Power Metals (TSXV:PWM) is a Hardrock Lithium Explorer with Substantial Upside: Ubika Research

    Equity Research Battery Metals | Canadian Small Cap May 11, 2018
    Chris Thompson | Head of Research | Ubika Research Chris@UbikaResearch.com | 1 (416) 574-0469
    Patrick Smith | Analyst | Ubika Research Patrick@UbikaResearch.com | 1 (647) 444-5506

    Power Metals Corp.’s (TSXV:PWM) ambitious 2018 drill program could unlock significant value and results to-date have been successful

    Market Data (TSXV:PWM)

    Price (May 10, 2018) $0.50

    52 Week Range $0.25 – $0.88

    Market Cap (M) $48.1

    Current Shares Outstanding (basic, M) 96.2

    Current Shares Outstanding (fully diluted, M) 118.8

    Free Float 70%

    Average Daily Volume (3 months) 192K

    Last Reported Debt (M)* $0.6

    Last Reported Cash (M)* $2.2

    Total Assets (M)* $10.0

    Headquarters Vancouver, BC, Canada

    Top Shareholders

    Management Insiders 30%

    Marquest Asset Management Inc. 1%

    Management

    Johnathan More Chairman

    Brent Butler CEO & Director

    Cyrus Driver CFO & Director

    Julie Selway VP Exploration

    Rob Dardi Director

    Brian LaRocco Director

    *As of Feb 28, 2018 All figures in CAD unless otherwise stated. Source: Company Reports, Thomson Reuters

    Price Performance

    2018 Drill Targets

    Source: Company Presentation

    Power Metals Corp. (TSXV:PWM)

    Company Description
    Power Metals Corp. (“Power Metals”) is a hard rock lithium explorer focused on its flagship Case Lake property, comprising 38 mining claims for 7,136 Ha, located 100 km north of Kirkland Lake, NE Ontario. An all-seasons access road encircles the property. Although limited to 83 current drilled holes, work-to-date indicates that spodumene pegmatites may occur throughout the property in dykes hosted by domes. There are nine dome targets on the property, and only one has been drilled to-date, the Henry Dome, which hosts the Northeast and Main Dykes. Economic near-surface lithium and tantalum grades have indicated the potential for a significant open-pit hard rock deposit. There has been some historical work on the property, last completed in 2001. This work included only seven drill holes, six channel samples, outcrop mapping, and grab sampling. MGX Minerals Inc. (CSE:XMG) owns a 20% working interest in the property.

    Investment Highlights

    • Ambitious 2018 drill program could unlock significant value. Beginning in April, Power Metals plans to start a mapping program on the domes, which will be followed by a 15,000m drill campaign, comprised of 8,000m in the spring and 7,000m or more in the fall. The Company expects to target six different areas, four of which have not been drilled before. PWM intends to start drilling with the two new spodumene dykes, which were discovered at the end of the 2017 winter drill program. This will be followed by drilling along the 900m strike length between the Main and Northeast Dykes. Further discovery in the other target areas could lead to a significant lithiumtantalum deposit. An active drill campaign should provide many catalysts for the stock throughout the remainder of the year.
    • Results to-date have been successful, with results averaging 1.56% Li2 O and 143ppm Ta and up to 3.02% Li2 O and 735ppm Ta. Highlights from the last batch of results released in January at Case Lake at the Main dyke include 2.07% Li2 O and 214ppm Ta over 18.0m from drill hole PWM-17-40. The winter 2017 drill program comprised of 5,400m over 50 holes on the Main and North Dykes. Additionally, the winter 2018 drill program consisted of 33 holes (3,020m) drilled on the Northeast Dyke. For context, PWM’s lithium and tantalum grades are on the higher-end for hard rock lithium projects. For example, Critical Element’s (TSXV:CRE) Rose FeasibilityStage project located in Quebec is anticipated to mine ~4,400 tonnes per day at an average grade of 0.85% Li2 O and 133ppm Ta for a mine life of 17 years. As well, although significantly larger, Nemaska Lithium’s (TSX:NMX) Feasibility-Stage Whabouchi project, located in Quebec, hosts P&P open-pit & underground reserves of 1.53% Li2 O and 1.16% Li2 O, respectively.

    Financial Analysis

    • Funded 2018 exploration program. On January 15, 2018, Power Metals closed a $3.5M bought deal at $0.50/unit. Each unit comprises one two-year warrant with a strike price of $0.70. PWM also owns 3M shares of MGX Minerals, which represents ~$2.5M at current prices

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