Company Interview / Pan Asia Metals' copper move

Key Topics:

Acquisition of the Rosario copper project by Pan Asia Metals (ASX: PAM)Global supply and demand situation of copperUpdate and future plans for Pan Asia Metals' lithium projects

Paul Lock, MD of Pan Asia Metals (ASX: PAM), discusses the acquisition of the Rosario copper project, located in one of Chile's premier copper producing regions. Paul indicates this is not a pivot from their lithium projects but a strategic move to diversify. He describes the Rosario project as an excellent opportunity due to its incredibly high grades that set it apart in the copper industry. In parallel, they have arranged a series of tests to solidify their understanding of the asset.

Lock also takes into account the global copper situation, noting the rise in copper demand in the face of dwindling supply, especially in Chile. He expresses confidence in the long-term opportunities within the copper industry, amid global electrification and the rapid growth of AI. While acknowledging the competition in the copper market, he reaffirms Pan Asia Metals' (ASX: PAM) focus on high grades and achievable projects to remain competitive.

Furthermore, he updates on their lithium projects, revealing that while the global market is currently fluctuating, they remain steadfast in their operations. Emphasising the advantage of being located in a low cost operating environment like Thailand, Paul envisions their strong position when the market eventually bounces back. He alludes to a potential collaboration with strategic investors to elevate their projects further. Despite recognising the unpredictable investment environment, Lock is confident in the company's ability to attract investors with high-quality assets.

Full unedited transcript:

0:00

Let's get into the small caps again. Now. Critical metals explorer and developer Pan Asia Metals has acquired the Rosario Copper project in one of Chile's premier copper producing regions. To get the detail, Managing Director of Pan Asia Metals, Paul Locke joining us now. Paul, welcome to OSB. Thanks for joining us. So why are you taking this option then to

0:23

well, obviously you've also got some lithium projects on the go. Why the pivot to copper, particularly in Chile?

0:33

Well,

0:34

Andrew, we we don't call it a pivot. It's a strategic move, OK. And when you see a good asset

0:41

and a good opportunity, you've got to take it and that's what we see in Rosario. So we've got two very good lithium projects. But as we can see in the broader market, shareholders aren't that crash out on lithium at the moment. We've been looking at copper in Chile for a long time and this asset came up. It's got incredibly high grades, some of the highest I've seen in the PE group for a long time. And we had to make a move on it. And I think it's going to be very good for our shareholders in the company. All right. So what's the plan then given this acquisition in terms of development?

1:15

Well, right now, we've only got service surface assays. So what attracted us to the asset was a broad suite of surface assays, rock chips. When I say rock chips, I mean two and 3K bags which have been assayed. And of the 89 samples, 73 averaged 2.13% copper which is really good and 60% of those samples averaged 3% copper and nine grammes a tonne silver. So this is a a classic Manto style copper silver project and those sorts of grades make you sit up and have a good look.

1:54

The next stage we're arranging a inverse polarisation geophysics, IP geophysics and we expect that to start pretty soon. That'll identify or confirm what we've identified as walk up drill targets. And then we should be on our way later this year drilling some holes and I think we'll produce some really good results. All right. Well, that sounds exciting. And particularly as you say, given you also have some lithium projects. So before we get to that point,

2:22

any other copper projects you're considering at the moment or is this your focus?

2:26

Look,

2:27

let's take baby steps. We've been in Chile for a while. We used to look at copper a long time ago, back before Pan Asian metals became Pan Asian metals. But what we want to do is just build the foundations in this asset. We're always on the lookout, but at this point we want to just focus here. What's your view on copper at the moment in terms of that? What we're seeing globally with supply and demand, the

2:54

copper price has come off quite significantly of light. But of course yours is the longer term play given the

3:01

decarbonisation that we're seeing, the electrification of the planets. How bullish are you on copper?

3:08

Well, I'm very bullish and actually when we look at assets, I'm very bullish on lithium and copper. I think the long term opportunity is significant, particularly in copper and in Chile. What we've seen is with the say the 25 largest producers in Chile, seventeen of those, their copper production has declined mainly through grade deterioration, but they're all bodies are running out. There's only been three new projects in the last 10 years, three significant projects. And this is a reflection of what's happening globally. Yet we've got electrification, we've got AI which is using up a lot of copper and then electric vehicles and energy. And we we're sort of reaching a tipping point where copper

3:59

will or, or demand will overtake supply in a couple of years. And we want to be set up for that. But it's not just about the demand supply, it's also about where you think it can be on the cost curve. And that's the most important thing in a project. So

4:13

we see a lot of our peers chasing the biggest copper project, but the grades might be very low. What we want to do is be nimble, chasing high grades and something that's doable where the CapEx won't be extraordinarily high for us.

4:26

So Paul, can you bring us up to date then with what's going on with your lithium projects? Where are you at at the moment given? Yeah, of course, we've seen this globally. Obviously many lithium companies have put their operations on hold essentially. Yeah.

4:40

Yeah. Well, our company's philosophy, our strategy is to focus on projects which are doable and which in low cost are in low cost jurisdictions. So the lithium projects we have are very good, But at the end of the day, the market is the market, and I can't do much about that. But the idea is that we will continue doing light work on our projects. So we've got 3 prospects at our RK Lithium project in Thailand. And we just announced on Monday nearly three times increase in the footprint of one of the higher grade sections of that project. Thailand's a very low cost operating environment. Our market is right there on our doorstep. The market will change and when it does our project, the position or our company's position to take advantage of that. But in the meantime, the majority of our expenditure will go into

5:33

into copper. Further to that, we are actually talking to strategic investors and the idea is to have them come in sooner rather than later and start to invest in our projects too. All right, that was my next question. Just how your funding is looking at the moment.

5:48

Well,

5:49

the reality is we're all cash burners and explorations like biotech or tech.

5:56

Every dollar we spend, we want to create more dollars and hopefully a lot more dollars.

6:01

So the so we, we can make a choice. We can sort of batten down the hatches, so to speak and not do anything. But I think my shareholders want to see the company continue to grow. So our objective is to,

6:15

as much as we can, focus on doing what we do best and that's generating good assets and building them. How difficult is it to attract new investors at the moment, given what we're seeing more globally at the moment? Obviously, there's a lot of uncertainty there. And you take a look at commodity prices, once again, uncertainty that you're having a difficulty in attracting new investors.

6:38

Yeah, actually, I might step back. You did ask me about the copper price. It has pulled back a little bit, but inventory levels on a historical basis are incredibly low, even though they've increased in the last,

6:52

you know, or been reported to increase in the last few weeks. But when it comes to investors, investors are looking for good solid assets and we are at the riskier end of the spectrum, but there's still a risk profile. So

7:06

I think we've gone through a bit of a route in the market. The number of ASX listed companies in the material space is reduced from over 900 to around 700 now in the last say six months, seven months. And what we're seeing, it's a bit of a clean out. Investors aren't supporting those really speculative plays, but it comes down to asset quality and if your assets are high quality, you will get the support.