pumping fields across Isabel Segunda as well as Maria Magdalena, three pumping wells for each tenement moving into those ponds. We also have an additional wellfield optionality at Sal Rio 02, and that also comes in with the next steps of what we're looking to do to build on this PFS and the steps we're going to be taking moving forward. So the next step really going forward for us now is drilling at the Mito tenement. And this slide really highlights the two prospective options for us we're reinterpreting the CSAMT. And within this slide, you can see the two prospective drill hole locations that was pulled off of Google Earth. Circled on the right of screen is the diamond drill hole that I've talked about before, which to depth reached 900 mg/l Li, which is one of the highest grades anywhere across Chile, Bolivia and Argentina, very, very high-grade lithium, which for us, as you can see, the proximity, there's an expectation that should the aquifer continue along the Salar, which the CSAMT we did in 2023 suggests it does, we could intercept something as high as that grade. However, consistent grades are being hit around this area where you can actually see on Google Earth, some of the drill pads from other companies in close proximity, average grades going from 300 to 500 to 600 mg/l Li. And this is a bigger area. So over the next coming weeks to months, you'll see a reinterpretation of this CSAMT data. The low resistivity area is the area that we're targeting. That is where we'll be putting those drill holes first in the north and then the south and then looking towards pumping wells across Mito and Maria Magdalena and Isabel Segunda. Isabel Segunda, as you can see on the right map there, the indicated resource is only partially across the tenement. So, for us, it's really looking at how do we maximize our resource, both in confidence, scale and grade. And that's from looking at drilling Mito, where we've obviously had close proximity to a very, very high-grade hit, which is something that we'd be hopeful to replicate. On top of that and then moving towards the pumping wells. Pumping wells will provide a few things for us across a 30-day continuous test. The first one is increasing the confidence in the resource going from indicated to measured. This also affects the PFS and future DFS, BFS and any addendums we do in the interim as what we'll be doing there is going from a probable to a proven reserve, which is quite significant. And that's done by achieving that 30-day pumping well. On top of which we'll also be looking at how we capture the brine and putting it into test evaporation ponds and the scenarios, which I'll outline in a few more slides of what we're intending to do with the existing pilot plan. So, for us, over the coming months now, it's really about getting rigs up, which we're looking at doing relatively quickly over the March, April period, we'll be looking at commencing that drilling at Mito, drilling one of the first two holes, be it in the northern section or closer towards the Salar edge, which will be decided off of the reinterpretation of the CSAMT, which our geologists are currently doing at the moment. However, having said that, we're quite excited about that low resistivity layer, and it also provides a real opportunity for us to significantly expand the resource. If you look at the tenements in size and you look at the scope, we have 1 million tonnes in those southern tenements. However, having said this, this is an opportunity with some very significant hits that we can actually increase the scale of the resource significantly, pushing and targeting above that 2 million to 3 million tonnes, which we're seeing in other companies that are working on the Salar. Alongside that, we'll look at how we can optimize our pilot plant. This has obviously produced 99.5% lithium carbonate sits in the city of Salta. And for us now, it's about how do we extract the next level of value. So one of the things that we're looking at, and this is an illustrative example is relocating the plant to site with smaller test ponds. This is actually from Rincon Lithium back in 2008, where I used to work. This was what was at site in the testing phase, where you have six small evaporation ponds, and you can see them on the left. Those capture from the brine field and then you have a continuous operating plant. This is a very critical component as when doing this, you're operating the plant under real Salar conditions, not down in Salta, where it's not up at altitude. For example, water at the Salar boils at 70 to 80 degrees. It doesn't boil at 100 is when you're down at sea level. So when you're factoring in those conditions and producing 25 tonnes per annum, 10 tonnes per annum, it then becomes about a factor of scale and using that plant to derisk systems to avoid issues with processing circuits, factoring in your purchasing of reagents, purchasing of materials that go into the processing. So for us, this is a key component of work stream that we'll be looking at alongside Mito that we feel will enhance the value and allow us to also move to a DFS where you have essentially a test pilot plant up at site testing and producing the material that you're aiming to use at that 5,000-tonne operation. It also allows us to look at a bigger scale opportunity, which we are doing at a PFS level, where we are revising that addendum. And if you go back through some of our previous material, we outlined a production strategy. For us, we'll be working on an addendum to the PFS that we intend to bring out within the next coming months, which looks at those larger scale scenarios. So currently, the PFS works on a straight 5,000-tonne operation, it's 25-year mine life. We'll be looking at a scenario that starts at 5,000 tonnes and then expands to a larger commercial unit after a couple of years. So we'll be looking at that work stream as we come out. So within the Rio Grande Sur project, just to recap, and I'll recap this at the end, there is a lot of movement across resource expansion, but also the engineering phase where we're really looking to solidify that plant up at site. We're looking to continue to work towards the production element, which also goes hand-in-hand with the MOU discussions that we have with other -- sorry, with third parties, where we're looking for those offtake agreements, looking to advance that and really looking at the work streams that interested parties are looking to see. So