Producing a 43-101 compliant resource estimate is a huge step forward for any junior resource company. For Abraham Drost, CEO of Clean Air Metals (TSXV: AIR), this was an especially satisfying moment because it confirms a new approach to a potentially very valuable platinum group metals deposit.
“I live in Thunder Bay,” said Drost. “The original Current Lake discovery was made in 2008 and all the Thunder Bay geos were aware of that discovery. It is what is known as a magma conduit. As one can see from the updated 43-101 it has significant grade and 1.3 million ounces palladium equivalent Indicated and close to 0.5 million ounces Inferred mineralization.”
The Current Lake deposit and a second conduit, the Escape Lake deposit are roughly 50 kilometers north east of Thunder Bay. The projects are road accessible, close to existing infrastructure and in an area where there are several producing mines including the Lac Des Iles mine owned by Impala Platinum Holdings and the Eagle mine owned by Lundin Mining.
Current Lake is the focus of Clear Air’s potential mine development efforts but the exploration upside potential at the nearby deposit at Escape Lake, formerly owned and drilled by Rio Tinto, is also part of the package acquired from project generator Benton Resources (BEX.V) in May, 2020. Close to C$100 million had been spent on the project by previous owners and the updated 43-101 resource estimate for Current Lake is based on 647 core drill holes (167,500m) as well as a number of airborne and ground geophysical surveys, geological and structural mapping, petrological and baseline environmental studies.
Previous resource estimation was based upon an open pit concept. Perfectly reasonable but economically and environmentally iffy for Current Lake. The waste:ore “strip ratio” at 9:1 was quite high and would have required coffer dams and significant modifications to Current Lake. Leaving aside any metallurgy and recovery numbers, that was a troubled hole to dig before one could expect paying rock.
Clean Air’s insight under the influence of its Executive Chairman Jim Gallagher was to consider an underground ramp mine design. Essentially, what the 43-101 Resource estimate in Clean Air’s January 20th press release suggests is that an underground ramp be sunk to the mineralized zones. This changes the economics of a prospective mine completely as it eliminates the need to take out 100’s meters of rock before hitting the pay zone.
“We raised 15 million dollars for exploration in February 2020 and began drilling in May 2020,” said Drost. “At Current Lake the previous owner had already drilled 700 holes and we had an excellent data set. Our focus was on testing the potential at Escape Lake as well. Our project manager, Allan McTavish, had drilled the earlier holes at the Current Lake deposit for the previous operators and supervised each of our holes at the Escape Lake deposit. This was new work.”
With the updated 43-101 on Current Lake this project moves into the “development” category with a Preliminary Economic Assessment planned for completion in Q2, 2021. At the same time, the Escape Lake project becomes the exploration heir apparent. While Escape Lake was perhaps not material for a multi-national mining company like Rio Tinto, at over a half-million ounces palladium equivalent Indicated and geologically open, it is potentially very material to a small company like Clean Air Metals.
“Both assets will be under the economic microscope,” said Drost.
That microscope will reflect significant strengthening in the markets for the platinum group metals. “Platinum and Palladium are noble metals with catalytic properties,” said Drost. “With the tightening of emissions standards for internal combustion engines catalytic converters have to become more robust. Palladium is the element of choice in catalytic converters.”
The price swings in the Platinum group of metals can be dramatic. A few years ago, platinum was selling at $1500 an ounce, then it crashed to $600 an ounce before coming back to its current price of around $1000. Rhodium, which is present at both Current and Escape Lakes, has risen to over $19,000 an ounce.
The price of platinum itself is being driven by a renewed interest in hydrogen fuel cells where it is used as the anode for the hydrogen process. Hydrogen fuel cell technology is seen as renewable and non-carbon generating – combining hydrogen and oxygen to produce electricity to power hybrid electric motors with the only emission – water. The demand for platinum catalysts for this technology may well replace the dwindling demand for the metal in diesel emission control systems.
All of which is very good news for Clean Air Metals but there is one more piece of the puzzle which Drost explained. “One can see that, along with the Platinum group elements, there is both copper and nickel in the Current and Escape Lake deposits. This is important because one can metallurgically recover those metals by a process known as flotation and when one does, they typically bring the platinum group metals along with them.”
Firming platinum metal group prices, significant grades, 100 million dollars worth of historical work, a new mine plan, nearby infrastructure and “floatable” material all suggest that Clean Air is on the way to building a mine. Now the hard work of verifying the economics of the project needs to be done.
Clean Air Metals is trading around $0.40 with a market cap of just under 51 million dollars. We expect a steady stream of news as the drills turn.