Bizarro World Podcast,
with Nick and Gerardo
Oct. 17, 2022
This episode was recorded “live” at the New Orleans Investment Conference on Friday the 14th of October in a workshop entitled “Green Metals: The Revenge of the Miners Is Near.” It covers topics including why current EV and carbon reduction targets can’t be met without significantly increasing the mining of certain metals, including lithium and uranium, and how to profit from it with three companies that we’ve invested in privately and continue to cover in our premium publications.
1:12 Multiplying Critical Metals Mines Means Multiplying Money
12:13 A 3,000% Lithium Stock
19:20 A Nevada Lithium Speculation That's Drilling Now
24:25 A Well-Funded Uranium Junior
35:19 A Tiny Copper Stock to Watch
Gerardo Del Real: First off, thank you, everybody, for competing with the bar, which is what we're doing right now. So I appreciate you all being here. I am Gerardo Del Real along with Mr. Nick Hodge. This is our therapy session that we call Bizarro World, number 190, so you can do the math on how many weeks we've been at this. Listen back in 2017, 2018, Nick and I had a beer and decided we were going to start a podcast. We speculated that the world was going to get more volatile and that it would be interesting to have a platform where we sat and shared our thoughts. Now, we won't be sharing our social, political, or apolitical views today, but we will most definitely be getting into the markets.
I'm going to go ahead and assume that most of you have been or seen a presentation today that begged you to just wait for better markets because the share price is going to be much higher soon. Right? And so the premise of our conversation today is about making money while that happens.
Multiplying Critical Metals Mines Means Multiplying Money
And so I say that to say this has been one of our better trading years from January through mid-October, and it hasn't been because we've been right on everything. It's been because where we've been right, we've been very, very right. And so when I hear conversations about gold having further downside, and I believe that's absolutely possible. I believe gold could break through $1,600, maybe flirt with that $1,575, $1580 level. When I hear conversations about well just wait for the Fed to pivot, well that could be in a month. It could be in two months. It could be in six months. And if you have six months to wait to lose more money then this is probably not the conversation for you because we want to talk about how to take advantage of mega trends that are alive and happening today. And so with that being said, I think let's get to your beautiful little slide show here, Nick, that we put together here on the go.
Benchmark Intelligence is by far, in my opinion, the best analyst as it relates to critical metals. They've been doing this for years. They have a team that's absolutely topnotch and they know everybody in the space. So when I hear a group like Benchmark Intelligence tell me that they believe that lithium has to scale by a factor of 20 by 2050 in order for automakers to meet their current stated goals — not future projections, their current goals. And I look at the lithium price, which is up some 500% this year. Everybody's mad at gold. Everybody's mad at silver. Everybody's worried that mortgage rates are above 7%. There's bull markets that are active right now that you should be profiting off of and anybody that tells you otherwise isn't paying attention. The lithium price is going to continue to surge because of the demand.
Benchmark believes that by 2040 all the lithium that was mined from the 42 mines that are active right now in the world last year will be enough for one month of supply in 2040. And so I tend to pride myself on being a really simple guy. I don't pride myself as being the smartest guy of the room ever. I don't think I'm smarter than anyone else, simple guy with a simple premise. If lithium is up 500% and one of our top picks this year is up some 3000%, 4000% on that pick. We helped finance it at C$0.16 cents. It ran to a high of C$7.40. This is all within the last 12 to 15 months. And I believe that company, and I'll share it with you near the end, has the potential to be a $25, $30 company this time next year. And then I think as a potential with the right side of conditions to be bought out at $50.
Now that sounds like a lot. I've been saying this since the company was $1, $2 and I got a lot of the crazy looks that I'm getting right now and all that's happened since is the chart going up and to the right. And look, a lot of things have to fall into place for something like that to happen. It's great to have gold. You should own some gold. You should own some silver. It's a great hedge. It's a great wealth preserver. I actually believe it's done a pretty good job, if we consider that the dollar index, it's at 113 today. It hit 115 here recently. Gold has held in pretty well despite that. But when you have a market that's up some 500% just this year, like the lithium spot price and continues to make new highs, no matter what Goldman Sachs tells you, you might want to do a bit of due diligence there and see if there's an opportunity to profit from a trend that the smartest guys in the room, and I believe the smartest guys and gals are Benchmark Intelligence say is going to run until 2050.
