Transition Metals (XTM) - Sustainable Prospect Generator

Transition Metals Corp. is a Canadian based, multi-commodity exploration company, which implements a project generator business model. The company believes that the project generator business model provides maximum exposure to the discovery stage of a project which has the greatest opportunity for share price growth. The company has a strong and diverse portfolio of assets which support green energy and encompasses various mineral commodities.

Matthew Gordon spoke with Scott McLean, the president and CEO of Transition Metals Corp. (XTM:TSX-V) to discuss the company and its business model. 

Company Overview

The company’s exposure to various commodities enables it to not be affected by commodity price fluctuations. The portfolio of Transition Metals Corp. consists of more than 24 projects throughout Canada which span over 6 jurisdictions.

The business model of the company enables it to not have to dilute its shareholder equity through the sale of equity in the company but rather through the sale of interest in the company’s projects. Transition Metals Corp. implements a data-driven approach regarding the selection of its projects. The company believes that this methodical, systematic and detailed approach, which encapsulates all bases of geoscientific data, enables it to identify projects that possess high growth potential, and are also alluring to other companies for the creation of a joint venture. The company believes that its business model allows it to be selective regarding its projects and that each project is selected based on merit with no maximum time allocated for selection.

The company plans on acquiring various new projects to expand its asset portfolio in the coming year. Transition Metals Corp. further plans to conduct fieldwork at the Saturday Night PGM project, the Thompson gold project, the Maude Lace nickel copper and PGM project and the Aylmer copper-gold project. Transition Metals Corp. plans to further continue securing joint venture partnerships to advance its multi-commodity project portfolio.

Management

The company is led by Scott Mclean, who is President and CEO. Mclean has over 30 years of experience in exploration and management. He served 23 years with Falconbridge Limited and Xstrata Nickel. Mclean was named the Prospector of the Year in 2004 by the Prospectors and Developers Association of Canada for his involvement in the discovery of the 17-million-ton Nickel Rim South deposit in Sudbury, Ontario. He was also appointed to the transitional board of the Association of Professional Geoscientists of Ontario and has represented the profession as President.

Carmelo Marrelli is the Chief Financial Officer of the company and the principal of The Marrelli Group of Companies. Marrelli holds a Bachelor’s degree in Commerce from the University of Toronto and is a Chartered Professional Accountant and a member of the Institute of Chartered Secretaries and Administrators. Marrelli is also the Chief Financial Officer for several issuers on the Toronto Stock Exchange (TSX), TSX Venture Exchange, and Canadian Securities Exchange (CSE).

Greg Collins is the Chief Operating Officer (COO) of the company and has over 20 years of experience in gold and base metals exploration, project generation, resource estimation, mine planning, operations, and management. He spent 11 years with Falconbridge Limited and previously also served as the Vice President (VP) of Exploration for Crowflight Minerals

Tom Hart is the VP of Exploration for Transition Metals Corp. and has over 35 years of experience in leading and conducting private and public sector exploration and mapping programs. Hart was the co-recipient of the Northwestern Ontario Prospectors Association 2004 Discovery of the Year Award. He is regarded as a specialist in lode gold and base metals systems above- and underground.

Grant Mourre, rounds out the management team as the Exploration Manager for the company. Mourre has over 16 years of experience in mineral exploration, with 10 years thereof spent in the Sudbury Basin in Canada. He was named the 2014 Ontario Discoverer of the Year and specialises in Nickel, Copper, Cobalt and Platinum Group Metals (Ni-Cu-Co-PGMs).

What is a Prospect Generator?

Prospect Generator is most often used to describe a junior mining company which has a business model centred on de-risking the exploration approach. Traditionally Prospect Generators stake and/or acquire the mineral rights to an area that the company believes holds potential. The Prospect Generator then partners with another company to develop and advance the property. Traditional Junior Mining companies on the other hand develop an area and to be able to do this, have to raise funds from the market. Scott Mclean explains why the approach of a traditional junior mining company is flawed:

“They do have some ups and downs in share price. Few of them have some significant discoveries but generally, over time, they have to consolidate their share price against the shareholders and restart the engine. They never go bankrupt because they don't take on any debt but really, they're not a viable business”

Transition Metals Corp. believes that through the implementation of a Prospector Generator business model it is able to have the advantage of a traditional junior mining company i.e. the increase in share price due to mineral discovery, without the share dilution associated with raising funds to reach the discovery. He explains:

“By taking on a prospect generator model, you're really focused on discovery and we do that by mitigating the risks, we don't need to go to raise funds, do financings and dilute the shareholders. So a traditional junior generally has one or two projects, they advance those projects by selling equity in the company that dilutes your shareholders significantly and if they're successful, with the odds being 1 and 1000 to 1 and 3000, they can have a significant portion of a significant discovery.”

