Mawson Resources (TSX: MAW) CEO Michael Hudson on Finland's Place in the Battery Supply Chain & the Major Resource Expansion Drilling Campaign at Rajapalot Project
Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the CEO of Mawson Resources (TSX: MAW)(OTC: MWSNF), Mr. Michael Hudson. Mike, how are you this afternoon?
Michael Hudson: Very well. Morning down under still, but all good. Thanks, Gerardo.
Gerardo Del Real: Well, good morning to you. We're going into 2020. We're closing out the year in what looks like a pretty resilient gold macro backdrop. Gold is holding that $1,474 level as we speak. It hasn't budged much lower.
I'm excited for 2020, I'm excited for companies that are actually exploring, drilling and answering questions. Mawson checks all those boxes. You had some news today providing a resource expansion drill program update. I would love to get the details from you.
Michael Hudson: Thanks, Gerardo. We raised $7.9 million a month or so ago and we've wasted no time in getting the rigs back to site, getting geophysics surveys ongoing. Well, they've started and are ongoing as we speak. Metallurgical work has been ongoing. One rig is drilling one of the three resource areas below the resource as we speak. There'll be another three rigs brought in, in about one month's time when winter conditions allow. So at the start of January.
This is a 15-kilometer program. It's all about the resource expansion in three areas, at least. Palokas, South Palokas and Raja. And the aim is to be in a position at the end of the program, by April, May next year, to start a new resource calculation, which will be the big milestone for the company.
Basically the first resource – which was 420,000 ounces constrained, 480,000 ounces unconstrained – was announced about a year ago. And since then, we put 15 kilometers in beyond that resource. So outside that resource area and extended it, but we haven't updated the resource. And then this program with another 15 kilometers. So, basically the resource had 15 kilometers in it also of drilling that put that resource together. So we're basically tripling the meters in and beyond the resource area come April, May.
Gerardo Del Real: There's a lot to unpack there. Let me start with the geophysical surveys. I know that electromagnetic surveys were very critical in in the understanding of how the gold and the cobalt mineralization was distributed. We talked about that in some detail a few months back, but I would love for you to provide a brief recap of kind of that step change that happened midway through last year where you really got a handle on the controls and the structures. Can you explain that a bit?
Michael Hudson: Yeah. Earlier this year we drilled something like 44 holes and the last 12 holes of that program contained 8 of the best intersections. That was no fluke. That was because we really started to learn more about the system. It became much more predictable as we gathered more data.
Remember, exploration is a scientific pursuit. You collect data, you form a theory and you collect more data. If it conforms to the theory, then the theory holds or you modify the theory. And the theory seemed to hold in this case. And we determine the controls on gold in combination with the electromagnetics.
The gold is intimately associated with a mineral called peridotite, which is conductive. So we can basically light the mineralization up like a Christmas tree as you've heard me mention that term before. And that Christmas tree extends way beyond the limits of where we've drilled, so that gives us an ability, with the geological controls, to target it.
So it de-risks the exploration program, not absolutely because geology in nature is always more complex than we try and simplify it to. However, we have started to really work out this system and that is a key step change as you say.
Gerardo Del Real: I stand corrected and you're 100% correct. That was this year. My mind, I'm ready for 2020, Mike. I think it's going to be a blockbuster year for the better precious metals names in the space and obviously I believe that Mawson checks that box or we would not be speaking.
I would love for you to provide an update on the metallurgical studies that are ongoing, because you and I both know you could have the prettiest rock in a box and if you can't recover any of the minerals or the metals, it's not worth a thing. Right?
Michael Hudson: Correct, correct. It's a key part of understanding a mineral system from the very start and what mineralogies you have and how you can separate those minerals or not separate them. In our case, the two payable minerals will be gold and cobalt.
We're fortunate that there's a publicly-funded entity in Finland called BATCircle, a group of universities and companies and government institutions that's looking to put Finland way up in the battery supply chain space. So they've got 20 million euros to spend in collaboration with companies over this year and next year.
We've got approximately $1 million dollars to research the metallurgy of our deposit. So that's brought a lot of smart people and a lot of very, very interesting data to the table. We know that the goal is free milling. We haven't got refractory gold and we know that the flowsheet will be traditional gravity followed by cyanidation, but the cobalt was all a little bit unknown until relatively recently.
We're fortunate that at relatively coarse grain sizes – so that means less energy – the gold comes free, but so does the cobalt. And we're seeing a lot of recovery of the cobalt minerals into that gravity concentrate also. We're doing a lot of work now. We're doing a lot of metallurgical studies to see how the minerals vary through the deposit, we're moving onto flotation and leach studies also.
All this data will come to provide a flowsheet that we can do some real world tests from start to end. That's probably 6 to 12 months away. We'll be starting to run those real world tests on a flowsheet that's been designed from all this great data that is very necessary to understand before you say, “Well this is what a process part would look like and let's run the tests around that and then try and optimize it.” So a hell of a lot of work, a lot of money, a lot of time, a lot of smart people being involved, putting together all that data for us.
Gerardo Del Real: You mentioned Finland's, and by extension of course Europe's, almost manic push into establishing an independent battery supply chain. Right? It's so China dominated that the cobalt really has become a very strategic metal for Mawson Resources. Can you explain that a bit for people that may be new to the story?
Michael Hudson: Sure. So this is a gold deposit that has a byproduct that will be cobalt. That in-situ value today in terms of the breakdown between gold and cobalt is about 80-90% gold and 10-20% cobalt. So it's clearly driven by the gold, but there is a cobalt kick, if you like, that will add economically but also add strategically, as you mentioned, to the company and the project.
It's one of the few compliant cobalt resources in Europe. Finland is very much ingrained in the cobalt supply chain. In fact, they refine half of the world's non-Chinese refined cobalt. So 80% of cobalt in the world is refined in China, 20% outside of China, half of that comes from Finland. But they don't really mine a lot. I think they mine 0.4% of the world's cobalt. So there's a big gap there.
We can help fill that gap, if you like, from a point of view of providing ethically sustainably sourced minerals to fill that supply chain that Europe is chasing and almost starting to look like they will compete with China.
Now it's been a lot of time and money again in Europe and there's billions of euros that have been spent to position Europe into this place. Then with all the car makers, they're really heading down the electrification path with gusto, it's amazing how it plays out into the natural resource space, where we are, at the very start of the business.
And of course, without cobalt you can't have your lithium-ion batteries and it's a key component. And a majority of the cobalt from the world comes from the Congo today, which has some questions around its sustainability and ethical supplies. People don't like sitting in electric cars or having phones where they know that a child's been forced to mine for those minerals. It's interesting how the world is changing.
Gerardo Del Real: Well said. I have to believe if you're a Mawson shareholder, you're probably pretty excited. There is a ton of news flow. At the very least, the next two quarters we'll see a lot of very, very important news.
You have drilling underway. It's aggressive. There will be four drills turning here within the next month or two. I can't think of a better backdrop for Mawson Resources, especially if we can get gold to push through that $1,550 level that seems to be right around the corner. Mike, anything you'd like to add to that?
Michael Hudson: That's a great summary, Gerardo. We've got the cash, we've got the drills turning, we've got the resources that are getting bigger. Yeah, this is a key key program for the company, culminating in a resource where we'll see triple the drill meters from the earlier resource we published a year ago into the deposits that we're finding. So a very, very exciting time.
Gerardo Del Real: Excellent. Mike, thank you so much for the update. I appreciate it.
Michael Hudson: Take care, Gerardo