Palladium One (PDM) - Resource Due in Q1/22

Palladium One Mining is a PGE (Platinum Group Element) Nickel-Copper exploration and development company. Its assets include the Lantinen Koillismaa PEG-Nickel-Copper Project, located in north-central Finland, and the Tyko Nickel-Copper, PGE property near Marathon, Ontario, Canada. 

Matt Gordon caught up with Derrick Weyrauch, President, and CEO, Palladium One Mining. Derrick is an experienced mining executive and Corporate Director. His background includes finance, risk management, corporate restructuring, and turnarounds, coupled with M&A strategy development, execution, and post-transaction integration. He is the Co-founder of Magna Mining Corp. and is a former Corporate Director for a number of companies including Eco Oro Minerals Corp, Jaguar Mining Inc, and Banro Corp. He is a former CFO at Jaguar Mining Inc. and Andina Minerals Inc. He currently serves as a Non-executive Director at Cabral Gold Inc. He obtained his CPA CA designation from KPMG LLP. Derrick is also a member of CPA Canada and the Institute of Corporate Directors. His education credentials include a B.A. Honors degree in Economics from York University. 

Company Overview

Palladium One Mining Inc. is a mineral exploration and development company that focuses on nickel-copper and PGE. The company was founded in 2007 and is headquartered in Vancouver, Canada. The company is listed on the Toronto Stock Exchange (TSX-V: PDM), the Frankfurt Stock Exchange (FSE: 7N11), and the OTC Markets (OTCQB: NKORF). Nortec Minerals Oy is the company’s subsidiary. 

Palladium One is a PGE green energy, metals-focused company operating in Tier 1 jurisdictions, namely Finland and Canada. It has a strong institutional shareholder base along with the financing to advance its strategy of developing large-scale resources. 

The company’s Tyko Nickel-Copper, PGE property in Canada served as a listing asset. The asset features exceptionally high-grade intercepts. The company made a significant discovery last year which led to increased interest from the market. The company is currently putting out drill intercepts of 10% nickel equivalent at 4m, starting from the surface.

An Experienced Team

Neil Pettigrew is a geologist based out of Thunder Bay, Ontario. He has over 2 decades of experience within the mining sector. Neil and Peter Lightfoot, are responsible for the decision-making and day-to-day advancement of the company’s exploration programs. Peter previously served as the Chief Geologist for Inco Vale and is currently a board member at Palladium One Mining. 

The company’s Board and Management are brand new. This is a result of the restructuring carried out by the company CEO Derrick Weyrauch. 

Spin-off Considerations 

Palladium One Mining is open to the possibility of spinning off its 2 assets in Finland and Canada. Both assets are focused on green metals that include nickel, copper, and PGE. The Canadian asset majorly consists of nickel and copper as dominant metals, while the Finland asset is PGE-dominant. 

As per the company, the PGE side of the business will be the major contributor to revenue generation. The company seeks to develop these projects further before considering a potential spin-off. Additionally, the company is also open to a monetizing opportunity. However, this decision would be considered based on the market conditions and timing. 

The company is looking to further advance the Tyko asset. It seeks to define a resource at the Lantinen Koillismaa PGE-Nickel-Copper Project in Finland in Q1 2022. Currently, the asset has a 50/50 split between precious metals namely palladium, platinum, gold, and battery metals: cobalt, copper, and nickel. It has plans to achieve a similar split for its Tyko asset in Canada. 

The Lantinen Koillismaa PEG-Nickel-Copper Project

Palladium One Mining secured the Lantinen Koillismaa PEG-Nickel-Copper Project as the first order of business. Following this, the company assessed the historical data and reinterpreted the information re-assays. This led to the culmination of the initial resource in September 2019. This resource featured a 1.2Moz palladium-equivalent resource. The resource enabled the company to gain traction in the market. This enabled the company to raise capital for advancing the project. 

The Finland asset has had reconnaissance drilling along with historical data and thesis. It has significant growth potential. The company made a fantastic discovery in August 2020, however, the operations were side-tracked due to covid. Since then, the company has gained increased market attention. It has focused on definition drilling to significantly expand the existing resource. This area is called the Kaukua area. The details of this drill program will be published in late Q1. In an event where the resource demonstrates critical mass, the company has plans to quickly move into a PEA (Preliminary Economic Assessment).