The company instead of selling shares of itself, rather sells shares of its projects, in such a way minimises share dilution and maximising exposure.

“Whereas we have many projects, we tend to, we'd like to sell interest in the projects rather than selling interest in equity. Therefore, we keep the shareholder’s equity really tight. At the end of the day we’ll have interest in many discoveries, but probably minority interest or Royalty interests but through this process, we've mitigated the risk we have numerous irons in the fire to be able to bring discoveries to our shareholders.”

Project Selection process:

Transition Metals Corp. implements a data-driven approach when it comes to the selection of its projects. The company implements both proprietary as well as public data in its evaluation process. The company takes a systematic approach to ensure that all aspects of the obtained geophysical data are utilised. Mclean explains it as follows:

“We're all highly technically skilled in the company. Taking the numerous databases that are out there, whether they're public databases, proprietary databases or databases that we have of our own, and put them all into one platform where we can compare various layers of data to generate ideas.”

The company believes that due to its business model, and not being required to chase discoveries like traditional mining companies in order to progress it can take its time and evaluate a potential project thoroughly.

“…our mentality is much more systematic and we can afford to be systematic because we don't have to get that intersection that gets us to that next financing in place. We can really take the best of the best and do a systematic approach, the way we would have done if we had USD$ 30 million budgets in a large company.”

Thunder Bay opportunities

Transition Metals Corp. plans on focusing on the advancement of its various opportunities located in Thunder Bay, Ontario in the coming year. The company’s Thunder Bay projects consist of the Sunday Lake PGM project in which the company holds a 25% stake, the Saturday Night project, The Owl Lake project, the Maude Lake project and the Jolly Gold project.

The Sunday Lake project is located 25 km north of the city of Thunder Bay and 60 km southeast of the Lac Des Isle Mine and Mill Complex owned by Impala Canada. The project shows mineralisation highlights including 3.22 g/t platinum, 2.08 g/t palladium, 0.21 g/t gold and 0.57 % copper over a mineralisation intercept of 41.2 m. The mineralisation also includes 15.8 m at 5.42 g/t platinum, 3.35 g/t palladium, 0.34 g/t gold and 0.88 % copper. The project is a joint venture with Impala Canada with Transition Metals Corp. holding a 25% free carried interest in the project. Mclean describes the project as follows: 

“Sunday Lake is probably one of our better discoveries, that's probably a very significant discovery on a worldwide scale. The mineralized zone now is probably 1500m by 800m, and the best intersection being about 41m about 5.5g Platinum, Palladium plus Gold with some very high-grade intersections within that. So on a worldwide scale, it's a really important project.” 

The company holds a 100% interest in the Saturday Night project which lies 16 km from the Sunday Lake project and holds similar mineralisation. The company is optimistic regarding the project with Mclean stating: 

“Saturday Night is a lookalike to Sunday Lake. It's about 16km along strike, we have 100% interest in that project. It only has one drill hole that we drilled in the intrusion, it's a better discovery intersection to what Sunday Lake was. It's identical in every way.”

The Maude Lake project of the company is a high-quality nickel, copper, cobalt and PGM project with mineralisation of up to 6.23% nickel. Mclean believes the portfolio holds potential and states that the company is searching for a partnership regarding the project.

“..that Maude Lake project has some obvious drilling targets. We will most likely drill those ourselves before looking for a partner if all so that's a good one to watch and see. There are a couple of press releases owed on it to date but there's a lot more work to do this summer on that project.” 

The Jolly Gold project of the company is also part of its Thunder Bay opportunities and includes highlights as a 46 km² land position and mineralisation of up to 146.5 g/t of gold over 0.41 m and 24.4 g/t gold over 0.61 m intercepted in previous channel sampling programs.  

The Sudbury opportunities of the company include the Doherty Lake, Aylmer IOCG, Fostung and Espanola properties. The property the company is focused on in the coming year is the Aylmer project. Mclean states:

“Aylmer. It's in the Sudbury mining district outside of Sudbury Nickel camp. It's a large breccia stock that's seen a lot of alterations. We've got really good Gold and Copper numbers coming out of that and some really interesting geophysical targets to drill at depth.”

Future

Transition Metals Corp. plans on advancing its Thunder Bay opportunities in the coming year, with fieldwork programs already planned. The company plans on conducting exploration drilling at the Maude Lake, Thompson and Aylmer projects. The company plans on advancing its projects whilst simultaneously searching for partnership agreements that will enable the company to advance its actively growing asset portfolio. 

To find out more, go to the Transition Metals website