February 01, 2023

Kicking off the new year right, Clean Air Metals to advance its Thunder Bay North Critical Minerals Project

I can’t say that I know a lot, if anything, about royalty or streaming deals for hard rock miners. However, based merely on historical transactions I’ve read along the way, I think it seems like a pretty big deal when a company can raise C$15 million for a Net Smelter Return (NSR) royalty on a project that only has a Preliminary Economic Assessment (PEA) completed thus far. Am I missing something? I’m probably missing a lot of things, but I do know that any junior miner is ecstatic to raise C$15 million in one deal from one source. That kind of working capital is the lifeblood of small explorers, and goes a long way towards drilling up and expanding any existing resource, doing a Pre-Feasibility Study (PFS) and generally allowing a Company to continue going about doing what it does best rather than stressing about where the next source of funding is going to come from.

On December 19, 2022, Clean Air Metals Inc. (TSXV: AIR | OTCQB: CLRMF) announced it had closed the first tranche in the amount of C$10 million of a C$15 million mineral royalty financing agreement with Triple Flag Precious Metals Corp. (TSX: TFPM | NYSE: TFPM). The agreement features a 2.5% NSR mining royalty for all mineral products produced on Clean Air’s Thunder Bay North Critical Minerals (Platinum, Palladium, Copper, Nickel) Project in Northern Ontario, Canada. If something seems familiar about this deal, readers may recall Triple Flag’s 3.5% NSR agreement with the nearby Talon Metals Corp. (TSX: TLO) in 2019, who has since struck agreements with Tesla for battery metal supply and could receive US$114 million of US government grants towards project construction and execution costs for Talon’s Battery Minerals Processing Facility in North Dakota.

Now I’m not saying that Clean Air Metals is on its way to following in the footsteps of Talon Metals, but it does give you an idea of what the possibilities out there are for mining companies focused on important battery materials. And Clean Air Metals has a pretty good portfolio of exactly the kinds of metals that EV battery and car manufacturers are looking for these days. The Company’s flagship asset, the 100% owned, high-grade Thunder Bay North Project, a platinum, palladium, copper, nickel project is located near the City of Thunder Bay, Ontario and the Lac des Iles Mine owned by Impala Platinum. The Thunder Bay North Project hosts the twin magma conduit bodies which host the Current and Escape deposits forming the basis for a PEA filed January 12, 2022.

The Lac des Iles Mine is noteworthy because Clean Air Metals Executive Chair Jim Gallagher was the former CEO of North American Palladium Ltd. which owned the Lac des Iles Mine prior to the sale to Impala Platinum in December 2019. Jim and his team are credited with the mine turnaround and creation of significant value for shareholders. Now he, and COO Mike Garbutt, lead an experienced technical team who are using the Norilsk magma conduit stratigraphic and mineral deposit model to guide ongoing exploration and development pre-feasibility studies for a low-carbon, all-electric sustainable mining operation at Thunder Bay North.

Proceeds of the Triple Flag royalty financing will be used: (i) to finance the last installment payment of C$1.5 million cash to earn a 100% interest in the Thunder Bay North Project and the Escape Project, now collectively called the Thunder Bay North Critical Minerals Project; (ii) to complete the Prefeasibility Study for the Project pursuant to National Instrument 43-101 under supervision of Chief Operating Officer Mike Garbutt, P.Eng.; (iii) to advance environmental and regulatory permitting activities; and (iv) to advance further exploration activities. The Company plans exploration drilling of high-value massive sulphide targets in Q1 of 2023, with a mineral resource update in Q2 and delivery of a PFS and 2P mineable reserves by Q4.

To summarize, Clean Air Metals has: experienced management…check; area geological knowledge…check; ample working capital…check; and a robust PEA as a starting point…check. This C$31 million market cap company appears to be well positioned to succeed going forward but there is still a lot of work to be done. At least they can focus on the task at hand for the next few months without the pressure of worrying about that next capital raise.

Disclaimer: The author of this post may or may not be a shareholder of any of the companies mentioned in this column. None of the companies discussed in the above feature have paid for this content. The writer of this article/post/column/opinion is not an investment advisor, and is neither licensed to nor is making any buy or sell recommendations. For more information about this or any other company, please review their public documents to conduct your own due diligence. To access the InvestorIntel.com disclaimer and other important legal notices, click here.

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