that's the Rio Grande Sur project in a nutshell of where we'll be going. So that's recapping where we've done that 5,000 tonne study. We sit on a JORC resource of 1.2 million tonnes, slightly little upgrade, but now it's working towards resource expansion. And then on top of that, continuing the engineering development across the pilot level and the DFS addendum as well as working towards a BFS as well. So quite a lot going on in the next coming months. Sascha Marcelina, this project, we're quite excited about, and that's something, again, we'll work towards really putting some meat on the bone with. So really summed up in this image where you have the geophysics and geological exploration lines that we'll be doing. Those geo lines are in the black there. You've got the geophysics work that will be going across Sascha Main, Valdivia Brechon, Estancia and the Marcelina silica cap as well as the Igloo prospect, just building those out and getting a bit more field data, understanding some of the structures and host lithologies a bit better. which then you've got those four drill holes at Marcelina and then the two drill holes at Sac Main. So we'll be progressing those quite rapidly. The first three holes, it will be split into two programs. The first three holes will be this one, as you can see on the screen, RECo-1, which pierces that high chargeability unit, the high resistivity, all very compelling in terms of the target, very similar to a lot of the deposits we've seen in the Massif. And then from there, moving forward to the Sascha Main targets, which is RECo-3 and RECo-5. So, for us, it's about testing that hypothesis that underneath that silica cap is substantive mineralization. And all of the geological indicators point to that. That's not a guarantee exploration is a risky business. But having said that, there is a lot of evidence within this system and what we've seen at other systems in very close proximity that there's a preserved system with potential mineralization at depth, both at the silica cap, but also Sascha Main where the boiling zones haven't been tested at 400, 500 meters. So, for us, it's really about now working through those first geophysics, working through and refining the targets of the drill holes. And these drill holes may change slightly from what those geophysics and structural mapping generate. But from us moving forward and having that first drill campaign hopefully have some significant results that will then set up other drill campaigns in the area. We may switch some of those campaigns depending on the geophysics at some of the other targets within the asset. But having said that, it's a very compelling prospect. I know my Chairman, Tom Eadie is quite excited about it. We're in a fantastic neighborhood in Santa Cruz there down in Deseado Massif, 30 million ounces of endowment across the region. So very highly prospective and something that we're moving forward to within the first couple of months. So that geophysics work will be -- is in progress at the moment. So we're mobilizing those fill crews, really looking to efficiently deploy the capital so that we can start drilling hopefully before the winter season or shortly thereafter as soon as the winter season finishes and we can get rigs out. So, for us, we're working across drilling quite extensively across the two assets and drilling is the name of the game at Sascha Marcelina. Just touching on Argentina in a minute. It's really, again, probably one of the best periods of the economy and the mining sector that I've seen in the past sort of 10 years. And that's really underscored by Argentina. Real GDP grew 3.3% year-over-year. Inflation continues to drop. But really looking at the amount of capital that majors are deploying in Argentina is very substantive. We're seeing now billions of dollars invested across Rio Tinto, BHP, but also a lot of the projects such as El Pachon from Glencore has been submitted to RIGI. You're seeing $800 million invested in copper projects by BHP and Lundin Mining over 2026. So a large commitment of capital from miners that really pushes the jurisdiction to that Tier 1 level. Also importantly, the critical minerals agreement signed with the U.S. is opening up significant funding from institutions like the U.S. EXIM Bank that are taking active interest in securing supply and feedstock from Argentina from lithium to tungsten to silver, to copper. Many of these minerals are on the critical mineral list. And for us, that provides another avenue where we can look to commercialize our projects and seek sources of capital from. So, from that perspective, really Argentina coming to the forefront now and a very significant and stable Tier 1 jurisdiction, which we're seeing with a lot of that capital deployed, strong economic growth and fiscal results from the Argentine government, but also the strategic partnerships and the regulatory developments, which are coming out, such as expansion of RIGI. That program is set to be extended beyond its current life. That's currently being discussed. We're also seeing things like the Glacier Law, which is quite an impediment to some of the projects in the Andes. When you're quite high up, you have these Glaciers and they've been economically -- sorry, environmentally protected, but there's going to be a shift in that authority, which would hopefully see more projects like McEwen Mining, Los Azules and these bigger mines up in San Juan, which would come in into production. So a very positive pro mining government, which is something that Pursuit is able to benefit from. So, just recapping some of this, it's really what's the news flow, what to expect, how do we intend to create value. And from that, really separating Rio Grande Sur drilling that Mito tenement, we're targeting through reinterpretation of that CSAMT data, significant resource expansion. That's what we're looking to do. That's what we're looking to achieve. We intend to do that initially by a diamond drill hole, which will go down to 400 to 600 meters, very similar to what we did at Maria Magdalena and Sal Rio 02. And then from there, evaluation of a pumping well. So using a rotary drill, again, potentially to 400 meters, but really where we get those packer intercepts where for us, it's about that continuous pumping rates, looking at the pumping results, which can then increase both the resource confidence and also be used in the chemical engineering studies and expansion of the pilot