That is a mega trend that gives you a lot of runway and it is a lot easier to speculate in a very risky sector like the resource space when you have a mega trend that is going to continue to accelerate. And, by the way, has bipartisan support, not just here in the US but on a global scale because all these we're going to be net zero on the carbon footprint goals, it sounds great. It markets really well. It communicates to the citizenry that you care. But the bottom line is if you don't have lithium, if you don't have copper, we'll talk about uranium a bit here in a bit, you're not going to achieve that. And so you have bipartisan support for a commodity that is red hot, demand that is surging. And so our job is to try to find companies that have projects that are being de-risked and that take as much risk — because there's always a lot of risk in this space — out of the equation. It's much easier to do that in a sector that's going to continue to trend higher where demand is trending higher than it is a sector where everybody's hoping that the guys that caused the recession and the inflation and told you the inflation didn't exist, we're hoping that they come back and save the day again.
Nick Hodge: So Gerardo will get into companies in a second. Let me set the stage for the name of the talk and why we're getting to a point where the revenge of the miners is near. So that's a line that comes from Robert Friedland. He's got a couple of companies in the copper space and he's been talking for a while about how in this transition to the electrification of everything and the electrification of cars, for example, we just don't have enough resources to meet the demand that's already there, let alone the demand that's going to come in the next 10 or 15 years, which is sort what Gerardo was talking about there. So I spent a lot of time in the renewable energy space. It's where I started writing about over 13 years ago. And there was a lot of pie in the sky ideas. Gerardo knows I'd love to talk about the solar roads.
Gerardo Del Real: Solar roads.
Nick Hodge: We were going to pave the roads with solar panels and we were going to have wave energy and we were going to do all this stuff. And none of that is really feasible. Right? It doesn't work out. What is feasible is solar panels, sure, wind turbines, absolutely, and lithium batteries. And while I was hearing about solar roads in 2007 and 2008, now I hear about there's always going to be the next great battery that's going to replace lithium or we're going to have this forever battery or whatever is the marketing that you're seeing on a week to week basis.
Gerardo Del Real: Elon is dying every week.
Nick Hodge: Yeah. Exactly right. Elon Musk is dead. Tesla is going to go away. I don't buy into any of that stuff. The lithium battery is going to be around for at least 15 years and there's no way to replace the lithium. So you can reduce some of the other metals that are in the anode, for example, like cobalt, and you can change the chemistries, but it's going to be the lithium battery that the world is committed to producing for the next 15 years. And you can't recycle the stuff. I mean you can, but it's not going to penetrate anymore than five to 10% of the needs we have for lithium in the next 15 years. So let me run through a couple of slides and I'll give it back to Gerardo who's going to do most of the talking. Here's one from the IEA.
They're talking about the kilograms per megawatt hour you're going to need for electric cars, conventional cars, and then all these renewable energy technologies.
And it's not just lithium and it's not just copper. You can run down the entire list there and see how many kilograms per megawatt hour each of those technologies needs. And then you get into how is that going to go in the next couple of years?
And this is a chart that shows revenue generated from mining coal now relative to all those metals that were on the previous slide and how the revenue is going to transition from coal to these other metals.
And you see clearly by in the next 15 to 18 years that more revenue is going to be generated mining these so-called green metals than coal. And the world just needs to realize that. Right? It's still going to be mining. Climate detractors talk about strip mining coal and how bad it is and raping the earth or whatever the term is that they use.
And this is still an extraction business. Right? You still have to extract all these metals from the earth. And that's why we talk about the revenge of the miners in the green industry. Because I mean the prices are through the roof. Like lithium prices have gone up four to five x just this year. I mean lithium carbonate's trading for $71,000 a tonne, you all time record high prices. And you'll see a phase where copper's going to go back to five and $8 and the price of these metals is going to go up for a long time to come. And the main pinch point, the main problem is essentially China.
On the left are the countries that mine these metals. And on the right is the countries that process these metals. And it's very, very concentrated. I mean for cobalt, it almost entirely comes from the DRC. For the rare earths, it comes almost entirely from China. And that's just on the extraction side. On the processing side, China completely dominates all the processing. There's no refiners of any of these metals hardly outside of China. And it's going to be a really big problem for us to meet these targets. A couple of weeks ago I read that California was going to ban the sale of gas cars in 2030 or something like that.
Gerardo Del Real: What happened the next day, Nick?
