ValOre Metals (TSX-V: VO) - Valuing This Large Canadian Uranium Resource

ValOre Metals is focused on moving the society forward through the discovery and advancement of feasible metals and mining projects. With a team of industry experts and an impressive track record of exploration, project development, and M&A success, ValOre’s goal is to add significant value to metals and mining projects around the world. The company is part of the Discovery Group.

Matt Gordon caught up with Jim Paterson, Chairman, and CEO, ValOre Metals. Jim is a principal of Discovery Group and has been actively involved in marketing and corporate development activities for the group companies since 2002. Jim has 23 years of industry experience, including capital raises, acquisitions, joint ventures, spin-outs, RTOs, and IPOs. He is the driving force behind more than $60M in equity financings for ValOre Metals which led to multiple discoveries and a 200% increase in mineral resources at ValOre’s Angilak uranium project. Jim was a long-standing and active Director of Kaminak Gold Corp. (Acquired by Goldcorp.) and Founding Director of Northern Empire Resources Corp. (acquired by Coeur Mining). In 2007, Jim founded Corsa Capital Ltd. Corsa’s 2008 IPO led to a 2010 transaction that created a leading U.S. metallurgical coal producer with a C$250M market capitalization.

Company Overview

ValOre Metals is driven to help propel society forward through the discovery, exploration, and advancement of high-demand mineral and metal resources. The company was founded in 2008 and is headquartered in Vancouver, Canada. It is listed on the Toronto Stock Exchange (TSX-V: VO).

ValOre Metals has a $50M market cap. It has 2 assets in its portfolio, a uranium asset in Canada, and a palladium-platinum asset in Brazil. The company’s representatives recently attended the Mines and Money conference in London. During the conference, the company had several meetings and received a highly positive response.

The company is a part of the Discovery Group, which is a brand and an alliance. It is an incubator of private and public companies that are focused on mineral exploration. The Group has had a strong track record of attracting great people. This has enabled ValOre Metals to retain really good people within the group, which, in turn, has attracted good projects. The team’s experience enables the company to pick great projects and attract capital that can be used to execute business or exploration plans. In the past 6 years, the group has had a number of big successes. One of these had almost $2Bn in exits. The Great Bear Royalty is expected to take place this year.

At the conference, Brandon McDonald, CEO of Fireweed Metals announced a major deal that led to the creation of a lot of extra demand and financing. The company was able to upsize and observed a strong performance in stock prices. It is now in a position to execute a big exploration program.

The Angilak Property

ValOre Metals holds the Angilak property, a uranium project based in Northern Canada. The asset has a 43 million pound resource at 0.69% U₃O₈ (Triuranium Octoxide). This makes it one of the six independent Canadian-listed companies that have a resource in place.

The uranium grades are important as the Athabasca Basin is considered the crown jewel of the world when it comes to uranium production. The company’s asset is the highest-grade uranium project with over 20 million pounds outside the Athabasca Basin. The material grades are significantly higher than the global average, which shows growth potential. In the area around the resource, the company has made 10 different discoveries by way of drilling. While the company hasn’t delineated the resources to the inferred category, it plans of publishing news flow on three of the ten discoveries that were worked on in 2022.

The Pedra Branca Project

ValOre has a Palladium-Platinum project in northeastern Brazil called the Pedra Branca Project. The project features a 2.2Moz resource at the surface with >1g grades, comprising 60% palladium and 40% platinum.  The resource has a very low-to-no strip ratio along with several zones of mineralization. The company has a big discovery pipeline that is currently full. This enables it to identify mineralization quickly and it also functions as an add-on to the material available at the surface. The company intends to grow this resource through auger drilling and trenching. It is looking to drill these targets in order to add them to the existing resource.

