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Cauldron Energy (ASX:CXU): Interview with CEO Jonathan Fisher

July 12, 2023

Cauldron Energy, CXU


Cauldron Energy (ASX:CXU)

We spoke with Cauldron Energy (ASX:CXU) CEO Jonathan Fisher about the exciting Melrose Project which the company is working on in the West Yilgarn, and in particularly how magnetic inversion modelling has shown some great drill targets in an area that has proved company-making for Chalice (ASX: CHN).

We also touched on Yanrey, Cauldron’s uranium project, and the significant upside that could be created once Western Australia’s policy changes regarding new uranium mines.

Full transcription below.


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Stuart: Hello, and welcome to “Stocks Down Under.” My name is Stuart Roberts, and I’m one of the co-founders of our service. And joining me on the morning of Tuesday, the 4th of July, 2023 from right here in Sydney is Mr. Jonathan Fisher, who’s the CEO of Cauldron Energy, ASX:CXU. Jonathan, good morning.

Jonathan: Morning, Stuart. Thanks for having me.

Stuart: So, Cauldron Energy. A lot of people bought the stock because of a uranium project in Western Australia called Yanrey, but that’s not what we’re gonna talk about today. You’ve had to put that project on ice, unfortunately, because the Western Australian government decided to block all uranium project developments. Although we think that will change.

Jonathan: Yeah. Look, the global nuclear renaissance is happening. There’s a future for Yanrey, and it’s not as far off as people think. But we have diversified our strategy to broadly exploring the energy transition. Our first foray is picking up the Melrose nickel project, which is just in Dalwallinu, conveniently, just a couple of hours from Perth.

Stuart: Now, that’s got me excited. Folks, if you have ever driven up from Perth to Mecca, at about the halfway mark, you come to Dalwallinu. So, sealed roads the whole way to get to your project area. And you…

Jonathan: Absolutely. Yup.

Stuart: …1500 kilometers of prime nickel ground, and not just nickel, but platinum and palladium as well with Chalice and their Barrabarra project just down the road as well. So, you’re hunting in elephant country right now.

Jonathan: Oh, mate. The Westfield Garden is a great area for exploration and has received a lot of interest in recent times. As you know, we’ve got Chalice just above us. We’ve also got Chalice’s Julimar project, obviously a bit further to the South, yet our interpretation would say that we’re on the same sort of geological trend there. And just about 10ks, I think, to the east, is Nickel X. And actually, we do have some contiguous ground with Nickel X on some of the tenements. As you said, we’ve got a very large tenement package here, about 1500 square Ks.

Stuart: Right. And in the middle of your territory, your IGO discovered a small deposit, which is excised from your ground as well, but that’s telling you that there’s something out there worth looking at.

Jonathan: Yeah. Look, there’s, I mean, IGO put about 1,000 poles into the ground, so we’ve got fantastic historic data. There was a little gold project that was run off the back of that small scale, but something like 15 grams a ton, you know, nice if you can get it. We’re not looking for gold in that area, which is actually what independence we’re looking for. We’re looking for repeats of Julimar-style mineralization. So, that’s sort of nickel, copper, and as you mentioned, platinum-group metals.

Stuart: Right. So, it’s got everything that Chalice has made us all excited about, that ultramafic complex.

Jonathan: Yup.

Stuart: You’ve just had your geophysicists look at it. And they’ve done some inversion modeling across the ground, and there are at least four targets that are flashing like a Christmas tree at the moment. They’re just begging to be drilled right underneath some of that air core. Tell us what you’ve got.

Jonathan: Yeah. Look, this is really exciting. And if people understand, you know, the aero mag, you know, you usually see these maps and they look like red and blue and stuff or green, stuff like that, yellow. What the engineers are able to do is remodel that and actually give you 3D interpretation of what’s below the ground and where it is. And what they’ve defined is an anomaly that sits quite shallow. It’s about a hundred meters below ground or 60 meters below the deepest of the old shallow holes. And it lines up perfectly with…the first part is what we call Target One, where we…

Stuart: That was very imaginative of you, Jonathan, Target One.

Jonathan: Yeah. We were gonna go with something a bit more racy, but decided to be factual. And look, that Target One is where the historic results, you know, returned up to 0.47% nickel. And it just lines up perfectly with the aero mag, the inversion, the historical data. And we’re very excited to get out on the ground. I’m actually going out there next week to sort of confirm landowner access, you know, get some reads from the physical markers on the ground, and work as quickly as we can towards drilling that area.