Nick Hodge: And I'm thinking to myself, “The hell you are.” The next day they announced you can't plug in your electric car because they're going to have rolling blackouts in California. It's like, come on.
Gerardo Del Real: You can't make this stuff up.
Nick Hodge: So all that to say that there's going to be a revenge of the miners that are going to profit precipitously from this transition that has to occur to get the extraction and the processing out of just a few countries and just a few companies.
So I know that's a busy slide, but the most important part is at the bottom, the IEA is saying that just to meet the demand that's projected now by 2030, you need 41 new nickel mines, 11 new cobalt mines, in the higher case scenario, 60 new nickel mines, 17 new cobalt mines. And there's a number out there that we need similar amounts of new lithium mines and...
Gerardo Del Real: 234 by 2050 actually.
Nick Hodge: There you go. And what they don't understand is that mine takes at least 10 years to come online from discovery to an ultimate extraction when you have to de-risk it and do a PEA and a feasibility study and then the permitting. I have a six year old daughter and I've been involved in companies that have been in the permitting process for six years — since before she was born. And so to get this amount of new mines online by that time is honestly impossible. And so the price, at least in my mind, has to rise to incent the companies and the countries to bring the stuff online. And that's why they're rising like they are now.
A 3,000% Lithium Stock
Gerardo Del Real: If gold was $6,000 today, you would all be rushing to talk to every single company here with ‘gold’ in its name. Correct? Of course you would. Because you would think there's probably some money to be made there. What do the bros say? To the moon. You just ride the trend to the moon. Right? That happened in lithium this year and it's as if no one really noticed or very few people noticed. And so when we talk about an opportunity like the company that will talk about it in a bit. Nick and I and a few other close friends help finance this company at C$0.16 cents just over a year ago. A lot of luck involved, it went on to make a massive discovery, a lithium discovery, in a great part of the world in Quebec, which I think is going to end up being one of the, if not the, biggest hard rock lithium deposits in the world within the next two years.
So that company went from C$0.16 and that had C$0.25 warrant by the way to, again, a 52 week high of C$7.40 here recently. I think it closed today somewhere around the $6.15 range. So when you look at that, you see 3000%, 4000% gains in a year. And then you sit there and you start to think, I start to myself at least, I easily see this company being a C$20 to C$25 company next year. And then you start thinking about what those returns are. You can make nine other very horrible picks and still be okay in your portfolio. Right? And so what I try to do is if I'm going to allocate capital to a risky sector like the junior resource space, I like to shoot for big wins. And look, it's an exception to the rule that's not going to happen every single year, those kind of returns.
But all it takes is one to hold you over for a couple of years until you find the next great idea. And in the case of this company here, Patriot Battery Metals (TSX-V: PMET)(OTC: PMETF), again, I absolutely believe the best is yet to come. It's a company that's worth half a billion dollars today. It's got a market cap of C$500 million.
It's got a land package that's 100% owned. It's currently only explored roughly two and a half kilometers of a 50 kilometer trend. The grades are fantastic. We talk about de-risking projects and the checklists that we go through when we look at a company in these tough environments, these tough markets that we have right now. The company just closed a C$20 million financing. All of it's going into the ground to explore this 50 kilometer trend. It did so at a price of C$13.33 cents while shares traded in the C$6, C$7 range.
If they never find another tonne of lithium, I think the resource today, which they don't have a 43-101 compliant resource because, again, it's a relatively new company. But I think within the next six months we'll see a resource somewhere between the 125 million tonne and 175 million tonne range of roughly 1.2% lithium and a tantalum credit. That would put it in the top five hard rock lithium deposits in the world. And that's only after a year plus of exploration. I'll give you the very optimistic scenario and I have a very close friend of mine that likes to tell me I'm too much of an optimist. And he says that to me because he's an optimist with experience and he's probably right. But I see a scenario where, and some of this is already happening, automakers are having to go to exploration companies and having to go to lithium producers and paying very steep premiums to secure agreements where they're buying supply directly because they don't have the expertise.
Some of them barely have the expertise to produce a car, let alone actually mine lithium, and then develop their own critical metal supply chain when it comes to lithium. So they are going to have to rely on the expertise of the companies that are already doing this. And nothing says, come and talk to me like a big robust, scalable resource that has great metallurgy, great mineralogy. The recoveries early on are fantastic, huge exploration upside. This company's right next to hydropower. They could bill themselves as producing green lithium. Greta would throw sleepover and a party. Everybody would be happy. And can you imagine Tesla coming out and saying, hey, we've partnered with a company that's going to help us produce green lithium for all of our North American vehicles.
