Callinex Mines: Leveraging High-Grade Copper in Manitoba with Significant Growth Potential in Supply Constraint World

• Callinex Mines is advancing high-grade copper-rich VMS discoveries in the Flin Flon district of Manitoba, Canada
• Callinex recently announced a maiden resource at two deposits, Rainbow and Pine Bay, with over 3% copper grades
• They believe the copper market will be driven by supply constraints due to lack of investment in exploration over the past 10-15 years
• Plans to focus on further exploration and discovery in 2024 to expand resources, targeting the core of the system at the Alchemist discovery
• Highlighted advantages of being high-grade, located near infrastructure and hydro power in a stable jurisdiction vs lower grade deposits in riskier locales

In a recent interview, Max Porterfield, President and CEO of Callinex Mines, made a compelling case for why the company represents an attractive opportunity in the junior copper exploration and development space. With its portfolio of high-grade copper deposits in the established Flin Flon mining district of Manitoba, Canada, Callinex appears well-positioned to benefit from an expected surge in copper demand driven by the green energy transition and electric vehicle adoption.

Callinex Mines' High-Grade Copper Play

Porterfield believes the copper market will be defined by supply constraints in the coming years.

"It's going to be a lack of investment in exploration over the past 10 to 15 years," he noted. "You can have all the demand in the world, but if you don't have the supply it won't matter much, and we don't have the supply there. That's the real opportunity."

On the demand side, Porterfield sees it as "baked in" due to government policies supporting EVs and renewable energy infrastructure. AI is expected to be another demand driver. However, the Porterfield emphasized that supply will be the key factor, stating "it's going to be supply, supply, supply that drives things at the end of the day."

Interview with President & CEO Max Porterfield

High-Grade Deposits in a Top Jurisdiction

Callinex's key differentiator is the high-grade nature of its deposits. The company recently announced a maiden resource across its Rainbow and Pine Bay deposits, totaling nearly 6 million tonnes at 3% copper.

"At the Rainbow deposit, copper grades specifically are 3.14%," highlighted Porterfield. "When you add in the gold, silver and zinc, it's over 3.6% copper equivalent. Truly exceptional grades."

He contrasted this with large but low-grade deposits in places like Chile and Peru that are only around 0.25% copper - meaning Callinex's resources are 12-15x higher grade. This translates to much less volume of rock to move and lower energy and human capital intensity.

"Being high grade, being in Canada and being an underground operation with access to hydroelectric power really shields us from inflationary cost pressures," Porterfield added.

The Flin Flon Advantage

In addition to the high-grade nature of Callinex's deposits, Porterfield repeatedly highlighted the advantages of the company's location in Manitoba's Flin Flon mining district. Its projects are within a 20-25 minute drive of existing infrastructure, including a currently idled mill with over 5,000tpd of capacity that could potentially be expanded. The company also has road access, water on site, and access to low-cost renewable hydroelectric power.

This is in stark contrast to more remote projects that require hundreds of millions or billions of dollars to build out new infrastructure in addition to the mine itself. It also means Callinex could potentially move from discovery to production much faster. Porterfield noted that in Flin Flon there are precedents for expediting projects, and support from the highest levels of the provincial government.

Exploration Upside, 2024 Drilling

While Callinex has already delineated an impressive high-grade resource base, Porterfield sees substantial exploration upside. The company plans to focus on further drilling in 2024 to make new discoveries and expand the resource, particularly targeting the core of the system at its Alchemist discovery.

"Alchemist is an area that has always held great potential," noted Porterfield. "It's not a new discovery by any means - majors were targeting it as far back as the 1990s."

Callinex has confirmed mineralization with initial drilling and geophysics, and believes it is just at the edge of the system. The goal this year is to step out and target the high-grade core of the VMS deposit.

The CEO also highlighted three additional high-priority target areas that will see drilling in 2024. These targets are the culmination of years of geological work and are supported by geochemistry, geophysics and historical data. "2024 is going to be the year of discovery," proclaimed Porterfield.

The Path Forward

With its maiden high-grade resource in hand, Callinex is beginning to turn its attention to the next steps in advancing its projects. Porterfield noted the company recently received a grant from the Manitoba Mineral Development Fund to conduct environmental baseline work to prepare for permitting.

The company envisions starting with a small-scale, high-grade operation that could utilize the existing Flin Flon mill and infrastructure. An initial step would be to permit an exploration ramp to extract a bulk sample. Longer-term, Callinex could look to permit a larger standalone operation.

However, Porterfield was quick to note that the company's immediate focus remains on exploration and that the pace of advancement will depend on drilling success.

"If we could have started the permitting work on the day we hit that first spectacular drill hole, I would have done that," he quipped. "But you know, that's just not how things work. There's a process to everything."

Conclusion

Callinex is a company with a unique combination of attributes: high-grade deposits in a top jurisdiction, substantial exploration upside, and a clear path forward to create value. With copper supply constrained and demand expected to surge, the company appears well-positioned to attract investor interest.

In the near-term, the key catalysts will be exploration results as Callinex looks to grow its high-grade resource base. Porterfield noted that copper above $4/lb means any new pound discovered will be extremely valuable for the company. Longer-term, the company aims to transition from explorer to developer and producer.

As a small explorer with a market capitalization below C$30 million, Callinex provides direct exposure to copper prices and drilling success. While speculative, the potential reward is high if the company can continue to deliver strong exploration results and advance its projects towards production in the coming years.

Investment Thesis for Callinex Mines

Overall, the Callinex story is one that could resonate with resource investors. The company has many of the key ingredients you look for: good grades, a supportive jurisdiction, access to infrastructure, an experienced team, and plenty of exploration upside. With the copper market likely to face supply issues in the face of growing demand, Callinex appears well-positioned to create value for shareholders in the years ahead.

• High-grade copper deposits (>3% Cu) in established Flin Flon district
• Access to existing infrastructure (roads, water, hydro power, mill) = lower capex and faster timeline
• Manitoba is a top-rated global mining jurisdiction with strong government support
• Substantial exploration upside and active 2024 drill program planned
• Potential to expand resources and make new discoveries
• Compelling market outlook for copper with supply deficits expected
• De-risked by infrastructure but still provides high torque to rising copper price
• Positioning to transition to developer/producer in the medium-term

Macro Thematic Analysis

The global shift towards electrification and decarbonization is expected to drive a massive increase in copper demand in the coming years. Copper is a key metal used in electric vehicles, charging infrastructure, renewable energy, and the transmission of electricity. With the push to adopt EVs and grow low-carbon energy sources, copper demand from these sectors is forecast to surge.

At the same time, copper supply growth is expected to be constrained. The copper industry has seen relatively limited investment in new mine development over the past decade due to a period of low prices. Developing new copper mines is increasingly challenging due to declining grades, rising input costs and increased political risks. There are also concerns about the availability of new copper discoveries and the long lead times required to bring them into production.

In this context, copper exploration and development companies with high-quality assets in stable jurisdictions are expected to attract strong investor interest. They provide direct exposure to a compelling long-term demand story and potential supply shortfalls. Callinex, with its portfolio of high-grade deposits in Manitoba, Canada, appears particularly well-positioned given its grades, infrastructure, and exploration upside.