Stuart: Right. Now, your neighbors in Chalice, when they got started with Julimar, one of the things that people were happy about with Chalice was they didn’t have to worry about native title issues because it was in state land. State forest, obviously. Have you got to go and do some native title issues before you can get going on this one?

Jonathan: So, we, blessing and a curse, we’re in green title agricultural land, so the farmers own their land.

Stuart: Right.

Jonathan: We’ve commenced that process already, actually, and I’m just really pleased to say that, and a shout-out to all the Dalwallinu farmers out there. They’re all such nice people. All. Actually, there’s been very little turnover of land even since IGO drilled it last sort of 15 years ago. They’re all very keen for us to get back out there, and very excited to see what could happen. And, you know, they understand the process well in terms of, you know, land access and the arrangements on which that happen. So, no native title, good landowner relations. Obviously, there is the recent West Australian Heritage Act coming in recently, which, you know, can potentially just cause a few more little hurdles to go through, but we don’t see any issues.

Stuart: All right. So, Air Core obviously alleged to this particular ground. We’re drilling Target One shortly. What’s the timing on that?

Jonathan: Yeah. So, my first reaction was to drill, drill, drill straight away, but I’m, you know, I have the benefit of very good technical team and we all work really well together. Look, the desire is probably to actually do another EM survey, which we can do quite short notice. And if you know anything about EM, you’ve got two options there. You can fly up an narrow EM, or you can do a ground-based looped arrangement.

Stuart: And your arrangement is ground-based loop, I presume.

Jonathan: Look, we’re gonna confirm that actually post-discussions with the landowner next week.

Stuart: Okay.

Jonathan: You could get higher-powered air aero EM rigs these days, which can do a good job as well. Ground loop is also preferable. We just need to work in with the farmers, actually, and their cropping rotations and things like that. So, that’s the importance of getting on the ground, walking over it, and seeing exactly where we wanna go. But that’s a fairly short process. And then after that, you know, that’s the third bit of evidence we need to lock down those drill holes and then we go and drill it.

Stuart: Right. Talk to us about the grades that IGO got with that Air Core all those years ago. We’re talking peak about 0.47 on the nickel, but tantalizingly, it’s good for the platinum and palladium as well. That could be interesting.

Jonathan: Yeah. Look, we’re very confident that the area is anomalous in platinum and palladium as well. As per Chalice, we’ve been clear that we’re chasing sort of Julimar-style repeats of the mineralization. The grades that we’ve had there up to 0.47 compare really well to Julimar, but, you know, everyone knows that Julimar, you’re not interested in Julimar for the grade, you’re interested in Julimar for the scale. What we’ve seen with this first defined anomaly under the inversion modeling is it’s pretty big. You know, the first anomaly is 2 kilometers long, 350 meters wide, and who knows how deep. And it kicks in from 100 meters below surface. So, you know, we’re excited about the potential scale of what we’ve got there.

Stuart: Right. So, it’s now three years since those wonderful early intersections that Chalice was getting in Julimar down to the south. And obviously, the news continue to be good there. Every man, woman, and their dog has been trying to peg ground in this particular area. How competitive was the rush to get land? In your case, you were able to peg most of your project.

Jonathan: Yeah. So, we picked up…we were aware of some tenements that were available in the market, which we sort of hoovered up quietly. And then as part of, you know, whenever you pick up tenement package, you know, you do a review of the surrounding area and hoover up what’s available. And so we were able to peg some tenements surrounding the core. That said, the core tenements that we’re looking at with Target One are the ones that we actually bought.

Stuart: Okay. So, another magnetic survey and then we’ll go mobilize the drill rigs so long as the farmers are happy with that on our first site. But it’s fair to say that before Christmas, we could be mobilizing our rigs to go explore this interesting neighborhood.

Jonathan: Yeah. Look, the good case on that is, yes, well, before Christmas. You know, there is an alternative case which says, well, hang on, and I’ll confirm this, you know, literally next week when I’m out there looking at the land is that if we have to work around crops and everything, it may be January, but, you know, we’ve got a really strong forward work plan as well. There’s more inversion modeling to come. I think there’s gonna be more targets identified out of that and more anomalies to come. Stay tuned on that. And, you know, the EM will, I am sure produce some good results. And if you saw our neighbors, Nickel X, actually just ran some EM a few weeks ago. Reported those EM conductors to the market and you saw a very, very strong price performance on the back of that.

