Pan Global Resources (TSX-V: PGZ) - Copper VMS Drilling in European EV Market

Pan Global Resources Inc. is a Vancouver-based junior resource company actively engaged in base and precious metals exploration in Spain. The company’s Board of Directors and Leadership Team bring decades of knowledge and global exploration experience to the company. The team has led their respective organisations to successful exit strategies or into production, generating hundreds of millions in shareholder value. 

Matt Gordon caught up with Tim Moody, President, CEO, and Director, Pan Global Resources. Mr. Moody has over 30 years of experience in the mining industry including mineral exploration, resource assessment, business development, strategy, and government relations. He spent 24 of those years with Rio Tinto, where he held the posts of Exploration Director (2005-2010) and Vice President and Director of Business Development (2010-2015). He currently holds directorships on the boards of Prism resources, Indico Resources, and Xiana Mining. Mr. Moody has a Bachelor of Science in Geology and Geophysics (Honors) from the University of New England. He is a graduate of the Senior Leadership Program from the London Business School, a graduate of the Business Leadership Development Program from the Australian Graduate School of Management, and a Fellow of the Society of Economic Geologists. 

Company Overview

Pan Global Resources Inc. is a junior resource company operating in Spain. The company was founded in 2006 and is headquartered in Vancouver, Canada. Minera Escacena S.L., Minera Águila S.L.U, Minera Sabina S.L.U, and Lithium Li Holdings Inc. are the company’s subsidiaries. It is listed on the Toronto Stock Exchange (TSX-V: PGZ), and the OTC Markets (OTC: PGNRF). 

Pan Global Resources is a Canadian-listed company focused on copper exploration in Spain. The company has made a new discovery in the Iberian Pyrite Belt. It has a lot of upside, both at the original discovery, which continues to grow, and also on several new targets that the company has started testing. 

The company’s project is located in Andalusia, Southern Spain, specifically in the Iberian Pyrite Belt. This is a mining-friendly part of the country, where the majority of Spain’s mining industry is located. The Iberian Pyrite Belt has 5 large operating mines that are being actively explored. The region also has a track record of fast permitting from grassroots discovery right through to the commencement of mining operations. Interestingly, there are other parts of Spain that are less mining-friendly. The company does not operate in those regions. 

Spain has a well-established mining code and process in place. While this can be laborious at times, the country has a solid mining law. Once a project acquires permits, it gains the rights to carry out mining operations and has government support. In case of access-related issues, there are pathways and solutions where the government can intervene on the company’s behalf, making it a great place for exploration. 

Back when the company’s CEO was working with Rio Tinto, the company had made a discovery called Las Cruces in the Iberian Pyrite Belt. Following the discovery, Mr. Moody was asked to come over and run Rio Tinto’s exploration in Spain and Portugal. At the time, it became the largest exploration project globally for Rio Tinto. Mr. Moody has an in-depth understanding of the area's geology and targets along with the particular patch of ground where the first discovery was made. 

Following his departure from Rio Tinto, Mr. Moody started a private company in Spain, focusing on the Águilas Project. During this time, he met with some of the directors of Pan Global who were looking for a project. Back then, the property was a very early-stage exploration project in Spain. The property was farmed off to Pan Global, and soon after, Mr. Moody was offered to run the company. Since then, he has continued to run Pan Global Resources for the past 4-5 years. 

An Experienced Team 

Since Mr. Moody was familiar with Spain, as soon as Pan Global became active, he started getting in touch with former colleagues. He built a team around the people that have worked with him in the past. Currently, Pan Global has 6-7 geologists. This year, the company also brought in Juan Garcia Valledor as a General Manager. Juan is a highly-experienced mining engineer that has worked with Rio Tinto for several years, along with experience in taking projects from pre-resource right through to development. He also brings open-pit mining experience to the role, which is highly relevant to Pan Global’s project. Interestingly, his previous mining operation was producing tin, which is one of the commodities that Pan Global has found in its main project. 

Jim Royal, the Vice President of Exploration at Pan Global Resources has also worked with Rio Tinto for many years. Jim has an in-depth understanding of the Pyrite Belt. He has been with the company since its inception, working on Pyrite Belt exploration. 

The company has another mining engineer who is highly experienced and well-regarded. He helps the company in dealing with the administration. The company has a very diverse team with an equal number of male and female employees. It has a highly enthusiastic young geology team. Pan Global’s main project is in the Iberian Pyrite Belt, which is a highly important geological and mining province that has been mined continuously for 3,000 years. 

Pan Global’s land package is an area spread over 5,500 hectares at the eastern end of the highly prolific Iberian Pyrite Belt. The deposit is surrounded by some big mines. Right next door is a Mexican group that is looking to restart an old Boliden mine in the Los Frailes mining area. Further to the west, about 20km away is the site of the original Rio Tinto mine, where the company first started operating. It is the largest VMS (Volcanogenic Massive Sulphide) deposit in the world. 