The company took a long hiatus from its PGE (Platinum Group Elements) project. Its current strategy is to get back on the table and start separating the assets. The company undertook a review process that is currently underway with Kennecott. It went out and pulled the marketplace in terms of the uranium companies in North America and Australia. It hasn’t had a lot of discussions with UK-listed companies. On the Palladium side, the company largely focused on mid-tier producers, precious metal producers, and larger producers in the palladium and platinum space.

The company is interested in talking with various groups and receiving feedback on the most accretive and interesting direction for the shareholders. Jim Paterson, the company’s CEO is a major shareholder who is incentivized by an M&A (Mergers and Acquisitions) transaction. The company is looking to determine the best path to add value to the projects on an individual basis.

Over the course of the next 30 days, the company is looking to create two separate entities that can further maximize the value proposition. It is focused on taking advantage of a market that’s not quite there yet with the uranium equities. The company is looking to have a sufficient scale interest in sustainability to be a relevant player in the game. On the palladium side, the company is looking to quickly fund the project so that it has a clear path in adding lots of ounces and nailing down a PEA (Preliminary Economic Assessment). It is focused on an increased resource base PEA and wrapping the economics around the project in order to make it attractive for either a potential takeout or continued development.

The company believes that it was hindered by the flow through funds as they could only be spent on the ground for the Canada-based asset. Since the company no longer has the flow-through dollars, the company has a lot more flexibility. It has received significant interest from the international market. In fact, the company anticipates that it has the strongest interest among Canadian-listed companies. This can lead to potential synergies, shareholder bases, and different financing methods. ValOre Metals intends to separate the uranium asset and the PGE asset as different companies. Both assets will have separate management teams.

The company anticipates that Brazil offers a lot of potential and it has yet to tap the market. There is a lot of investor interest in mining and metals in the country. Being a venture-listed company with a uranium project isn’t working in the company’s favor. It is looking to devise an ownership and financing strategy that will support the locals by bringing in investors. The strategy will be dependent on the availability of funds.

The company continues to have a massive land package around the unconformity and is largely void of any competition. It has a resource in place, but unlike other players in the market, the company is not constrained by the mineral plane. The asset has a massive upside. The company has collected samples that indicate that the entire base and margin are mineralized with uranium.

ESG Considerations

Nunavut’s population is largely concentrated in small hamlets and villages. This enables the company to communicate with the population quite easily. It has had conversations with selectively brought elders from different hamlets to the site. This helps convey and demonstrate that the uranium mine isn’t currently in operation. Currently, the company has an exploration camp that is located over 200km away from some of the villages. The discussions help the local population understand the importance of environmental stewardship from the company’s purview. Based on the budgets and program size, the company is looking to hire as many locals as possible. As the program grows, the company will be able to hire additional people to bring the operation up to capacity by getting the locals involved. The company is cognizant that it is dealing with the MTR of the Inuit that live in the area. Outside of Nunavut, a company might not know the people they are working with, which can lead to confusion and problems down the line.

Targets 2022 and Beyond

By January next year, the company will have some clarity for the two paths. Depending on the structure, the company will either go for a full-fledged spin-out, which will be a longer process compared to a sale for shares in a new vehicle that could be distributed to shareholders. The latter may or may not require shareholder approval, which can significantly affect the timing. The longer the spin-out process takes, the more likely it is to lower the potential value. Due to this, the company is looking for a quick and efficient strategy that the shareholders can tangibly understand.

The company did not provide a definite timeline for the process, but it anticipates that the process could be completed within two months. However, if the company plans to sell the concept to people across multiple continents, the interested parties are expected to move at their own pace. Once the discussions are finalized, the company will be looking to sign a deal and make an announcement.

Cash Position

ValOre Metals has a little under a million dollars in current cash flow. A major portion of the company’s funds has been expended toward project exploration. It is currently awaiting assay results in Canada and Brazil. The company is currently holding off for two major reasons, the first being the stage of the process, which could potentially affect the capital needs. The second reason is the upcoming news flow, which would help determine a clear financing strategy for both Canadian and Brazilian assets.

To find out more, go to the ValOre Metals website