facilities and taking those to site. We are looking at doing a rotary well at Isabel Segunda or Maria Magdalena, and that also enhances the well field dynamics that we use in the PFS, getting more further testing and results, and again, continuing the evaluation of the chemical engineering at site using the pilot plant, which has successfully produced 99.5% lithium carbonate. So, clear resource growth targets, permitting advancement and derisking the project as we work towards those MOU strategic partnerships that we're currently quoting. We do have quite a few NDAs in place with various parties who have received samples. So, for us now, it's about progressing those discussions with the benchmark of the 5,000 tonne study. This is the CapEx. This is what we're looking to raise. And then from there, looking to progress those towards an MOU towards a heads of agreement for a strategic partnership where we can look to bring the project into construction. Sascha Marcelina, other end of the spectrum, that from there is going straight into the drilling geophysics at the start where we're assessing those other targets that have been missed. We'll look at the geological structural mapping to interpret the better results -- sorry, the lithology for hopefully better results, which will start those initial three holes followed by the preceding three holes, which have been outlined across the Marcelina main target and then Sascha Main. So the news flow really there is continuous news flow about drilling assays, interpretation of the structures follow-up expansion targeting, really looking at multiple near-term catalysts for a discovery sale system, which is what we're hopeful to find and all of the geologies there at the moment. So, over the next six months, really be looking out for that news flow around Mito. We're quite excited about that and have wanted to drill that tenement for a significant period of time, especially as lithium prices are now starting to rebound. They're starting to come up with that market demand of BESS. So very interesting time for lithium at the moment where you do have OEMs, end users looking for security supply, looking for projects like ours where they can bring those online in short order. And also from there, as we move Mito, looking at the potential of relocating the plant, and we'll announce that as we go through the environmental permitting processes to have that small plant, small evaporation ponds, test ponds at site and then continue -- look at continuing developing the engineering work streams. Also look out for an addendum to our PFS, as mentioned, looking and targeting larger scale operations after we commence that 5,000 tonne for a couple of years. We've talked about this previously in my presentations where we look at scaling up over time and the Mito tenement has always been pegged as part of the area where we can do that, and that's what we're currently working on at the moment. Sascha Marcelina, again, that will be the drilling, which we're all excited for testing that silica cap thesis that underneath 400 meters, 500, 600 meters is where the key gold mineralization is. So we'll be working towards that again within the first six months of the year, where we're hoping to be able to drill before the winter season. Santa Cruz is very far south. It is more difficult to drill in winter. So for us, we're working through that as fast as we can to get those drill bits in the ground. So, if anyone has any questions, please feel free to submit those. I'll stop sharing my screen and see if any questions come through. Okay. Well, we don't have any questions. So, from that perspective, look, thanks, everyone, for joining. We'll keep it short here. If you do have any questions, feel free to contact me on my e-mail. It's at the bottom of all of the ASX announcements, from there, really again, look out over the next coming weeks.

When -- sorry, someone's asked here, when are we -- when exactly are you drilling on the gold? So the gold drilling is set to start. We're hoping within and before -- around April. However, that depends on environmental permits and some of the and permits that we need to drill. And then from there also the winter season and availability of rigs. So we're working through that now. However, it's probably going to be around that April period that we actually start drilling there. It will be that Marcelina silica cap target, which will be the first hole. If there's any other questions, please feel free to put them through. All right. I'll leave it there then with no further questions coming through. Look, thanks, everyone, for joining. Again, feel free to send me an e-mail by e-mails at the bottom of the announcements. Happy to talk through anything that you've seen here and heard here today. A replay of this will be uploaded to our YouTube channel and sent out across our distribution list. Again, any further questions, please get in touch. We're always happy to discuss what we're doing with shareholders and really take you on that journey. From there, again, just recapping. Where we are now, we've just completed that $7 million raise. We've brought out the PFS, which is a significant milestone for the company. From there, it's now moving into drilling Mito, continuing expansion across the Salar with a potential pumping well at Isabel Segunda, Maria Magdalena. What we're looking to achieve increase of resource, increase of resource confidence, scaling up the project while working on a PFS addendum, moving into a DFS for those larger scenarios, but also the engineering work stream of moving the pilot plant from Salta to site for continuous operation. So we feel that will really bring the project forward and closer towards a producer and create significant value. At the same time, we'll be continuing Sascha Marcelina drilling for gold across the Marcelina silica cap following the geophysics and geological mapping, that structural mapping that's ongoing at the moment and then moving to Sascha Main vein with those maiden six drill holes. From there, we're hoping that, that will generate significant gold mineralization at depth, which is what we're seeing all of the signs on the system point to. And then from there, set up further drilling across the prospect. So quite a lot happening in the next six months, and we really look forward to taking you on that journey. Again, any further questions, please get in touch, and I hope you all have a lovely day.