I mean it's a beautiful scenario. Sure it's optimistic. But again, if I'm wrong, and they never find another ton of lithium, I think the resource now as it stands is between 125 to 175 million tons. And that would merit a market cap using peer comparables of roughly C$20 to C$25 a share. And again, as I mentioned, they have 50 kilometers of trend. They've explored two and a half kilometers of trend and they have C$20 million that's all going in the ground here over the next six to nine months to go explore some more of that. So I would say Patriot Battery Metals is absolutely should be a top pick and a part of everybody's speculative lithium portfolio. And I've been saying that since C$0.16 and so far so good. Right?
Nick Hodge: Yeah. Caveat. We eat our own cooking. So we're shareholders in these companies and then they sponsor some websites that we publish. But nonetheless, we're obviously incredibly bullish. And just to punctuate some of the stuff Gerardo was saying, a hundred to 150 million tons is a giant mine. Some of the most well known and respected lithium executives in the world are calling this one of the most exciting lithium discoveries, potentially one of the biggest in the world, new biggest discoveries. A hundred to 150 million tonnes that Gerardo just referenced is four to five to six times larger than some of the mines that are already going into production. Mines that are going into production have 25, 30 million tonnes of lithium ore. This is an order of magnitude bigger. And so this is a pretty big deal.
What did I want to plug in that you missed? They had a chairman come from a company in Australia that took Pilbara, which is one of the world's biggest lithium companies from I think a couple of hundred million dollar market cap to a $15 billion market cap. He just came and joined this company as the chairman and he took his payment in options. So while the shares were trading at C$6, he took his payment in options priced at seven and C$9. So if that gives you a sense of where he thinks the shares are going, he can't even make money unless it goes up another $9, another, what, 50% from $6. So it's a pretty big deal. It's a very big discovery. It's an exciting discovery and I don't think you've seen anything yet as it comes to lithium in Quebec.
Gerardo Del Real: Well said, Mr. Hodge. What do we got here?
A Nevada Lithium Speculation That's Drilling Now
Nick Hodge: Nevada Sunrise.
Gerardo Del Real: Nevada Sunrise Metals (TSX-V: NEV)(OTC: NVSGF). Now they finally changed the name, which we've been calling for quite a bit. So now we're going to get more speculative. With Patriot Battery Metals, I have a pretty good grasp of the resource that's already there. My worst case scenario is I think 125 to 175 million tons on what's been drilled. And I think a C$20 to $25 share price or a two to 3 billion market cap valuation is already baked in. The market hasn't realized that yet because I don't think they've done the math. And frankly, I think, the discovery caught a lot of people off guard. That is a much safer speculation. And all of these are speculations, by the way, than this next company, which is at a much earlier stage. The company was recently named Nevada Sunrise Gold. It's got a gold asset and we'll talk about that in a bit that I really like.
But it recently made a discovery in Nevada of lithium in clays. Now, I don't have to tell you that Nevada is a great state to work in. If you're a miner, an explorer, a company that's looking to extract lithium, there's a lot of infrastructure that's set up and a lot of advantages, permitting wise, that come with being in Nevada. And so when a few months back, the company made a lithium discovery in Nevada, it caught the market's attention and it took the market cap. Again, we eat our own cooking. Right? I'm biased. I'm a shareholder. We helped finance this company as well as low as C$0.03 I think earlier in the year. And now it trades roughly at between C$0.22 and C$0.25 on a regular basis. So again, these types of returns, that was this year for us. That was during the market where everybody's waiting for Jerome to pivot.
I mean, you could wait for Jerome to pivot all you want, but there's some opportunities out there. Now the neat thing with this company, it's really early stage. It's only got a C$23 million market cap. So when I talk about Patriot having a C$550 million market cap, and I talk about this company having a C$23 million market cap, that should give you an indication of how early it is as far as Nevada Sunrise Metals go. Now, here's what I like about the company in the near term and then why I think there's some money to be made here if Mother Nature cooperates. The company is funded for a drill program that I believe should start next week. The first couple of holes that they drilled here in the past several months were very successful, some of the better grades in clays that we've seen in Nevada. All of that is fine and great and I actually think they're going to continue to hit in the clay and I think the market cap will continue to rise just based on that.