Cash Position

Following the August 2020 discovery at its Finland asset, the company received a lot of interest from multiple institutions. At this time, the company had a massive warrant overhang. These warrants were due expiry in December 2020. All but $200,000 in warrants were exercised, leading to the trade of 70M shares in the market as a result of warrant clipping, leading the company into a strong cash position. 

Palladium One Mining closed the offering at $0.15c/share without the overhang. This led to a jump in the company’s share price which enabled it to complete a bought deal short-form prospectus financing at $0.29c that was announced a month later. The company currently has the next tranche of warrant overhang which is due in April and May 2021. 

It is important to note that these developments took place at a time when the world is facing a global chip shortage that has had an adverse impact on automotive sales. Palladium and platinum are essential metals that are present in catalytic converters which help vehicles mitigate the harmful effects of exhaust, a key contributor to environmental pollution. The reduced sales have led to a drop in palladium’s spot price, which has also impacted the company’s share price.

Palladium One Mining has a robust treasury which, paired with a disciplined approach towards plan execution has enabled it to add value to the endowment through drilling and discoveries in Finland and Canada. 

The company’s strategy for Finland is to define a credible mining scenario. Due to the absence of a PEA, the company isn’t able to provide a cash flow analysis for the market. Once the company identifies the presence of a critical mass, it will move towards a PEA that will enable investors to assess the NPV (Net Present Value) analysis for the asset, leading to a better company evaluation. The company is focused on a small part of the Canadian property package. It has plans to look at the regional exploration upside along with scale demonstration for the asset. 

Palladium One Mining has a cash position of $18M. This includes the cash balance from September-end and the December 2021 financing. Accounting for the burn rate, the company had a $15M cash flow by the end of 2021. The company’s December financing was carried out at a 52% premium to the market which was allocated to a single precious metals fund. 

The PGE Market

The PGE space has seen limited interest from the market in the past. This is because the global-mined production of platinum accounted for only 6Moz/year pre-covid, while palladium accounted for about 7Moz pre-covid. 90% of this supply is a by-product of other mining activities, usually nickel or platinum. 

The PGE space isn’t a big market at present. 80% of palladium originates from Russia and South Africa. Both are known for being high-risk jurisdictions. Comparatively, Palladium One Mining’s Finland asset is based in a Tier-1 jurisdiction. 

There’s an increasing need to educate the market about the environmental situation in Russia, the power issues, and the lack of re-investment in South Africa. As these jurisdictions are considered high-risk, there is a need in the market for an additional source with palladium as the primary metal.

Notable developments have been made in the South African platinum space in recent times. This includes the diversification of jurisdiction risk by South African platinum companies through investments outside the country. One such development is the acquisition of North American Palladium by Impala Platinum. 

Ongoing Operations

Palladium One Mining seeks to carry out the work associated with its project and make discoveries. It is looking to ensure that the project is robust and is moving along the development path. The company is focused on balancing between building a resource at a sufficient scale and long mine life. In the past 2 years, the company is focused on striking a balance between regional exploration and asset growth. It is currently looking to de-risk the project through an extensive metallurgical program. It seeks to extract the maximum value while demonstrating the economic viability of the deposit across palladium, platinum, gold, cobalt, nickel, and copper. 

The company is currently looking to position itself for a PFS (Preliminary Feasibility Study). It is testing over 18-19 different lithologies and grades to obtain a proper representation of the ore body. It has plans to build a master composite that accurately represents the project. The company is also looking towards obtaining permits. It has already initiated baseline studies along with building a permitting roadmap while taking into consideration any potential gating issues. 

The KS and LK Projects

In April 2020, Palladium One Mining received approval from the Finnish Mining Authority for a 20,000-hectare reservation, called the Kostonjarvi (KS) project, located adjacent to the company’s flagship Lantinen Koillismaa (LK) Project in Central Finland. 

The KS project is a massive, pipe-shaped asset that runs across Finland. It commences at the Russian border and makes its way to the Koillismaa complex where the company’s LK project is situated. The asset runs deep as it's the feeder for the magma flow. It offers potential for a very high-grade mass of sulphide. The deposit sticks out on the gravity and magnetic geophysics survey. The KS project offers a high-risk, high-reward opportunity. The company isn’t spending funds on this project due to high-risk mitigation. It is currently focused on the LK Project. 