Stuart: Okay. Jonathan, tell us a bit about yourself. Up until late last year, you were with TNG Limited working on Mount Peake, and now you’re back at the coalface hustling up some shareholder value elsewhere. Take us way back in time. What’s been your career so far?

Jonathan: Look, Perth boy, born and bred. But as many of us do, spend some time in London. And my time in London was at Rothschild in the natural resources team there. I spent a lot of time actually in nuclear energy, which is why the uranium opportunity at Yanrey really resonates with me. And I’ve been a champion in nuclear energy for as long as I can remember.

Stuart: I looked up the dictionary the other day under the word patience, and there’s a photograph of you there because it’s gonna take a little patience to break out what is an enormous amount of shareholder value potentially built in Yanrey over the years.

Jonathan: Well, so, look, there’s no company that is more exposed and more levered to the upside on a change in uranium policy in WA. Yanrey was one of the most advanced projects prior to the WA government’s change of policy. Unfortunately, it wasn’t one of the ones that grandfathered through the approvals process. So, we really were the company that lost the most value out of that policy. And therefore, we do stand to gain the most value back. Not only once that policy changes, but once momentum builds towards a policy changing, people will understand the inherent value that is in Yanrey. And therefore, you know, the stock should start to move.

The thing I’d note also is that, you know, with the global nuclear renaissance on the way, you know, a lot of people think, “Oh, we’re not gonna get a change in policy until we get a change in government.” And I don’t think that’s true. I think the WA electorate and the people understand that, you know, nuclear is a really important part of the energy transition. And providing those zero carbon megawatt hours on a base load basis is really important. So, I think the WA government will start to see the view of the people and that we may see a change in policy even before we see a change in government.

Stuart: Right. It’s instructive to me talking with American friends of mine. Most Americans, when you poll them, are in favor of nuclear power. That’s part of the renaissance we’re talking about. And I suspect here in Australia, we’re not too far behind that in terms of coming around to accept that this is part of the energy transition.

Jonathan: So look, we’ve had some recent polling released, I think it was on May the 16th in a national newspaper around the national view on nuclear power and uranium mining in Australia is strongly positive. There’s also been recent polling, follow-up polling on the AUKUS submarine deal. And that remains. So, that’s follow-up polling from one year before. And both polls show that the AUKUS deal is extremely popular in Australia. Now, that might be for a variety of reasons. It might just be because nuclear subs are just really cool technology. I kind of think they are. It might be a little bit of, you know, people wanting to stand up to China, or it might be an energy transition and climate-related view. But, you know, those subs, they’re really, really popular.

And the WA government, for example, is crowing about the fact that they actually get to home port half of those subs in WA. They’re very, very, very keen on doing that, yet they still have a policy which says it’s unsafe to mine uranium, yet they’re saying it’s safe for their, you know, our sailors to not only live next, like, literally 5 meters away from a small modular reactor, but to have it parked off the coast of Perth. Those things are completely inconsistent with each other, and I think they’re actually inconsistent with the view of the people. And therefore, I’m quite confident that that policy is gonna change maybe sooner than people think.

Stuart: Okay. But in the meantime, that’s in the bottom drawer of Cauldron Energy. And you’ve got something that can get the punters pretty interested in 2023. Talk to us in closing, how did you end up picking this particular part of Western Australia as your next focus in the Melrose project, I mean.

Jonathan: Yeah. So, look, we defined our new strategy of exploring the energy transition. Obviously, that, you know, uranium is a core part of that, but we said, “Well, what other are the energy transition metals do we need to focus on?”

Stuart. Nickel, obviously. Yeah.

Jonathan: Nickel was clearly one of them. We like WA, obviously, as a mining jurisdiction. And so we started looking around to say, “Well, okay, where have people had good nickel exploration discoveries,” and actually around the Westug, and there’s sort of the Julimar belt, you know, really stood out for us. There’s a number of benefits. You know, you’re close to Perth.

Actually, there’s no native title, which is great. And, you know, there’s a lot of historic data. So, we were able to really walk up to the start line or run up to the start line and get going as opposed to, you know, starting from a standing start. So, we’re very excited about what Melrose can bring to the party. And actually, you know, when you take the trouble to sort of digest what is all there, and then you look at our market cap and you go, “Oh, hang on, this is something…” The market hasn’t yet realized what we’ve picked up in the Melrose project.

Stuart: Well, let’s look very closely. Jonathan Fisher, thanks for joining “Stocks Down Under.”

Jonathan: Thanks, Stuart. Appreciate it.