But the real prize is the potential for a brine in Nevada if they're able to locate the source of the lithium that was in the clays and in some of the water, because the water came from somewhere. Right? So the speculation is there has to be a brine. It's a matter of whether it's on their land package or not. If they're able to tap into that, then you have a situation where that company can trade in dollars instead of cents very, very quickly. With lithium plays, you don't have to wait too long, you drill it and kill it. You either hit lithium and it's there, or, you know what, the rock is bare and you don't have it. You better move that drill rig or find another project.
And so here's the secondary aspect to a speculation in this company. They have a great gold asset that they own 20% of also in Nevada. They own 20% of a project called the Kinsley Mountain Gold Project that a company by the name of Copaur Minerals is operator of and 80% owner of.
I had a great meeting with them at the Beaver Creek conference in September. They indicated to me they were going to be very aggressive with the drill program there. That should start here within the next month or two. They've done phenomenal work with geophysics on the gold property. They have a lot of great new targets. So you have the potential for an emerging lithium discovery in Nevada, but you also are going to have some gold drill results that hopefully exceed prior expectations because it hasn't been properly drilled in quite a long time.
And, oh, they also have a copper property I really like, the Coronado property, which is a VMS type pass producing project. And if anyone is familiar at all, and I'm no geologist, but if you're familiar with VMS deposits, they typically happen in clusters. It's like pearls. Right? If you have one deposit, you usually can infer that there's going to be another two or three nearby. Coronado produced at very high grades once upon a time, but it was only one deposit that was ever mined. And they haven't properly tested any of the other targets they have on the property. So you get multiple shots on goal for a company with a market cap that's tiny, at $23 million. You get some gold exposure. You get some copper exposure and you get some lithium exposure. If one of those three works out, I think we're going to do great. If two of those three work out, it's going to be a phenomenal holiday here near your end. And if all three work, then we're all going to look real smart and we're back here next year having a party and talking about it.
Nick Hodge: Anything else?
A Well-Funded Uranium Junior
Gerardo Del Real: No. I think that's it for now on Nevada Sunrise Metals. Lastly, we have to talk uranium. This is the other green commodity. This is my second favorite commodity next to lithium right now. Uranium, again, kind of like lithium, is one of the few things that Democrats, Republicans, Libertarians, everybody, even Greta here recently, can agree on. Right? And so when I see not states, not countries, entire continents do a 360 on whether or not they're going to go nuclear, that should be an indicator to you that there is a bull market in that metal coming. Right? And so Germany had said, didn't want to continue with its nuclear ambitions. They then said, oh, we realize we don't have a choice. Japan, after Fukushima, understandably so, said, we need to reassess this and make sure we understand exactly what it is that we're doing.
Well that was 2014, if I recall correctly. They now realize that they have an energy situation that is not easily fixed with any other commodity. I could continue. France just made an announcement. The US is rushing now to establish its own independent uranium reserve. So uranium next to lithium for the next several years is my favorite commodity. And so when I look at those commodities and I look at lithium and I look at uranium and then I look at the companies and I say, okay, well lithium has had a nice run. Uranium has perked up. It's at a $50 spot price right now. It was as low as the teens here maybe just over a year ago. And look, we had companies in the portfolio that went from 10-cents to $1.20 just on that first leg up because they were so battered and depressed.
This is the gold stocks right now. Right? Nobody loves gold and silver. Gold and silver will have their day. I promise you that. And the contrarians amongst you should be adding to those positions, the better positions, the quality names, because you can buy them for pennies on the dollar. But if you're looking for returns in the near to midterm, I’m talking about the next several months, then to me lithium is the number one sector you should be looking at. Uranium should be a close second. I think we had that run up. There's a company, Fission Uranium (TSX-V: FCU)(OTC: FCUUF), that was trading down by, it was like C$0.14 cents at one time, very cheap. And it ran to a high of $1.20 on that initial euphoria that countries were coming back and embracing nuclear and governments were showing bipartisan support and they're actually allocating capital to it now. Right? And then that same company went from C$1.20 back down to the C$0.65 level. Consolidations are good if the fundamentals of the underlying commodity are still supportive. In the uranium space, the people that I speak with that are much more intelligent than I, in the space and in general all say they've never seen fundamentals as bullish in the uranium space as they have right now.
