Clean Air Metals (TSXV: AIR) will begin trading at today's open and NIA believes it will quickly become the #1 hottest IPO of 2020. 126,299,266 shares are issued and outstanding.
AIR is being led by an all-star management team including its Executive Chairman Jim Gallagher who most recently was CEO of North American Palladium (NAP) when it was acquired on December 17, 2019 for CAD$1 billion. NAP was the owner of the Lac des Iles Palladium Mine in Thunder Bay, Ontario, which is located adjacent to AIR's Thunder Bay North/Escape Lake project. At the time of NAP's sale, the Lac des Iles Mine had a total measured & indicated resource of 72.982 million tonnes grading 2.14 g/t palladium, 0.213 g/t platinum, 0.16 g/t gold, 0.06% copper, and 0.07% nickel. Based on current metals prices, NAP's measured & indicated resource had a total palladium equivalent grade of 2.55 g/t and contained 5,987,543 oz of palladium equivalent. This means that NAP sold for CAD$167 per oz of palladium equivalent in the ground. If we subtract CAD$300 million from NAP's sale price to account for the estimated current value of existing infrastructure, NAP's high grade resource was valued at CAD$700 million or $116.91 per oz of palladium equivalent in the ground.
The Thunder Bay North portion of AIR's project contains a historical indicated resource from 2012 of 9.829 million tonnes grading 1.058 g/t palladium, 1.125 g/t platinum, 0.076 g/t gold, 0.275% copper, 0.188% nickel, 0.046 g/t rhodium, 1.653 g/t silver, and 0.0143% cobalt. Based on current metals prices, AIR's indicated resource has a total palladium equivalent grade of 2.47 g/t and contains 780,543 oz of palladium equivalent. AIR's indicated palladium equivalent grade is only 3.14% below the palladium equivalent grade of Lac des Iles. If NAP sold for CAD$116.91 per oz of palladium equivalent in the ground and we reduce this amount by 3.14% it would equal CAD$113.24 per oz of palladium equivalent.
A valuation of CAD$113.24 per oz of palladium equivalent would value AIR at CAD$88.39 million or $0.70 per share (based on Thunder Bay North's historical resource from 2012).
AIR is going public with approximately $10 million in cash and in the upcoming days AIR will launch a major drilling campaign at the Escape Lake section of its property, which was previously explored by Rio Rinto and contains what could potentially be the highest grade deposit on the entire property.
AIR's phase one drilling at Escape Lake will consist of 13 holes targeting the deposit that was discovered by six Rio Tinto drill holes in 2011-2012. Rio Tinto's six drill holes each intercepted between 109 and 274 grammeters of palladium equivalent and averaged 207.26 grammeters of palladium equivalent.
As a rule of thumb when drilling for gold a drill hole of 25 grammeters of gold or higher is economically significant while a drill hole of 100 grammeters of gold or higher is exceptional. With palladium currently priced 16% higher than gold, Rio Tinto's six Escape Lake drill holes averaging 207.26 grammeters of palladium equivalent is the same as averaging 240.42 grammeters of gold equivalent, which is 2.40X the level that most investors consider to be an exceptional drill hole!
On average, Rio Tinto's six drill holes intercepted 39m of 2.89 g/t palladium, 2.25 g/t platinum, 0.20 g/t gold, 1.012% copper, and 0.452% nickel!
If AIR's 13 drill holes are able to successfully confirm Rio Tinto's extremely high grade discovery, it will likely add significantly to AIR's total palladium equivalent resource of 780,543 oz while simultaneously increasing AIR's total indicated resource grade of 2.47 g/t palladium equivalent (based on current metals prices) to a level that far exceeds Lac des Iles!
Following AIR's phase 1 drilling of 13 drill holes at Escape Lake, AIR will launch a phase 2 drilling campaign at Escape Lake of 20 additional drill holes! AIR believes that the drilling it has planned for Escape Lake will successfully double its total resource tonnage from 9.829 million tonnes up to 19.658 million tonnes. Therefore, when AIR files its maiden 43-101 resource estimate we expect its total palladium equivalent resource size to more than double from its historical resource of 780,543 oz of palladium equivalent to over 1.56 million oz of high-grade palladium equivalent!
If AIR successfully establishes a high-grade 43-101 resource this year of 1.56 million oz of palladium equivalent and the market values this resource at CAD$113.24 per oz of palladium equivalent, AIR will become a CAD$176.65 million company, which would value AIR at $1.40 per share!
Yesterday, NIA's President Gerard Adams added 90,000 shares to his Benton Resources (TSXV: BEX) position. BEX owns 24,615,384 AIR shares and a 0.50% NSR royalty covering AIR's entire project. We consider BEX's 0.50% royalty to be equivalent to owning an additional 5% of AIR's equity, which would be equal to BEX owning an additional 6,314,963 shares of AIR for a total AIR position of 30.93 million shares. We consider BEX's non-AIR assets alone to be worth a minimum of $0.10 per share.
Past performance is not an indicator of future returns. NIA is not an investment advisor and does not provide investment advice. Always do your own research and make your own investment decisions. This message is not a solicitation or recommendation to buy, sell, or hold securities. NIA's President has purchased 1.14 million shares of BEX in the open market. He intends to sell in the future for a profit but could also add additional shares at any time. This message is meant for informational and educational purposes only and does not provide investment advice.
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