Global Energy Metals Corp (TSX-V:GEMC) has its sights set on maximizing investor exposure to the battery supply chain through the company’s interests in multiple commodity projects in top-tier mining jurisdictions globally.
Proactive recently spoke with CEO Mitchell Smith who discussed topics such as the world’s transition away from fossil fuels, raw materials in the battery supply chain, as well as his company’s strategy for monetizing Global Energy Metals assets.
Proactive: Governments around the world are pledging to end local sales of gasoline-and-diesel-powered vehicles in favour of those using zero-emission technologies, with some having drawn that line less than 15 years from today. As far as electric vehicles are concerned, what are the biggest challenges to realizing these goals?
Mitchell Smith: I'd say it comes down to three factors: investment; policy; and industry. Even with the recognition that there's a massive need to implement these private, public, and government initiatives, there's a significant disconnect in how we bridge that policy, investment, and industry to build out the lithium-ion battery supply chain. Developing a thriving industry not only depends on the growth of the individual parts of the value chain, but really on building the connections between those individual parts.
I'm starting to see that this is really coming to fruition, with both local and foreign governments putting massive amounts of capital to work to build new supply chains. We've seen that with Canada, with Australia, with the EU and obviously with the US. And I'm seeing the automotive industry and the battery manufacturers really looking to secure long-term supply contracts to ensure raw materials are available. After many years in the space, I'm now seeing private and public capital being deployed into companies such as Global Energy Metals to see these critical metals projects advance. And I think this is just the start of the opportunity for investors and shareholders, and why now is the opportunity to be getting exposure to the sector.
Give us a sense of the current status of raw materials in the battery supply chain, and how do future supply scenarios match up with the demand from manufacturers of electric vehicles and other high-tech products?
The simple answer is that at current rates of production the amount of raw material produced for the lithium-ion battery sector will quickly be inadequate. As we've witnessed with price volatility and growth in some of the key commodities such as cobalt, nickel, lithium and others, that future demand is starting to play into the EV (electric vehicle) sector growth. The level of supply for this is multiple times less than the pace of growth for EV demand. This is only going to be exacerbated as the world transitions from internal combustion to electric, and at the same time there's other new energy technologies that are being developed that require these key ingredients. I think the takeaway from this is that new supply must come online and with that it means investment in the space.
Global Energy Metals is advancing projects in North America, Europe and Australia. What is the rationale behind operating in multiple jurisdictions?
As the saying goes, don't put all your eggs in one basket. And in our case, don't pay for all those eggs to hatch using your own dollars. And this is really the approach that Global Energy Metals is taking to this diversified commodity and jurisdictionally-wide approach to investment into the space. We've purposely diversified not only our commodity base, but we've been strategically selective in the jurisdictions that we are operating in. We have project positions in the world's top mining jurisdictions in close proximity to emerging and existing battery manufacturing capacity.
These are two factors that I think play a really important role in us having a competitive advantage and strategic position in what's becoming an emerging Net Zero economy and because of that there's less need for transportation and material, and we think it can be produced in a cleaner fashion given where we have operations. We've also taken a collaborative approach, where we're partnering with other industry peers, utilizing their regional and technical expertise, as well as capital to advance our projects. And while we maintain project-level exposure, we gain equity exposure in these companies and minimize dilution that would otherwise be necessary to advance the assets. And, like I said, we still hold a diverse portfolio of highly-prospective assets, providing our shareholders with maximum exposure to the lithium-ion battery sector.
It must take a deep and talented team to keep so many projects going. Tell us more about yourself and the people helping you to grow the company.
I'm very proud of the team we've been able to attract and build over the years. The company's management, advisors, the board, and strategic partners all hold decades of combined experience, not only as mining, financial and technical experts, but also as leaders specifically in the lithium-ion battery industry. Take, for example, our partnership with American Battery Metals Technology Company and the team they've assembled from the likes of Tesla, Apple and others. It's relationships like this that we benefit from, and so do our shareholders. So, I feel very fortunate to be able to surround myself with leaders who share my passion and vision for the sector and who are equally as dedicated to building a go-to battery metals company.
Mineral exploration companies typically don’t have a near-term path to cash flow. What is your strategy for monetizing your assets?
Global Energy Metals provides shareholders exposure to battery metals and the overall electrification megatrend. And we're doing that through a three-pillar strategy based on project acquisition, monetization, exploration, and development, as well as peer collaboration. We've been active in monetizing our non-core projects while we move forward with exploration on those that we feel are core to us. And, in doing so, we benefit from the growth of those non-core assets through partners and gaining valuable exposure to not only peer companies but the underlying projects, royalties and the assets they hold.
For example, the COVID-19 pandemic made it very restrictive for travel, and that's to do any work in Australia, especially as a foreign country, never mind those within different states. We were still able to create value from our Australian projects by first selling a small royalty to Electric Royalties for a sizeable share position in that company, and we get the added benefit and exposure to battery metals such as lithium, graphite, manganese, and tin through the 18 or so different royalties representing commodities that we don’t directly hold in our portfolio. Now, further to that, we monetized the Millennium asset through a partnership with Metal Bank, which is an ASX-listed company. They're joint venturing and earning an 80% interest through project spend of $3 million. Plus, we get $600,000 with their share equity.
We did it again in Norway with our Råna Project with an incoming partner called Metals One and their commitment to fund development. It’s a promising, past-producing nickel project in an emerging battery manufacturing hub in Europe. So, it's a proven strategy that we have and one that we feel gives our shareholders a diversified approach to the sector, commodities and jurisdictions, but also minimizes dilution and risk at the same time.
Finally, consumers have done a good job of adopting clean technologies, with electric vehicles selling well, and in many jurisdictions difficult to buy at present. What about governments? What can governments do to ensure not only continued adoption, but also that the inputs required to support clean-tech industries are available, and reliably so?
The world's largest economies are ramping up their climate ambitions and I think they're radically reimagining their economies because of this. Policy is going to play an important role in the development of the battery supply chain and adopting the philosophy that critical minerals are going to get us to Net Zero is paramount. Governments across the globe are now awake and they've realized that security of supply, something that we've been saying for a while now, is vital to their nation's economic and strategic wellbeing. They're now prioritizing this with funding and promise to permit in support of the facilitation of localized, or regionalized, electric vehicle materials supply chain.
I'm not shy in saying that more needs to be done, not just with government but at all levels, but I'll emphasize that it all starts with investment. There's going to be hurdles along the way but the direction is clear, now is the time. And I keep saying this: now is the time to be part of this incredible opportunity. It's a transition unlike we've ever seen before and I think Global Energy Metals and shareholders that follow along with us are going to benefit from it greatly as this electric revolution strengthens.
Contact Sean at sean@proactiveinvestors.com