I was speaking to a gentleman by the name of Amir Adnani here recently from UEC (NYSE: UEC), and I asked him about his strategy, because the company has millions and millions of pounds in the ground. And I said, Amir, why are you unhedged? The biggest companies, the Camecos (NYSE: CCJ), all have signed agreements and a lot of their production is being sold at a fixed price. And I loved his answer. He said, “Gerardo, I've waited 18 years to get this uranium market. Why would I sell at a fixed price and cap my upside?” He said, “I'm not selling at a fixed price. I am buying.” He not only decided not to sell at a fixed price, he's got contracts for 5 million pounds fixed at $37 a pound. And his plan is, of course, when it reaches what I think eventually will be an overshoot to $150, $175, possibly $200 before it settles back in that $100 range, which I think is the mid to long term kind of analysis that I have. $80 to $100 is where it'll settle, but I think it'll overshoot because in the lithium space, I think there's going to be a scramble to secure supply.
The utilities are the biggest consumer. They're the biggest customer of uranium, and their contracts are starting to roll over, much like US debt, by the way, in the next 18 months. And so they're going to have to come back to the market and secure their next supply of uranium for the next five to 10 years. Now why that's important is, one, they're the largest consumer of uranium, but, two, the input cost to that customer is so minute that they don't care if they pay $50 or $100. It's not consequential to them. And so again, when we talk about fundamentals and we talk about other commodities, there are bull markets out there right now that all you have to do is pick right. And you can diversify. You can find an explorer. You can find a developer. You can find a producer and go ahead and sit it out and just let the fundamentals do the work for you. So one company that went public here recently is a company by the name of Labrador Uranium (CSE: LUR)(OTC: LURAF).
I suspect there may be a name change in the next six to 12 months because of the commodity exposure that the company provides. And this is actually a very good thing. It has a suite of projects in the central mineral belt that's a 260 kilometer long by 75 kilometer wide belt that's got everything from copper to uranium, vanadium, gold, silver, rare earths, iron, molybdenum. I could continue on, but the focus right now has been uranium. The company went public in the summer, which means it didn't get to participate from that upside that a lot of the uranium companies got to participate in when the spot price started rising from the teens to the $50 mark. Right?
It didn't benefit from that. It went public probably at the worst time when the uranium juniors were consolidating again and everything was kind of coming back to the mean, not to previous lows, but definitely settling. Right? And so I think the company's got a C$23 million market cap right now. It's got a management team that's got a history of monetizing assets. They know how to explore and it's a commodity rich belt. The biggest challenge for Labrador is it's going to have to figure out if it wants to be a uranium company, a copper company, a vanadium company. And I think eventually they have such a talented technical team that they'll make a uranium discovery, spin out the copper, make a copper discovery, spin out the copper, and then spin out the vanadium. Right? Those are good problems to have.
But much like Nevada Sunrise Metals, you get multiple shots on goal. And again, this sector is risky. Anybody that tells you there's a sure thing is lying to you. It's a risky sector. Give yourself shots on goal. If they miss on the copper, they have the uranium. If they miss on the uranium, they have some rare earths. Hopefully they hit on everything, right, or make a discovery like a Patriot and have a once in a generation type discovery. But at a C$23 million market cap, that's a company that I think has a lot going for it and I think has much higher share prices here in the near term.
Nick Hodge: They have cash.
Gerardo Del Real: How much cash do they have now, Nick?
Nick Hodge: Oh gosh, C$10 or C$11 million.
Gerardo Del Real: Yeah. Yeah. I believe it's C$10 million the last that I looked. So they're cashed up as well. So much like Patriot with its C$20 million balance sheet, they're very healthy with the treasury. They have the money to go explore these commodities and go figure out these structures and these trends and these targets and go make a discovery that matters.
Nick Hodge: And just to put a point on uranium and bring it back to the revenge of the miners, Gerardo touched on the fundamentals, but there's even more going on. It's not just bipartisan support. You've got Democratic governors now extending the life of reactors. California just extended the life of Diablo Canyon. I mean to have democratic governor of California say, “Hey, we got to extend the life of this nuclear reactor” is a pretty big deal. And so that's a pivoting to a technology that for a long, long time the so-called green supporters were against or anti and now they're embracing it because they know, just like they can't reach their electric vehicle targets without mining lithium, they can't reach their emission reduction targets without mining uranium and keeping these nuclear plants online. So keeping the nuclear plants online is one part of the equation, extending the life of them, but they're also giving them subsidies. So in the Inflation Reduction Act that was just passed a little while ago, there's... It's a funny name.