The LK deposit is an at-surface, pancake-shaped deposit that comes through the KS’s pipe-shaped structure. This deposit was broken up into several different larger blocks which were tilted upwards. The base of these blocks was pushed to the surface. The company is targeting these at-surface blocks. The company also has basal contact as a channel series that spans 38km. 

The KS project has the potential for high grades. A single intersected hole has been drilled at this site so far. The first geological survey at the KS project was carried out in 2020. 

Meanwhile, the LK deposit is a lower-grade, bulk tonnage operation. The project is ideal for an open-pit operation at surface. The deposit outcrops at Kaukua under 9m-10m of overburden. The company has 38km of this contact zone. The entire 38km zone has been reconnaissance drilled by the Finnish Geological Survey. The company has access to this historical drill data. It has carried out a geophysics survey at the deposit to induce polarization. This survey was chosen because it is known to work very well in similar settings. The resulting data was used by the company as a vectoring tool for the Kaukua zone discovery at the LK deposit. The company is looking to carry out extensive drill operations along with resource definition by drilling over 3km of the 38km strike length. 

The Kaukua zone features a 7km long anomaly. The company seeks to carry out extensive drilling at this deposit. It has identified additional anomalies in other parts of the property. The company published a resource on the Haukiaho zone in September 2021 which is located 12km south of the Kaukua zone. This zone features a lower-grade, bulk tonnage operation with a 1:1 strip ratio. According to the company, this is possibly the largest blue sky trend on the property at 17km in one fell swoop of contact. 

Palladium One Mining is currently focused on metallurgical work along with the development of a resource. It had a drill cut-off in September 2021 for resource development. It is also focusing on concluding the mineralogical work on the deposit.

The company considers palladium as the dominant metal from a revenue perspective. It is looking to generate 50% of its revenue from palladium, platinum, and gold. The remaining 50% of the revenue will be generated through cobalt, copper, and nickel. 

The company has plans to carry out additional drilling. It has identified multiple zones within the existing resource envelope that turned out to be dykes. The company anticipates that these dykes may feature additional tonnage. It is looking to carry out hydrological drilling to de-risk the pit slope design. 

The Tyko Nickel-Copper, PGE Property

Palladium One Mining has allocated $5M for the Tyko Property in 2022. It made a considerable discovery at the deposit, featuring 10% nickel at-surface. The company traced this discovery over 430m to a zone called Smoke Lake. Currently, the company has run out of permitted drill pad locations. It has submitted an application to expand the permitted drill zone. 

The company carried out an extensive geophysics program across the entire property in 2021 which led to the identification of a few multi-line EM (electromagnetic) anomalies. In addition, the company carried out soil sampling at the asset that identified an extremely high presence of copper and nickel within the soil. The soil sampling also led to the discovery of cobalt presence at both the north and the south Bulldozer anomalies. 

The company has separate drill permit applications for each of the multi-line anomaly zones. It is looking to drill these anomalies as quickly as possible. The company is currently building a winter camp that would be ready for use as soon as the permits are acquired. The $5M budget will enable the company to carry out the first pass on each of these areas. The results from these operations will enable the company to devise a future strategy. 

Following the discovery, the company was approached by several large companies for project involvement along with acquisition proposals. Currently, the company is focused on growing the resource, testing out the targets, and generating significant value. 

The Tyko asset is situated in an atypical terrain featuring a big batholith. It is a sedimentary belt that was intruded. The entire bulldozer intrusion is part of the company’s property package, spanning a 25,000-hectare land area. The company’s asset is located 50km south of the old mine and 55km northeast of Marathon, Ontario where Generation Mining Ltd’s operations are based. 

The Tyko project does not have any prior drilling. The company was focused on its Finland asset. However, in order to maintain the Canadian asset, a minimum amount of spending is required each year. In the first year of operations, the company spent CAD$20,000 on the Tyko asset. In the second year, the company received fantastic results from a soil survey in and around the Smoke Lake area. The following year, Palladium One Mining spent CAD$50,000 and found promising soil results which were similar to the other anomalies within the project. Following covid restrictions, the company carried out additional drilling, raised capital, and applied for permits. 

The infrastructure at the Tyko project features road access from the east and west sides of the property. The commute time from the nearest town is 1.5-2 hours by road based on weather conditions. The logging roads are fairly intact as they were built within the past 2 decades. The company is currently building a camp at the site to save time on the daily commute.

To find out more, go to the Palladium One Mining Website