The region is well-explored and has seen extensive mining activity for a very long time. Interestingly, the company’s patch of ground hasn’t seen any serious exploration since the early 1980s. This aspect makes the deposit highly remarkable, especially since it’s surrounded by very well-explored, mature exploration projects. This is one of the reasons why the first hole drilled by the company found a potential ore body. Here, the company had a drill intersection of grades and thickness that made it highly likely that it would be developed into a mining project.

Pan Global’s first discovery hole was over 20m of >1% copper along with some tin and silver 30m below the surface. The company followed it up with better intersections. Based on the drill results, the company considers this a discovery hole. It has continued to hit nearly every drill hole for the next 130 holes. 

The company acquired some old exploration data that wasn’t a part of the public domain. This comprised old exploration data from Exxon Mobil, which included some marks with old gravity contours and drill information. Pan Global Resources digitised the data and identified a number of gravity anomalies and geophysics targets. One of the targets was La Romana, where the company carried out 2 lines of gravity from the ground, or ground truthing for the anomaly. It carried out 1 line of IP (Induced Polarisation) geophysics before drilling. The early Exxon data formed the basis for identifying targets on the land package. 

The company carried out additional surveys on the entire area based on the early geophysics information. It conducted a detailed gravity survey along with helicopter-assisted electromagnetic and magnetic surveys. The company has covered large areas with surface soil geochemistry along with some mapping. This was followed up with group IP surveys or detailed geological mapping on selected targets. This has enabled the company to build a picture of coincident indicators of potential mineralization, which are ranked in order of priority. Currently, the company is using its own data to back up the anomalies with additional information. It has multiple data sets that enable it to maximise success potential when drilling operations commence. 

In addition to La Romana, the company has at least a dozen more targets, and it plans to continue generating additional targets. The La Romana target had copper along with some tin, and a bit of silver. Tin presence is not commonly seen in these systems. It serves as a positive development as tin is usually attributed to very big copper-rich VMS-type deposits. The tin presence may indicate the potential for finding something substantial. For some of the other targets, the company is looking to follow up on a zinc anomaly. 

Recently, the company started drilling a new target called Hornitos, a big zinc soil geochemistry anomaly. It had a gravity anomaly along with some IP. The company drilled a couple of holes here and hit some sphalerite (zinc) and galena (lead) mineralization. This shows that the company’s drilling strategy seems to be working. These deposits usually tend to be polymetallic in nature, but given the importance of the location, the copper presence serves as a big win. 

Cash Position 

Pan Global Resources has set up a 20,000m drill program that will focus largely on the La Romana target along with several new targets. The company started out the year with $14M-$15M in cash flow and brought in some money through warrants. It has about $11M in current cash flow. By the end of the year, the company expects to have a bit over $8M, entering 2023 in a strong position. 

Targets 2022 and Beyond

In 2023, the company intends to be highly conscious of the market and conservative with its cash flow. It has the financial resources in place and does not intend to raise additional funds in the near future. In the meantime, the company is looking for the market to get in a better position. The company’s cost of exploration is a lot less than a lot of other copper projects. Copper mining companies in North America and South America often have challenging terrains, higher labour costs, and higher drilling costs along with other factors. Since Pan Global’s operational costs are lower, it can put a bit over 80% of its cash into the ground, which is significantly higher in comparison to other exploration companies. 

Despite the inflationary environment, the company is not dealing with high energy costs as it does not use a lot of fuel or electricity. While some pressure on the labour costs is expected, it is not facing skill shortages as the company has a very strong team that is well-equipped for big exploration programs. The company is focused on prioritising the targets and being efficient with the exploration work while being highly systematic and methodical at the same time. When it comes to target testing, the company is looking to build a strong target before drilling it in order to get the best bang for the buck. 

Shareholder Registry 

Currently, the company insiders hold about 8.7% of the total issued shares. This includes the Directors, the CFO, and the CEO. In terms of other incentives, the company issues options each year. Though the company has been prudent with issuing and distributing options. The company’s CEO holds around 6M shares personally. The senior management and the team on the ground are all well-incentivized. 

Going into 2023, the company expects to have a bit over $8M in the bank. It is refining the plan at the moment, and it expects to enter the next year with a similar cash flow as 2022. The spending in 2023 is also expected to be similar to last year. In case of success, the company has the flexibility to increase the number of drill rigs and accelerate the program. Currently, the company has 2 drill rigs deployed and is looking for a third rig. 

The current copper market inventories are very low. It is important to note that massive quantities of copper will be needed in order to meet the energy transition requirements. Large parts of the world are still in the development stage, and copper is a metal that’s fundamental for improving people’s quality of life. The transition from oil and gas based energy to alternative energy sources such as battery metals will also drive copper demand. Copper is a key metal used in batteries, cars, wind turbine energy stations, and car charging stations. While lithium is needed for battery manufacturing, copper is required to build the infrastructure that will deliver the energy for the batteries.

To find out more, go to the Pan Global website