After the PDAC mining show in March of this year, it was really just a question of which big name would buy into Stillwater Critical Minerals (TSXV: PGE; FRA: J0G; OTCQB: PGEZF), and when, for keen observers. As of Friday, we know: Glencore PLC (LON: GLEN; market cap around $68 billion USD) has become the first major company to come out of the woodwork, kicking off its involvement in the high-potential polymetallic battery metals explorer in the U.S. with a CAD4.94 million investment at CAD0.25, a premium of more than 50 percent to the prior closing price.
Bottom line: Sometimes it takes the market a frustratingly long time to realize the value of a project. Stillwater’s starting disadvantage was certainly that the project did not fit easily into a box. In the beginning, Stillwater was misunderstood as a platinum-palladium project – hence the ticker PGE. Other investors were only interested in the base metals. Both perspectives fail to recognize what is special about Stillwater Critical, because at its core it is about transferring the polymetallic approach of Ivanhoe’s Platreef to the conditions at Stillwater. Glencore understands this and will support this strategy going forward.
After the PDAC mining show in March of this year, it was really just a question of which big name would buy into Stillwater Critical Minerals (TSXV: PGE; FRA: J0G; OTCQB: PGEZF), and when, for keen observers. As of Friday, we know: Glencore PLC (LON: GLEN; market cap around $68 billion USD) has become the first major company to come out of the woodwork, kicking off its involvement in the high-potential polymetallic battery metals explorer in the U.S. with a CAD4.94 million investment at CAD0.25, a premium of more than 50 percent to the prior closing price.
The purchase price relates to 19,758,861 so-called units, which give the buyer the right to acquire an additional 13,831,203 company shares at a price of CAD 0.375 for three years through additional warrants at a ratio of 1:0.7. If Glencore were to exercise its right, the stake would increase to 15.87% without further dilution and Stillwater would receive a further ~$5 million. We have little doubt this will happen.
Basically, the management led by CEO Mike Rowley has been working towards a deal of this kind for some years. Congratulations for such staying power and persistence despite very difficult markets! Last year, Stillwater recruited two top ex-Ivanhoe geologists for its project, Dr. Danie Grobler and Albie Brits – both of whom had been with that company for two decades and were instrumental in the success of its Platreef project in South Africa. This definitely raised some eyebrows, even more so after the geologists confirmed the thesis of the Stillwater district being analogous to the northern Bushveld and the Stillwater West project to Ivanhoe’s Platreef. And the potential for at least five Platreef-style nickel and copper sulfide deposits at Stillwater West has been identified which, given the size of the project, could actually end up being bigger than Platreef. At the latest, the entry of one of the world’s top five mining companies now validates the claimed special status of the flagship Stillwater West project in the USA as a future North American supplier of low-carbon critical minerals. The benchmark is not so much the existing resource, because there are companies that are more advanced. But there may be no other company in the U.S. that offers a comparable polymetallic cocktail of critical minerals of nickel, copper and cobalt, as well as palladium, platinum, rhodium and gold, and that can be scaled so easily and with a team who has done exactly that previously to tremendous success. https://youtu.be/l8JT2SdnzvM
CEO Mike Rowley commented, “There are very few projects in the world, and especially in the United States, that offer the combination of grade and scale in a producing area that we see at Stillwater West.”
The fresh money from Glencore now allows the company to book its drilling campaign for 2023 after – to the frustration of some investors – foregoing new drilling last year to preserve capital given horrendous sentiment in the junior mining space while focusing on other valuable work. In particular Stillwater focused on fully integrating the Platreef geologic model and delivering a significantly larger 43-101-compliant resource. As a result, the 2023 campaign has thoroughly planned, taking into account the new findings of the ex-Ivanhoe geologists with a focus on high-grade nickel sulphide. We are therefore looking forward to the upcoming news and would not be surprised if Stillwater quickly expands its existing resource with a few large drill holes.
Bottom line: Sometimes it takes the market a frustratingly long time to realize the value of a project. Stillwater’s starting disadvantage was certainly that the project did not fit easily into a box. In the beginning, Stillwater was misunderstood as a platinum-palladium project – hence the ticker PGE. Other investors were only interested in the base metals. Both perspectives fail to recognize what is special about Stillwater Critical, because at its core it is about transferring the polymetallic approach of Ivanhoe’s Platreef to the conditions at Stillwater. Glencore understands this and will support this strategy going forward.
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