Gerardo Del Real: I love that name.
Nick Hodge: There's a per kilowatt hour subsidy that's carved out for existing nuclear plants. And then there's money coming and approvals coming for small modular reactors, which we haven't mentioned. And that's sort of the next generation of nuclear technology. The NERC, the Nuclear Energy Regulatory Commission, just approved the first small modular reactor to be built in the United States. It's going to be built in Idaho. And so there's a lot of things coming that are very bullish for uranium, bullish for nuclear energy. And there's always the elephant in the room, right, about the safety and the waste. For all the waste that's been produced for nuclear reactors, I might get the height wrong, but it fits all on a hundred yard football field, I think like six feet high or something if it's stacked in 55 gallon barrel drums. So it's a tiny footprint as the waste is concerned and some of these new technologies can repurpose that waste and use it as additional fuel.
And then there's the safety aspect, which it has high profile incidents. We've talked about Fukushima that there's been a couple of others, but on a per kilowatt hour basis, some people might know that nuclear energy's the safest form of energy there's ever been, fewer deaths even than solar when you account for the manufacturing of the panels and things like that. So a very safe technology and then a bit grim, I guess, but recently we've had the specter of nuclear war has been brought up in the news and that's certainly not positive for the industry. But what I would say is that there's a nuclear plant in Ukraine that's literally been shelled in the past couple of months and there hasn't been any major safety implications. So you've got a technology here that can withstand shelling, not like every nuclear plant's going to withstand shelling. I just bring it up as an example of how safe the technology actually is.
And so the last thing I'd say is that the $50 pound price that Gerardo was saying, it's not even close to the all in sustaining costs for producing uranium. You'll hear Rick Rule say it's $65 or $70 and perhaps a bit higher than that if you include the cost of capital. So uranium prices have a bit to go higher, unlike lithium, which has already risen a bit. And it's one of those things that explodes, so you like rare earth are-
Gerardo Del Real: Not literally.
Nick Hodge: Yeah. Not literally. Sorry about that. And there's not a lot of companies. I mean there's only probably a dozen quality companies in the space. And so you're able to take your shots, do some deep due diligence, and potentially have some real success as the prices continue to rise. Last thing I'd add is that uranium prices are actually up for the year and it's tough to find things that are up for the year right now.
A Tiny Copper Stock to Watch
Gerardo Del Real: And now I'm going to give you a quick freebie before we get to some Q and A because I did mention copper, so I kind of feel obligated to give you my favorite copper pick and a pick, frankly, that I think has the potential like Patriot for the next 24 months. And that's a company named Hannan Metals (TSX-V: HAN)(OTC: HANNF). Hannan Metals controls a basin scale project. I'm talking over 2,000 square kilometers of a basin in Peru. This is a region that previously was challenged by drug traffickers, let's put it that way, in the late 1990s, so it was off limits for exploration for quite some time. That has since been remedied. It is safer. It is secure now. Hannan Metals is a top 10 landholder in the country. All other nine companies that own that kind of square footage in the country have billion dollar and multi-billion dollar market caps.
Hannan Metals has a market cap of roughly C$25 million. They have two very, very strategic partners. One is a joint venture that's actually a joint venture that's worth more than the value of all of Hannan Metals. So on a third of their land package, JOGMEC, which is the Japanese government's mining oil and gas arm came in and decided they wanted to invest C$35 million to explore one third of that land package over the next several years. I think drills will be turning on that aspect of the joint venture in early 2023. I think there are a lot of copper, gold, silver discoveries to be made. And just recently Teck (NYSE: TECK) liked some parts of the other land package so much that they decided to come in and take a 9% stake at the market price just to get a position.
I'll speculate, and this is just speculation that Teck, one of the biggest miners in the world likely will want to joint venture several of the projects within this basin, because again, when I say basin, I'm talking an entire basin. There are many, many projects. The company's already identified seven periphery copper gold centers and, yeah, I think it's got 24 months of runway. I think it trades at C$0.32 the last I checked today. That's a company that I will be as aggressive with as I was with Patriot Battery Metals in adding to my personal holdings and letting the team go make some discoveries that I think can become makers.
Nick Hodge: Close out the podcast.
Gerardo Del Real: I think that's it. This was number 190 of our therapy session we call Bizarro World. Thank you, everybody.